Property Law in New South Wales [5 ed.] 9780409352559, 9780409352566

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Property Law in New South Wales Fifth edition

To my mother, Mona, and my late father, Gordon, who stimulated my interest in property and property law JG

To my beloved family, and especially to those who have arrived since the last edition: Naomi, Imogen and Joella NF

In loving memory of Professor Phillipa Weeks, whose passion for Property Law inspired generations of ANU Law students HR

Property Law in New South Wales Fifth edition Janice Gray BA, LLB (Grad) Dip Ed (UNSW); Grad Dip (Leg Prac) (UTS); MA (History) (UNSW); PhD (Law) (UEA) Solicitor of the Supreme Court of New South Wales Honorary Associate Professor, School of Private and Commercial Law, Faculty of Law and Justice, University of New South Wales, Sydney

Neil Foster BA, LLB (UNSW), BTh (ACT), DipATh (Moore), LLM (UoN) Associate Professor, Newcastle Law School, The University of Newcastle

Heather Roberts PhD (ANU); BA(Asian Studies)(Hons) / LLB(Hons) (ANU) Associate Professor, ANU College of Law, Australian National University

Darryn Jensen B Com, LLB (Hons), LLM, PhD Honorary Senior Lecturer, Law School, Australian National University

LexisNexis Australia 2022

LexisNexis AUSTRALIA LexisNexis 475–495 Victoria Avenue, Chatswood NSW 2067 On the internet at: www.lexisnexis.com.au ARGENTINA LexisNexis Argentina, Buenos Aires AUSTRIA LexisNexis Verlag ARD Orac GmbH & Co KG, Vienna BRAZIL LexisNexis Latin America, Sao Paulo CANADA LexisNexis Canada, Markham, Ontario CHILE LexisNexis Chile, Santiago CHINA LexisNexis China, Beijing, Shanghai CZECH REPUBLIC Nakladatelství Orac sro, Prague FRANCE LexisNexis SA, Paris GERMANY LexisNexis Germany, Frankfurt HONG KONG LexisNexis Hong Kong, Hong Kong HUNGARY HVG-Orac, Budapest INDIA LexisNexis, New Delhi ITALY Dott A Giuffrè Editore SpA, Milan JAPAN LexisNexis Japan KK, Tokyo KOREA LexisNexis, Seoul MALAYSIA LexisNexis Malaysia Sdn Bhd, Petaling Jaya, Selangor NEW ZEALAND LexisNexis, Wellington POLAND Wydawnictwo Prawnicze LexisNexis, Warsaw SINGAPORE LexisNexis, Singapore SOUTH AFRICA LexisNexis Butterworths, Durban SWITZERLAND Staempfli Verlag AG, Berne TAIWAN LexisNexis, Taiwan UNITED KINGDOM LexisNexis UK, London, Edinburgh USA LexisNexis Group, New York, New York LexisNexis, Miamisburg, Ohio

ISBN:

9780409352559 (pbk). 9780409352566 (ebk).

© 2022 Reed International Books Australia Pty Limited trading as LexisNexis. First edition 2003 (reprinted 2006); second edition 2007 (reprinted 2009); third edition 2012 (reprinted 2014 and 2015); fourth edition 2018 (reprinted 2019, 2020 (two times) and 2021 (two times)). Cover image: ‘Urban Confusion’, photograph by Philip Bell, . This book is copyright. Except as permitted under the Copyright Act 1968 (Cth), no part of this publication may be reproduced by any process, electronic or otherwise, without the specific written permission of the copyright owner. Neither may information be stored electronically in any form whatsoever without such permission. Inquiries should be addressed to the publishers. Typeset in Helvetica Neue LT Std and Bembo Std. Printed in Australia. Visit LexisNexis at www.lexisnexis.com.au

Contents Detailed Contents

vii

Prefacexix Table of Cases xxiii Table of Statutes lix Chapter 1: The Concept of Property

1

Chapter 2: Land, Fixtures and Chattels

49

Chapter 3: Fundamental Principles — Tenure and Estates

85

Chapter 4: Native Title

149

Chapter 5: Possession and Adverse Possession

217

Chapter 6: Law, Equity and Trusts

287

Chapter 7: Old System and Priorities

327

Chapter 8: Torrens Title

349

Chapter 9: Common Property

457

Chapter 10: Perpetuities

517

Chapter 11: Leases and Tenancies

557

Chapter 12: Easements and Profits à Prendre

635

Chapter 13: Freehold Covenants

681

Chapter 14: Mortgages

715

Index795

v

Detailed Contents Contentsv Prefacexix Table of Cases xxiii Table of Statutes lix Chapter 1: The Concept of Property

1

Connections to Property Introduction to the Concept Analytical Dimension

1 6 8

What do we mean by the term ‘property’? 8 Is property a relationship or a thing? 12 Philosophical Bases of Property 17 Labour theory of property 17 Utilitarian justifications for private property 20 Economic justification for private property 21 Justice and equality 24 Women and property 27 A pluralist approach? 30 Historical Changes in the Nature and Function of Property 31 Doctrinal Dimension — The Boundary Between Property and Other Rights 34 Property and contract 34 Property and Indigenous rights 35 Body parts and property rights 36 Is there property in a spectacle? 39 Property and information 41 Property and the right to work 42 Property and civil rights 43 Public property, private property, common property 44 Property rights and human rights 45 Conclusion 47 Chapter 2: Land, Fixtures and Chattels 49 Introduction 49 Land 49 Personalty 50 Choses in possession 51 Choses in action 51 vii

Property Law in New South Wales

What is Land? 51 Airspace 52 Subsoil 53 Natural rights 54 Boundaries of Land 54 Land bounded by tidal waters 54 Land bounded by non-tidal waters 54 Accretion and erosion 55 Fixtures 55 Introduction 55 General principles 56 Tenant’s fixtures 61 Protection of Property Interests in Land 64 Trespass to land — tort 64 Title to sue 65 Recovery of possession 65 Self-help 66 Trespass to land — statutory penalties 67 Chattels 68 Introduction 68 Property interests in chattels 68 Fragmented property interests — bailment 70 Actions in tort to protect proprietary interests in chattels 72 Overlapping of remedies 74 The jus tertii defence 75 An exception — permanent loss or damage to a reversionary interest 76 Rights of a bailee 78 Self-help 80 Finders 80 Finder versus employer or principal 81 Finder versus occupier 81 Reform 83 Fixtures by mistake 83 Right to implead a third party in an action in conversion 83

Chapter 3: Fundamental Principles — Tenure and Estates 85 Introduction 85 International Law, Common Law and Principles of Reception 86 Doctrine of Tenure 90 Background and history 90 viii

Detailed Contents

Local Developments and the Doctrine of Tenure 102 New South Wales and tenures — background 102 Quit rents 103 Pastoral leases 103 Other statutory modifications 107 Relevance of English Tenure to Australia 107 Differences between English and Australian doctrines 107 Tenure, allodialism and native title 109 Doctrine of Estates 111 Definition of an ‘estate’ 111 Freehold estates 114 Determinable and conditional fees 115 Words of limitation 127 The Rule in Shelley’s Case 132 Estates of less than freehold — leasehold 134 Future interests 137 Vested and contingent remainders 139 Reform 144

Chapter 4: Native Title 149 Introduction 149 The Evolution of Native Title in Australia 150 Relationship with the land 150 ‘Settlement’ and onwards 151 The Gove case 157 Mabo (No 2) 158 Background 158 The finding in Mabo (No 2) 160 Some key continuing issues in the ‘common law’ of native title 167 Legislation 198 Native Title Act 1993 (Cth) 198 Native Title Amendment Act 1998 (Cth) 209 More recent legislative amendments 212 Reform 213 Definition of ‘native title’ 213 Cultural knowledge 214 Compensation 215 Chapter 5: Possession and Adverse Possession 217 Introduction 217 Historical Development 219 ix

Property Law in New South Wales

Concept of Possession 221 Property, possession, ownership, title and seisin 222 Possessory actions 225 Ejectment and Possession 230 Need to establish ownership? 230 Need to establish a better right to possession? 231 Jus Tertii 235 Adverse Possession 236 Definition 236 Rationale 238 Source of Adverse Possession Rights 244 Adverse Possession and the Crown 245 The Limitation Period 247 When does the limitation period start? 247 What needs to occur for the cause of action to accrue? 247 Suspending or cancelling time running 249 Ultimate time limit on actions to recover land 251 What are the Criteria for Adverse Possession? 251 Introduction 251 Factual possession 252 Animus possidendi or intention to possess 258 Additional issues 263 Examples of Adverse Possession 267 Summary of requirements for factual possession and the animus possidendi 269 Abandonment 270 Adding Consecutive Periods of Adverse Possession Together 271 How Can the Documentary Owner Recover Possession? 273 To what rights does adverse possession give rise? 274 Possessory Title and Torrens Land 275 Whole parcels of land 277 Caveats and possessory title 280 Adding consecutive periods of adverse possession together under Torrens 280 Crown grants or leases, Torrens and adverse possession 280 What kind of interest does an adverse possessor have before a possessory application is granted? 280 Preserving the integrity of the Torrens Register 281 Reform 281 Paper dealings 281

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Detailed Contents

Nature of the adverse possessor’s rights before a successful claim over Torrens title land Abolition of adverse possession doctrine

282 282

Chapter 6: Law, Equity and Trusts 287 Introduction 287 Legal and Equitable Ownership 288 Historical introduction 288 Creation and Transfer of Interests in Land at Law 290 Deeds 290 Legal interests created by parol or by conduct 291 Interests in personalty 291 Creation and Transfer of Interests in Land in Equity — Contracts for the Sale of Land 292 General 292 Auctions 293 Overcoming the absence of formal requirements — the equitable doctrine of part performance 293 Equitable interests arising under contract — the doctrine of conversion and requirement of specific enforceability 296 Creation and Transfer of Interests in Land in Equity — Trusts 301 Express trusts — general 301 Transfer of equitable interests 301 Formalities 302 Non-express trusts 304 Estoppel 312 Proprietary estoppel 312 Equitable estoppel 314 Gifts 318 Personalty 318 Land 319 Trusts and Domestic Relationships — Statutory Intervention 319 Property (Relationships) 1984 Act (NSW) s 20 320 Family Law Act (Cth) s 79 322 Reform 323 Uncertainty surrounding Conveyancing Act 1919 (NSW) s 23 323 Presumptions of resulting trust and advancement 324 Domestic labour and unconscionability 325 Chapter 7: Old System and Priorities 327 Introduction 327 xi

Property Law in New South Wales

Common Law and Equitable Priority Rules 328 Earlier legal interest versus later legal interest 328 Earlier legal interest versus later equitable interest 328 Earlier equitable interest versus later legal interest 330 Prior equitable interest versus later equitable interest 335 Registration of Deeds and Priorities 341 Introduction 341 Registration of ‘instruments’ 342 Registration and priority 342 Bona fide and for valuable consideration 343 Effect of registration on void instruments 344 Reform 344 Persistence of old system title generally 344 Tabula in naufragio 345 Equities and ‘mere equities’ 346

Chapter 8: Torrens Title 349 Introduction 349 Sir Robert Torrens 350 Introduction of the Torrens scheme 351 How land is brought under the Torrens system 351 Old system title and computerisation conversions 353 Torrens Register, folios and dealings 354 Principles underpinning the Torrens system 359 Indefeasibility of Title 361 What is indefeasibility? 361 Deferred versus immediate indefeasibility 362 What will attract indefeasibility on registration? 367 Exceptions to Indefeasibility 379 Fraud 380 Other estates and interests in land 387 Prior folio 390 Omission or misdescription of easements 390 Omission or misdescription of profits à prendre 390 Wrong descriptions of parcels 391 Short-term tenancies 392 Some Other Exceptions to Indefeasibility 393 In personam exception 393 Adverse possession 403 Overriding statutes 403 Registrar-General’s general power to correct 408 xii

Detailed Contents

Other provisions in the Real Property Act 410 Volunteers 410 Unregistered Interests under the Torrens system 413 Caveats 414 Other circumstances where caveats may be used 426 Priority notices 427 Competition between unregistered interests 430 Section 43A of the Real Property Act 436 Torrens Assurance Fund — Pt 14 of the Real Property Act 1900 (NSW) 441 Key sections of the Real Property Act — ss 120 and 129 443 Fraud and the Torrens Assurance Fund 446 Damages 447 Interrelationship with other sections 448 Proceedings for recovery 448 Reform 450 Overriding statutes and the Real Property Act 1900 (NSW) 450 Which is preferable — deferred or immediate indefeasibility? 451 Volunteers 454 Torrens Assurance Fund 455 Electronic Conveyancing and the Torrens System — new risks and burdens 455 Chapter 9: Common Property 457 Introduction 457 Co-ownership 457 General 457 Joint tenancy 458 Tenancy in common 460 Creation of co-ownership — joint tenancy or tenancy in common? 460 Severance of joint tenancy 466 Rights and obligations of co-owners 479 Termination of co-ownership 483 Strata Schemes 485 Introduction 485 Basic structure of strata schemes 487 Common property 490 Owners corporation 492 Management 493 Responsibilities of owners and occupiers 500 By-laws 501 Disputes 506 Termination of strata schemes 512 Strata renewal process 512 xiii

Property Law in New South Wales

Reform 513 Unilateral severance of Torrens title land 513 Occupation rents and profits 514 Strata scheme by-laws and property rights 515

Chapter 10: Perpetuities 517 Introduction 517 History of the Rule against Perpetuities 518 Modern Rule Against Perpetuities 520 Shared principles 520 Common law position 530 Perpetuities Act 1984 (NSW) 539 Applying the Rule against Perpetuities 549 Examples of the rule’s application 550 Reform 551 Abolition of the rule against perpetuities 552 Section 4(3) of the Perpetuities Act 554 ‘Wait and see’ rule 555 Chapter 11: Leases and Tenancies 557 Introduction 557 Leases at Common Law — Terminology 557 Creation of Leases 558 Substantive requirements 558 Formal requirements 562 Types of Tenancies at Common Law 565 Fixed-term leases 565 Periodic tenancies 565 Tenancy at will 568 Tenancy at sufferance 569 Tenancy by estoppel 569 Concurrent leases 570 Reversionary leases 570 Covenants in Leases 570 Introduction 570 Implied covenants 571 Express covenants 581 Enforceability of Covenants 585 Privity of contract 585 Privity of estate 586 Covenants touching and concerning the land 587 xiv

Detailed Contents

Assignment of the lease 588 Assignment of the reversion 590 Can assignors or assignees sue or be sued for past breaches? 591 Termination of Leases 593 Termination by notice 593 Effluxion of time 593 Breach of Lease Covenants 593 Forfeiture 595 Merger 602 Surrender 602 Frustration 603 Remedies 604 Damages and injunction 604 Set-off 604 Reform of the Common Law 605 Removal of the certain duration requirement 605 Abolition of s 127 implied tenancies 605 Privity of estate and continuing liability for tenants after assignment 606 Residential Tenancies 606 Introduction 606 What is a residential tenancy? 607 Creating residential tenancies 612 Parties’ obligations 614 Rent 617 Termination 619 NSW Civil and Administrative Tribunal (NCAT) 623 Residential tenancies and priorities 626 Reform of residential tenancies legislation 627 Retail Leases 629 What is a retail lease? 630 Rights and obligations 630 Rent 631 Assignment and subletting 631 Termination 632 Disputes 633 Chapter 12: Easements and Profits à Prendre 635 Introduction 635 Easements 635 General 635 Substantive requirements for the creation of an easement 636 xv

Property Law in New South Wales

Examples of easements 643 Easements distinguished from other types of rights 644 Formal requirements for the creation of an easement 647 Common types of easements and the extent of rights conferred 659 Remedies 665 Easements and the Torrens system 666 Extinguishment of easements 671 Profits à Prendre 676 General 676 Creation of profits à prendre 676 Remedies 678 Extinguishment of profits 678 Profits à rendre 678 Access to Neighbouring Land Act 2000 (NSW) 679 Reform 679 Easements in gross 679 Easements and profits by prescription 680 Chapter 13: Freehold Covenants 681 Introduction 681 Terminology 683 Enforceability of the Benefit of a Covenant at Common Law (Benefit of the Covenant Running with the Land of the Covenantee) 684 Annexation of covenant to the land 685 Express assignment of the benefit at law 688 Enforceability of Covenants and s 36C of the Conveyancing Act 1919 (NSW) 689 Enforceability of the Burden of a Covenant 690 At common law 691 In equity — the doctrine in Tulk v Moxhay 693 Requirements of s 88(1) of the Conveyancing Act 697 Enforceability of the Benefit of a Covenant in Equity 697 Benefit annexed to the land 698 Express assignment 700 Building Schemes 700 Requirements of a building scheme 701 Freehold Covenants and the Torrens System 703 Restrictive covenants 703 Building schemes and the Torrens system 704 xvi

Detailed Contents

Formal Requirements for the Creation of Freehold Covenants 705 Old system title 705 Torrens title 705 Section 88B of the Conveyancing Act 705 Remedies 706 Modification and Extinguishment of Covenants 707 Express agreement 708 Implied agreement 708 Merger 709 Statutory extinguishment under s 89(1) of the Conveyancing Act 709 Suspension of covenants 712 Reform 712 Positive covenants and freehold land 712 Section 36C of the Conveyancing Act 713

Chapter 14: Mortgages 715 Introduction 715 Nature of a mortgage 715 Securities over chattels, hire-purchase, consumer credit law and the Personal Property Securities Act 2009 (Cth) (PPSA) 716 Mortgages over land 724 Old System Title Mortgages 725 Creation of legal and equitable mortgages over freehold land 725 Mortgage of leasehold 726 Torrens Title Mortgages 727 Creation of registered and unregistered mortgages over freehold land 727 Creation of mortgage of leasehold 729 Crown land mortgages 730 Clogs on the Equity of Redemption 730 Introduction 730 Extinguishment of the right to redeem 731 Postponement of the right to redeem 732 Collateral advantages 733 Other covenants 736 Statutory intervention 737 Relationship Debt and Mortgages 741 Rights and Remedies of the Mortgagee 745 Personal covenant 745 Possession of the mortgaged property 747 Right to assign 751 Right to improve property 752 xvii

Property Law in New South Wales

Power to lease 752 Rights to fixtures 755 Appointment of a receiver 755 Foreclosure 756 Discharge of mortgage 760 Power of sale 762 Priorities 782 Priority between mortgages 782 Tacking 784 Mortgagors and Purchasers 787 Death and Mortgages 790 Reform 790 Accurate nomenclature 790 Internet advertising 791 Sureties and sexually transmitted debt 791 Transfers as mortgages 792

Index795

xviii

Preface This, the fifth edition of Property Law in New South Wales, like earlier editions, aims to provide a useful resource for practitioners and students alike.We have tried to take a critical approach to property law, identifying areas where legal rules may unfairly disadvantage certain groups but, equally, acknowledging law that is effectively serving society’s needs. Our aim has been to balance doctrinal explanations and analysis with contextualised commentary. Much has happened in the world since the last edition. There have been wars, climate emergencies and, of course, the COVID-19 pandemic. Such events have had implications for, or connections to, property law, underscoring the significant role of property law in society. Accordingly, in this edition we have sought to tease out some of those links, especially between COVID-19 and property law’s capacity to respond flexibly, in terms of new (but temporary) changes to the law of leases and mortgages, for example.We have also highlighted property-related issues such as homelessness, bearing in mind that legal rules express the values and dominant concerns of a particular time and place, and that property law may be used to shape social, cultural, economic and environmental outcomes. In this edition and in line with reforms to Torrens title law, we include a more detailed section on eConveyancing and raise areas ripe for attention and perhaps reform.This includes the role of priority notices and the impact of the abolition of certificates of title. We also devote attention to the Personal Property Securities Act 2009, which profoundly changed the law regarding the enforceability and priority of security interests in respect of personal property. This edition also includes new adverse possession cases. In that regard, we observe that despite conflicting views on the doctrine’s rationale and benefit, cases (sometimes over miniscule pieces of land) still consistently come before the courts for resolution. Further, in this edition we have included material on the developing law of compensation for extinguishment of native title, and on the clarification of acceptable rules in strata schemes. Then there is the question of history. Tempting as it may be to excise much of the historical material that lies behind modern property law, we have resisted that approach. Our view is that the history of land law not only informs the development of modern law (and makes it more accessible), but that it is also a legitimate and valuable sub-discipline itself. While offering a treatise on the history of land law is well beyond our present brief, we hope that the sections in this edition, which hark back to the law of former times, offer a launching pad for the further study of legal (property law) history. In that regard, we are mindful of Cicero’s words, ‘Not to know what happened before you were born is to remain forever a child’.1 1.

Marcus Tullius Cicero, De Oratore  ch. 34, para 120 as referred to in S Ratcliffe (ed), Oxford Essential Quotations, 2017 (accessed 14 June 2022).

xix

Property Law in New South Wales

Our decision on the value of retaining some historical material has had implications for the literature to which we refer and cite in this edition. In some cases, we refer to older editions of books because they contain material that we believe remains helpful and relevant. At other times, we cite the more recent versions of such books. Another issue that has been of concern to us is that of appropriate pronoun usage. While we are fully aware of the debate around the use of non-binary, gender-neutral pronouns such as ‘their, they and them’, as substitutes for singular, gendered pronouns such as ‘he, she, him and her’, we have opted not to use the non-binary, gender-neutral pronouns. We apologise in advance if this gives offence, but our decision was taken in the interests of clarity. As property law cases often have many parties (property rights being enforceable against all the world), the fact situations can be very complex, and it is sometimes necessary to distinguish individual parties (by using him/her) from parties collectively (them). Further, while the singular, gender-neutral pronoun, ‘it’ was available, we found it a little too de-humanising if referring to people. We await a better alternative. In terms of responsibilities, in this edition the lead (and original) author, Janice Gray, has been responsible for Chapters 1, 3 and 5. Chapter 1, originally written and revised by Brendan Edgeworth, became Janice’s responsibility in the previous edition and has continued to be so in this edition. Chapters 3 and 5 were originally written by Janice Gray and revised by her in all later editions. Neil Foster has been responsible for Chapters 4 and 9 in the 5th edition. Chapter 4 was originally written by Janice Gray, and Chapter 9 by Brendan Edgeworth, with Neil Foster revising both chapters in the 2nd, 3rd and 4th editions). In this edition, as in the last, Heather Roberts has been responsible for Chapters  2, 6, 7 and 8. Chapters  2, 6 and 7 were originally written by Brendan Edgeworth and revised by him in the 2nd and 3rd editions. Meanwhile, Chapter 8 was originally written by Janice Gray and revised by her in all subsequent editions until Heather assumed this responsibility in the 4th edition. In this 2022 edition, we welcome Dr Darryn Jensen to the authorship team, while at the same time farewelling Professor Shaunnagh Dorsett, a much-valued contributor, who had been responsible for Chapters 11, 12 and 13, originally written by Brendan Edgeworth, but later revised by Shaunnagh. Darryn has taken over responsibility for Chapters 11, 12 and 13, but also stepped up to revise Chapters 10 and 14 for this edition. Chapter 10 was originally written by Janice Gray and thereafter revised in all previous editions by her. Meanwhile, Chapter 14 was originally written by Janice Gray, but revised in the 2nd, 3rd and 4th editions by Neil Foster. It goes without saying that an undertaking such as this book is a large one, and we are grateful to the many people who have supported us along the way. Unfortunately, we are unable to thank them all here. However, some people deserve special mention. Our special thanks go to the team at LexisNexis and particularly, Jocelyn Holmes, our patient and obliging commissioning editor, who has steered this book through the tough times of COVID-19 and various author mishaps.We also thank our copyeditor, Edward Caruso. xx

Preface

Janice Gray would like to thank the Faculty of Law and Justice, UNSW, Sydney, for the sabbatical leave that gave her time to reflect and write. She also thanks Professors Helen Carr, Susan Bright, Liz Fisher, Bettina Lange and Irit Samet, along with Dr Yael Liftshitz for some very stimulating and helpful legal discussions that inform the book. Janice would like to acknowledge the late Honourable Justice Margaret Stone, her teacher and early mentor, who influenced her work in many ways, but Janice’s greatest thanks go to David for his unfaltering support and affection. Neil Foster thanks his family for their ongoing love and support. Heather Roberts would like to thank Justice Rachel Pepper, Andrew Henderson and Wayne Morgan for their helpful discussions. Darryn Jensen would like to thank William Gordon for research assistance and Wayne Morgan for the valuable feedback he provided. We have stated the law as it was available to us in May 2022. Janice Gray Neil Foster Heather Roberts Darryn Jensen June 2022

xxi

Table of Cases References are to paragraph numbers 2 Elizabeth Bay Road Pty Ltd v The Owners — Strata Plan No 73943 (2014) 88 NSWLR 488 …. 9.111 7-Eleven Stores Pty Ltd v United Petroleum Pty Ltd [2010] QSC 469 …. 11.39 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504 …. 12.34

A Abate, in the matter of Chang Rajii v Chang Rajii (No 3) [2019] FCA 577 …. 8.119 Abbatangelo v Whittlesea City Council [2007] VSC 529; [2008] V Conv R 54-750 …. 5.62, 5.110 Abbiss v Burney (1881) 17 Ch D 211 …. 10.12, 10.26 Abela v Public Trustee [1983] 1 NSWLR 308 …. 9.44, 9.46 Abigail v Lapin [1934] AC 491; (1934) 51 CLR 58 …. 8.131, 8.138, 8.163, 8.166, 14.128 Ace Property Holdings Pty Ltd v Australian Postal Corp [2010] QCA 55 …. 5.9, 5.77 Ackroyd v Smith (1850) 10 CB 164 …. 12.5 Acorn Computers v MCS Microcomputer Systems Pty Ltd (1984) 6 FCR 277 …. 6.15 Adamson v Hayes (1973) 130 CLR 276 …. 6.23, 6.53 Adavale Realty Pty Ltd v Williams (RTT 96/024133) …. 11.123 Adderley v Dixon (1824) 1 Sim & St 607 …. 6.14 Adeyinka Oyekan v Musendiku Adele [1957] 1 WLR 876 …. 4.20 Adler v Blackman [1953] 1 QB 146 (CA) …. 11.13 Administration of Papua and New Guinea v Daera Guba (1973) 130 CLR 353 …. 4.13 Agra Bank v Barry (1874) LR 7 HL 135 …. 7.7, 7.39 Agripay Pty Ltd v Byrne [2011] 2 Qd R 501 …. 14.43 Agripower Barraba Pty Ltd v Blomfield (2015) 317 ALR 202 …. 2.18, 2.20 Ahern v LA Wilkinson (Northern) Ltd [1929] St R Q 66 …. 11.43 Ahluwalia v Robinson [2003] NSWCA 175 …. 11.36

Akiba on behalf of the Torres Strait Islanders of the Regional Seas Claim Group v State of Queensland (No 2) [2010] FCA 643 …. 4.34 Akiba v Commonwealth (2013) 250 CLR 209 …. 4.34, 4.57 Akici v LR Butlin [2005] EWCA Civ 1296; [2006] 1 WLR 201 …. 5.9 Alcorn v R [2006] NSWCCA 209 …. 8.204 Alcova Holdings Pty Ltd v Pandarlo Pty Ltd (1988) 15 NSWLR 53 …. 8.89, 8.91 Aldin v Latimer Clark, Muirhead & Co [1894] 2 Ch 437 …. 11.23 Aldred v Stelcad Pty Ltd [2015] NSWCA 201 …. 11.36 Aldred’s Case, Re (1610) 9 Co Rep 57b …. 12.7 Aldridge v Wright [1929] 2 KB 117 …. 12.26, 12.51 Allam Homes Pty Ltd v Vocata [2003] NSWSC 628 …. 8.145 Alleasing Pty Ltd; Re OneSteel Manufacturing Pty Ltd v OneSteel Manufacturing Pty Ltd [2017] FCA 656 …. 14.10 Allen v Anthony (1816) 1 Mer 282; 35 ER 978 …. 7.19 — v Knight (1846) 5 Hare 272 …. 7.28 — v Roughley (1955) 94 CLR 98 …. 5.32, 5.33, 5.38, 5.39, 5.43, 5.44, 5.45, 5.55, 5.74, 5.136, 5.137, 5.138 — v Snyder [1977] 2 NSWLR 685 …. 6.33, 6.34 Allen’s Asphalt Pty Ltd v SPM Group Pty Ltd [2010] 1 Qd R 202; [2009] QCA 134 …. 8.136, 14.17 Allfox Building Pty Ltd v Bank of Melbourne Ltd (1992) NSW ConvR ¶55-634 …. 14.118 Allianz Australia Insurance Ltd v Lo-Guidice [2012] NSWSC 145 …. 2.47 Allison v Petty (1899) 9 QLJ 125 …. 3.58 Almona Pty Ltd v Parklea Corporation Pty Ltd [2021] NSWCA 171 …. 14.109, 14.117, 14.137 Altarama Ltd v Camp (1980) 5 ACLR 513 …. 14.118 American Express International Banking Corporation v Hurley [1985] 3 All ER 564 …. 14.67 Amodu Tijani v Secretary, Southern Nigeria [1921] 2 AC 399 …. 3.43

xxiii

Property Law in New South Wales Ampol Petroleum Limited v Mutton (1952) 53 SR (NSW) 1 …. 13.41 Amtel Pty Ltd v Ah Chee [2015] WASC 341 …. 14.42, 14.44 Anderson v Anderson [2016] NSWSC 1204; [2017] NSWCA 131 …. 9.33, 9.35 — v Bowles (1951) 84 CLR 310 …. 11.16, 11.25 — v O’Donnell (2000) 10 BPR 18,501 …. 9.34 Anderson, Ex parte; Re Green (1946) 46 SR (NSW) 389 …. 11.53 Anderson Group Pty Ltd v Tynan Motors Pty Ltd [2006] NSWCA 22 …. 2.61 Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205 …. 14.34 — v Parker [1973] Qd R 93 …. 3.116, 3.118 — v Partington (1791) 3 Bro CC 401; 29 ER 610 …. 10.18 — v — (1954) 70 LQR 61 …. 10.18 Anonymous (1722) 2 P Wms 75; 24 ER 646 …. 3.5 Antar v Fairchild Developments Pty Ltd [2008] NSWSC 638 …. 8.145 Antoniades v Villiers (jointly reported with AG Securities v Vaughan) [1990] 1 AC 417 …. 11.5 AG (CQ) Pty Ltd as Trustee for AG (CQ) Family Trust v A & T Promotions Pty Ltd as Trustee for Toowoomba Unit Trust [2011] 1 Qd R 306 …. 7.26, 7.27, 8.162 ANZ Banking Group Ltd v Bangadilly Pastoral Co Pty Ltd (1978) 139 CLR 195 …. 14.99, 14.101, 14.113 — v Comer (1993) NSW ConvR ¶55-668 …. 14.57 — v Devine Holdings Pty Ltd (1991) ANZ ConvR 526 …. 14.89 — v Widin (1990) 26 FCR 21; (1990) 102 ALR 289 …. 6.8, 14.17 Appleyard Capital Pty Ltd, Re (2014) 101 ACSR 629 …. 14.6 Application of Fox (1981) 2 BPR 9310 …. 13.6 Application of Mango Credit Pty Ltd, Re [2016] NSWSC 199 …. 14.34 Apriaden Pty Ltd v Seacrest Pty Ltd (2005) 12 VR 319 …. 11.65 Arambasic v Veza (No 4) [2014] NSWSC 110 …. 8.124 Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd [1976] 1 NSWLR 377 …. 11.66 Armitage v Nurse [1998] Ch 241 …. 7.7 Armory v Delamirie (1722) 1 Strange 506; 93 ER 664 …. 2.63 Armour v Penrith Projects Pty Ltd [1979] 1 NSWLR 98 …. 8.194

Ashburnam Golf Club Ltd v Hogan (22 July 1982, unreported) …. 5.114 Asher v Whitlock (1865) LR1QB 1 …. 3.16, 5.16, 5.33, 5.34, 5.35, 5.37, 5.44, 5.48, 5.68, 5.74, 5.97, 5.137, 5.138 Ashforth, Re [1905] 1 Ch 535 …. 10.10 Ashmore Developments Pty Ltd v Eaton (1992) Qd R 1 …. 11.55 Ashoil Holdings Pty Ltd v Fassoulas (2005) NSW ConvR ¶56-125 …. 12.62 Assets Co Ltd v Mere Roihi [1905] AC 176 …. 8.25, 8.28, 8.62, 8.66, 8.70, 8.73 Attorney-General v Brown (1847) 1 Legge 312; 2 SCR (NSW) 30 …. 3.5, 3.7, 3.33, 3.36, 3.38, 4.7 — v Chambers (1854) 4 De GM & G 206 …. 2.12 — v Mosman Council (1910) 11 SR (NSW) 113 …. 2.8 — v Pyle (1738) 1 Atk 435; 26 ER 278 …. 3.117, 10.54 — v Simpson [1901] 2 Ch 671 …. 12.32 Attorney-General (Cth) v R T Co Pty Ltd (No 2) (1957) 97 CLR 146 …. 2.20 Attorney-General (Quebec) v Attorney-General (Canada) [1921] 1 AC 401 …. 4.43 Atwell v Roberts (No 3) [2009] WASC 96 …. 6.19 Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd 1 …. 11.22, 11.23 Austerberry v Corporation of Oldham (1885) 29 Ch D 750 …. 12.37 — v Oldham Corp (1885) 29 Ch D 750 …. 13.12 Austin Construction Co (Australia) Ltd v Becketts Holdings Pty Ltd (1958) 75 WN (NSW) 444 …. 8.89 Austotel Pty Ltd v Franklins Self-Serve Pty Ltd (1989) 16 NSWLR 582 …. 6.41 Australia & New Zealand Bank Ltd v Sinclair [1968] 2 NSWR 26 …. 14.65 Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd [2017] NSWCA 99; (2017) 18 BPR 36, 683 …. 6.19, 7.26, 7.27, 7.28 Australia in Owners of East Fremantle Shopping Centre West Strata Plan 8618 v Action Supermarkets Pty Ltd (2008) 37 WAR 498 …. 12.7 Australian Co-operative Development Society Ltd, Ex parte [1978] Qd R 395 …. 14.123 Australian Express Pty Ltd v Pejovic [1963] NSWR 954 …. 14.56 Australian Guarantee Corp (NZ) Ltd v CFF Commercial Finance Ltd [1995] 1 NZLR 129 …. 8.168 Australian Guarantee Corporation Ltd v De Jager [1984] VR 483 …. 8.78

xxiv

Table of Cases Australian Hi-Fi Publications Pty Ltd v Gehl [1979] 2 NSWLR 618 …. 8.86, 12.49, 12.51 Australian Provincial Assurance Co Ltd v Rogers (1943) 43 SR (NSW) 202 …. 11.8 Australian Provincial Co Ltd v Coroneo (1938) 38 SR (NSW) 700 …. 2.21 Australian Regional Credit Pty Ltd v Mula [2009] NSWSC 325 …. 14.43 Australian Retirement Holdings Pty Ltd v Tracey Anne Higgins in her capacity as administrator of the estate of the late Monica Mary Pritchard [2021] NSWSC 1158 …. 5.69, 5.73, 5.74, 5.86, 5.87, 5.102, 5.138, 5.147 Australian Securities & Investments Commission, Re Money for Living (Aust) Pty Ltd (admins apptd) v Money for Living (Aust) Pty Ltd (admins apptd) (No 2) (2006) 24 ACLC 1240 …. 14.36 Australian Security Estates Pty Ltd v Bluecrest Holdings Pty Ltd (1999) 9 BPR 17,533 …. 8.137 Australian Softwood Forests Pty Ltd v AttorneyGeneral (NSW) (1981) 148 CLR 121 …. 12.65 Avco Financial Services Ltd v Commonwealth Bank of Australia (1989) 17 NSWLR 679 …. 14.124, 14.125 — v White [1977] VR 561 …. 8.143 Ayton v Ayton (1787) 1 Cox 327; 29 ER 1188 …. 10.21

B Backhouse v Bonomi (1861) 9 HLC 503 …. 12.11 Bacon v O’Dea (1989) 88 ALR 486 …. 8.143 Bahr v Nicolay (No 2) (1988) 164 CLR 604; 78 ALR 1 …. 6.20, 8.66, 8.75, 8.92, 8.97, 8.101, 12.51 Bailey v Barnes [1894] 1 Ch 25 …. 7.5, 7.31, 14.131 — v J Paynter (Mayfield) Pty Ltd [1966] 1 NSWR 596 …. 11.38 Bain v Brand (1876) 1 App Cas 762 …. 2.24 Bainbrigge v Browne (1881) 18 Ch D 188 …. 7.33 Baird Textile Holdings v Marks & Spencer Plc [2001] EWCA Civ 274 …. 1.45 Baker v Sebright (1879) 13 Ch D 179 …. 3.68 Bakewell Management Ltd v Brandwood [2004] 2 AC 519 …. 12.33 Baldwin v Rogers (1853) 3 De GM & G 649; 43 ER 255 …. 10.21 Ballard’s Conveyance, Re [1937] Ch 473 …. 13.6 Ball-Guymer v Livantes (1990) 102 FLR 327 …. 2.17 Baloglow v Konstantinidis (2000) 11 BPR 20,721 …. 6.22 Bank of New South Wales v Commonwealth (1948) 76 CLR 1 …. 4.50

Bank of South Australia v Ferguson (1998) 192 CLR 248; 151 ALR 729 …. 8.76 Bank of Victoria v Forbes (1887) 13 VLR 760 …. 5.111 — v M’Hutchison (1881) 7 VLR (L) 452 …. 11.13 Bannister v Bannister [1948] 2 All ER 133 …. 6.32 — v Cheung [2014] NSWCATCD 105 …. 11.109 Barham v Barham [2010] NSWSC 503 …. 9.35 Barina Properties Pty Ltd v Bernard Hastie (Australia) Pty Ltd [1979] 1 NSWLR 480 …. 11.42 Barker v Corporation of the City of Adelaide [1900] SALR 29 …. 2.8 Barlin Investments Pty Ltd v Westpac Banking Corporation (2012) 16 BPR 30,671 …. 8.177, 8.181 Barnes v Addy (1874) LR 9 Ch App 244 …. 6.31, 8.102 — v Addy [2022] NSWCA 23 …. 8.105 Barnhart v Greenshields (1853) 9 Moo PC 18 …. 7.18 Barns v Edwards [1993] 31 NSWLR 714 …. 2.38 — v Queensland National Bank Ltd (1906) 3 CLR 925 …. 14.98 Barrell v Renehan 39 A (2d) 330 (Vermont 1944) …. 5.93 Barrett v Barrett (1918) 18 SR(NSW) 637 …. 10.14 Barry v Heider (1914) 19 CLR 197 …. 8.25, 8.92, 8.93, 8.94, 8.128, 8.129, 8.137, 8.161, 14.20 Bartha v O’Riordan [2004] QSC 205 …. 5.96 Bartholomew’s Will, Re (1849) 1 Mac & G 354 …. 10.14 Bartlett v Ryan (2000) 10 BPR 18,077 …. 5.94, 5.148 Basely v Clarkson (1681) 3 Lev 37 …. 2.30 Bass v Gregory (1890) 25 QBD 481 …. 12.7, 12.10 Bassett v Cameron [2021] NSWSC 207 …. 6.42, 9.19 — v Nosworthy (1673) Rep t Finch 102 …. 7.11 Batchelor v Marlow [2003] 1 WLR 764 …. 12.7 Batey v Potts (2004) 61 NSWLR 274 …. 9.50 Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566 …. 6.31 Batiste v Lenin (2002) 11 BPR 20,403 …. 11.60, 11.72, 11.82 Baumgartner v Baumgartner (1987) 164 CLR 137 …. 6.35, 6.49, 6.55, 7.20 Bawn v Trade Credits (1986) NSW ConvR ¶55-290 …. 14.42 Baxendale v Instow PC [1981] 2 All ER 620 …. 2.14 Baxter v Four Oaks Properties Ltd [1965] Ch 816 …. 13.33

xxv

Property Law in New South Wales Bayliss v Public Trustee (1988) 12 NSWLR 214 …. 8.126 Baynes & Co v Lloyd & Sons [1895] 2 QB 610 …. 11.22 Bayport v Watson [2002] VSC 206 …. 5.105 Bazley v Wesley Monash IVF Pty Ltd [2011] 2 Qd R 207 …. 1.65 Beames v Queensland [2002] QSC 83 …. 8.118 Beatty v Australia and New Zealand Banking Group Ltd [1995] 2 VR 301 …. 8.32 Beaulane Properties Ltd v Palmer [2005] EWHC 1460 (Ch); [2006] Ch 79 …. 5.59, 5.115 Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459 …. 8.152 Beconwood Securities Pty Ltd v Australia and New Zealand Banking Group Ltd (2008) 246 ALR 361 …. 14.1 Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106 …. 8.152, 8.160 Beeby v Official Assignee of Pickering [1953] NZLR 832 …. 14.124 Beever v Spaceline Engineering Pty Ltd (1993) New South Wales Conveyancing Reporter 55-678 …. 5.35, 5.94 Belgrave Nominees Pty Ltd v Barlin-Scott Airconditioning (Australia) Pty Ltd [1984] VR 947 …. 2.20 Bellevue Crescent Pty Ltd v Marland Holdings Pty Ltd (1998) 34 NSWLR 364 …. 12.54 Bellissimo v JCL Investments Pty Ltd [2009] NSWSC 1260 …. 8.136 Belperio v Linehaul Holdings Pty Ltd (2004) 89 SASR 185 …. 11.60 Bendal Pty Ltd v Mirvac Project Pty Ltd (1991) 23 NSWLR 464 …. 2.8 Bendigo and Adelaide Bank Ltd v Karamihos [2014] NSWCA 17 …. 14.38 Benjamin, Re [1926] VLR 378 …. 10.14 Bennell v Western Australia (2006) 153 FCR 120 …. 4.32 Bernstein of Leigh (Baron) v Skyviews and General Ltd [1978] QB 479 …. 2.7 Bernstein v Skyviews & General Ltd [1978] QB 479 …. 1.4 Berrisford v Mexfield Housing Co-operative Ltd [2012] 1 AC 955 …. 11.4 Berryman v Sonnenschein [2008] NSWSC 213 …. 12.36 Beswick v Beswick [1966] Ch 538; [1968] AC 58 …. 13.10 Bethian Pty Ltd v Green (1977) 3 Fam LR 11,579 …. 8.142 Betlehem v Keytown Constructions Pty Ltd [2007] WASC 38 …. 8.142

Bevan v Bevan [2014] FamCAFC 19 …. 6.51 Bevham Investments Pty Ltd v Belgot Pty Ltd (1982) NSW ConvR ¶55-088 …. 14.97 Bhana v Bhana [2002] NSWSC 117 …. 3.115 Big Top Hereford Pty Ltd v Thomas (2006) 12 BPR 23,843 …. 9.65 Biggs v Hoddinott [1898] 2 Ch 307 …. 14.30 Billson v Residential Apartments Ltd [1992] 1 AC 494 …. 11.73 Bird v Hildage [1948] 1 KB 91 …. 11.66 Birmingham Citizens Permanent Building Society v Caunt [1962] Ch 883 …. 14.56 Bishop v Taylor (1968) 118 CLR 518 …. 11.4 Biviano v Natoli (1998) 43 NSWLR 695 …. 9.54, 9.59 Black v Garnock (2007) 230 CLR 438; [2007] HCA 31 …. 6.18, 8.135, 8.138, 8.172 Blacks Ltd v Rix [1962] SASR 161 …. 13.39 Blackwell, Re [1926] Ch 223 (CA) …. 10.14 Blackwood v London Chartered Bank of Australia (1871) 10 SCR (NSW) Eq 91 …. 7.39 Blades v Higgs (1861) 10 CBNS 713; 142 ER 634 …. 2.62 Blankard v Galdy (1693) 2 Salk 411; 91 ER 356 …. 3.36 Blathwayt v Baron Cawley [1976] AC 397; [1975] 3 All ER 625 …. 3.57 Blaxland v Grattan (1887) 8 LR (NSW) (L) 287 …. 7.41 Bleckly, Re; Bleckly v Bleckly [1951] Ch 740 …. 10.21 Blower v Larkin [1833] NSWSupC 94 …. 5.50 Blulock Pty Ltd v Majic (2001) 10 BPR 19,143 …. 12.34 Blundell v Curvers [2002] NSWSC 436 …. 9.65 Bodney v Bennell (2008) 167 FCR 84 …. 4.32 Bogdanovic v Koteff (1988) 12 NSWLR 472 …. 8.27, 8.124, 8.125 Bolten v Beckenham [1981] 1 QB 278 …. 14.49 Bolton v Bolton (1879) 11 Ch D 968 …. 12.29 Bona Vista Properties Pty Ltd, Re [2007] NSWSC 1278 …. 12.61 Bonanno v Finamore [2021] NSWSC 1538 …. 14.33 Bond v Hong Kong Bank of Australia Ltd (1991) 25 NSWLR 286 …. 14.50 Bondlake Pty Ltd v Owners — Strata Plan No 60285 (2005) 62 NSWLR 158 …. 9.74, 9.75 Bonner v Tottenham & Edmonton Permanent Investment BS [1899] 1 QB 161 …. 11.48 Booth v The Salvation Army Building Association Ltd (1897) 14 TLR 3 …. 14.34

xxvi

Table of Cases Borg-Warner Acceptance Corporation (Australia) Ltd v Diprose (1987) 4 BPR 9408; NSW ConvR ¶55-364 …. 14.42 Borman v Griffith [1930] 1 Ch 493 …. 12.6, 12.26 Boss v Hamilton Island Enterprises Ltd [2009] QCA 229 …. 11.42 Bostock’s Settlement, Re; Norrish v Bostock [1921] 2 Ch 469 …. 3.86 Boulter v Boulter (1898) 19 LR (NSW) Eq 135 …. 9.56 Boulton v Pilcher (1861) 29 Beav 633 …. 10.14 Bourke v Beneficial Finance Corp Ltd (1991) ANZ ConvR 473 …. 14.114 Bowden v Lo (1999) 9 BPR 16,317 …. 11.82 Boyce v Beckman (1890) 11 LR (NSW)(L) 139 …. 7.38 Boyd v Mayor of Wellington [1924] NZLR 1174 …. 8.26, 8.28 Boyer v Warbey [1953] 1 QB 234 …. 11.50, 11.86 BP Properties Ltd v Buckler (1988) 55 P & CR 337 …. 5.101 Brace v Duchess of Marlborough (1728) 2 P Wms 491 …. 7.10, 7.31 Bradford Banking Co Ltd v Henry Briggs, Son & Co Ltd (1886) 12 App Cas 29 …. 14.136 Bradford Corporation v Pickles [1895] AC 587 …. 12.11 Bradley v Carritt [1903] AC 253 …. 14.32 Brand v Chris Building Co Pty Ltd [1957] VR 625 …. 2.29, 2.65 Braye v Tarnawskyj [2019] NSWSC 277; (2019) 19 BPR 39213 …. 5.86 Break Fast Investments Pty Ltd v Giannopoulos (also known as Giannopoulos) (No 5) [2011] NSWSC 1508 …. 8.105 Breams Property Investment Co Ltd v Stroulger [1948] 2 KB 1 …. 11.45 Bree v Scott (1904) 29 VLR 692 …. 5.111 Breen v Williams (1996) 186 CLR 71 …. 4.52 Breheney, In the Will of [1915] VLR 242; (1915) 21 ALR 273 …. 10.20 Breskvar v Wall (1971) 126 CLR 376 …. 7.26, 8.20, 8.27, 8.29, 8.30, 8.44, 8.92, 8.104, 8.124, 8.125, 8.167, 8.202, 14.145 Brett, In the Will of [1947] VLR 483 …. 10.38 Brickwood v Young (1905) 2 CLR 387 …. 9.55 Bridges v Bridges [2010] NSWSC 1287 …. 5.67, 5.77, 5.96, 5.99, 5.134 — v Hawkesworth (1851) 21 LJQB 75; [1843–60] All ER Rep 122 …. 2.66 Brikom Investments Ltd v Carr [1979] QB 467; [1979] 2 All ER 753 …. 11.66 Brisbane South Regional Health Authority v Taylor [1996] HCA 25 …. 5.66

Brisbane Water County Council v Commissioner of Stamp Duties [1979] 1 NSWLR 320 …. 9.122 British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1979] 2 All ER 1063 …. 11.82 British Bakeries (Midlands) v Michael Testler & Co Ltd [1986] 1 EGLR 64 …. 11.42 British Road Services Ltd v Arthur V Crutchley & Co Ltd [1968] 1 All ER 811 …. 2.51, 2.61 Broadlands International Finance Ltd v Sly (1987) 4 BPR 9420; NSW ConvR ¶55-342 …. 14.42 Brocklesby v The Temperance Permanent Building Society [1895] AC 173 …. 7.8 Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd (2007) 35 WAR 27 …. 8.131 Brook, Ex parte; Re Roberts (1878) 10 Ch D 100 …. 2.27 Brookfield Multiplex Ltd v Owners — Strata Plan No 61288 (2014) 254 CLR 185 …. 9.71 Brown v Brown (1993) 31 NSWLR 582 …. 6.30, 6.54 Brown (on behalf of the Ngarla People) v State of Western Australia (No 2) [2010] FCA 498 …. 4.57, 4.58 Browne v Flower [1911] 1 Ch 219 …. 11.22, 12.7 — v St Clair Peerry [1991] 1 WLR 1297 (PC) …. 5.82 Brunker v Perpetual Trustee Co Ltd (1937) 57 CLR 555 …. 8.128 Brutan Investments Pty Ltd v Underwriting and Insurance Ltd (1980) 39 ACTR 47 …. 14.119 Bruton v London & Quadrant Housing Trust [2000] 1 AC 406 (HL) …. 5.123, 11.5, 11.17 Brydall v The Owners of Strata Plan 66794 (2009) 14 BPR 26,831 …. 12.7 Bryson v Bryant (1992) 29 NSWLR 188 …. 6.36, 6.55 Buchanan-Wollaston’s Conveyance, Re [1939] Ch 738 …. 9.63 Buckinghamshire County Council v Moran [1990] Ch 263; [1989] 2 All ER 225 …. 5.103, 5.105, 5.110, 5.115, 5.116, 5.118 Bucknall v Reid (1876) 10 SALR 188 …. 11.28 Buffrey v Buffrey [2006] NSWSC 1349 …. 6.30 Bull v Bull [1955] 1GÇàQB 234 …. 9.15 Bullen v A’Beckett (1865) 1 Moo NS 223; 15 ER 684 …. 7.11, 7.40 Bulli Coal Mining Co v Osborne [1899] AC 351 …. 2.9 Bulstrode v Lambert [1953] 1 WLR 1064 …. 12.36 Bunn, Re (1880) 16 Ch D 47 …. 10.14 Bunning Building Supplies v Sgro (1995) V Conv R ¶54-535 …. 8.143

xxvii

Property Law in New South Wales Bunny Industries Ltd v FSW Enterprises Pty Ltd [1982] Qd R 712 …. 6.14, 6.15 Burgess v Rawnsley [1975] Ch 429 …. 9.31, 9.43 Burman’s Caveat, Re [1994] 1 Qd R 123 …. 8.151 Burnett v Randwick City Council [2006] NSWCA 196 …. 2.64 Burnham v Carroll Musgrove Theatres Ltd (1928) 41 CLR 540 …. 11.14 Burns, Re (1918) 14 Tas LR 83 …. 3.63 Burrell, Re (1869) LR 7 Eq 399 …. 14.50 Burrows v Crimp (1887) 4 WN (NSW) 11b …. 7.39 Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73 …. 2.6, 8.81, 8.82, 9.66, 12.7 Butcher v Bowen [1964] NSWR 36 …. 11.10 Butler v Fairclough (1917) 23 CLR 78 …. 8.66, 8.131, 8.138, 8.147, 8.162, 8.165, 8.168, 14.128 Byrne v Hoare [1965] Qd R 135 …. 2.64

C C J Belmore Pty Ltd v AGC (General Finance) Ltd [1976] 1 NSWLR 507 …. 14.35 Cable v Bryant [1908] 1 Ch 259 …. 11.23 Cadell v Palmer (1833) 1 Cl & Fin 372; 6 ER 956 …. 10.5, 10.26 Cain v New South Wales Land and Housing Corporation [2014] NSWCA 28; (2014) 86 NSWLR 1 …. 11.125 Calabrese v Miuccio (No 2) [1985] 1 Qd R 17 …. 9.43 Calder v Attorney-General of British Columbia (1973) 34 DLR (3rd) 145 (SC Canada) …. 4.13, 4.42 Caldwell v Rural Bank of New South Wales (1951) 69 WN (NSW) 246 …. 8.26 Callow v Rupchev (2009) 14 BPR 27,533 …. 9.58, 9.132 Calverley v Green (1984) 155 CLR 242 …. 6.29, 6.30, 6.54, 9.17 Calverley, Jain v Amit Laundry Pty Ltd [2019] NSWCA 20 …. 6.29 Cambridge v Rous (1858) 25 Beav 409; 53 ER 693 …. 10.32 Cameron v Murdoch (1986) 63 ALR 575 …. 6.39 Campbell v Baigent (2010) 15 BPR 28, 959 …. 12.59, 12.61, 12.62 — v Commercial Banking Co of Sydney (1879) 2 LR (NSW) 375 …. 14.95 — v Holyland (1877) 7 Ch D 166 …. 14.73, 14.74 Canas Property Co Ltd v KL Television Services Ltd [1970] 2 QB 433 …. 11.68 Canning’s Will Trusts, Re [1936] Ch 309 …. 10.36

Cape v Trustees of the Savings Bank of New South Wales (1893) 14 LR (NSW) Eq 204 …. 14.83 Capital Finance Australia Ltd v Karabassis (2003) 11 BPR 21,123 …. 8.142 — v Struthers (2008) 14 BPR 98,328; [2008] NSWSC 440 …. 7.29, 8.140 Carberry v Gardiner (1936) 36 SR (NSW) 559 …. 11.8 Cardwell v Walker [2004] 2 P & CR 9 …. 12.6 Carey v Doyne (1856) I Ch R 104 …. 14.50 Carmody v Delehunt [1984] 1 NSWLR 667 …. 9.133 Carolyn Deigan as executrix for the estate of the late James Boyd Lockrey v Barnard James Fussell [2019] NSWCA 299 …. 8.19 Carpet Fashion Pty Ltd v Forma Holdings Pty Ltd [2004] NSWCA 150 …. 11.20 Carr v Finance Corp of Australia (No 2) (1982) 150 CLR 139 …. 14.95 Carroll v Perpetual Trustee Co Ltd (1916) 22 CLR 423 …. 10.12 Carter v Cole [2006] All ER (D) 139 …. 12.37 Cartwright, Re; Avis v Newman (1889) 41 Ch D 532 …. 3.65 Cassegrain v Gerard Cassegrain & Co Pty Ltd (2015) 254 CLR 425; 316 ALR 111 …. 7.11, 7.24, 8.20, 8.62, 8.127, 9.23 Castell & Brown Ltd, Re [1898] 1 Ch 315 …. 7.28 Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (2013) 247 CLR 149 …. 8.23, 8.116, 12.48 — v Sahab Holdings Pty Ltd (No 2) (2013) 303 ALR 84 …. 8.23 Casuarina Rec Club Casuarina Rec Club Pty Ltd v The Owners — Strata Plan 77971 (2011) 80 NSWLR 711 …. 9.104, 9.127, 9.134 Cavalier v Pope [1906] AC 428 …. 11.36 Cawthorne v Thomas (1993) 6 BPR 13,840 …. 5.133, 5.138 Caxton Publishing v Sutherland Publishing [1939] AC 178 …. 2.48 Cayton Bay Holiday Camp Ltd v Shell Mex and BP Ltd [1975] QB 94; [1974] 3 All ER 575 …. 5.116 Central Estates (Belgravia) Ltd v Woolgar (No 2) [1972] 1 WLR 1048 …. 11.66 Central Mortgage Registry of Australia Ltd v Donemore Pty Ltd [1984] 2 NSWLR 128 …. 14.135 Cervi v Letcher (2011) 33 VR 320 …. 5.102, 5.106, 5.108 Chaffers v Abell (1839) 3 Jur 577 …. 10.14 Challenger Managed Investments Ltd v Direct Money Corp Pty Ltd (2003) 59 NSWLR 452 …. 8.184, 8.185, 8.187, 8.204

xxviii

Table of Cases Champion Homes Sales Pty Ltd v JKAM Investments Pty Ltd [2014] NSWSC 952 …. 8.168 Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 24,675 …. 8.46, 8.47, 8.48, 8.50 — v — [2008] NSWSC 178 …. 8.191, 8.193 Chang v Registrar of Titles (1976) 137 CLR 177 …. 6.18 Chant v Deputy Commissioner of Taxation (1994) 15 ACSR 184 …. 14.122 Chaplin v Chaplin (1773) 3 P Wms 229 …. 3.62 — v Smith [1926] 1 KB 198 …. 5.9 Chapman, Re [1977] 1 WLR 1163 …. 10.18 Chartered Trust plc v Davies (1997) 76 P & CR 396 …. 11.23 Chase Corporation (Australia) Pty Ltd v North Sydney Brick and Tile Co Ltd (1994) 35 NSWLR 1 …. 14.134 Chasfild Pty Ltd v Taranto [1991] VR 225 …. 8.31 Chatham Empire Theatre (1955) Ltd v Ultrans Ltd [1961] 2 All ER 381 …. 11.74 Chatsworth Estates Co v Fewell [1931] 1 Ch 224 …. 13.44, 13.48 Cheah Theam Swee v Equiticorp Finance Group Ltd [1992] 1 AC 472 (PC) …. 14.50 Cheedy on behalf of the Yindjibarndi People v Western Australia [2011] FCAFC 100 …. 4.1, 4.86 Chelsea Yacht & Boat Co Ltd v Pope [2000] 1 WLR 1941 …. 2.20 Cheung v Cheung [2021] HKCFA 19 (27 May 2021) …. 9.58 Chia v Rennie (1997) 8 BPR 15,601 …. 14.119 Chick v Dockray [2011] TASFC 1 …. 12.36 China and South Sea Bank Ltd v Tan Soon Gin [1990] 1 AC 536 …. 14.105, 14.111, 14.116 Chiu v Healey (2003) 11 BPR 21,241 …. 12.36, 12.59 Chong v Chanell (No 2) [2009] NSWSC 1066 …. 8.151 Christopoulos v Kells (1988) 13 NSWRL 541 …. 12.50 Chronopoulos v Caltex Oil (Australia) Pty Ltd (1982) 45 ALR 481 …. 6.5, 11.50 Chung Ping Kwan v Lam Island Co Ltd [1997] AC 38 (PC) …. 5.77 Circuit Finance Australia Ltd v Panella (2012) 16 BPR 30,347 …. 6.19 Circuit Finance Australia Ltd (in Liq) v Panella [2011] NSWSC 311 …. 7.27, 8.162 Circuit Finance Pty Ltd v Glenauchen Pty Ltd [2001] SASC 41 …. 14.34 City and Metropolitan Properties Ltd v Greycroft Ltd [1987] 1 WLR 1085 …. 11.55

City Developments Pty Ltd v Registrar-General of the Northern Territory [2001] NTCA 7 …. 12.5 City Motors (1933) Pty Ltd v Southern Aerial Super Service Pty Ltd (1961) 106 CLR 477 …. 2.61 City of Canada Bay v Bonaccorso Pty Ltd (2007) 71 NSWLR 424 …. 8.109, 8.110 City of Subiaco v Heytesbury Properties Pty Ltd [2001] 24 WAR 146 …. 11.77 Cityland Property (Holdings) Ltd v Dabrah [1968] Ch 166 …. 14.34 Civil Service Co-operative Society Ltd v McGrigor’s Trustee [1923] 2 Ch 347 …. 11.64 Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 3] [2009] WASC 52 …. 2.68 Clare Morris Ltd v Hunter BNZ Finance Ltd (1988) 4 BPR 9609 …. 14.95 Clark v Baker (1987) 4 BPR 9476 …. 14.37 — v Raymor (Brisbane) Pty Ltd (No 2) [1982] Qd R 790 …. 8.143 Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404 …. 14.95 — v Ramuz [1891] 2 QB 456 …. 6.16 Classic Heights Pty Ltd v Black Hole Enterprises (1994) V Conv R ¶54-506 …. 8.143 Clay v Karlson (1998) 19 WAR 287 …. 3.43 Clayton v Ramsden [1943] AC 320 …. 3.57 Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227 …. 13.6 Clement v Jones (1909) 8 CLR 133 …. 5.87 Clements v Ellis (1934) 51 CLR 217 …. 8.20, 8.26, 8.28 Cleret v Rago [2014] QCA 158 …. 5.96 Clifford v Dove (2003) 11 BPR 21,149 …. 12.9, 12.37, 13.14, 13.15 Clifford, Re [1980] 2 WLR 749 …. 10.18 Climie v Wood (1869) LR Ex 328 …. 2.25 Clobery v Lampen (1683) 2 Free 24; 2 Ch Cas 155 …. 10.14 Clos Farming Estates Pty Ltd v Easton (2001) 10 BPR 18,845 …. 5.10 — v — (2002) 11 BPR 20,605 …. 12.5, 12.7, 12.65, 12.73 Clunies-Ross v Commonwealth (1984) 155 CLR 193; 55 ALR 609 …. 4.50 Clyne v Lowe (1968) 69 SR (NSW) 433 …. 7.18, 8.89 — v NSW Bar Association (1960) 104 CLR 186 …. 1.73 Coaker v Willcocks [1911] 2 KB 124 …. 12.41 Coe v Commonwealth (1979) 53 ALJR 403 …. 4.9, 4.13 — v — (1993) 68 ALJR 110 …. 4.35 Coffill v Lagudi Holdings Pty Ltd [2016] NSWSC 1764 …. 12.63

xxix

Property Law in New South Wales Cohen v Popular Restaurants Ltd [1917] 1 KB 480 …. 11.45 Cole v Kelly [1920] 2 KB 106 …. 11.51 Coleman, Re [1936] Ch 528 …. 10.36 Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14,638 …. 12.34, 13.49 Coles Supermarkets Australia Pty Ltd v Stateland Developments Pty Ltd [2008] NSWSC 1425 …. 8.145 Collins v Urban [2014] NSWCATAP 17 …. 11.130 Colls v Home and Colonial Stores Ltd [1904] AC 179 …. 12.10 Commercial and General Acceptance Ltd v Nixon (1980) ANZ ConvR 306 …. 14.113 — v — (1981) 152 CLR 491 …. 14.112, 14.113 Commercial Bank of Australia v Amadio (1983) 151 CLR 447 …. 14.45 Commissioner of Taxation v Bosanac (No 7) [2021] FCA 249 …. 6.30 Commonwealth v Akiba (2012) 204 FCR 260 …. 4.34 — v Orr (1981) 37 ALR 653 …. 14.63, 14.65 — v Registrar of Titles (Vic) (1918) 24 CLR 348 …. 12.7 — v Verwayen (1990) 170 CLR 394 …. 6.42 — v Yarmirr (2001) 208 CLR 1; 184 ALR 113 …. 3.2, 4.27, 4.29, 4.34, 4.40, 4.42, 4.44, 4.48, 4.51, 4.52, 4.54, 4.66, 4.84 Commonwealth Bank of Australia v Buffett (1993) 114 ALR 245 …. 14.50 — v Serobian [2009] NSWSC 302 …. 14.37 — v Tugvale Pty Ltd (1993) NSW ConvR ¶55-687 …. 14.88 Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR (NSW) 47 …. 3.95, 11.2, 11.40 Commonwealth of Australia v Yarmirr (2002) 2 OUCLJ 257 …. 4.34 Composite Buyers Ltd v Soong (1995) 38 NSWLR 286 …. 8.143 Comptroller of Stamps v Howard-Smith (1936) 54 CLR 614 …. 6.21 Concept Projects Ltd v McKay [1984] 1 NZLR 560 …. 2.27 Congoo (on behalf of Bar-Barrum People) (No 4) v Queensland (2014) 218 FCR 358 …. 4.58 Conlan v Registrar of Titles (2001) 24 WAR 299 …. 8.77 Connell v Bond Corp Pty Ltd (1992) 8 WAR 352 …. 8.145 Connors v United Kingdom [2004] EHRR 189 …. 1.77 Consolidated Trust Co Ltd v Naylor (1936) 55 CLR 423 …. 8.37, 14.59

Cook v Bank of New South Wales (1982) 2 BPR 9580 …. 14.37 — v Shoesmith [1951] 1 KB 752 …. 11.41 Cooke v Dunn (1998) 9 BPR 16,489 …. 5.90, 5.111, 5.144 Coombs v Rogers (RTT 88/288) …. 11.117 Cooper v Stuart (1889) 14 App Cas 286 …. 3.5, 3.7, 4.9 — v The Owners — Strata Plan No 58068 [2020] NSWCA 250 …. 9.104, 9.108 Cooper, Re (1882) 20 Ch D 611 …. 7.41 Cooper’s Conveyance Trusts, Re [1956] WLR 1096 …. 10.54 Cope v Keen (1968) 118 CLR 1 …. 8.126 Copeland v Greenhalf [1952] Ch 488 …. 12.7 Cordingley, Re (1948) 48 SR (NSW) 248 …. 9.64 Corin v Patton (1990) 169 CLR 540; 92 ALR 1 …. 6.46, 8.126, 9.8, 9.25, 9.31, 9.42, 9.130 Corozo Pty Ltd v Total Australia Ltd [1988] 2 Qd R 266 …. 8.96 Corporate Affairs Commission v ASC Timber Pty Ltd (1989) 18 NSWLR 577 …. 12.65 Costin v Costin (1997) ANZ ConvR 401; (1997) NSW ConvR 55-811 (CA) …. 8.126, 9.32, 9.130 Cottage Holiday Associates Ltd v Customs and Excise Commissioners [1983] QB 735 …. 11.9 Couche v Adams (2002) 11 BPR 20,101 …. 12.56, 12.60 Countrywide Banking Corp v Robinson [1991] 1 NZLR 75 …. 14.116 Courtenay v Austin (1961) 78 WN (NSW) 1082 …. 8.172 Cousins v Wilson [1994] NZLR 463 …. 2.32 Cowell v Rosehill Racecourse Co Ltd (1969) 56 CLR 605; 43 ALR 69 …. 1.57 Cowlishaw v Ponsford (1928) 28 SR (NSW) 331 …. 12.54 Cox v Bath (1893) 14 LR (NSW) 263 …. 2.62 — v Bishop (1857) 8 De GM & G 815 …. 11.50 — v Colossal Cavern Co, 276 SW 540 (1925) …. 5.93 Crabb v Arun District Council [1976] 1 Ch 179 …. 6.39, 12.17 Craigie & Harley v Kemp [2016] WASC 243 …. 9.32 Cram Foundation v Corbett Jones (2006) NSWSC 495 …. 3.46, 3.117, 10.54 Crate v Miller [1947] KB 946 …. 11.11 Cray v Willis (1729) 2 P Wms 528 …. 9.25 Credit Connect v Carney [2010] NSWSC 910 …. 14.36, 14.38 Creer v P & O Lines of Australia (1971) 125 CLR 84 …. 11.42

xxx

Table of Cases Cresdon v Chan Pty Ltd (1989) 64 ALJR 111 …. 8.128 Cressy v Johnson (No 3) [2009] VSC 52 …. 2.47 Crest Nicholson Residential (South) Ltd v McAllister [2004] EWCA Civ 410 …. 13.4 Critchley v Collins [2004] SASC 10 …. 8.78 Croft v Kennaugh [1945] VLR 40 …. 14.57 Crook v Consumer, Trader and Tenancy Tribunal (2003) 59 NSWLR 300 …. 11.125 Crosbie-Hill v Sayer [1908] 1 Ch 866 …. 14.80 Crow v Wood [1971] 1 QB 77 …. 12.41 Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 2016 …. 6.42, 11.7 Cruse v Mount [1933] Ch 278 …. 11.24 Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949 …. 14.104, 14.113 Cumerlong Holdings Pty Ltd v Dalcross Properties Pty Ltd [2011] HCA 27 …. 13.51 Cunningham v Commonwealth of Australia [2016] HCA 39 …. 1.73 — v Moody (1748) 1 Ves Sen 174 …. 3.104 — v National Australia Bank Ltd (1987) ATPR ¶40-826 …. 14.118 Cure v Bridge Housing Ltd [2014] NSWCATAP 80 …. 11.125 Currumbin Investments Pty Ltd v Body Corp Mitchell Park Parkwood CTS [2012] 2 Qd R 511 …. 12.36 Curryer’s Will Trusts [1938] Ch 952 …. 10.32 Cuthbertson v Irving (1859) 4 H & N 742; 157 ER (H & N), 1039 (ER) …. 5.123 Cuzeno Pty Ltd v The Owners — Strata Plan 65870 [2013] NSWSC 1385 …. 12.26

D D v W [2011] SADC 151 …. 9.58 Dabbs v Seaman (1925) 36 CLR 538 …. 12.31, 12.54 Dale v Moses [2007] FCAFC 82 …. 4.17 Dalegrove Pty Ltd v Isles Parking Station Pty Ltd (1988) 12 NSWLR 546 …. 11.53, 11.55 Dally-Watkins, Ex parte; Re Wilson (1955) 72 WN (NSW) 454 …. 14.91 Dalton v Angus (1881) 6 App Cas 740 …. 12.10 — v Ellis: Estate of Bristow (2005) 65 NSWLR 134 …. 13.10 — v Henry Angus & Co (1881) 6 App Cas 740 …. 12.11, 12.33, 12.40 Damdounis v Recorder of Titles (Tas) 2002 11 Tas R 185 …. 8.159 Daniels v Davison (1809) 16 Ves 249; 33 ER 978 …. 7.19 Daniher v Fitzgerald (1919) 19 SR (NSW) 260 …. 14.61

Darby v Harris (1841) 1 QB 895 …. 2.25 Darbyshire v Darbyshire (1905) 2 CLR 787 …. 7.38 Darcey v Pre-Term Foundation Clinic [1983] 2 NSWLR 497 …. 2.38 D’Arcy v Burelli Investments Pty Ltd (1987) 8 NSWLR 317 …. 2.27 Dare v Heathcote (1856) 25 LJ Ex 245 …. 12.33 Dashwood v Magniac [1891] 3 Ch 306 …. 3.66 Daulia Ltd v Four Millbank Nominees Ltd [1978] 1 Ch 231 …. 6.9 Davey v Durrant (1857) 1 De G & J 535; 44 ER 830 …. 14.101 David Blackstone Ltd v Burnetts (West End) Ltd [1973] 1 WLR 1487 …. 11.66 David Jones Ltd v Leventhal (1927) 40 CLR 357 …. 11.22 David Securities Pty Ltd v Commonwealth Bank of Australia (1990) 93 ALR 271 …. 14.34 Davidson v Registrar of Titles [2002] WASC 168 …. 14.133 Davies v Bennison (1927) 22 Tas LR 52 …. 2.8 — v Ryan [1951] VLR 283 …. 8.26 — v Williams (1851) 16 QB 546 …. 12.44 Davis v Commonwealth (1988) 166 CLR 79; 82 ALR 633 …. 1.5, 1.74, 1.76 — v Symons [1934] Ch 442 …. 14.27 — v Town Properties Investment Corp Ltd [1903] 1 Ch 797 …. 11.51 Davison’s Settlement, Re [1913] 2 Ch 498 …. 3.74 Dawes v Hawkins [1860] EngR 968; (1860) 8 CB NS 848; 141 ER 1399 …. 5.71 De Campo Holdings Pty Ltd v Cianciullo [1977] WAR 56 …. 9.63 De Lorenzo v De Lorenzo [2020] NSWCA 351 …. 9.24, 9.65 De Rose v South Australia [2013] FCA 988 …. 4.70 — v — (No 2) (2005) 145 FCR 290; [2005] FCAFC 110 …. 4.23, 4.27, 4.58 Deacon v South-Eastern Railway (1889) 61 LT 377 …. 12.29 Dearle v Hall (1823) 3 Russ 1; 38 ER 475 …. 14.55 Debney, Re (1959) 60 SR (NSW) 471 …. 9.64 Debney v Semerdziev [1982] 2 NSWLR 391 …. 14.125 Dee Trading Co Pty Ltd v Baldwin [1938] VLR 173 …. 2.59 Deguisa v Lynn [2019] SASCFC 107 …. 13.32, 13.33 — v Lynn (2020) 268 CLR 638; [2020] HCA 39 …. 8.1, 8.81, 13.37 Delehunt v Carmody (1986) 161 CLR 464 …. 9.15, 9.22 Delgamuukw v British Columbia (1992) 17 Queens Law Journal 350 …. 3.5

xxxi

Property Law in New South Wales — v — (1993) 104 DLR (4th) 470 …. 4.58 — v — [1998] 1 CNLR 14 …. 4.36, 4.43 Delohery v Permanent Trustee Co of New South Wales (1904) 1 CLR 283 …. 12.32 Dendy v Nicholl (1858) 4 CB (NS) 376 …. 11.66 Dennis v McDonald [1982] 1 All ER 590 …. 9.54, 9.58 Deputy Commissioner of Taxation (Vic) v General Credits Ltd (1983) 82 ALR 101 …. 14.53 Dewhirst v Edwards [1983] 1 NSWLR 34 …. 12.33, 12.50, 12.53 Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572 …. 9.23 Diera Pty Ltd v Grover (1990) ASC 55-974 …. 14.95 Dillon v Nash [1950] VLR 293 …. 11.34 Dillwyn v Llewellyn (1862) 4 De GF & J 517; 45 ER 1285 …. 6.38 Dimmick v Pearce Investments Pty Ltd (1980) 43 FLR 235 …. 14.111 Dinsdale v Arthur [2006] NSWSC 809 …. 6.29 Direct Food Supplies (Victoria) Pty Ltd v DLV Pty Ltd [1975] VR 358 …. 11.71 Director of Public Prosecutions for Victoria v Le (2007) 232 CLR 562 …. 9.3 Djaigween v Douglas (1994) 48 FCR 535 …. 4.84 DKLR Holding Co (No 2) Pty Ltd v Comr of Stamp Duties (NSW) (1982) 149 CLR 431 …. 9.40 Dobbie v Davidson (1991) 23 NSWLR 625 …. 8.85, 12.33, 12.48, 12.51, 12.70 Dockray v Chick [2010] TASSC 32 …. 12.33, 12.52 Dockrill v Cavanagh (1944) 45 SR (NSW) 78 …. 3.94, 11.6, 11.8, 11.13 Doe d Carter v Barnard (1849) 13 QB 945; 116 ER 1524 …. 5.32, 5.47, 5.48 Doe d Garnons v Knight (1826) 5 B & C 671 …. 6.5 Doe d Lockwood v Clarke & Brown (1807) 103 ER 313 …. 11.4 Doe v Bird (1809) 11 East 49; 103 ER 922 …. 9.54 Dogan v Morton (1935) 35 SR (NSW) 142 …. 11.64 Doherty v Allman (1878) 3 App Cas 709 …. 3.67 Dolphin’s Conveyance, Re [1970] Ch 654 …. 13.31, 13.32, 13.33 Donald v Suckling (1866) LR 1 QB 585 …. 2.57 Donoghue v Stevenson [1932] AC 562 …. 14.104 Doodeward v Spence (1908) 6 CLR 406 …. 1.63, 1.64, 1.65 Dorman v Rogers (1982) 148 CLR 365 …. 1.72, 1.73

Double Bay Newspapers Pty Ltd v A W Holdings Pty Ltd (1996) 42 NSWLR 409 …. 7.35, 8.163, 8.165 Dowdle v Inverell Shire Council (1998) 9 BPR 17,349 …. 8.151 Downsview Nominees Ltd v First City Corp Ltd [1993] 2 WLR 86 …. 14.69, 14.105 Dowse v Wynyard Holdings Ltd [1962] NSWR 252 …. 11.34 DPP v Rossi [2020] VCC 1471 …. 5.161 Dresdner v Scida (2003) 12 BPR 22,629 …. 12.23, 12.39 Drulroad Pty Ltd v Gibson (1992) 5 BPR 11,878; (1992) NSW ConvR ¶55-637 …. 8.172, 8.181, 14.17 Ducker v Smith [2011] NSWCA 212 …. 9.58 Dugdale, Re (1888) LR 20 Eq 186 …. 3.55 Duke of Norfolk’s Case (1682) 3 Ch Cas 1; 22 ER 931 …. 10.5 Dullow v Dullow (1985) 3 NSWLR 531 …. 6.30, 6.54 Duncan v Cliftonville Estates Pty Ltd (2001) 10 BPR 19,127 …. 12.7 — v Louch (1845) 6 QB 904 …. 12.37 — v McDonald [1997] 2 NZLR 669 …. 8.37, 8.57 Duncliffe v Caerfelin Properties Ltd [1989] 2 EGLR 38 …. 11.55 Durian (Holdings) Pty Ltd v Cavacourt Pty Ltd (2000) NSW ConvR ¶55-933; 10 BPR 18,099 …. 12.60, 12.61 Dyce v Lady James Hay (1852) 1 Macq 305 …. 12.7 Dykes v Gerke [1963] NSWR 721 …. 11.76

E E R Ives Investment v High [1967] 2 QB 379; [1967] 1 All ER 504 …. 6.40, 6.44, 13.14 E S & A Bank v Phillips (1937) 57 CLR 302 …. 14.19 Eade v Vogiazopoulos [1993] 3 VR 889 …. 8.32 Eagling v Gardner [1970] 2 All ER 838 …. 13.33 Earl Bathurst v Fine [1974] 2 All ER 1160 …. 11.72 Earl de la Warr v Miles (1881) 17 Ch D 535 …. 12.68 Eatock v Bolt (2011) 197 FCR 261 …. 4.17 Eaton v Swansea Waterworks Co (1851) 17 QB 267 …. 12.33 Ecclesiastical Commissioners for England’s Conveyance, Re [1936] Ch 430 …. 13.10 Eddowes, Re [1991] 2 Qd R 381 …. 12.5 Edgington v Clark [1964] 1 QB 367 …. 5.83, 5.84 Edward Kazas & Associates Pty Ltd v Multiplex (Mountain Street) Pty Ltd (2002) 11 BPR 20,353 …. 11.23, 11.34

xxxii

Table of Cases Edwards v Amos (1945) 62 WN (NSW) 204 …. 2.54 — v Sims 24 SW 2d 619 (Ky 1929) …. 2.9 Edwards; Re the Estate of Edwards [2011] NSWSC 478 …. 1.65 Effeney v Millar Investments Pty Ltd [2011] NSWSC 708 …. 12.62 Elderly Citizens Homes of SA Inc v Balnaves (1998) 72 SASR 210 …. 8.140 Elfar v Registrar General of New South Wales [2010] NSWSC 539 …. 8.191, 8.193 Elitestone Ltd v Morris [1997] 1 WLR 687 …. 2.20 Ellaway v Lawson [2006] QSC 170 …. 3.57 Ellenborough Park, Re [1956] Ch 131 …. 12.3, 12.5, 12.7, 12.9 Elliot, Re (1886) 7 LR (NSW) 271 …. 8.145 Elliott v Bishop (1854) 10 Exch 496; 156 ER 534 …. 2.25 — v Boynton [1924] 1 Ch 236 …. 11.68 — v Renner [1923] St R Qd 172 …. 12.36 Ellis v City Women’s Hostel (RTT 97/022789) …. 11.92, 11.129 — v Lambeth LBC (2000) 32 HLR 596 …. 5.93 — v Loftus Iron Co (1874) LR 10 CP 10 …. 2.8 Ellison v Alliance Acceptance Ltd (1984) NSW ConvR ¶55-217 …. 14.119 — v O’Neill [1968] 2 NSWR 246 …. 13.6 Ellis’s Town House Pty Ltd v Botan Pty Ltd [2017] NSWCA 20 …. 11.79 Elliston v Reacher [1908] 2 Ch 374 …. 13.31 Elroa Nominees Pty Ltd v Registrar of Titles [2003] QCA 165 …. 2.14 Elsom & Taylor-Parker v Coroneos [2016] NSWCATCD 47 …. 11.117 Elwes v Brigg Gas Co (1886) 33 Ch D 562 …. 2.65 — v Maw (1802) 3 East 38; 102 ER 510 …. 2.28 Elwin v Monash (1879) 2 SCR (NSW) Eq 57 …. 8.145 Eng Mee Yong v Letchumanan [1980] AC 331 …. 8.151 Enkelmann v Glissan (1982) 2 BPR 9640 …. 11.6, 11.8 Epic Feast Pty Ltd v Mawson KLM Holdings Pty Ltd (1998) 71 SASR 161 …. 14.33 Equiticorp Industries Group Ltd v R [1996] 3 NZLR 586 …. 8.102 Equititrust Ltd v Franks (2009) 258 ALR 388 …. 9.20 ER Ives Investment Ltd v High [1967] 2 QB 379 …. 12.17 Errington v Errington [1952] 1 KB 290 …. 11.5 Esber v Kimberley Securities Ltd [2009] NSWSC 1422 …. 14.123, 14.124

Essex County Roman Catholic Separate School Board and Antaya, Re (1977) 80 DLR (3d) 405 …. 10.38 Estate Late Chow Cho-Poon, Re; Application for Judicial Advice [2013] NSWSC 844 …. 10.18, 10.44 Estate of K, Re (1996) Tas R 365 …. 10.27 Estate of Novosadek, Re [2016] NSWSC 554 …. 9.51 Eudunda Farmers’ Co-operative Society Ltd v Mattiske [1920] SASR 309 …. 8.146 Evanel Pty Ltd v Nelson (1995) 39 NSWLR 209 …. 12.9 Evans v Bicknell (1801) 6 Ves 174 …. 7.7 — v Cornish Nominees Pty Ltd (2009) 14 BPR 27,257 …. 12.34 — v Miller [2011] WASCA 89 …. 13.41 — v Walker (1876) 3 Ch D 211 …. 10.12 Everett v Bayliss (1881) 2 LR (NSW) (Eq) 66 …. 14.47 Expo International Pty Ltd v Chant [1979] 2 NSWLR 820 …. 14.69

F FAI Insurance Ltd v Pioneer Concrete Services Ltd (1987) 15 NSWLR 552 …. 8.168 Fairclough v Swan Brewery Co Ltd [1912] AC 565 …. 14.26, 14.28, 14.33 Fairweather v St Marylebone Property Co Ltd [1963] AC 510 …. 5.137, 5.145 Falloon v Madden; Madden v Madden [2012] NSWSC 652 …. 9.22 Fanigun Pty Ltd v Woolworths Ltd [2006] ANZ ConvR 196 …. 12.36 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 …. 8.66, 8.104, 8.125 Farmer v Francis (1824) 2 Bing 151; (1826) 2 S & St 505 …. 10.14 Farrand v Yorkshire Banking Co (1888) 40 Ch D 182 …. 7.28 Farrar v Farrars Ltd (1888) 40 Ch D 395 …. 14.100 Farrow Mortgage Services Pty Ltd v Ragata Developments Pty Ltd (1993) 32 NSWLR 333 …. 14.94 Fast Funds Pty Ltd v Coppola; Coppola v Hall [2010] NSWSC 470 …. 14.38 Federated Homes Ltd v Mill Lodge Properties Ltd [1980] 1 All ER 371 …. 13.4, 13.25 Fejo v Northern Territory (1998) 195 CLR 96; 156 ALR 721 …. 3.2, 4.54, 4.56, 4.58, 4.61, 4.76 Fennings v Lord Grenville (1808) 1 Taunt 245; 127 ER 825 …. 5.29 Ferella v Otvosi (2004) 12 BPR 22,191 …. 13.34 Ferguson v Miller [1978] 1 NZLR 819 …. 9.54

xxxiii

Property Law in New South Wales — v Registrar of Titles [1919] VLR 509 …. 5.137 Fernandes v Houstein (1963) 4 FLR 355 …. 8.145 Ferrari v Beccaris [1979] 2 NSWLR 181 …. 9.65 Field v Barkworth [1986] 1 WLR 137 …. 11.41 Finlay v R & I Bank of Western Australia Ltd (1993) NSW ConvR ¶55-686 …. 8.181 Finucane v Registrar of Titles [1902] St R Qd 75 …. 8.184 Firth v Halloran (1926) 38 CLR 261 …. 11.77 Flack v Chairperson, National Crime Authority (1997) 150 ALR 153 …. 2.66 Flourentzou v Spink [2019] NSWCA 315 …. 6.29, 6.30 FNCB-Waltons Finance Pty Ltd v Crest Realty Pty Ltd (1987) 10 NSWLR 621 …. 14.81 Ford v Perpetual Trustees Victoria Ltd [2009] NSWCA 186 …. 14.37 Forestview Nominees Pty Ltd v Perpetual Trustees WA Ltd (1998) 193 CLR 154 …. 13.4, 13.5, 13.26 Forgeard v Shanahan (1994) 35 NSWLR 206 …. 9.57, 9.58, 9.59, 9.60, 9.63, 9.132, 9.133 Formby v Barker [1903] 2 Ch 539 …. 13.28 Forrest Trust; Trustees, Executors and Agency Co Ltd v Anson, Re [1953] VLR 246 …. 9.38, 14.142 Forster v Finance Corp of Australia Ltd [1980] VR 63 …. 14.99 Forsyth v Blundell (1973) 129 CLR 477; [1973] HCA 20 …. 14.20, 14.119, 14.120, 14.138, 14.139 Fortescue Metals Group v Warrie on behalf of the Yindjibarndi People [2019] FCAFC 177, (2019) 273 FCR 350 …. 4.44 Forte-Senes Hotels Pty Ltd v Austcorp No 473 Pty Ltd (2004) NSW ConvR ¶56-095 …. 11.76 Foster v Mountford (1976) 14 ALR 71 …. 1.71 Fouldes v Willoughby (1841) 8 M&W 540 …. 2.47, 2.49 — v Willoughby (1848) 8 M&W 438 …. 2.48 Foundas v Arambatzis [2020] NSWCA 47 …. 9.57 Four Maids Ltd v Dudley Marshall (Properties) Ltd [1957] Ch 317 …. 14.52 Fourniotis v Vallianatos [2018] VSC 369 …. 9.54 Fowley Marine (Emsworth) Ltd v Gafford [1967] 2 QB 808 …. 5.110 Francis Jackson Developments Ltd v Stemp [1943] 2 All ER 601 …. 11.15 Francis v Francis [2009] SASC 363 …. 9.63 Franklin, Re [2009] VSC 496 …. 5.122, 9.9 Fraser v Canterbury Diocesan Board of Finance [2001] Ch 669 …. 3.46 Frasers Lorne Pty Ltd v Joyce Goldsworthy Burke [2008] NSWSC 743 …. 12.61, 12.63, 13.49, 13.50

Frazer v Walker [1967] 1 AC 569; 1 All ER 649 …. 8.27, 8.29, 8.31, 8.44, 8.92, 8.118, 8.124, 8.202, 12.52 Freed v Taffel [1984] 2 NSWLR 322 …. 9.41 Freemasons Hospital v Attorney General (Vic) [2010] VSC 273 …. 10.54 French v Barcham [2009] 1 All ER 145 …. 9.58 Frieze v Unger [1960] VR 230 …. 9.39, 9.54 Frost, Re (1889) 43 Ch D 246 …. 10.10 Fuentes v Bondi Beachside Pty Ltd [2016] NSWSC 531 …. 6.19 Fuller v De Rose [2006] HCA Trans 49 …. 4.23 — v Goodwin (1865) 4 SCR (NSW) 66 …. 7.38, 7.41 Furdson v Clogg (1842) 10 M & W 572; 152 ER 599 …. 5.84 Fyvie v Anand (1994) BPR 13,743 …. 12.11

G G J Coles & Co Pty Ltd v Commissioner of Taxation (1975) 49 ALJR 188 …. 11.40 Gage v Bulkeley (Packington’s Case) (1744) 3 Atk 215; 26 ER 925 …. 3.68 Gaite’s Will Trusts, Re [1949] 1 All ER 459; (1949) 65 TLR 194 …. 10.31 Gallagher, Ex parte (1908) 8 SR (NSW) 230 …. 8.23 Gallagher v Rainbow (1994) 179 CLR 624 …. 12.5, 12.36 Gambacorta v Di Giovanni [2021] NSWSC 61 …. 9.44 Garbutt v Shaw (1996) 7 BPR 14, 816 …. 5.101 Garcia v National Australia Bank Ltd (1993) 5 BPR 11,996; (1993) NSW ConvR ¶55-662 …. 14.43 — v — (1998) 194 CLR 395 …. 14.43 Gardener v Lewis [1998] 1 WLR 1535 …. 8.87 Garfitt v Allen (1888) 37 Ch D 48 …. 14.54 Garofano v Reliance Finance Corporation Pty Ltd (1992) NSW ConvR ¶55-640 …. 8.31, 8.93, 8.100 Garrard v Frankel (1862) 30 Beav 445; Smith v Jones [1954] 1 WLR 1089 …. 7.33 Gartner v Kidman (1961–62) 108 CLR 12 …. 3.6 Gazebo Penthouse Pty Ltd v Owners Corporation SP 73943 [2015] NSWCATCD 93 …. 9.110 General Credits Ltd v Southern Goldfields Ltd (1991) ANZ ConvR 40 …. 14.104 Gentle v Faulkner [1900] 2 QB 267 …. 11.40 George Wimpey & Co Ltd v Sohn [1966] 1 All ER 232; [1967] Ch 487 …. 5.102, 5.110, 5.132 Georgeski v Owners Corp SP 49833 (2004) 62 NSWLR 534; 12 BPR 22,573 …. 1.58, 2.32

xxxiv

Table of Cases Georgiadis v Australia and Overseas Telecommunications Corp (1994) 179 CLR 297; 119 ALR 629 …. 4.50 Gerhardy v Brown (1985) 159 CLR 70 …. 4.13 Gerraty v McGavin (1914) 18 CLR 152 …. 11.64 Gibbs v Messer [1891] AC 248 …. 8.22, 8.26, 8.27, 8.28, 8.31, 8.33 Gibson v Co-ordinated Building Services Pty Ltd (1989) 4 BPR 9630 …. 8.151 — v Holland (1865) LR 1 CP 1 …. 6.8 Gifford v Lord Yarborough (1828) 5 Bing 163; 130 ER 1023 …. 2.14 Gilbert v Spoor [1983] Ch 27 …. 13.49 Gill v Lewis [1956] 2 QB 1 …. 11.71 Ginelle Finance Pty Ltd v Diakakis (2002) 12 BPR 22,137 …. 8.98 Ginger Development Enterprises Pty Ltd v Crown Developments Australia Pty Ltd [2003] NSWCA 296 …. 8.137 Gissing v Gissing [1971] AC 886 …. 6.32 Gissing and Sheffield [2012] FMCAfam 111 …. 6.51 Gittany v McDowell (2009) 14 BPR 26,803 …. 12.34 Giumelli v Giumelli (1999) 186 CLR 101 …. 6.31, 6.42 Glass v Hollander (1935) 35 SR (NSW) 304 …. 2.48 GMS Syndicate Ltd v Garry Elliott Ltd [1982] Ch 1 …. 11.71 Godwin v Francis (1870) LR 5 CP 295 …. 6.8 Golden Mile Property Investments Pty Ltd (In Liq) v Cudgegong Australia Pty Ltd (2015) 89 NSWLR 237 …. 6.19 Goodright d Humphreys v Moses (1774) 2 Wm B1 …. 7.11 Goodwin v Papadopoulos (1985) NSW ConvR ¶55-256 …. 12.50 Gordon v Lever (No 2) [2019] NSWCA 275 …. 2.13, 12.34 — v Lidcombe Developments Pty Ltd [1966] 2 NSWR 9 …. 11.23 Gorman, Re [1990] 1 All ER 717 …. 9.57, 9.59 Gough v Wood [1894] 1 QB 713 …. 14.66 Gould v Kemp (1834) 2 My & K 304; 39 ER 959 …. 9.8 Govindan-Lee v Sawkins [2016] NSWSC 328 …. 12.34 Goyal v Chandra [2006] NSWSC 239 …. 9.34, 9.35 Graham v KD Morris & Sons Pty Ltd [1974] Qd R 1 …. 2.8 — v Peat (1801) 1 East 244; 102 ER 95 …. 2.33 — v Philcox [1984] QB 747 …. 12.57 — v The Markets Hotel Pty Ltd (1942) 43 SR (NSW) 98 …. 11.38

— v — (1943) 67 CLR 567 …. 11.38 Granada Theatres Ltd v Freehold Investment (Leytonstone) Ltd [1959] Ch 592 …. 11.55 Grant v NZMC Ltd [1989] 1 NZLR 8 …. 11.82 — v Preece [2012] VSC 55 …. 13.49 — v Roberts [2019] NSWSC 843 …. 6.41 — v YYH Holdings Pty Ltd [2012] NSWCA 360 …. 2.50 Grave v Wharton (1879) 5 VLR 97 …. 5.135 Graves v Weld (1833) 5 B & Ad 105; 110 ER 731 …. 3.63 Gray v Wykeham-Martin …. 5.119 Great Western Railway Co v Smith (1875) 2 Ch D 235 …. 11.74 Greenfield v Greenfield (1979) 38 P & CR 570 …. 9.46 Greenwood Village Pty Ltd v Tom the Cheap (WA) Pty Ltd [1976] WAR 49 …. 11.71 Greita Sebea v Territory of Papua (1941) 67 CLR 544 …. 2.25 Grepo v Jam-Cal Bundaberg Pty Ltd [2015] QCA 131 …. 11.41 Grescot v Green (1700) 1 Salk 199 …. 11.55 Grey v Inland Revenue Commissioners [1960] AC 1; [1959] 3 All ER 603 …. 6.24 Grgic v Australia and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 …. 8.46, 8.76, 8.77, 8.79, 8.92, 8.93, 8.101 Griffiths v Northern Territory of Australia (No 3) [2016] FCA 900 …. 4.70 Grigsby v Melville [1973] 1 All ER 385 …. 12.7 Grill v Hockey (1991) 5 BPR 11,421 …. 12.62 Grime v Owners Corporation SP 52011 (Strata & Community Schemes) [2005] NSWCTTT 202 …. 9.78 Groch v Knights [2018] NSWSC 1365 …. 9.58 Groongal Pastoral Co Ltd v Falkiner (1924) 35 CLR 157 …. 14.79, 14.81 Grosvenor Mortgage Management Pty Ltd v Younan (NSWSC,Young J, 23 August 1990, unreported, BC9002094) …. 8.93 Grundel v Registrar-General (1990) 5 BPR 11,217 …. 3.95 — v — (1990) NSW ConvR ¶55-548 …. 11.100 Grundy v Ley [1984] 2 NSWLR 467 …. 8.44, 14.79 Guerin v R (1984) 13 DLR (4th) 321 …. 4.24 Guggenheimer v Registrar of Titles [2002] VSC 124 …. 5.86, 5.124 Guirgis v JEA Developments Pty Ltd [2019] NSWSC 164 …. 8.148, 8.152 Guler v NSW Trustee and Guardian [2012] NSWSC 1369 …. 9.51

xxxv

Property Law in New South Wales Gumana v Northern Territory of Australia (2005) 141 FCR 457 …. 4.34 — v— [2007] FCAFC 23 …. 4.34 Gumland Property Holdings Ltd v Duffy Brothers Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237 …. 11.45, 11.51, 11.60, 11.61 Gurfinkel v Bentley Pty Ltd (1966) 116 CLR 98 …. 14.22, 14.72 Gyarfas v Bray (1989) 4 BPR 9736 …. 13.6

H Hahndorf Golf Club Inc v John Nitschke Nominees Pty Ltd (2003) 86 SASR 221 …. 8.38 Haji Abdul Rahman v Mahomed Hassan [1917] AC 209 …. 8.73 Halaseh v Citibank Pty Ltd (RTT 96/016769) …. 11.131 Hall v Busst (1960) 104 CLR 206 …. 10.2 Hallifax Property Corporation Pty Ltd v GIFC Ltd (1987) NSW ConvR ¶55-361 …. 14.96, 14.98 Halsall v Brizell [1957] Ch 169 …. 13.14 Hamilton v Iredale (1903) 3 SR (NSW) 535 …. 8.87 Hammond v Farrow [1904] 2 KB 332 …. 8.89 Hanbury v Jenkins [1901] 2 Ch 401 …. 12.4 Hancock v Watson [1902] AC 14 …. 10.32 Hanny v Lewis (1998) 9 BPR 16,205 …. 12.34 Hanson v Graham (1801) 6 Ves 239 …. 10.14 Hanson Construction Materials Pty Ltd v Vimwise Civil Engineering Pty Ltd [2005] NSWSC 880 …. 8.136 Harbour Estates Ltd v HSBC Bank plc [2005] 2 WLR 67 …. 13.9 Harbour Port Consulting v NSW Maritime [2011] NSWSC 813 …. 6.42 Hardcastle v Hardcastle (1862) 1 H & M 405 …. 10.14 Harding v National Insurance Co (1871) 2 AJR 67 …. 2.25 Harding, Re [1956] NZLR 482 …. 10.14 Hardy v Sidoti [2020] NSWSC 1057 …. 1.1, 5.151 Hare v Van Brugge (2013) 84 NSWLR 41 …. 12.36, 12.37, 12.45 Harmer v Jumbil (Nigeria) Tin Areas Ltd [1921] 1 Ch 200 …. 11.23 Harnett v Green (No 2) (1883) 4 LR (NSW) 292; 5 ALT 61 …. 5.94, 5.126, 5.131 Harris v Flower (1904) 74 LJ Ch 127 …. 12.36 — v King (1936) 56 CLR 177 …. 10.31 — v Smith (2008) 14 BPR 26,223 …. 8.94 Harrison v Murphy (1877) 3 VLR (E) 105 …. 6.8 Harrow London Borough Council v Qazi [2004] 1 AC 983 …. 5.3, 5.4, 5.14 Hart’s Trusts, Re (1858) 3 De G & J 195 …. 10.14

Harvey v McWatters (1948) 49 SR (NSW) 173 …. 14.119 Haselhurst v Elliot [1945] VLR 153 …. 11.6 Haskell v Marlow [1928] 2 KB 45 …. 11.25, 11.38 Hassett v Colonial Bank of Australasia (1881) 7 VLR 380 …. 8.83 Hastie v National Australia Bank Ltd (1994) 7 BPR 15,116 …. 8.148 Hawkins v Farley [1997] 2 Qd R 361 …. 2.21 Hayes v Northern Territory (1999) 97 FCR 32 …. 4.28, 4.42, 4.59, 4.66 Haynes Case (1614) 12 Co Rep 113; 77 ER 1389 …. 2.66 Hayward v Smith (1887) 9 LR (NSW) Eq 11 …. 14.24 Haywood v Brunswick Building Society (1881) 8 QBD 403 …. 13.2, 13.16 Hazlett v Presnell (1982) 43 ALR 1 …. 2.14 Healey v Hawkins [1968] 1 WLR 1967 …. 12.33 Heath v Pugh (1881) 6 QBD 345 …. 14.70 Heathe v Heathe (1740) 2 Atk 121 …. 9.13 Hedley v Roberts [1977] VR 282 …. 9.54 Hegarty v Ellis (1908) 6 CLR 264 …. 3.34 Heggies Bulkhaul Ltd v Global Minerals Australia Pty Ltd (2003) 59 NSWLR 312 …. 8.97 Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 …. 7.27, 7.28, 8.163, 8.171 Hemmings v Stoke Poges Golf Club Ltd [1920] 1 KB 720 …. 2.36, 11.69 Henderson v Astwood [1894] AC 150 …. 14.100 Henriksen v Bilpin Inn Pty Ltd (CT, Rossiter DC, 3 May 1996, unreported) …. 11.144 Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd [1976] VR 309 …. 14.119 Heslop v Burns [1974] 3 All ER 406 …. 11.5 Hewitt v Loosemore (1851) 9 Hare 449 …. 7.7 Hibbert v McKiernan [1948] 2 KB 142 …. 2.66 Hickey v Powershift Tractors Pty Ltd (1999) NSW ConvR ¶55-889 …. 8.78 Hickson v Darlow (1883) 23 Ch D 690 …. 14.118 Higgs v Nassauvian Ltd [1975] AC 464 …. 5.128, 5.130 Hill v Hill (2013) 11 ASTLR 121 …. 9.51 — v Lyne (1893) 14 LR (NSW) 449 …. 2.12, 2.14 — v Tupper (1863) 2 H & C 121 …. 2.32, 12.5, 12.75 Hillig v NSW Native Title Services Ltd [2006] FCA 1184 …. 4.78 Hillpalm Pty Ltd v Heaven’s Door Pty Ltd (2004) 220 CLR 472 …. 8.109, 8.110, 8.111 Hilton v Gray [2007] QSC 401 …. 8.46 Hinds v Uellendahl (No 2) (1992) 112 FLR 222 …. 8.97

xxxvi

Table of Cases Hircock v Windsor Homes (Development No 3) Pty Ltd [1979] 1 NSWLR 501 …. 9.23 Hitchcock, Re (1900) 17 WN (NSW) 62 …. 8.131 Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 …. 2.45 Hobson v Gorringe [1897] 1 Ch 182 …. 2.19, 2.23, 14.66 Hocking v Director-General of the National Archives of Australia [2020] HCA 19; 94 ALJR 569; 379 ALR 395; [2020] ALMD 2194 …. 1.4 Hockley v Rendell (1909) 11 WALR 170 …. 3.67 Hodson v Deans [1903] 2 Ch 647 …. 14.122 Hodson & Howes’ Contract, Re (1887) 35 Ch D 668 (CA) …. 14.93 Hoffman v Feinberg [1949] 1 Ch 245 …. 11.72 Hogarth v Jackson (1827) Mood & M 58; ER 1080 …. 5.29 Holden v Blaiklock [1974] 2 NSWLR 262 …. 11.64 Holland v Hodgson (1872) LR 7 CP 328 …. 2.17, 2.18 Holland, Re; Ex parte Official Trustee in Bankruptcy (1985) 5 FCR 165 …. 9.52 Hollins v Fowler (1875) LR 7 HL 757 …. 2.48, 2.58 Hong Kong and Shanghai Banking Corp v Kloekner & Co AG [1989] 3 All ER 513 …. 11.82 Hooker Industrial Developments Pty Ltd v Trustees of the Christian Brothers [1977] 2 NSWLR 109 …. 6.5 Hoole v Smith (1881) 17 Ch D 434 …. 14.89 Hopkins v Worcester and Birmingham Canal Proprietors (1869) LR 6 Eq 437 …. 14.49 Hopkinson v Rolt (1861) 9 HL Cas 514; 11 ER 829 …. 14.19, 14.136 Hopper v Liverpool Corporation (1944) 88 Sol Jo 213; (1946) 62 LQR 222 …. 3.117, 10.54 Hornsby Council v Roads and Traffic Authority (1997) 41 NSWLR 15 …. 12.73 Horsey Estate Ltd v Steiger & Petrifite Company Ltd [1899] 2 QB 79 …. 11.64 Horvath v Commonwealth Bank of Australia [1999] 1 VR 643 …. 8.93 Hosking v Haas [2009] NSWSC 624 …. 13.20 — v — (No 2) [2009] NSWSC 1328 …. 13.20, 13.33 Hosking v Smith (1888) 13 App Cas 582 …. 14.80 Houghland v R R Low (Luxury Coaches) Ltd [1962] 1 QB 694; [1962] 2 All ER 159 …. 2.46 Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 …. 9.76, 9.110 Howard v Shaw (1841) 8 M & W 118 …. 11.15 Hoyle, Re; Hoyle v Hoyle [1893] 1 Ch 84 …. 6.8 Hudson v Cripps [1896] 1 Ch 265 …. 11.22

Hughes v Griffin [1969] 1 WLR 23 …. 5.96, 5.97 Hulme v Schaecken [1999] NSWSC 1291 …. 9.31 Hume, Re [1912] 1 Ch 693 …. 10.14 Hungry Jack’s Pty Ltd v The Trust Company (Australia) Ltd [No 2] [2020] WASC 427 …. 5.131 Hunt v Luck [1902] 1 Ch 428 …. 7.19, 8.89 Hunter v Canary Wharf Ltd [1997] AC 655 …. 12.7 — v Hunter [1936] AC 222 …. 14.87 Hunter’s Lease, Re [1942] Ch 124 …. 11.45, 11.52, 11.55 Hussey v Palmer [1972] 1 WLR 1286; [1972] 3 All ER 744 …. 6.32, 6.33 Hycenko v Hrycenko [2016] VSC 247 …. 9.45 Hyde v Pearce [1982] 1 WLR 560 …. 5.99 — v Pimley [1952] 2 QB 506 …. 11.41 Hyman v Rose [1912] AC 623 …. 11.72 Hypec Electronics Pty Ltd (in liq) v RegistrarGeneral (2005) 64 NSWLR 679 …. 8.18

I IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550 …. 8.90, 8.173, 8.174, 8.178, 8.179, 8.180 ICM Agriculture Pty Ltd v Commonwealth (2009) 240 CLR 140 …. 1.4 Imray v Oakshette [1897] 2 QB 218 …. 11.74 Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580 …. 11.17 Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 …. 14.118 Ingram v Mohren (1993) 10 WAR 497 …. 14.50 International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] 1 Ch 513 …. 11.42 International Factors v Rodriguez [1979] QB 351 …. 2.56 International Tea Stores Co v Hobbs [1903] 2 Ch 165 …. 12.36 Inwards v Baker [1965] 2 QB 29 …. 6.38, 6.44 Ironside v Cook (1981) 41 P & CR 326 …. 12.33 Italian Forum Limited v Owners — Strata Plan 60919 [2012] NSWSC 895 …. 9.108 IWC Industries Pty Ltd v Sergienko [2021] NSWCA 292 (1 December 2021) …. 7.26, 7.28

J J & H Just (Holdings) Pty Ltd v Bank of New South (1969) 90 WN (Pt 1) (NSW) 571 …. 8.167 — v — (1970) 92 WN (NSW) 803 …. 8.168 — v — (1971) 125 CLR 546 …. 8.138, 8.165, 8.167, 8.181, 14.20

xxxvii

Property Law in New South Wales J A McBeath Nominees Pty Ltd v Jenkins Development Corp Pty Ltd [1992] 2 Qd R 121 …. 11.42 J C Berndt Pty Ltd v Walsh [1969] SASR 34 …. 11.22 J C Williamson Ltd v Lukey (1931) 45 CLR 282 …. 6.11 JA Pye (Oxford) Ltd v Graham (2000) 3 WLR 242 …. 5.59, 5.60, 5.67 — v — [2003] 1 AC 419; [2002] UKHL 30 …. 1.76, 5.9, 5.14, 5.51, 5.59, 5.60, 5.67, 5.87, 5.91, 5.95, 5.96, 5.102, 5.104, 5.106, 5.109, 5.115, 5.117, 5.118, 5.129, 5.146, 5.160 JA Pye (Oxford) Ltd v United Kingdom (2006) 43 EHRR 3; [2005] ECHR 921 …. 1.76, 5.14, 5.58, 5.59, 5.60, 5.61, 5.62, 5.65, 5.160 — v — [2007] ECHR 700 …. 1.76, 5.52 — v — (2008) 46 EHRR 45 …. 5.58, 5.59, 5.60, 5.61, 5.65 Jackson v Jackson (1804) 9 Ves Jun 591 …. 9.15 — v NSW Land and Housing Corporation [2014] NSWCATAP 22 …. 11.130 Jackson, Ex parte; Re Australasian Catholic Assurance Co Ltd (1941) 41 SR (NSW) 285 …. 14.58 Jacobs v Platt Nominees Pty Ltd [1990] VR 146 …. 8.168 Jaggard v Sawyer [1995] 1 WLR 269 …. 2.8, 13.41 James v Dean (1805) 11 Ves 383 …. 11.15 — v Harris (1876) 35 LT 240 …. 11.22 — v Nesbitt (1954) 28 ALJR 482 …. 11.76 — v Plant (1836) 4 A & E 749 …. 12.58 — v Registrar-General (1967) 69 SR (NSW) 361 …. 8.118, 12.50, 12.70 — v Stevenson [1893] AC 162 …. 8.85 Jango v Northern Territory of Australia (2006) 152 FCR 150 …. 4.32, 4.70 — v Northern Territory of Australia (2007) 159 FCR 531 …. 4.32, 4.70 JB Northridge Pty Ltd v Winner’s Circle Group Pty Ltd [2014] NSWSC 950 …. 11.42 Jee v Audley (1787) 1 Cox Eq Cas 324; 29 ER 1186 …. 10.31 Jeffries v Great Western Railway Co (1856) 5 E & B 802; 119 ER 680 …. 2.41, 2.54, 2.55 Jelbert v Davis [1968] 1 WLR 589 …. 12.38, 12.57 Jellicoe v Wellington Loan Co (1886) 4 NZLR 330 …. 14.58 Jensen v Hawksley [1955] VLR 470 …. 7.21 Jessica Holdings Pty Ltd v Anglican Property Trust Diocese of Sydney (1992) 27 NSWLR 140 …. 8.136 Jin v Yang [2008] NSWSC 754 …. 8.105

John Alexander’s Clubs v White City Tennis Club (2010) 241 CLR 1 …. 8.172 John F Goulding Pty Ltd v Victorian Railways Commissioners (1932) 48 CLR 157 …. 2.50 Johnson v McIntosh [1823] USSC 22 (1823) 8 Wheat 543 …. 3.5, 4.13 Johnson, Ex parte; Re Whyte (1868) 5 WW & A’B (L) 55 …. 12.4 Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd (2003) 9 VR 171 …. 2.48 Jonah and White [2011] FamCA 22 …. 6.51 Jones v Baker (2002) 10 BPR 19,115 …. 8.136 — v Bartlett (2000) 205 CLR 166 …. 11.36, 11.109 Jones v Chappell (1875) LR 20 Eq 539 …. 3.67 — v Collins (1891) 12 LR (NSW) L 247 …. 7.39 — v Lavington [1903] 1 KB 253 …. 11.22 — v Lock (1865) 1 Ch App 25 …. 6.45 — v Mackilwain (1826) 1 Russ 220 …. 10.14 — v Pritchard [1908] 1 Ch 630 …. 12.30 Jonray (Sydney) Pty Ltd v Partridge Bros Pty Ltd (1969) 89 WN (Pt 1) (NSW) 568 …. 8.174, 8.176, 8.181 Jonton Pty Ltd, Re [1992] 1 Qd R 105 …. 7.44, 7.45 Jorss’ Caveat, Re [1982] Qd R 458 …. 8.151 Jourdain v Wilson [1821] 4 B & Ald 266 …. 11.45 JS and GP, Re (2006) 35 Fam L R 88 …. 6.24 Jurd v Public Trustee [2001] NSWSC 632 …. 6.48

K Kaizen Global Investments Ltd v Australia New Agribusiness & Chemical Group Ltd (in liq), Re [2017] FCA 431 …. 14.6 Kakavas v The Crown (2013) 250 CLR 392 …. 7.17 Karacominakis v Big Country Developments Pty Ltd (2000) 10 BPR 18,235 …. 8.46, 8.57, 11.54 Karaggianis v Malltown Pty Ltd (1979) 21 SASR 381 …. 11.34 Karamihos v Bendigo and Adelaide Bank Ltd [2013] NSWSC 172 …. 14.38 Karpany v Dietman (2013) 252 CLR 507 …. 4.34, 4.57 Kartal v Dustanee [2018] FamCA 918 …. 6.52 Katakouzinos v Roufir Pty Ltd (1999) 9 BPR 17,303 …. 12.34 Kater v Kater (No 3) [1964] NSWR 987 …. 11.95 Kay v Lambeth London Borough Council [2004] 3 WLR 1396 …. 11.5 Kay’s Leasing Corporation Pty Ltd v CSR Provident Fund Nominees Pty Ltd [1962] VR 429 …. 14.99 Kebewar Pty Ltd v Harkin (1987) 9 NSWLR 738 …. 12.51

xxxviii

Table of Cases Keeves v Dean [1924] 1 KB 685 …. 11.40 Kelly, Re [1932] IR 255 …. 10.28, 10.29 Kelsen v Imperial Tobacco Co Ltd [1957] 2 QB 334 …. 2.8 Kemp v Lumeah Investments Pty Ltd (1984) NSW ConvR ¶55-162 …. 11.64 Kennard v AGC (Advances) Ltd (1987) V ConvR 54-210 …. 14.36 Kennedy v De Trafford [1897] AC 180 …. 14.106 — v General Credits Ltd (1982) 2 BPR 9456 …. 14.53 Kennewell v Dye [1949] Ch 517 …. 14.48 Kenny v Preen [1963] 1 QB 499 …. 11.22 Kent v Kavanagh [2007] Ch 1 …. 12.26 Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222 …. 8.131, 8.149, 8.151, 8.168, 14.123 Kerridge v Foley (1964) 82 WN (NSW) (Pt 1) 293 …. 13.20, 13.28, 13.45 Khattar v Wiese (2005) 12 BPR 23,235 …. 12.34 Khoury v Khouri (2006) 66 NSWLR 241 …. 6.11, 6.23 Kierford Ridge Pty Ltd v Ward [2005] VSC 215 …. 5.87, 5.105 Killick v Second Covent Garden Property Co Ltd [1973] 1 WLR 658; [1973] 2 All ER 337 …. 11.42 Kilpatrick v Gresser (NSWSC, Foster J, 13 May 1987, unreported, BC8701375) …. 11.116 Kindervater, In the Matter of an Application by [1996] ANZ Conv Rep 331 …. 12.34 King v AGC (Advances) Ltd [1983] 2 Qd R 75 …. 8.143 — v David Allen & Sons, Billposting Ltd [1916] 2 AC 54 …. 1.58, 1.59, 12.9, 12.14, 12.65 — v New South Wales Land and Housing Corp (1992) 26 ALD 684 …. 11.129 — v Smail [1958] VR 273 …. 8.124, 8.125, 8.206 King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076 …. 14.14, 14.19, 14.34, 14.54, 14.57 King’s Trusts, Re (1892) 29 LR Ir 401 …. 3.118 Kingswood Estate Co Ltd v Anderson [1963] 2 QB 169; [1962] 3 All ER 593 …. 11.7 Kirby v Cowderoy [1912] AC 599 …. 5.131 Kirk v Sutherland [1949] VLR 3 …. 5.137 Kirkland v Quinross Pty Ltd [2008] NSWSC 286 …. 8.116, 8.191 KJRR Pty Ltd v Commissioner of State Revenue (Vic) [1999] 2 VR 174 …. 11.5 Knightsbridge Estates Trust Ltd v Byrne [1939] Ch 441 …. 14.27 — v — [1940] AC 613 …. 14.27

Kogarah Municipal Council v Golden Paradise Corp [2005] NSWCA 230 …. 8.109, 8.112 Koorootang Nominees Pty Ltd v ANZ Banking Group Ltd [1998] 3 VR 16 …. 8.103 Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62 …. 6.20 Kowalczuk v Accom Finance (2008) 77 NSWLR 205 …. 14.37 Kreglinger v New Patagonia Meat and Cold Storage Co Ltd [1914] AC 25 …. 14.31 Krey v National Australia Bank Ltd (1992) NSW ConvR ¶55-653 …. 14.95 Krolczyk v Raffan [1992] ANZ ConvR 228 …. 12.36 Kruger v Commonwealth (1997) 190 CLR 1 …. 4.35 Kumar, Re [2017] VSC 81 …. 9.8 Kumar v Dunning [1989] QB 193 …. 13.9 Kushner v Law Society [1952] 1KB 264; [1952] 1 All ER 404 …. 11.6 Kyren Pty Ltd v Cinema Place Pty Ltd [2006] SASC 93 …. 12.36, 12.38

L La Martina v Penney [1968] SASR 411 …. 8.146 Lace v Chantler [1944] KB 368 …. 11.4 Lacon v Allen (1856) 3 Drew 579 …. 6.11 Ladies’ Hosiery & Underwear Pty Ltd v Parker [1930] 1 Ch 304 …. 11.13 Lagan Navigation Co v Lambeg Bleaching, Dyeing and Finishing Co Ltd [1927] AC 226 …. 12.44 Lake v Craddock (1732) P Wms 158 …. 9.19 Lake Macquarie City Council v Luka (1999) 9 BPR 17,481 …. 12.31, 12.54 Lakshmijit v Faiz Sherani [1974] AC 605 …. 5.99 Lam Kee Ying v Lam Shes Tong [1975] AC 247 …. 5.9 Lamiri v Aidan Nominees Pty Ltd (1987) ANZ ConvR 497 …. 11.22, 11.23 Lancaster v Lloyd (1927) 27 SR (NSW) 379 …. 12.26 Land Settlement Association Ltd v Carr [1944] 1 KB 657 …. 11.10 Landale v Menzies (1909) 9 CLR 89 …. 11.15 Lane v Capsey [1891] 3 Ch 411 …. 12.44 — v Goudge (1803) 9 Ves 225 …. 10.14 Lane Cove Municipal Council v W & H Hurdis Pty Ltd (1955) SR (NSW) 434 …. 13.6 Lanyon Pty Ltd v Canberra Washed Sand Pty Ltd (1966) 115 CLR 342 …. 2.13 Lapin v Abigail (1930) 44 CLR 166 …. 7.26, 7.27, 14.22 Lardil Peoples v Queensland [2004] FCA 298 …. 4.34

xxxix

Property Law in New South Wales — v — (1992) 174 CLR 407; 106 ALR 595 …. 8.31, 8.129 Leverhulme, Re [1943] 2 All ER 274 …. 10.27 Levi v Spicer (2003) 11 BPR 20,927 …. 13.50 Lewen v Dodd (1595) Cro Eli 443 …. 9.13 Lewis v Bell (1985) 1 NSWLR 731 …. 11.5 LHK Nominees v Kenworthy (2002) 26 WAR 517 …. 8.104 Li v Eliezer (NSWSC, Simpson J, 1 May 1997, unreported, BC9703051) …. 11.112 Lidsdale Nominees Pty Ltd v Elkharadly [1979] VR 84 …. 11.66 Lift Capital Partners Pty Ltd v Merrill Lynch International (2009) 73 NSWLR 404 …. 14.33 Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23 …. 11.15 Lincu v Registrar-General [2019] NSWSC 568 …. 8.188, 8.191 Lissa v Cianci (1993) NSW ConvR ¶55-667 …. 8.101 Littledale v Liverpool College [1900] 1 Ch 19 …. 5.102 Liverpool City Council v Irwin [1977] AC 239 …. 11.34 Liverpool Corporation v H Coghill & Sons Ltd [1918] 1 Ch 307 …. 12.33 LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1989) 24 NSWLR 490 …. 2.8 Lloyd v Banks (1868) 3 Ch App 488 …. 7.16 Lloyds and Scottish Trust Ltd v Britten (1982) 44 P & CR 249 …. 14.70 Lloyds Bank Ltd v Bullock [1896] 2 Ch 192 …. 7.30, 8.163 Lloyds Bank NZA v National Safety Council of Australia (1993) 115 ALR 93 …. 14.122 Lochner v New York 198 US 45 (1905) …. 1.16 Lock v Abercester Ltd [1939] Ch 861 …. 12.36 Locke v Yogoat Pty Ltd (1992) 5 BPR 11,687 …. 8.136 Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537 …. 8.31, 8.92, 8.96, 8.101 Loibner v Owens [2006] NSWSC 410 …. 9.57 Loke Yew v Port Swettenham Rubber Co [1913] AC 491 …. 8.67 Lolakis v Konitsas (2002) 11 BPR 20,499 …. 12.7, 12.56 London & Blenheim Estates v Ladbroke Retail Parks Ltd [1992] 1 WLR 1278 …. 12.7 —v —[1994] 1 WLR 31 …. 12.7 London and County (A & D) Ltd v Wilfred Sportsman Ltd [1970] 3 WLR 418 …. 11.55, 11.69 London Borough of Southwark v Williams [1971] Ch 734 …. 2.30

Larke Hoskins & Co Ltd v Icher (1929) 29 SR (NSW) 142 …. 11.14 Larking v Great Western (Nepean) Gravel Ltd (in liq) (1940) 64 CLR 221 …. 11.66 Last v Rosenfeld [1972] 2 NSWLR 923 …. 6.33 Latec Investments Limited v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 …. 7.26, 7.27, 7.33, 7.34, 7.45, 8.77, 14.20, 14.115, 14.137, 14.139, 14.142 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 …. 11.60 Lavender v Betts [1942] 2 All ER 72 …. 11.22 Lawson v Minister for Environment & Water (SA) [2021] NSWCA 6, (2021) 246 LGERA 421 …. 4.21 — v NSW Department of Housing (RTT 92/001699) …. 11.112 Lawton v Lawton (1743) 3 Atk 13 …. 2.25 Lax Kw’alaams Indian Band v Canada (Attorney General), 2011 SCC 56 (10 November 2011) …. 4.34, 4.35 Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57; 4 ALR 482 …. 8.145 Le v Williams [2004] NSWSC 645 …. 9.71 Leach v Thomas (1835) 7 C & P 327; 173 ER 145 …. 2.25 Lee v Blakeney (1887) 8 LR (NSW) 141 …. 2.34 — v Ferno Holdings Pty Ltd (1993) 33 NSWLR 404 …. 5.123 Leeds Industrial Co-operative Society Ltd v Slack [1924] AC 851 …. 12.45 Lee-Parker v Izzet [1971] 1 WLR 1688; [1971] 3 All ER 1099 …. 11.81 Lee’s Application, Re (1996) 72 P & CR 439 …. 13.49 Lehrer and the Real Property Act 1900, Re (1960) 61 SR (NSW) 365 …. 8.39 Leigh v Dickeson (1884) 15 QBD 60 …. 9.55, 9.57, 9.58, 9.64 — v Jack (1879) 5 Ex D 264 …. 5.113, 5.114 — v — (1895) 5 Ex D 264 …. 5.117 — v — (1897) 5 Ex D 264 …. 5.117 — v Taylor [1902] 1 Ch 523 …. 2.18 Leitz Leeholme Stud Pty Ltd v Robinson [1977] 2 NSWLR 544 …. 11.7, 11.12, 11.13, 11.60 Lemmon v Webb [1895] AC 1 …. 2.8 Lend Lease Development Pty Ltd v Zemlicka (1985) 3 NSWLR 207 …. 11.23 Lennard v Jessica Estates Pty Ltd (2008) 71 NSWLR 306 …. 13.51 Lennon v Bell [2005] QSC 286 …. 9.44 Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407 …. 8.131

xl

Table of Cases Macintosh v Bebarfalds Ltd (1922) 22 SR (NSW) 371 …. 11.79 — v Lobel (1993) 30 NSWLR 441 …. 2.36, 2.37, 14.69 Mack and the Conveyancing Act, Re [1975] 2 NSWLR 623 …. 13.32 Mackintosh v Trotter (1838) 3 M & W 184; 150 ER 1108 …. 2.27 Mackreth v Symmons (1808) 15 Ves Jun 328 …. 6.16 Macleay, Re (1875) LR 20 Eq 186 …. 3.55 Macpherson v Maund (1937) 58 CLR 341; 11 ALJ 346 …. 10.36 Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 …. 8.72, 8.93, 8.104 Macquarie International Health Clinic Pty Ltd v South Sydney West Area Health Service [2010] NSWCA 268 …. 11.60, 11.64, 11.65 Maddison v Alderson (1883) 8 App Cas 467 …. 6.11 Magill v Magill (1997) NSW ConvR ¶55-795 …. 9.45 Maher v Bayview Golf Club Ltd (2004) 12 BPR 22,457 …. 12.32 — v Maher (1877) 1 LR Ir 22 …. 10.14 Maiden Civil (P&E) Pty Ltd, Re ; Albarran v Queensland Excavation Services Pty Ltd (2013) 277 FLR 337 …. 14.5, 14.6, 14.7 Mailman v Challenge Bank Ltd (1991) 5 BPR 11,721 …. 14.105 Maiorana and the Conveyancing Act, Re [1970] 1 NSWR 627 …. 12.23 Maitland Railways Pty Ltd v Satellite Centres Australia Pty Ltd [2009] NSWSC 716 …. 5.119 Majestic Homes Pty Ltd v Wise [1978] Qd R 225 …. 8.96 Malayan Credit v Jack Chia-MPH Ltd [1986] 1 WLR 590 …. 9.19 Malin, In the Will and Estate of [1905] VLR 270 …. 10.10 Mallett v Mallett (1984) 156 CLR 605 …. 6.51 Malzy v Eichholz [1916] 2 KB 308 …. 11.20, 11.22 Mamfredas Investment Group Pty Ltd (formerly known as MAM Marketing Pty Ltd) v Property IT and Consulting Pty Ltd [2013] NSWSC 929 …. 13.46, 13.48, 13.49 Manchester Bonded Warehouse Co Ltd v Carr (1880) 5 CPD 507; [1874–80] All ER Rep 563 …. 11.24 Manfield & Sons Ltd v Botchin [1970] 2 QB 612 …. 11.15 Mangan, Re (1983) 123 ALR 633 …. 14.60 Mangiola v Costanzo [1980] ANZ ConvR 331 …. 11.4

London County Council v Allen [1914] 3 KB 642 …. 13.2, 13.20 Lonergan v Lewis [2011] NSWSC 1133 …. 12.34 Long v Gowlett [1923] 2 Ch 177 …. 12.27 —v Mitchie [2003] NSWSC 233 …. 12.56, 12.62 Long Leys Co Pty Ltd v Silkdale Pty Ltd (1991) 5 BPR 11,512 …. 14.59 Longley v Longley (1871) LR 13 Eq 133 …. 6.27 Loose Fit Pty Ltd v Marshbaum [2011] NSWCA 372 …. 11.36 Lopeman v WIN Corporation Pty Ltd [2020] NSWSC 1305 …. 12.34 Lord v Commissioners for the City of Sydney (1859) 12 Moo PC 473; 14 ER 991 …. 2.13 — v Price (1874) LR 9 Ex 54 …. 2.57 Lord Advocate v Lord Lovat (1880) 5 App Cas 273 …. 5.88, 5.131 Louis and the Conveyancing Act 1919, Re 1971] 1 NSWLR 164 …. 13.20, 13.28, 13.35 Love v Commonwealth of Australia; Thoms v Commonwealth of Australia [2020] HCA 3, (2020) 270 CLR 152 …. 4.17 Lowe v Sze Tu [2015] HCATrans 179 …. 8.125 Lowe’s Will Trusts, Re [1973] 1 WLR 882 …. 3.17 Loxton v Waterhouse (1891) 7 WN (NSW) 98 …. 2.32 Lubrano v Proprietors of Strata Plan No 4038 (1993) 6 BPR 13,308 …. 9.84 Lukacs v Wood (1978) 19 SASR 520 …. 8.96, 8.101 Luke v Luke (1936) 36 SR (NSW) 310 …. 9.58 Lumbers v W Cook Builders Pty Ltd (2008) 232 CLR 635 …. 2.29 Lyde v Russell (1830) 1 B & Ad 394; 109 ER 834 …. 2.25, 2.27 Lyons v Lyons [1967] VR 169 …. 9.38, 9.43, 14.19 Lysaght v Edwards (1876) 2 Ch D 499 …. 6.14, 6.15, 7.45, 9.30, 9.43

M Mabo v Queensland [1992] 1 Qd R 78 …. 4.14 — v — (1994) 23 Anglo-American Law Review 397 …. 3.31 — v — (No 1) (1988) 166 CLR 186; 83 ALR 14 …. 4.14 — v — (No 2) (1992) 175 CLR 1; 107 ALR 1; CLR 110; ALR 83; 141 ALR 129 …. 1.3, 1.8, 1.59, 1.77, 3.2, 3.4, 3.5, 3.6, 3.7, 3.31, 3.33, 3.34, 3.35, 3.36, 3.37, 3.38, 3.55, 3.119, 4.1, 4.4, 4.5, 4.8, 4.9, 4.14, 4.15, 4.16, 4.17, 4.18, 4.20, 4.21, 4.22, 4.23, 4.24, 4.25, 4.26, 4.27, 4.28, 4.33, 4.36, 4.37, 4.38, 4.41, 4.43, 4.44, 4.47, 4.48, 4.57, 4.62, 4.63, 4.66, 4.68, 4.70, 4.73, 4.84, 5.8, 5.12, 5.29, 5.33 Macdonald v Robins [1954] HCA 5 …. 11.40

xli

Property Law in New South Wales Manners (dec’d), Re; Public Trustee v Manners [1955] 1 WLR 1096; [1955] 3 All ER 83 …. 10.18, 10.19 Mansfield v Mansfield (1890) 16 VLR 569 …. 9.38 Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361 …. 14.95 March v March (1945) 62 WN (NSW) 111 …. 6.30 Marchesi v Apostoulou [2006] FCA 1122 …. 5.106 Marengo Cave Co v Ross 7 NE (2nd) 59 (1937) …. 5.93 Margil Pty Ltd v Stegul Pastoral Pty Ltd [1984] 2 NSWLR 1 …. 12.23 Maridakis v Kouvaris (1975) 5 ALR 197 …. 11.76 Marist Bros Community Inc v Shire of Harvey (1994) 14 WAR 69 …. 6.22 Marker v Marker (1851) 9 Hare 1; 68 ER 389 …. 3.68 Markfield Investments Ltd v Evans [2001] 1 WLR 131 …. 5.143 Markham v Paget [1908] 1 Ch 697 …. 11.22 Markos v O R Autor (2007) 13 BPR 24,487 …. 12.60, 13.48 Marks v Warren [1979] 1 All ER 29 …. 11.40 Marquess of Zetland v Driver [1939] Ch 1 …. 13.6 Marquis of Cholmondeley v Lord Clinton (1820) 2 Jac & W 1; 37 ER 527 …. 5.53 Marriott, Re [1968] VR 260 …. 12.56 Marsden v Campbell (1897) 18 LR (NSW) Eq 33 …. 7.18, 7.39, 8.89 — v Edward Heyes Ltd [1927] 2 KB 1 …. 3.66 — v McAlister (1887) NSWLR (L) 300 …. 8.87 Marshall v Council of the Shire of Snowy River (1994) NSW ConvR ¶55-719 …. 11.7, 11.64, 11.65 Martin, Re [1900] SASR 69 …. 8.145 Martin v Martin (1959) 110 CLR 297 …. 6.30 Martins Camera Corner Pty Ltd v Hotel Mayfair [1976] 2 NSWLR 15 …. 11.22 Martinson v Clowes (1882) 21 Ch D 857 …. 14.101 Martyn, Re (1965) 65 SR (NSW) 387 …. 13.36 Martyn v Glennan [1979] 2 NSWLR 234 …. 8.152 Marvoe Management Pty Ltd t/as The Sweet Life v Plantation Management Services (WA) Pty Ltd (No 5) [2017] NSWSC 1167 …. 2.45 Mason v Clarke [1955] AC 778 (HL) …. 2.30, 2.32, 12.65, 12.68, 12.71 — v Shrewsbury and Hereford Railway Co (1871) LR 6 QB 578 …. 12.9 — v Tritton (1994) 34 NSWLR 572 …. 4.27 Mason and the Conveyancing Act, Re [1962] NSWR 762; (1960) 78 WN (NSW) 925 …. 12.63, 13.48 Massart v Blight (1951) 82 CLR 423 …. 11.41, 11.116

Matcove Pty Ltd, Re [2020] NSWSC 625 …. 14.33 Matthey v Curling [1922] 2 AC 180 …. 11.38 Mattie v Edwards (1847) 16 LJ Ch 405 …. 14.118 Matzner v Clyde Securities Ltd [1975] 2 NSWLR 293 …. 14.19, 14.123, 14.133, 14.135 Maurice Toltz Pty Ltd v Macy’s Emporium Pty Ltd [1970] 1 NSWR 474 …. 12.37 May v Ceedive Pty Ltd (2006) 13 BPR 24,147 …. 2.16, 2.18, 2.19 Mayer v Coe (1968) 88 WN (Pt 1) (NSW) 549 …. 8.174 Mayho v Buckhurst (1617) Cro Jac 438 …. 11.45 MBF Investments Pty Ltd v Nolan (2011) 37 VR 116 …. 14.84, 14.107 McCarthy & Stone v Julian S Hodge & Co Ltd [1971] 1 WLR 1547 …. 7.31 McCauley v Karooz (1944) 61 WN (NSW) 165 …. 2.61 McColl v Bright [1939] VLR 204. …. 14.83 McCoy v Caelli [2010] NSWSC 1233 …. 9.33 — v Estate of Peter Anthony Caelli [2008] NSWSC 986 …. 9.33 McDermott v Boggs (unreported, SC (NSW)) …. 2.38 McFarland v Gertos (2018) NSWSC 1629; 98 NSWLR 954; 19 BPR 38969 …. 5.73, 5.79, 5.86 McGlade v Native Title Registrar [2017] FCAFC 10 …. 4.32, 4.83 — v South West Aboriginal Land & Sea Aboriginal Corporation (No 2) [2019] FCAFC 238 …. 4.32 McGrath v Campbell (2006) NSW ConvR ¶56-159; [2006] NSWCA 180 …. 12.26, 12.50, 12.51, 12.53 McGreal v Wake (1984) 269 EG 1254 …. 11.39 McGuigan Investments Pty Ltd v Dalwood Vineyards Pty Ltd [1970] 1 NSWR 686 …. 13.6 McGuiness v NSW Land and Housing Corporation [2014] NSWCATAP 98 …. 11.125 — v Registrar-General (1998) 44 NSWLR 61 …. 5.112, 8.87 — v Registrar-General; Barrett v McGuiness [1998] NSWSC 215 [1998] NSWSC 215 …. 5.112 McGuren v Simpson [2004] NSWSC 35 …. 5.83 McHugh v Union Bank of Canada [1913] AC 299 …. 14.104 McIntyre v Porter [1983] VR 439 …. 12.56 McKean v Maloney (1988) ANZ ConvR 31 …. 14.113 McKean’s Caveat, Re [1988] 1 Qd R 524 …. 8.145 McKenzie v McAllum [1956] VLR 208 …. 11.42 McKeown v Cavalier Yachts Pty Ltd (1988) 13 NSWLR 303 …. 2.3 McKinnon v Portelli (1959) 60 SR (NSW) 343 …. 5.143

xlii

Table of Cases McMahon v Docker (1945) 62 WN (NSW) 155 …. 11.15 — v McMahon [1979] VR 239 …. 8.149 McManus v Cooke (1887) 35 ChD 681 …. 12.7, 12.17 McNamara and the Conveyancing Act, Re (1961) 78 WN (NSW) 1068 …. 9.63 McNamee v Martin as Financial Manager for John Boden McNamee [2021] NSWSC 568 …. 9.65 McPhail v Persons, Names Unknown [1973] Ch 447; [1973] 3 All ER 393 …. 5.46, 5.57 Mears v London and South Western Railway Co (1862) 11 CBNS 850 …. 2.59 Measures v McFadyen (1910) 11 CLR 723 …. 11.55, 14.59 Medforth v Blake [2000] Ch 86 …. 14.105 Mediservices International Pty Ltd v Stocks and Realty (Security Finance) Pty Ltd [1982] 1 NSWLR 516 …. 14.95 Mellor v Walmesley [1905] 2 Ch 164 …. 12.31 Members of the Yorta Yorta Aboriginal Community v Victoria [1998] FCA 1606 …. 4.17 — v — (2001) 110 FCR 244; 180 ALR 655 …. 4.27 — v — (2002) 214 CLR 422; 194 ALR 538 …. 4.18 Mercantile Credits Ltd v Comblas (1982) 56 ALJR 499 …. 14.50 — v Shell Co of Australia Ltd (1976) 136 CLR 326 …. 8.39, 8.40, 8.41, 8.42, 8.43, 8.46 Mercantile Mutual Life Insurance Co Ltd v Gosper (1991) 25 NSWLR 32 …. 8.92, 8.96, 8.98 Meriton Apartments Pty Ltd v McLaurin & Tait (1976) 133 CLR 671; 50 ALJR 743 …. 8.181 Mervin, Re [1891] 3 Ch 197 …. 10.26 Metropolitan Fire Brigades Board v Tait [1949] VLR 231 …. 11.5 Metropolitan Railway Co v Fowler [1892] 1 QB 165 …. 5.10 Metropolitan Trade Finance v Coumbis (1973) 131 CLR 396 …. 11.14 Meux v Cobley [1892] 2 Ch 253 …. 3.65, 3.67 — v Jacobs (1875) LR 7 HL 481 …. 14.66 Michael v Onisforou (1977) 1 BPR 9356 …. 8.87 Middle Harbour Investments Ltd, Re [1977] 2 NSWLR 652 …. 3.18 Middleton v Arthur (2002) 11 BPR 20,263 …. 12.39 Midland Bank Trust Co Ltd v Green [1983] AC 513 …. 7.12 Midland Brick Co Pty Ltd v Welsh [2006] WASC 122 …. 8.170 Mihalic v Mihalic (1987) 73 ALR 304 …. 8.145

Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 …. 1.8, 1.59, 3.36, 4.1, 4.2, 4.3, 4.9, 4.10, 4.11, 4.41 Millar v Candy (1981) 58 FLR 145 …. 2.61 Miller v Emcer Products Ltd [1956] Ch 304; [1956] 1 All ER 237 …. 12.9 — v Jackson [1977] QB 966 …. 12.7 — v Minister for Mines [1963] AC 484 …. 8.107, 8.109, 8.143 — v Sutherland (1990) 14 Fam LR 416 …. 6.36, 6.55 Mills v Renwick (1901) 1 SR (NSW) Eq 173 …. 7.38, 7.39 — v Ruthol Pty Ltd (2002) 10 BPR 19,381 …. 7.33 — v Stokman (1967) 116 CLR 61 …. 12.65 Milmo v Carreras [1946] KB 306 …. 11.44 Milne v James (1910) 13 CLR 168 …. 12.33 Milroy v Lord (1862) De GF & J 264; 45 ER 1185 …. 6.45, 8.126 Milutinovic v Milutinovic [2004] NSWSC 1110 …. 8.124 Minister for Education and Training v Canham [2004] NSWSC 274 …. 8.93 Minister for the Interior v Brisbane Amateur Turf Club (1949) 80 CLR 123 …. 11.18 Minister of State for the Army v Dalziel (1944) 68 CLR 261 …. 4.50, 5.10 Minshall v Lloyd (1837) 2 M & W 450 …. 2.17 Minter v Minter (2000) 10 BPR 18,133 …. 9.21 Mir Bros Projects Pty Ltd v 1924 Pty Ltd [1980] 2 NSWLR 907 …. 14.89, 14.95 Mischel Holdings Pty Ltd (in liq) v Mischel [2013] VSCA 375 …. 9.27 Mitchell v Arblaster [1964–65] NSWR 119 …. 9.20 Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 297 …. 11.82 M’Leod v M’Ghie (1841) 2 Man & G 326 …. 2.48 Modular Design Group Pty Ltd, Re (1994) 35 NSWLR 96 …. 14.33 Moffett v Dillon [1999] 2 VR 480 …. 7.29, 8.170 Mogo Local Aboriginal Land Council v Eurobodalla Shire Council [2002] NSWCA 12 …. 8.120 Monash City Council v Melville (2000) V ConVR 54-261 …. 5.119 Moncrieff v Jamieson [2007] 1 WLR 2620 …. 5.9, 12.7, 12.36 Monds v Stackhouse (1948) 77 CLR 232 …. 10.12 Money v Westpac Banking Corp (1988) ANZ ConvR 553 …. 14.36 Monsell v Team Link Management Pty Ltd (1997) 8 BPR 15,401 …. 14.4 Moody v Steggles (1879) 12 Ch D 261 …. 12.5, 12.6, 12.9

xliii

Property Law in New South Wales Moon v Diroan Pty Ltd (RTT 96/024196) …. 11.135 Moonking Gee v Tahos (1961) 63 SR (NSW) 935 …. 7.37, 7.39 Moore, Re [1901] 1 Ch 936 …. 10.27 Moore v Dimond (1929) 43 CLR 105 …. 11.13 — v Regents of the University of California 793 P 2d 479 (1990) …. 1.60, 1.61 — v Ullcoats Mining Co [1908] 1 Ch 575 …. 11.68 Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445 …. 12.34 Moorgate Tobacco Pty Ltd v Philip Morris Pty Ltd (1984) 156 CLR 414 …. 1.69 Moran v Buckinghamshire County Council (1988) 86 LQR 472 …. 5.105 Morgan v Coulson [1981] 2 NSWLR 801 …. 14.39 — v Jeffreys [1910] 1 Ch 620 …. 14.27 — v Morgan [2017] NSWSC 725 …. 9.35 — v Edmiston [1907] VLR 191 …. 11.13 — v London, County and Westminster Bank Ltd [1914] 3 KB 356 …. 2.60 Morley v Bird (1798) 3 Ves 628 …. 9.18 Morris v Tarrant [1971] 2 QB 143 …. 5.97 Morrison, Jones & Taylor Ltd, Re [1914] 1 Ch 50 …. 2.23 Mortimer v Bailey [2005] 2 P & CR 9 …. 13.41 Morton v Suncorp Finance Ltd (1987) 8 NSWLR 325 …. 14.98 Mostyn v Mostyn (1989) 16 NSWLR 635 …. 6.5 Motor Auction Pty Ltd v John Joyce Wholesale Cars Pty Ltd (1997) 8 BPR 15,565 …. 8.179 Moule v Garrett (1870) LR 5 Ex 132 …. 11.43 — v — (1872) LR 7 Ex 101 …. 11.48, 11.55 Mount Carmel Investments Ltd v Peter Thurlow Ltd [1988] 1 WLR 1078 …. 5.144 Mount Cathay v Pty Ltd v Lend Lease Funds Management Ltd [2012] QCA 274 …. 12.45 Mualgal People v Queensland [1999] FCA 157 …. 4.66 Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 …. 5.45, 5.68, 5.92, 5.94, 5.129, 5.131, 5.136, 5.137, 5.138, 5.139, 5.140 Multiservice Bookbinding Ltd v Marden [1979] Ch 84 …. 14.34 Mumford v Stohwasser (1874) LR 18 Eq 556 …. 7.31, 7.32, 7.44, 14.132 Munday v Australian Capital Territory (2000) 173 ALR 1 …. 2.66 — v Prowse (1878) 4 VLR (Eq) 101 …. 11.79 Municipal District of Concord v Coles (1905) 3 CLR 96 …. 12.4 Munro v Stuart (1924) 41 SR (NSW) 203 …. 8.68 Murnane v Findlay [1926] VLR 80 …. 5.104 Murrell, Re (1984) 57 ALR 85 …. 14.124

Murtagh v Murtagh [2013] NSWSC 926 …. 9.58 Muschinski v Dodds (1985) 160 CLR 583; 62 ALR 429 …. 6.34, 6.49, 6.55, 7.33, 7.45 — v — (1986) 9 UNSWLJ 63 …. 7.45 Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723 …. 11.22, 11.73

N Nadrak Pty Ltd v Permanent Custodians Ltd (1994) 6 BPR 13,344 …. 14.34 Naish and the Conveyancing Act, Re [1960] 77 WN (NSW) 892 …. 13.34 Napper v Miller (2003) 11 BPR 21,175 …. 10.27 Nash v Eads (1880) 25 Sol Jo 95 …. 14.84 National Australia Bank Limited v Blacker (2000) 179 ALR 97 …. 2.17, 2.20 — v Bridge Wholesale Acceptance Corp (Aust) Ltd (1990) 21 NSWLR 96 …. 8.152 — v Garrett [2016] FCA 714 …. 14.5 — v Golden Sea Dragon (Hobart) Pty Ltd (1992) 4 Tas R 250 …. 5.123 — v New South Wales [2009] 260 ALR 115 …. 3.18, 3.30 — v Sayed [2019] NSWSC 653 …. 14.107 — v Smith [2014] NSWSC 1605 …. 14.37 National Bank of Greece SA v Pinios Shipping Co (No 1) [1989] 3 WLR 185 …. 14.67 National Bank of Tasmania Ltd v McKenzie [1920] VLR 411 …. 14.93 National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675; [1980] UKHL 8 …. 11.77 National Provincial and Union Bank of England v Charnley [1924] 1 KB 431 …. 14.17 National Trust v White [1987] 1 WLR 907 …. 12.36 Natva Developments Pty Ltd v McDonald Bros Pty Ltd (2004) 12 BPR 22,287 …. 12.36, 12.64, 12.65 Natwest Markets Australia Ltd v Mannix (1995) NSW ConvR ¶55-743 …. 14.50 Naziridis v Rimis (1999) 9 BPR 16,201 …. 9.65 Neighbourhood Association DP No 285220 v Moffat [2008] NSWSC 54 …. 12.36 Nelson v Kimberley Homes Pty Ltd (1988) NSW ConvR ¶55-394 …. 8.152 — v Nelson (1995) 184 CLR 538 …. 6.30 Nemesis Australia Pty Ltd v Commissioner of Taxation …. 10.44 New South Wales v Koumdjiev (2005) 63 NSWLR 353 …. 9.76 New South Wales Co-operative Ice & Cold Storage Co, Re (1891) 12 LR (NSW) Eq 87 …. 2.22, 2.27

xliv

Table of Cases New South Wales Department of Housing v Hume [2007] NSWCA 69 …. 11.36 New South Wales Land and Housing Corporation v Green (NSWSC, Graham AJ, 31 October 1997, unreported, BC9705949) …. 11.125 New Zealand Government Property Corp v H M & S Ltd [1982] 1 All ER 624 …. 2.27 Newcastle City Council v Kern Land Pty Ltd & Commonwealth Bank of Australia (1997) 42 NSWLR 273 …. 3.115 Newcomen v Coulson (1877) 5 Ch D 133 …. 12.37 Newington v Windeyer (1985) 3 NSWLR 555 …. 5.33, 5.49, 5.131 Newman v Blundell-Felisak (RTT 97/023358) …. 11.108 Newton Abbot Co-operative Society v Williamson & Treadgold Ltd [1952] Ch 286 …. 13.7, 13.29, 13.38 Nguyen v Corbett [2017] NSWSC 1689 (7 December 2017) …. 7.15, 7.24 — v Kaha [2008] NSWCA 794 …. 8.144 Nicholas v Andrew (1920) 20 SR (NSW) 178 …. 5.135 Nicholls v Ely Beet Sugar Factory Ltd (No 1) [1931] 2 Ch 84 …. 12.71 Nilan v Nilan (1951) 68 WN (NSW) 271 …. 2.34 Nisbet and Potts’ Contract, Re [1905] 1 Ch 391 …. 13.17 — [1906] 1 Ch 386 …. 7.23, 13.17, 13.18 No Fuss Finance Pty Ltd v Miller [2006] NSWSC 630 …. 14.37 Noakes & Co Ltd v Rice [1902] AC 24 …. 14.25, 14.30 Noblett and Mansfield v Manley [1952] SASR 155 …. 11.92 Nordern v Bluepoint Enterprises Ltd [1996] 3 NZLR 450 …. 11.22, 11.23 North Ganalanja Aboriginal Corporation v Queensland (1996) 185 CLR 595 …. 4.63 North Sydney Printing Pty Ltd v Sabemo Investment Corp Pty Ltd [1971] 2 NSWLR 150 …. 12.29 Northern Counties of England Fire Insurance Co v Whipp (1884) 26 Ch D 482 …. 7.7, 7.8, 14.127 Northern Land Council v Commonwealth (No 2) (1987) 61 ALJR 616 …. 4.13 — v Quall [2020] HCA 33, (2020) 94 ALJR 904 …. 4.68 Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 …. 11.36, 11.109 Northern Territory of Australia v Griffiths [2017] FCAFC 106 …. 4.70

— v — (2019) 269 CLR 1 …. 4.54, 4.56, 4.70, 4.79, 4.87 Norton v Dashwood [1896] 2 Ch 497 …. 2.18, 2.22, 2.25 NRMA Insurance Ltd v B & B Shipping and Maritime Salvage Co Pty Ltd (1947) 47 SR (NSW) …. 5.44 NSW Trustee and Guardian v State of New South Wales [2015] NSWSC 1121 …. 9.8 Nullagine Investments Pty Ltd v Western Australia Club Inc (1993) 67 ALJR 739 …. 9.63 Nulyarimma v Thompson; Buzzacott v Minister for the Environment (1999) 96 FCR 153; 165 ALR 621 …. 4.81 NZI Capital Corp Pty Ltd v Child (1991) 23 NSWLR 481 …. 14.48

O OBG Ltd v Allen [2008] 1 AC 1 …. 2.48, 2.60 O’Brien v Robinson [1973] 1 All ER 583 …. 11.39 Ocean Accident and Guarantee Corporation Ltd v Ilford Gas Co [1905] 2 KB 493 …. 14.54 Ocean Estates v Pinder [1969] 2 AC 19 …. 5.105 Oertel v Hordern (1902) 2 SR (NSW) Eq 37 …. 8.140 Ofulue v Bossert [2000] WLR 749 (HL) …. 5.84 — v — [2009] 2 WLR 749 …. 5.82, 5.101 Ogilvie v Ryan [1976] 2 NSWLR 504 …. 6.13, 6.33, 6.49, 6.55 Oh Hiam v Tham Kong (1980) 2 BPR 9451 …. 8.95 Old Grovebury Manor Farm v W Seymour Plant Sales and Hire Ltd (No 2) [1979] 3 All ER 504 …. 11.64 Old Papa’s Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11 …. 11.50 Olivieri v Olivieri (1993) 38 NSWLR 665 …. 6.30 Olsson v Dyson (1969) 120 CLR 365 …. 6.43 Olympic Holdings Pty Ltd v Windslow Corp Pty Ltd (in liq) (2008) 36 WAR 342 …. 14.133 On v On [2002] NTSC 18 …. 9.45 O’Neil v Hart [1905] VLR 107 …. 5.111, 5.144 O’Neill v Commonwealth Bank of Australia [2013] NSWSC 836 …. 14.63 — v Robertson-Staton [2015] NSWSC 1949 …. 6.35 OneSteel Manufacturing Pty Ltd (admins apptd), Re [2017] NSWSC 21 …. 14.10 Orr Ewing v Colquhoun (1877) 2 App Cas 839 …. 2.13 O’Shea v Athanasakis (2009) 14 BPR 27,093 …. 12.34 Osmanoski v Rose [1974] VR 523 …. 8.168

xlv

Property Law in New South Wales Otter v Lord Vaux (1856) 6 De GM & G 638 …. 14.102 Owen v Gadd [1956] 2 QB 99 …. 11.22 Owners — Strata Plan 21702 v Krimbogiannis, The [2014] NSWCA 411 …. 9.78 Owners — Strata Plan No 70798 v Bakkante Constructions Pty Ltd, The (2014) 88 NSWLR 513 …. 9.111 Owners — Strata Plan No 73943 v Gazebo Penthouse Pty Ltd, The [2014] NSWSC 1536 …. 9.110 Owners Corporation of Strata Plan 71623 v Waldorf Apartments Hotel, The Entrance Pty Ltd [2015] NSWSC 1658 …. 8.105 Owners of East Fremantle Shopping Centre West Strata Plan 8618 v Action Supermarkets Pty Ltd (2008) 37 WAR 498 …. 12.7 Owners of Strata Plan No 3397 v Tate, The (2007) 70 NSWLR 344 …. 9.108, 9.110, 9.134 Owners SP 35042 v Seiwa Australia Pty Ltd, The (2007) 13 BPR 24,789; [2007] NSWCA 272 …. 9.71, 9.84 Owners Strata Plan 50276 v Thoo, The (2013) 17 BPR 33,789 …. 9.84 Owners Strata Plan No 2245 v Veney, The [2020] NSWSC 134 …. 9.102 Owners Strata Plan No 60919 v Consumer Trader and Tenancy Tribunal, The (2009) 16 BPR 31,673 …. 9.108 Oxford Meat Co Pty Ltd v McDonald [1963] SR (NSW) 423 …. 5.33 Oxley v Imperial Charter Pty Ltd (1996) NSW ConvR ¶55-783 …. 11.144

P P & A Swift Investments v Combined English Stores Group plc [1989] AC 632 …. 11.45 Pacific Film Laboratories Pty Ltd v Federal Commissioner for Taxation (1970) 121 CLR 154 …. 2.5 Page’s Application, Re (1996) 71 P & CR 440 …. 13.49 Paine & Co v St Neots Gas & Coke Co [1939] 3 All ER 812 …. 12.45 Palais Parking Ltd v Shea (1980) 23 SASR 425 …. 8.31 Palmer v Hendrie (1859) 27 Beav 349; 54 ER 136 …. 14.50 Palumberi v Palumberi (1986) NSW ConvR ¶55-287 …. 2.16, 2.21 Pampris v Thanos [1968] 1 NSWR 56 …. 11.24 Pangallo Estate Pty Ltd v Killara 10 Pty Ltd [2007] NSWSC 1528 …. 2.45

Pantalone v Alaouie (1989) 18 NSWLR 119 …. 12.11 Papadopoulos v Goodwin [1982] 1 NSWLR 413 …. 12.23 — v — (1983) 2 NSWLR 113 …. 12.50 Pareroultja v Tickner (1993) 42 FCR 32 …. 4.27 Parker v British Airways Board [1982] 1 QB 1004; [1982] 1 All ER 834 …. 2.66, 5.49 — v — [1960] 1 All ER 93; [1960] 1 WLR 286 …. 6.8 — v Registrar-General [1977] 1 NSWLR 22 …. 8.195 — v Webb (1693) 3 Salk 5; 91 ER 656 …. 11.45 Parker-Tweedale v Dunbar Bank plc [1991] Ch 12 …. 14.105 Parkinson v Braham [1962] SR (NSW) 663 …. 8.89, 11.8 Paroz v Paroz [2010] QCA 362; [2010] QSC 203 …. 9.54 — v — [2011] HCATrans 205 …. 9.54 Paterson v McCarthy (1892) 18 VLR 133 …. 14.58 Patsios v Glavinic [2006] VSC 92 …. 5.92 Paul v Nurse (1828) 8 B & C 486 …. 11.47, 11.55 Paul, Re (1902) 19 WN (NSW) 114 …. 8.145 Paulet v Stewart [2009] VSC 60 …. 6.30 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 …. 2.29 Pavlou (A Bankrupt), Re [1993] 1 WLR 1046 …. 9.58 Pawson’s Settlement, Re [1917] 1 Ch 541 …. 14.55 Payne v Dwyer [2013] WASC 271 …. 5.96 — v Rowe [2012] NSWSC 685 …. 9.58 — v Webb (1874) LR 19 Eq 26 …. 9.13 PD Consultants Pty Ltd v Childs [2004] NSWSC 1076 …. 12.34 Pearson v Spencer (1861) 1 B & S 571 …. 12.29 Peat v Chapman (1750) 1 Ves Sen 542 …. 9.13 Peden Pty Ltd v Bortolazzo [2006] 2 Qd R 574 …. 11.22 Pedulla v Panetta [2011] NSWSC 1386 …. 8.193, 8.195, 8.204 Pekar v Holden (Trustee) [2017] FCA 596 …. 9.53 Peldan v Anderson (2006) 229 ALR 432 …. 9.25, 9.53 Pelenoy Pty Ltd v Donovan Oates Hannaford Mortgage Corp [2004] NSWSC 4 …. 8.129 Pells v Brown (1620) Cro Jac 590 …. 10.5 Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676 …. 14.107, 14.111, 14.112, 14.113 Penfolds Wines v Elliott (1946) 74 CLR 204 …. 2.45, 2.47, 2.49, 2.59 — v — (1956) 63 LQR 461 …. 2.49

xlvi

Table of Cases Pennant Hills Golf Club v Roads and Traffic Authority of New South Wales (1999) 9 BPR 17,011 …. 12.65 Penton v Barnett [1898] 1 QB 276 …. 11.64 — v Robart (1801) 2 East 88; 102 ER 302 …. 2.24, 2.25 Perera v Vandiyar [1953] 1 WLR 672 …. 11.22 Permanent Finance Corp Ltd v Flavel [1968] Qd R 84 …. 14.58 Permanent Mortgages Pty Ltd v Cook [2006] ASC 155-082 …. 14.37 Permanent Trustee Australia Ltd v Shand (1992) 27 NSWLR 426 …. 12.65, 12.73 Permanent Trustee Co Ltd v Frazis [1999] NSWSC 319 …. 14.37 — v Pangas (1992) 75 LGRA 412 …. 5.102 Permanent Trustee Co of NSW v Campbelltown Municipal Council (1960) 105 CLR 401 …. 12.31 — v Richardson (1948) 48 SR (NSW) 313 …. 10.37 Perpetual Finance Corporation Ltd v Blain (1996) 9 BPR 16,243 …. 11.131 Perpetual Nominees Pty Ltd v Springfield Retail Pty Ltd [2009] NSWSC 188 …. 8.144 Perpetual Trustee Co Ltd v Khoshaba (2006) 14 BPR 26,639 …. 14.37 — v Motive Finance & Leasing Pty Ltd (2011) 15 BPR 29,267 …. 6.8 — v Smith (2010) 273 ALR 469; [2010] FCAFC 91 …. 7.18, 7.29, 8.168, 8.170 Perpetual Trustee Co Ltd (original plaintiff); Performance Capital Mortgage Pty Ltd v Motive Finance & Leasing Pty Ltd [2010] NSWSC 429 …. 8.168 Perpetual Trustees Company Ltd; Application of Chen [2010] NSWSC 808 …. 9.45 Perpetual Trustees Victoria Ltd v English [2009] NSWSC 478 …. 8.51, 8.52 — v — [2010] NSWCA 32 …. 8.47, 8.52, 8.53, 8.56 — v Tsai [2004] NSWSC 754 …. 8.48, 8.50 — v Tsai (2004) 1 BPR 22,811 …. 8.46 — v Van den Heuvel [2010] NSWCA 171 …. 8.45 Perrot’s Case (1594) Moo KB 368; 72 ER 634 …. 10.4 Perry v Clissold [1907] AC 73 …. 2.31, 2.34, 5.33, 5.43, 5.44, 5.47, 5.48, 5.49, 5.68, 5.137, 5.138 — v Fitzhowe (1846) 8 QB 757 …. 12.44 — v Rolfe [1948] VLR 297 …. 14.142 Perry-Herrick v Attwood (1857) 2 De G & J 21; 44 ER 895 …. 7.8

Person-to-Person Financial Services Pty Ltd v Sharari [1984] 1 NSWLR 745 …. 8.163, 8.165 Pertsoulis, In the Marriage of (1980) 6 Fam LR 39 …. 9.47 Peter v Russel (1716) 1 Eq Ca Abr 321 …. 7.8 Peters v Commonwealth Bank of Australia (1992) NSW ConvR ¶55-629; (1992) ANZ ConvR 497 …. 14.42 Pettey v Parsons [1914] 2 Ch 653 …. 12.39, 12.45 Phillips v Halliday [1891] AC 228 …. 12.5, 12.9 — v Lamdin [1949] 2 KB 33 …. 2.22 — v Martin (1890) 11 LR (NSW) 153 …. 8.92 — v Silvester (1872) LR 8 Ch App 173 …. 6.15 Philos Pty Ltd v National Bank of Australasia Ltd (1976) 5 BPR 11,810 …. 14.136 Phipps v Acker (1842) 9 Cl & F 583; 8 ER 539 …. 10.14 — v Pears [1965] 1 QB 76 …. 12.7, 12.10, 12.27 Picken v Matthews (1878) 10 Ch D 264; 39 LT 531 …. 10.20 Pickering v Rudd (1815) 4 Camp 219 …. 2.8 Pieper v Edwards [1982] 1 NSWLR 336 …. 12.59, 13.46 Pigot’s Case (1614) 11 Coke 26b; 77 ER 1177 …. 8.57 Pike v Venables (1984) NSW ConvR ¶55-170 …. 13.47 Pilcher v Rawlins (1872) LR 7 Ch App 259 …. 7.9, 8.171, 14.127 Piles Caveats, Re [1981] Qd R 81 …. 8.142 Pinhorn v Souster (1853) 8 Exch 763 …. 11.40 Pink v Lawrence (1978) 36 P & CR 98 …. 9.16 Pioneer Quarries (Sydney) Pty Ltd v Permanent Trustee Co of New South Wales Ltd (1970) 2 BPR 9562 …. 11.71 Pipikos v Trayans (2018) 265 CLR 222 …. 6.11 Pirrie v Saunders (1961) 104 CLR 149 …. 6.8 Plaister, Re; Perpetual Trustee Co v Crawshaw (1934) 34 SR (NSW) 547 …. 9.50 Platzer v Commonwealth Bank of Australia [1997] 1 Qd R 266 …. 7.20 Plymouth Corporation v Harvey [1971] 1 WLR 549 …. 11.64 Port Stephens Shire Council v Tellamist Pty Ltd [2004] NSWCA 353 …. 2.30 — v — [2005] HCATrans 365 …. 2.30 Porter v Associated Securities Ltd (1976) 1 BPR 9279 …. 14.111 Post Investments Pty Ltd v Wilson (1990) 26 NSWLR 598 …. 13.45 Potter v Edwards (1875) 26 LJ Ch 468 …. 14.34 Powell v Langdon (1944) 45 SR (NSW) 136 …. 12.39

xlvii

Property Law in New South Wales — v McFarlane (1977) 38 P & CR 452 …. 5.86, 5.89, 5.90, 5.96, 5.104, 5.105, 5.115 Power Rental Op Co Australia, LLC v Forge Group Power Pty Ltd (in liq) (recs and mgrs apptd) [2017] NSWCA 8 …. 14.5, 14.8, 14.9 Powley v Walker (1793) 5 Term Rep 373; 101 ER 208 …. 11.27 Powys v Blagrave (1854) 4 de GM & G 448; 43 ER 582 …. 3.63, 3.65 Pratten v Warringah Shire Council (1969) 90 WN (Pt 1) (NSW) 134 …. 8.107, 8.108, 8.201 Presbyterian Church (NSW) Property Trust v Scots Church Development Ltd (2007) 13 BPR 24,969 …. 8.68 Proctor v Bishop of Bath and Wells (1794) 2 Hy Bl 358; 126 ER 594 …. 10.35 Production Printing (Aust) Pty Ltd (in liq), Re [2017] NSWSC 505 …. 14.10 Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 …. 11.59, 11.60, 11.61, 11.77, 11.79 Proprietors Strata Plan No 30234 v Margiz Pty Ltd (1993) 32 NSWLR 294 …. 9.78 Proprietors — Strata Plan No 6522 v Furney, The [1976] 1 NSWLR 412 …. 9.71, 9.78 Proprietors Strata Plan No 9968 v Proprietors Strata Plan No 11173 [1979] 2 NSWLR 605 …. 12.62 Prosser v Rice (1859) 28 Beav 68 …. 14.122 Proudfoot v Hart (1890) 25 QBD 42 …. 11.29, 11.38 Provident Capital Ltd v Papa (2013) 84 NSWLR 231 …. 14.37 — v Printy [2008] NSWCA 131; (2008) 13 BPR 25,199 …. 8.46, 8.48, 8.50, 8.52 Prowse v Johnstone [2012] VSC 4 …. 13.49 Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386 …. 11.4 Pryke v Blazai (2000) 10 BPR 18,489 …. 6.16 PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 …. 8.37, 8.47, 14.59 Pua Hor Ong v Wu You Yang Pty Ltd (2008) 103 SASR 9 …. 8.151 Public Transport Commission (NSW) v Perry (1977) 137 CLR 107 …. 2.30 Public Trustee v Bellotti (1986) 4 BPR 9196 …. 5.56, 5.154 — v Bennett [2004] NSWSC 955 …. 10.44, 10.63 — v Evans (1985) 2 NSWLR 188 …. 9.49 — v Grivas [1974] 2 NSWLR 316 …. 9.47 — v Paradiso (1995) 64 SASR 387 …. 8.32 Public Trustee (NSW) v Fitter [2005] NSWSC 1188 …. 9.51

Purefoy v Rogers (1671) 2 Wms Saund 380; 85 ER 1181 …. 3.104, 10.10 Putz v Registrar of Titles [1928] VLR 348 …. 14.145 Pwllbach Colliery Co Ltd v Woodman [1915] AC 634 …. 12.30, 12.42 Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188 …. 8.46, 8.72

Q Quach v Marrickville Municipal Council (No 2) (1990) 22 NSWLR 55 …. 5.107, 5.111, 5.129, 5.146, 8.112 Quarmby v Keating [2008] TASSC 71 …. 5.107, 5.148 Queanbeyan Leagues Club v Poldune Pty Ltd (1996) 7 BPR 15,078 …. 8.151 Queensland v Congoo (2015) 256 CLR 239 …. 4.58 Queensland National Bank Ltd v MacBriar [1902] St R Qd 268 …. 14.66 Queensland Premier Mines Pty Ltd v French (2007) 235 CLR 81 …. 14.59 Quennell v Maltby [1979] 1 WLR 318 …. 14.52

R R & J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2006] NSWCA 177 …. 11.80 R v Ballard [1829] NSWSupC 26 …. 4.6 — v Bonjon [1841] NSWSC 92 …. 4.6 — v Cresswell [2019] 1 Qd R 403 …. 1.65 — v Herbert [1961] JPLGR 12 …. 1.65 — v Hussey (1924) 18 Cr App R 160 …. 11.69 — v Mitton (1827) 3 C & P 31; 172 ER 309 …. 2.62 — v Murrell and Bummaree [1836] NSWSupC 35 …. 4.6 — v NTC Smokehouse Ltd [1996] 2 SCR 672; (1996) 137 DLR (4th) 528 …. 4.28 — v Pamajewon [1996] 2 SCR 821 …. 4.28 — v Rothery [1976] Crim LR 69 …. 1.65 — v Symonds [1847] NZPCC 387 …. 4.13 — v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327; 44 ALR 63 …. 3.26, 12.65 — v Van der Peet (1996) 137 DLR (4th) 289 …. 4.28 — v Welsh [1974] RTR 478 …. 1.65 R (Beresford) v Sunderland City Council [2004] 1 AC 889 …. 12.33 Radaich v Smith (1959) 101 CLR 209 …. 11.5 Rains v Buxton (1880) 14 Ch D 537 …. 5.93 Ramsay v Trustees Executors and Agency Co Ltd (1948) 77 CLR 321 …. 3.57

xlviii

Table of Cases Rance v Elvin (1985) 50 P & CR 9 …. 12.10 Randall v Stevens (1853) 2 El & Bl 641; 118 ER 908 …. 5.144 Randwick Municipal Corporation v Rutledge (1959) 102 CLR 54; 5 LGRA 127 …. 3.23 Ranger v Giffin (1968) 87 WN (Pt 1) NSW 531 …. 2.65 Rasmanis v Jurewitsch (1969) 70 SR (NSW) 407 …. 9.48 Rasmussen v Rasmussen [1995] 1 VR 613 …. 8.124, 8.125, 8.206 Ratcliffe v Watters (1969) WN (NSW) (Pt 1) 497 …. 8.78 Ravenseft Properties Ltd v Davstone (Holdings) Ltd [1978] EWHC QB 1 …. 11.38 Rawson v Studholme [2018] NSWSC 1764 …. 12.34 Red House Farms (Thorndon) Ltd v Catchpole [1977] 244 EG 295; 121 Sol J 136 …. 5.126 Reef Health Pty v Vines [2014] NSWSC 70 …. 2.49 Refina Pty Ltd v Binnie [2009] NSWSC 914 …. 5.84, 5.149, 5.159 — v — (2010) 15 BPR 28,633; [2010] NSWCA 192 …. 5.56, 5.149, 5.156 Refuge Assurance Co Ltd v Pearlberg [1938] Ch 687 …. 14.47 Regent v Millett (1976) 133 CLR 679 …. 6.11 Regis Property Co Ltd v Dudley [1959] AC 370 …. 11.25, 11.37 — v Redman [1956] 2 QB 612 …. 12.27 Regis Towers Real Estate Pty Ltd v Kin Fung (2001) NSW ConvR ¶55-960 …. 9.127 Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 …. 8.116 — v Spencer (1909) 9 CLR 641 …. 8.195 Registrar-General v Cleaver (1996) 41 NSWLR 713 …. 8.195, 13.9 Registrar-General of New South Wales v Jea Holdings (Aust) Pty Ltd (2015) 88 NSWLR 321; [2015] NSWCA 74 …. 12.7, 12.48, 12.50 — v LawCover [2013] NSWSC 1471 …. 8.193 — v Wood (1926) 39 CLR 46 …. 9.24 Reid v Smith (1905) 3 CLR 656 …. 2.20 Reitano v Reitano [2012] NSWSC 1127 …. 6.11 Reliance Permanent Building Society v HarwoodStamper [1944] Ch 362 …. 14.111 Renals v Cowlishaw (1878) 9 Ch D 125 …. 13.4 Repatriation Commission v Tsourounakis (2007) 239 ALR 491 …. 6.42 Residential Housing Corporation v Esber (2011) 80 NSWLR 69 …. 14.124

Residential Tenancies Tribunal of New South Wales v Offe (NSWSC, Abadee J, 1 July 1997, unreported, BC9708044) …. 11.129 Residential Tenancies Tribunal of New South Wales and Henderson; Ex parte Defence Housing Authority, Re (1997) 146 ALR 495 …. 11.88 Reynolds v Ashby & Son [1904] AC 466 …. 2.23, 2.29 — v Clarke (1725) 2 Ld Raym 1399 …. 2.30 Rhone v Stephens [1994] 2 AC 310 …. 13.12, 13.14, 13.15 Rice v Rice (1853) 2 Drew 73; 61 ER 646 …. 7.26, 7.28, 7.30, 8.168, 8.171, 8.180, 14.127 — v — (1854) 61 ER 646 …. 6.16 Richards v Rose (1853) 9 Ex 218 …. 12.30, 12.40 Richardson v Greentree (NSWSC, Einstein J, 1 December 1997, unreported, BC9706375) …. 5.96, 5.97, 5.118 — v Langridge (1811) 4 Taunt 128 …. 11.13 Richmond City Local Board of Health v Victorian Permanent Building and Investment Society (1890) 16 VLR 845 …. 14.22 Rickett v Green [1910] 1 KB 253 …. 11.53, 11.86 Ricketts v Enfield Churchwardens [1909] 1 Ch 544 …. 11.45 Rigby v Chief Constable [1985] 1 WLR 1242 …. 2.30 Riley and the Real Property Act, Re (1964) 82 WN (Pt 1) (NSW) 373 …. 5.93, 5.129 Riley v Penttila [1974] VR 547 …. 5.102, 5.104, 5.110, 5.127, 5.132 Risk v Northern Territory of Australia [2006] FCA 404 …. 4.32 — v — (2007) 240 ALR 74 …. 4.32 RM Hosking v Barnes [1971] SASA 100 …. 8.97 Roads and Traffic Authority of New South Wales v Swain (1997) 41 NSWLR 452 …. 11.123 Roake v Chadha [1984] 1 WLR 40 …. 13.4 Roberts v IAC (Finance) Pty Ltd [1967] VR 231 …. 14.13 — v Rose (1865) LR 1 Ex 82 …. 12.44 — v Swangrove Estates Ltd [2008] 2 WLR 1111; Ch 439 …. 5.72 Robertson v Butler [1915] VLR 31 …. 5.144 — v Wilson (1958) 75 WN (NSW) 503 …. 11.77 Robinson v Hardcastle (1788) 2 TR 241; 100 ER 131 …. 10.26 — v Kilvert (1889) 41 Ch D 88 …. 11.23 — v Kingsmill (1954) 71 WN (NSW) 127 …. 11.76 — v Registrar-General (1983) NSW ConvR ¶55-138 …. 8.194 Roblin v the Public Trustee for the Australian Capital Territory and Labservices Pty Ltd [2015] ACTSC 100 …. 1.65

xlix

Property Law in New South Wales Safari 4x4 Engineering Pty Ltd v Doncaster Motors Pty Ltd [2006] VSC 460 …. 2.48 Sahab Holdings Pty Ltd v Registrar-General [2011] NSWCA 395 …. 8.116 Sahade v Owners Corporation SP 62022 [2013] NSWSC 1791 …. 8.116 — v The Owners — Strata Plan 62022 (2014) 87 NSWLR 261 …. 9.122 Saibai People v Queensland [1999] FCA 158 …. 4.66 Sakoua v Williams (2005) 64 NSWLR 588 …. 11.36, 11.109 Saleeba v Wilkie (2007) ANZ ConvR 664 …. 9.46 Salerno v Proprietors of Strata Plan No 42724 (1997) 8 BPR 15,457 …. 9.108 Saliba v Saliba [1976] Qd R 205 …. 3.55 Sammon, Re (1979) 94 DLR (3d) 594 …. 9.41 Sampi v Western Australia (2010) 266 ALR 537 …. 4.32 Samuel v Jarrah Timber and Wood Paving Corporation [1904] AC 322; [1904] UKHL 2 …. 14.26, 14.33 Samuel Allen & Sons Ltd, Re [1907] 1 Ch 575 …. 2.23 Sander v Twigg (1877) 13 VLR 765 …. 14.22 Sanders v Cooper [1974] WAR 129 …. 11.95 Sanderson v Berwick-upon-Tweed Corporation (1884) 13 QBD 547 …. 11.22 Sandhu v Farooqui [2004] 1 P & CR 3 …. 5.100 Sandhurst Trustees Ltd v 72 Seventh Street Nominees Pty Ltd (in liq) (1998) 45 NSWLR 556 …. 3.18, 3.30 Sandilands, Re (1871) LR 6 CP 411 …. 6.5 Sandon v Hooper (1843) 6 Beav 246; 49 ER 820 …. 14.60 Santai v The Owners — Strata Plan No 77971 [2010] NSWSC 628 …. 9.104, 9.127 Santley v Wilde [1899] 2 Ch 474 …. 14.2 Saravinovksa v Saravinovski [2016] NSWSC 964 …. 6.48 Saunders’ Case (1599) 5 Co Rep 12A; 77 ER 66 …. 3.66 Saviane v Stauffer Chemical Co (Australia) Pty Ltd [1974] 1 NSWLR 665 …. 11.29 Say v Smith (1561) 1 Plowd 269; 75 ER 410 …. 11.4 Say-Dee Pty Ltd v Farah Constructions Pty Ltd [2005] NSWCA 309 …. 8.104 Scanlon v Campbell (1991) 11 SR (NSW) 239 …. 5.144 Schmidt v 28 Myola Street Pty Ltd (2006) 14 VR 447 …. 8.143 Scholes v Blunt (1916) 17 SR (NSW) 36 …. 7.39

Roche v Douglas [2000] WASC 146 …. 1.65 Roche and the Conveyancing Act, Re (1960) 77 WN (NSW) 431 …. 13.6 Roda v Roda [2013] FamCAFC 27 …. 9.19, 9.46 Rogers v Hosegood [1900] 2 Ch 388 …. 13.3, 13.4, 13.5, 13.25, 13.26 Rogers v Resi-Statewide Corp Ltd (1991) 101 ALR 377 …. 8.32 Rose, Re [1952] Ch 499 …. 6.45 Rose v Spicer [1911] 2 KB 234 …. 11.72 Rosher, Re (1894) 26 Ch D 801 …. 3.55 Ross Cook & Brett Cook Pty Ltd v Bli Bli 1 Pty Ltd [2009] QSC 300 …. 8.152 Rossi v The Queen [2021] VSCA 296 …. 5.161 Routledge v Dorrill (1794) 2 Ves Jun 357; 30 ER 671 …. 10.26 Roy v Lagona [2010] VSC 250 …. 5.74, 5.87, 5.138 Roy & Anor v Lagona [2010] VSC 250 …. 5.98 Royal Bank of Scotland v Etridge (No 2) [2001] 4 All ER 449 …. 1.45 Royal Parks v Bluebird Boats Ltd [2021] EWHC 2278 …. 2.20 Rubibi Community v Western Australia (No 7) [2006] FCA 459 …. 4.32 Rugby School (Governors) v Tannahill [1934] 1 KB 695 …. 11.64 Russel v Russel (1783) 1 Bro CC 269; 28 ER 1121 …. 6.11, 14.17 Russell v Russell [1903] 1 IR 168 …. 10.14 Russo v Bendigo Bank Ltd [1999] 3 VR 376 …. 8.77, 8.78 Ruthol Pty Ltd v Mills (2003) 11 BPR 20,793 …. 7.35, 7.44, 7.45 Ryan v Brain [1994] 1 Qd R 681 …. 13.36 — v Dries (2002) 10 BPR 19,497 …. 6.29, 9.57, 9.58 — v Kalocsay [2009] NSWSC 1009 …. 8.142 — v O’Sullivan [1956] VLR 99 …. 14.93 — v Starr (2005) 12 BPR 22,803 …. 12.51 Rye v Rye [1962] AC 496 …. 11.75

S S & D International Pty Ltd (in liq), Re [2009] VSC 225 …. 14.124 S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd [1994] FCA 1109; (1994) 122 ALR 637 …. 11.7 S O Lovely Foods Pty Ltd v Macquarie Bank Ltd (CT, Cavanagh C, 28 March 1996, unreported) …. 11.144 Saade v Registrar-General (1993) 179 CLR 58 …. 8.194 Sackville-West v Viscount Holmesdale (1870) LR 4 HL 543 …. 3.87

l

Table of Cases Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206 …. 11.34 Short v Gill (1892) 13 LR(NSW) Eq 155 …. 7.21 — v Patrial Holdings Pty Ltd (1994) 6 BPR 13,996 …. 12.5 Shrimpton v Shrimpton (1862) 31 Beav 425 …. 10.14 Shropshire County Council v Edwards (1982) 46 P & CR 270 …. 13.5 Shropshire Union Railways & Canal Co v R (1875) LR7HL 496 …. 7.30 Sibbles v Highfern (1987) 164 CLR 214 …. 14.135 Sidebotham v Holland [1895] 1 QB 378; Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386 …. 11.11 Sidhu v Van Dyke (2014) 251 CLR 505 …. 6.41 Sidoti v Hardy [2021] NSWCA 105 …. 5.148, 5.151 Siemenski v Brooks Nominees Pty Ltd 1990 Tas R 236 …. 8.81 Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317 …. 14.121 Simmons v New South Wales Trustee and Guardian [2014] NSWCA 405 …. 8.97 Simpson v Forrester (1973) 132 CLR 499 …. 14.75 — v Mayor of Godmanchester [1897] AC 696 …. 12.5 — v North West County District Council (1978) 4 BPR 9277 …. 5.142, 5.144 Sims v Landray [1894] 2 Ch 318 …. 6.9 Sinclair v Jut (1996) 9 BPR 16,219 …. 12.39 Singer Co v Clark (1879) 5 Ex D 37 …. 2.48 Singh v Kaur Bal (No 2) [2014] WASCA 88 …. 9.2, 9.25 Sirtes v Pryer [2006] ANZ ConvR 188 …. 6.34 Sistrom v Urh (1993) 117 ALR 528 …. 9.52 Site Developments Ltd v Cuthbury Ltd [2011] Ch 226 …. 5.140 Slater v Slater (1987) 12 Fam LR 1 …. 9.44 Smilevska v Smilevska (No 2) [2016] NSWSC 397 …. 6.13, 6.42, 8.96 Smith v City Petroleum Co Ltd [1940] 1 All ER 260 …. 2.25, 2.27 — v Deane (1889) 10 LR (NSW) Eq 207 …. 7.41 — v Jones [1954] 1 WLR 1089 …. 7.19, 7.45 — v Lawson (1997) 75 P & CR 466 …. 5.96 — v Marrable (1843) 11 M & W 5; 152 ER 693 …. 11.24, 11.60 — v Miller (Bryson J, 23 April 1993, unreported, BC9301695) …. 14.34 — v Scott [1973] 1 Ch 314 …. 11.22 — v Smith [1934] Ch 322 …. 14.35

Schwann v Cotton [1916] 2 Ch 459 …. 12.26, 12.33 Sclanders v Cole (1918) 18 SR (NSW) 216 …. 3.65 Scotney v Lomer (1886) 31 Ch D 380 (CA) …. 10.14 Scott v Scott [2009] NSWSC 567 …. 9.45 Seager v Copydex Ltd [1967] 2 All ER 415 …. 1.71 Secretary, Department of Social Security v James (1990) 95 ALR 615 …. 6.24 Seddon v Smith (1877) 36 LT 168 …. 5.110 Segal v Barel (2013) 84 NSWLR 193 …. 9.64, 9.68 — v Obsborne [2016] NSWSC 941 …. 2.21 Segal Securities Ltd v Thoseby [1963] 1 QB 887 …. 11.66 Segulin v Car Owners’ Mutual Insurance Co Ltd (1984) NSW ConvR ¶55-191 …. 14.96 Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157 …. 9.84 Selby v Nettlefold (1873) 9 Ch App 111 …. 12.39 Sertari Pty Ltd v Nirimba Developments Pty Ltd (2008) NSW ConvR ¶56-200 …. 12.36 Seton v Slade (1802) 7 Ves 265 at 273; 32 ER 108 …. 14.26 Settree Estates, Re; Robinson v Settree [2018] NSWSC 1413 …. 9.51 Sewell v Agricultural Bank of Western Australia (1930) 44 CLR 104 …. 14.101 Sexton v Horton (1926) 38 CLR 240 …. 3.86, 3.87 Seyffer v Adamson [2001] NSWSC 1132 …. 5.149, 5.152 Seymour v Seymour (1996) 40 NSWLR 358 …. 5.81 Shanly v Ward (1913) 29 TLR 714 …. 11.42 Shaw v Garbutt (1996) 7 BPR 14,816 …. 5.94, 5.111, 5.139, 5.143 Shawyer v Amberday Pty Ltd (in liq) (2001) 10 BPR 18,869 …. 7.35 Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287 …. 13.41 Shell Co of Australia Ltd v Zanelli [1973] 1 NSWLR 216 …. 11.75 Shelley’s Case (1581) 1 Co Rep 88b; 76 ER 199 …. 3.89 — (1851) 1 Co Rep 93b; 76 ER 206 …. 3.80 Shelmerdine v Ringen Pty Ltd [1993] 1 VR 315 …. 5.138 Shepherd v Houston [1927] SASR 144 …. 8.146 Shevill v Builders’ Licensing Board (1982) 149 CLR 620 …. 11.60 — v — (1989) 149 CLR 629 …. 11.59, 11.60 Shi v ABI-K Pty Ltd (2014) 87 NSWLR 568 …. 12.34 Shiloh Spinners Ltd v Harding [1973] AC 691 …. 11.72

li

Property Law in New South Wales Standard Chartered Bank Ltd v Walker [1982] 1 WLR 1410 …. 14.104 Stanford v Stanford (2012) 247 CLR 108 …. 6.51 Stanhill Pty Ltd v Jackson (2005) 12 VR 224 …. 13.49 Stanwell Park Hotel v Leslie (1952) 85 CLR 189 …. 14.34 Stapleford Colliery Co, Re (1880) 14 Ch D 432 …. 7.25 Star Energy Weald Basin Ltd v Bocardo SA [2011] AC 380 …. 2.6, 2.9 State Bank of New South Wales v Berowra Waters Holdings Pty Ltd (1986) 4 NSWLR 398 …. 8.31, 8.116, 14.81 State Electricity Commission of Victoria and Joshua’s Contract, Re [1940] VLR 121 …. 12.30, 12.42 State Transit Authority of NSW v Australian Jockey Club (2003) 11 BPR 21,107 …. 7.21 Staughton v Brown (1875) 1 VLR (L) 150 …. 5.128 Steadman v Steadman [1976] AC 536 …. 6.12 Steel-Maitland v British Airways [1981] SLT 110 …. 2.8 Steepe v The Commonwealth [2021] NSWSC 368 …. 2.8 Stefanovic v Petrovic (NSWCA, Gleeson CJ, Meagher JA, Hope AJA, 30 October 1989, unreported, BC8901527) …. 8.126 Stening v Abrahams [1931] 1 Ch 470 …. 11.41 Stephens v Stephens (1736) Cas t Talb 228; 25 ER 751 …. 10.26 Stern, Re [1962] Ch 732 …. 10.26 Stern v McArthur (1988) 165 CLR 489 …. 6.14 Stevens v Williams (1886) 12 VLR 152 …. 8.83 Stevenson v Yasso [2006] 2 Qd R 150 …. 4.28 Stewart v Williams (1914) 18 CLR 381 …. 3.25 Sticklehorne v Hatchman (1586) Owen 43 …. 3.65 Stieper v Deviot Pty Ltd (1977) 2 BPR 9602 …. 11.71 Stokes v Costain Property Investments Ltd [1983] 1 WLR 907 …. 3.39 — v Mixconcrete (Holdings) Ltd (1978) 38 P & CR 488 …. 12.37 Stone Leaf Capital v Daley [2014] NSWSC 477 …. 8.181 Stoneham, Re; Stoneham v Stoneham [1919] 1 Ch 149; [1918–19] All ER Rep 1051 …. 6.45 Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722 …. 8.93, 8.100, 8.101, 8.202, 8.205 Stow v Mineral Holdings (Australia) Pty Ltd (1977) 180 CLR 295; 14 ALR 397 …. 1.6, 1.75, 12.12 Street v Mountford [1985] AC 809 …. 11.5 Strode v Parker (1694) 2 Vern 326 …. 14.34 Strong v Bird (1874) LR 18 Eq 315 …. 8.126 Stroyan v Knowles (1861) 6 H & N 454 …. 12.11

Smith & Snipes Hall Farm Ltd v River Douglas Catchment Board [1949] 2 KB 500 …. 13.3, 13.4, 13.5, 13.10 Smith, Kline & French Laboratories (Australia) Ltd v Secretary, Department of Community Services and Health (1990) 95 ALR 87 …. 1.71 Solak v Bank of Western Australia Ltd [2009] VSC 82 …. 8.48 South Eastern Sydney Area Health Service v Wallace (2003) 59 NSWLR 259 …. 10.27, 10.32 South Maitland Railways Pty Ltd v Satellite Centres Australia Pty Ltd (2009) 14 BPR 26, 823; [2009] NSWSC 716 …. 5.102, 5.104, 5.113, 5.119, 5.130, 5.148 South Staffordshire Water Co v Sharman [1896] 2 QB 44 …. 2.65 South-Eastern Drainage Board (SA) v Savings Bank of South Australia (1939) 62 CLR 603 …. 8.107, 8.114 Southern Centre of Theosophy Inc v South Australia [1982] AC 706 …. 2.14 Southern Goldfields Ltd v General Credits Ltd (1991) 4 WAR 138; [1991] WASC 316 …. 14.107, 14.115 Southern Rhodesia, Re [1919] AC 211 …. 4.9 Southwark London Borough Council v Mills [2001] 1 AC 1 …. 11.22 Southwell v Roberts (1940) 63 CLR 581 …. 14.60, 14.123 Sovmots Investments Ltd v Secretary of State for the Environment [1979] AC 144 …. 12.26 Spackman v Foster (1883) 11 QBD 99 …. 2.50 Spark v Whale Three Minute Car Wash (Cremorne Junction) Pty Ltd (1970) 92 WN (NSW) 1087 …. 5.33, 5.45, 5.49 Spencer v Commonwealth (1907) 5 CLR 418 …. 9.122 Spencer’s Case (1583) 5 Co Rep 16a; 77 ER 72 …. 11.46, 13.1, 14.18 SPIC Pacific Hydro Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 395 …. 2.20 Spina v Conran Associates Pty Ltd (2008) 13 BPR 25,435 …. 8.96 Sporle v Whayman (1855) 20 Beav 607; 52 ER 738 …. 14.17 Spotswood v Hand (1874) 5 AJR 85 …. 3.66 Sprott v Harper [2000] QCA 391 …. 9.44 Spyer v Phillipson [1931] 2 Ch 183 …. 2.18, 2.25 Squire v Rogers (1979) 39 FLR 106 …. 9.56 SS & M Ceramics Pty Ltd v Kin [1996] 2 Qd R 540 …. 12.36 St Catherine’s Milling and Lumber Co v R (1888) 14 App Cas 46 …. 4.42

lii

Table of Cases Tate v Commonwealth (NSWSC, Loveday J, 17 June 1988, unreported, BC8801829) …. 11.112 Taylor v Beal (1591) Cro Eliz 222; 78 ER 478 …. 11.81 — v London and County Banking [1901] 2 Ch 231 …. 7.30 — v Parkinson (1911) 31 NZLR 354 …. 14.101 — v Stibbert (1794) 2 Ves 437; 30 ER 713 …. 7.19 Taylor Construction Group Pty Ltd v Strata Plan 92888 t/as The Owners Strata Plan 92888 [2021] NSWSC 1315 …. 9.127 Taylor d Atkyns v Horde (1757) 1 Burr 60, 97 ER 190 …. 3.16 Teasdale v Sanderson (1864) 33 Beav 534; 55 ER 476 …. 9.58 TEC Desert Pty Ltd v Commissioner of State Revenue (2010) 241 CLR 576 …. 2.17 Tecbild Ltd v Chamberlain (1969) 20 P & CR 633 …. 2.31, 5.127 Tempe Recreational Reserve Trust v Sydney Water Corporation (2014) 88 NSWLR 449 …. 12.36 Templeton (Registrar of Titles (Vic)) v Leviathan Pty Ltd (1921) 30 CLR 34 …. 8.172 Tenstat Pty Ltd v Permanent Trustee Australia Ltd (1992) 28 NSWLR 625 …. 8.39 Tewkesbury Gas Company, Re [1911] 2 Ch 279 …. 14.49 Texaco Antilles Ltd v Kernochan [1973] AC 609 …. 13.34, 13.45 Thamesmead Town Ltd v Allotey (2000) 79 P & CR 557 …. 13.14 Thellusson v Woodford (1799) 4 Ves 227; 31 ER 117; (1805) 11 Ves 112 …. 10.56 Theodore v Mistford Pty Ltd (2005) 221 CLR 612; (2005) 219 ALR 296 …. 6.11, 14.17 Thompson v Ward (1871) LR 6 CP 327 …. 11.92 Thompson’s Mortgage Trusts, Re [1920] 1 Ch 508 …. 14.123 Thomson v McInnes (1911) 12 CLR 562 …. 6.8 Thoo v Owners — Strata Plan No 50276 [2014] HCASL 79 …. 9.84 Thorndike v Hunt (1859) 3 De G & J 563 …. 7.11 Thorner v Major [2009] 3 All ER 945 …. 6.41 Thorpe v Commonwealth (1997) 71 ALJR 767 …. 4.35 Threlfall, Re (1880) 16 Ch D 274 …. 11.11 Thrift v Thrift (1975) 10 ALR 332 …. 9.54 Thwaites v Brahe (1895) 21 VLR 192 …. 12.33 Ticehurst v Cross (2006) NSW ConvR ¶56-136 …. 11.143, 11.144 Tichborne v Weir (1892) 67 LT 735; [1891–94] All ER Rep 449 …. 5.145, 11.49

Stuart v Hishon [2013] NSWSC 766 …. 6.8 — v Joy [1904] 1 KB 362 …. 11.43 — v Kingston (1923) 32 CLR 309 …. 8.74 — v Marshall (1958) 75 WN (NSW) 252 …. 11.5 Sturges v Bridgman (1879) 11 Ch D 852 …. 12.33 Summers v Salford Corp [1943] AC 283 …. 11.109 Sun North Investments Pty Ltd (as Trustee of Sun Development Trust) v Dale [2014] 1 Qd R 369; [2013] QSC 44 …. 14.25, 14.33 Sundara Pty Ltd, Re [2015] NSWSC 1694 …. 8.114 Sunny Corporation Pty Ltd v Elkayess Nominees Pty Ltd [2006] VSC 314 …. 5.104 Super 1000 v Pacific General Securities [2008] NSWSC 1222; (2008) 221 FLR 427 …. 8.105 Surtees v Surtees (1871) LR 12 Eq 400 …. 9.13 Sutherland v Peel (1864) 1WW & A’B 18 …. 7.41 Sutton v Sutton (1883) 22 Ch D 511 …. 14.48 Suttons Motors (Temora) Pty Ltd v Hollywood Motors Pty Ltd [1971] VR 684 …. 2.62 Swan v Sinclair [1924] 1 Ch 254 …. 12.56 Sweet & Maxwell v Universal News Service Ltd [1964] 2 QB 699 …. 11.41 Swettenham v Wild [2005] QCA 264 …. 6.30 Swindon Waterworks Co Ltd v Wilts and Berks Canal Navigation Co (1875) LR 7 HL 697 …. 12.11 Sydney & Suburban Mutual Permanent Building Society Ltd v Lyons [1894] AC 260 …. 7.39 Sydney City Council v Parker (unreported, SC (NSW)) …. 2.35 Symes v Pitt [1952] VLR 412 …. 5.142, 5.144 Sze To Chun Keung v Kung Kwok Wai David [1997] 1 WLR 1232 …. 5.84 Sze Tu v Lowe [2014] NSWCA 462 …. 8.105

T T Choithram International SA v Pagarani [2001] 1 WLR 1 (PC) …. 8.126 Ta Lee Investment Pty Ltd v Antonios [2019] NSWCA 24 …. 8.114 Taddeo v Catalano (1975) 11 SASR 492 …. 8.168 Tadrous v Tadrous [2009] NSWSC 407 …. 8.151 Taleb v National Australia Bank Ltd (2011) 82 NSWLR 489 …. 8.162, 8.166 Tancred v Allgood (1859) 4 H & N 438; 157 ER 910 …. 2.59 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 …. 6.14, 6.18 Tara Shire Council v Garner [2003] 1 Qd R 556 …. 8.104 Tataurangi v Tairuakena v Maua Carr [1927] NZLR 688 …. 8.96, 8.101

liii

Property Law in New South Wales Treweeke v 36 Wolseley Raod Pty Ltd (1973) 128 CLR 274; [1973] HCA 27 …. 12.56, 12.59, 12.62 Tristmire Ltd v Mew [2012] 1 WLR 852 …. 2.20 Troja v Troja (1994) 33 NSWLR 269 …. 9.49 Troncone v Aliperti (1994) 6 BPR 13,291 …. 8.143 Truman, Hanbury, Buxton and Co Ltd’s Application, Re [1956] 1 QB 261 …. 13.48 Trust Company (Australia) Ltd v Hungry Jack’s Pty Ltd, The [2021] WASCA 29 …. 5.131 Trust Company Ltd v Chief Commissioner of State Revenue (2007) 13 BPR 25,019 …. 5.26 Trustees, Executors and Agency Co Ltd v Short (1888) 13 App Cas 793 …. 5.140 Trustees of Church Property of the Diocese of Newcastle v Ebbeck (1960) 104 CLR 394 …. 3.56 Trustees of Hollis’ Hospital and Hague’s Contract, Re [1899] 2 Ch 540 …. 10.38 Trustees of the Property of John Daniel Cummins (a bankrupt) v Cummins (2006) 224 ALR 280 …. 6.29, 6.54, 9.8, 9.17, 9.19, 9.53 Tse Kwong Lam v Wong Chit Sen [1983] 3 All ER 54; (1983) ANZ ConvR 520 …. 14.113 Tsilhqot’in Nation v British Columbia 2014 SCC 44 …. 4.32 Tubantia, The [1924] P 78 …. 2.40 Tucker v US Department of Commerce 958 F 2d 1411 …. 4.52 Tucker, Re; Nunan v Aylward [2019] VSC 210 …. 9.8 Tuck’s Settlement Trusts, Re [1978] Ch 49 …. 3.57 Tujilo v Watts [2005] NSWSC 209 …. 12.63 Tulk v Moxhay (1848) 41 ER 1143 …. 13.15, 13.16, 13.18 Turnbull v National Mutual Royal Bank (1992) 26 NSWLR 361 …. 14.98 Turner v Jackson (1856) 1 VLT 127 …. 3.68 — v York Motors Pty Ltd (1951) 85 CLR 55 …. 11.12, 11.14 Tutt v Doyle (1997) 42 NSWLR 10 …. 8.93 Twentieth Century Banking Corporation Ltd v Wilkinson [1976] 2 WLR 489 …. 14.75

Tickle v Brown (1836) 4 Ad & E 369; 111 ER 826 …. 12.33 Tidex v Trustees Executors and Agency Co Ltd [1971] 2 NSWLR 453 …. 10.29 Tierney v Loxton (1891) 12 LR (NSW) 308 …. 8.143 Tillack v Tillack [1941] VLR 151 …. 9.65 Tiller v Hawes (2005) 13 BPR 24,203 …. 12.7 Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 29 …. 11.60, 11.77 Timpar Nominees Pty Ltd v Archer [2001] WASCA 430 …. 12.36 Tjungarrayi v Western Australia; KN (deceased) and Others (Tjiwarl and Tjiwarl #2) v Western Australia [2019] HCA 12, (2019) 269 CLR 150 …. 4.68 Todd v Jingalong Pty Ltd [2014] NSWSC 362 …. 8.68 Todrick v Western National Omnibus Co Ltd [1934] 1 WLR 589; [1934] Ch 561 …. 12.5, 12.38 Tonna v Mendonca (No 2) [2020] NSWSC 306 …. 6.29 Toogood v Mills (1896) 23 VLR 106 …. 6.8 Toohey v Gunther (1928) 41 CLR 181 …. 8.82, 14.25, 14.31 Tooheys Ltd v Municipal Council of Sydney (1946) 71 CLR 407 …. 14.23 Topfelt Pty Ltd v State Bank of New South Wales (1993) NSW ConvR ¶55-676 (CA) …. 14.94 Tophams Ltd v Earl of Sefton [1967] 1 AC 50 …. 13.12 Torrisi v Oliver [1951] VLR 380 …. 11.92 Toscano v Holland Securities Pty Ltd (1985) 1 NSWLR 145 …. 14.37 Town and Country Sports Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd (1988) ATPR ¶40-911 …. 14.119 Townsend v Waverley Council (2001) 120 LGERA 164 …. 5.70 Toyota Finance Australia Ltd v Dennis (2002) 58 NSWLR 101 …. 2.62 Travinto Nominees Pty Ltd v Vlattas [1972] 1 NSWLR 24 …. 8.57, 8.58 — v — (1973) 129 CLR 1 …. 8.39, 8.42, 8.107, 8.108 Travis v Proprietors — Strata Plan No 3740 (1969) 90 WN (Pt 1) (NSW) 711 …. 9.78 Treloar v Nute [1976] 1 WLR 1295 …. 5.115 Trentelman v The Owners — Strata Plan No 76700 [2021] NSWCA 242 …. 6.41 Trevallyn-Jones v Owners Strata Plan No 50358 [2009] NSWSC 694 …. 9.84

U Ultimate Property Group Pty Ltd v Lord (2004) 60 NSWLR 646; [2004] NSWSC 114 …. 14.107 Underwood Estate Acts and Account (No 2), Re (1888) 9 LR (NSW) (Eq) 105 …. 3.61 Union Lighterage Co v London Graving Dock Co [1902] 2 Ch 557 …. 12.29, 12.33 United Star Bowkett Co-operative Building Society (No 11) Ltd v Clyne (1967) 68 SR (NSW) 331 …. 8.89, 8.181 United States v Alcea Band of Tillamooks 329 US 40 (1946) …. 4.36

liv

Table of Cases W

United States of America and Republic of France v Dollfus Mieg et Compagnie SA and Bank of England [1952] AC 582 …. 2.42, 2.46, 2.47, 5.8 Universal Music Australia Pty Limited v Pavlovic [2015] NSWSC 791 …. 6.8 Usborne v Usborne (1740) Dick 75; 21 ER 196 …. 14.66

W v D (2012) 115 SASR 61 …. 9.58 W R Carpenter Australia v Ogle [1999] 2 Qd R 327 …. 14.78 Waanyi People’s Native Title Application, Re (1994) 129 ALR 100 …. 4.73 Wadham, Re a Caveat by (1879) 13 SALR 70 …. 8.145 Wadi Wadi People’s Native Title Application, Re (1995) 129 ALR 167 …. 4.35 Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd [1926] AC 101 …. 8.21, 8.65, 8.66 Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1923] NZLR 1137 …. 8.71 Wakeham v Wood (1982) 43 P & CR 40 …. 13.41 Walker v Bridgewood (2006) 12 BPR 23,537; [2006] NSWSC 149 …. 12.36, 12.38, 12.61 — v Linom [1907] 2 Ch 104 …. 7.6, 7.30, 14.127 — v Puvesi Pty Ltd (RTT 86/000006) …. 11.92 Wallis’ Cayton Bay Holiday Camp Ltd v Shell-Mex and BP Ltd [1975] QB 94; [1974] 3 All ER 575 …. 5.117 Walsh v Lonsdale (1882) 21 Ch D 9 …. 6.15, 11.7, 11.76, 12.17, 12.20, 12.68, 14.17, 14.54 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 …. 6.41, 11.7 Wandsworth Board of Works v United Telephone Co (1884) 13 QBD 904 …. 2.6 Wang v Copko [2008] NSWSC 736 …. 8.19 Wanner v Caruana [1974] 2 NSWLR 301 …. 14.35 Ward v Kirkland [1967] Ch 194 …. 12.26, 12.27 — v Ward (1871) LR 6 Ch App 789 …. 5.146 — v Western Australia (1998) 159 ALR 483 …. 4.17, 4.42, 4.58 Wardell v Usher (1841) 10 LJCP 316 …. 2.25 Warmington v Miller [1973] QB 877; [1973] 2 All ER 372 …. 11.7 Warren v Keen [1954] 1 QB 15 …. 11.25, 11.37 Warrie (formerly TJ) (on behalf of the Yindjibarndi People) v State of Western Australia [2017] FCA 803 …. 3.2 Watson v Royal Permanent Building Society (1888) 14 VLR 283 …. 14.22 Watt v Lord (2005) 62 NSWLR 495 …. 8.19 Watts v Public Trustee (1949) 50 SR (NSW) 130 …. 8.126 Watu-Ofei v Danquah [1961] 1 WLR 1238 …. 5.110 Waverley Borough Council v Fletcher [1996] QB 334 …. 2.65 Weatherhead v Deka New Zealand Ltd (No 2) [1999] 1 NZLR 453 …. 11.38 Webb v Austin (1844) 7 Man & G 701 …. 11.17

V Vacuum Oil Co Ltd v Ellis [1914] 1 KB 693 …. 14.54 Valoutin Pty Ltd v Furst (1998) 154 ALR 119 …. 8.124 Valverde v Inch [2018] NSWSC 366 …. 9.20 Van den Bosch v Australian Provincial Assurance Association Ltd (1968) 88 WN (Pt 1) (NSW) 357 …. 14.78, 14.82 Van den Heuvel v Perpetual Trustees Victoria Ltd; Registrar General of NSW v Van den Heuvel [2010] NSWCA 171 …. 8.47, 8.54, 8.55, 8.56, 9.38, 14.37, 14.38 Van der Peet v R [1996] 2 SCR 507 …. 4.28 Vanderplank v King (1843) 3 Hare 1; 67 ER 273 …. 10.26 Vane v Lord Barnard (1716) 2 Vern 738; 23 ER 1082 …. 3.68 Vassos v State Bank of South Australia [1993] 2 VR 316 …. 8.32, 8.93, 8.94, 8.99, 8.202, 8.203 Vaudeville Electric Cinema Ltd v Muriset [1923] 2 Ch 74 …. 2.21 Vella v Permanent Mortgages Pty Ltd (2008) 13 BPR 25,343 …. 8.46, 8.48, 8.50 — v Wah Lai Investment (Aust) Pty Ltd (2004) 12 BPR 22,671 …. 11.7 Vernon v Smith (1821) 5 B & Ald 1; 106 ER 1094 …. 11.45 Vero Insurance Ltd v Owners of Strata Plan No 69352 (2011) 81 NSWLR 227 …. 9.76 Verrall v Nott (1939) 39 SR (NSW) 89 …. 2.12 Vickery v The Owners Strata Plan No 80412 [2020] NSWCA 284 …. 9.75, 9.84 Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479 …. 1.66, 1.68, 12.7, 12.11 Victoria Park Racing Co v Taylor (1937) 58 CLR 479 …. 2.7 Victorian Farmers’ Loan and Agency Co Ltd, Re (1897) 22 VLR 629 …. 8.142 Villar, Re [1929] 1 Ch 243 (CA) …. 10.27 Vopak Terminal Darwin Pty Ltd v Natural Fuels Darwin Pty Ltd (2009) 258 ALR 89 …. 2.17, 2.27 Votrubec Investments Pty Ltd v Hospital Foods and Services Pty Ltd (1981) 5 BPR 11,712 …. 14.60

lv

Property Law in New South Wales Westpac Banking Corporation v Ollis [2008] NSWSC 824 …. 6.14, 8.181 — v Sansom (1995) NSW ConvR ¶55-733 …. 8.203 Westpoint Corporation Pty Ltd v Registrar of Titles [2004] WASC 189 …. 13.18, 13.38 Whaley, Re [1908] 1 Ch 615 …. 2.15, 2.18 Wheeldon v Burrows (1879) 12 Ch D 31 …. 8.84, 8.129, 12.25, 12.26, 12.27, 12.29, 12.40, 12.50, 12.51, 12.52, 12.53 — v Burrows: McGrath v Campbell (2006) NSW ConvR ¶56-159 …. 12.24 Wheeler v Baldwin …. 5.49 Whitby v Mitchell (1890) 44 Ch D 85 (CA) …. 10.4, 10.5 — v Von Luedecke [1906] 1 Ch 783 …. 10.10 White v Betalli [2006] NSWSC 537 …. 9.74, 9.104, 9.108, 9.134 — v — (2007) 71 NSWLR 381 …. 9.74, 9.108, 9.134, 12.7 — v Grand Hotel, Eastbourne Ltd [1913] 1 Ch 113 …. 12.38 — v Hunter (1868) 5 WW & A’B (E) 178 …. 7.37 — v Neaylon (1886) 11 App Cas 171 …. 7.37, 7.38 — v Spiers Earthworks Pty Ltd (2014) 99 ACSR 214 …. 14.10 — v Taylor (No 2) [1969] 1 Ch 160 …. 12.26 — v Tomasel [2004] 2 Qd R 438 …. 8.93, 8.94 White Rose Cottage, Re [1964] Ch 483 …. 14.93 Whitham v Kershaw (1886) 16 QBD 613 …. 11.37 Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 …. 5.51, 5.74, 5.87, 5.103, 5.107, 5.108, 5.110, 5.119 Wicks v Bennett (1921) 30 CLR 80 …. 8.97 Wik Peoples v Queensland (1996) 63 FCR 450; 134 ALR 637; (1996) 187 CLR 1; 141 ALR 129 …. 3.7, 3.11, 3.20, 3.22, 3.23, 3.24, 3.25, 3.26, 3.30, 3.32, 3.34, 4.1, 4.9, 4.22, 4.37, 4.39, 4.42, 4.44, 4.57, 4.58, 4.62, 4.68, 4.73, 4.74 Wilde v Spratt (1986) 70 ALR 171 …. 7.39 Wilford’s Estate, Re; Taylor v Taylor [1934] VLR 129 …. 9.44 Wilkes v Greenway (1890) 6 TLR 449 …. 12.29 — v Spooner [1911] 2 KB 473 …. 7.25, 8.177, 13.18 Wilkie v Blacktown City Council (2002) 121 LGERA 444 …. 11.22 Wilkinson v Haygarth (1847) 12 QB 837; 116 ER 1085 …. 9.54 — v Rogers (1864) 2 De GJ & S 62; 46 ER 298 …. 11.45 Willey v Synan (1937) 57 CLR 200 …. 2.64

Webeck v Foley (1992) 5 BPR 11,694; (1992) NSW ConvR 59, 717 …. 5.121, 5.155 Weber v Ankin (2008) 13 BPR 25,231 …. 5.71, 5.132, 5.150, 12.31 Websdale v S & J D Investments Pty Ltd (1991) 24 NSWLR 573 …. 14.95 Webster v Bradac (1993) 5 BPR 12,032 …. 12.63, 13.50 Weg Motors Ltd v Hales [1961] Ch 176 …. 11.45 Weigall v Toman [2006] QSC 349 …. 12.7 Weld-Blundell v Wolseley [1903] 2 Ch 664 …. 3.68 Wellaway v Courtier [1918] 1 KB 200 …. 2.30 Weller v Williams [2010] NSWSC 716 …. 8.181 Wernher’s Settlement Trusts, Re [1961] 1 WLR 136 …. 10.18 West v AGC (Advances) Ltd (1986) 5 NSWLR 610 …. 14.37 — v Mead [2003] NSWSC 161 …. 6.35 — v Williams [1899] 1 Ch 132 …. 14.134 West Bank Estates Ltd v Arthur [1967] 1 AC 665 …. 5.114 West Bromwich Building Society v Bullock [1936] 1 All ER 887 …. 14.48 West Coast Hotel Co v Parrish 300 US 379 (1937). …. 1.17 West Ham Central Charity Board v East London Waterworks Co [1900] 1 Ch 624 …. 3.64 West London Commercial Bank v Reliance Permanent Building Society (1885) 29 Ch D 954 …. 14.123 West Sussex Constabulary’s Widows, Children and Benevolent (1930) Fund Trusts, Re [1971] Ch 1 …. 6.27 Western Australia v Brown (2014) 253 CLR 507 …. 4.23, 4.58, 4.62 — v Commonwealth (1995) 183 CLR 373 …. 4.23, 4.33, 4.63, 4.67 — v Manado [2020] HCA 9, (2020) 270 CLR 81 …. 4.34 — v Sebastian (2008) 173 FCR 1 …. 4.32 — v Thomas (1996) 133 FLR 124 …. 4.87 — v Ward (2000) 99 FCR 316; 170 ALR 159 …. 4.22, 4.54, 4.57, 4.58, 4.86 — v — (2002) 213 CLR 1; 191 ALR 1 …. 4.23, 4.27, 4.40, 4.42, 4.44, 4.45, 4.47, 4.49, 4.54, 4.55, 4.56, 4.58, 4.59, 4.60, 4.62, 4.73, 4.86, 5.8, 5.29 Westfield Holdings Ltd v Australian Capital Television Pty Ltd (1992) 32 NSWLR 194 …. 14.33 Westfield Management Ltd v Perpetual Trustee Co Ltd (2006) NSW ConvR ¶56-163 …. 12.36 — v — (2007) 233 CLR 528 …. 12.36

lvi

Table of Cases William Bros Direct Supply Ltd v Raftery [1958] 1 QB 159 …. 5.102, 5.114 Williams v Clark (1851) 4 De G & Sm 472 …. 10.14 — v Earle (1868) LR3QB 739 …. 11.45 Williams v Hensman (1861) 1 J & H 546 …. 9.27, 9.44, 9.45 — v James (1867) LR 2 CP 577 …. 12.25 — v Legg (1993) 29 NSWLR 687 …. 9.63 — v Marac Australia Ltd (1985) 5 NSWLR 529 …. 8.23 — v Papworth [1900] AC 563 …. 8.186 — v State Transit Authority of New South Wales (2004) 60 NSWLR 286 …. 5.7, 7.21, 8.86, 12.33, 12.50, 12.52, 12.76 — v Wellingborough Borough Council [1975] 1 WLR 1327 …. 14.100 Williamson v Bors (1900) 21 NSWLR (Eq) 302 …. 7.16 — v Friend (1901) 1 SR (NSW) (Eq) 23 …. 2.8 Wilson v Anderson (2002) 213 CLR 401; 190 ALR 313 …. 4.62 — v Knox (1884) 13 LR Ir 349 …. 10.14 — v Lombank [1963] 1 WLR 1294 …. 2.47 — v Registrar-General of New South Wales (2004) 12 BPR 22,667 …. 8.87 — v Stewart (1889) 15 VLR 781 …. 11.66 Wilson, Ex parte; Re Bannister (1925) 25 SR (NSW) 375 …. 14.58 Wilson, Re [2019] VSC 211 …. 9.31, 9.43 Wily as Administrator of Macquarie Medical Holdings Pty Ltd v Endeavour Health Care Services Pty Ltd (2003) 12 BPR 22,447 …. 14.32 Windella (NSW) Pty Ltd v Hughes (1999) NSW ConvR ¶55-926 …. 14.20 Winkfield, The [1902] P 42 …. 2.51, 2.60, 2.61, 2.68 Wirth v Wirth (1956) 98 CLR 228 …. 6.30 Wogama Pty Ltd v Harris [1969] 1 NSWR 245; (1968) 89 WN (Pt 2) (NSW) 62 …. 5.133 Wollondilly Shire Council v Picton Power Lines Pty Ltd (1994) 33 NSWLR 551 …. 10.2 Wong v Beaumont Property Trust Ltd [1965] 1 QB 173 …. 12.29 Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105 …. 11.65, 11.76 Wood, Re; Tullett v Colville [1894] 3 Ch 381 (CA) …. 10.31 Woodall v Clifton [1905] 2 Ch 257 …. 8.43, 11.45 Woodbury v Gilbert (1907) 3 Tas LR 7 …. 8.146 Woodhouse v Walker (1880) 5 QBD 404 …. 3.64 Woodland v Manly Municipal Council (No 1) (2003) 11 BPR 20,903 …. 12.34 Woodward v Wesley Hazell Pty Ltd (1994) ANZ ConvR 624 …. 5.119

Woollerton v Costain [1970] 1 WLR 411 …. 2.8 Worcester v Georgia [1832] USSC 39; (1832) 6 Pet 515 …. 3.4 Worimi (aka Gary Dates) v Worimi Local Aboriginal Land Council (2010) 181 FCR 320 …. 4.27 World Best Holdings Ltd v Sarker [2010] NSWCA 24 …. 11.65 Worssam v Vandenbrande (1858) 17 WR 53 …. 5.144 Worthington v Morgan (1849) 16 Sim 547; 60 ER 987 …. 7.23 Wortley v Birkhead (1754) 2 Ves Sen 571 …. 7.44 Wratten v Hunter [1978] 2 NSWLR 367 …. 6.24 Wrey, Re (1885) 30 Ch D 507 …. 10.14 Wright v Gibbons (1949) 78 CLR 313 …. 9.3, 9.25, 9.26, 9.29 — v Macadam [1949] 2 KB 744 …. 12.7, 12.27 — v Madden [1992] 1 Qd R 343 …. 6.9 — v New Zealand Farmers Co-operative Association of Canterbury Ltd [1939] AC 439 …. 14.99 — v Williams (1836) 1 M & W 77 …. 12.42 Wrotham Park Estate Co Limited v Parkside Homes Limited [1974] 1 WLR 798 …. 13.41 Wu v The Owners Strata Plan No 80611 [2021] NSWCATCD 109 …. 9.84 Wurridjal v The Commonwealth of Australia (2009) 237 CLR 309 …. 4.50 Wyatt v Harrison (1832) 3 B & Ad 871 …. 12.11 Wynne v Green (1901) 1 SR (NSW) 40 …. 2.33 — v Moore (1870) 1 AJR 156; Henderson v Astwood [1894] AC 150 …. 14.100 Wynstanley v Lee (1818) 36 ER 643 …. 12.32

X Xenos v Wickham (1867) LR 2 HL 296 …. 6.5

Y Yang Bai v Watson Elite Pty Ltd [2022] NSWSC 318 …. 14.33 Yanner v Eaton (1999) 201 CLR 351; 166 ALR 258 …. 3.2, 4.27, 4.28, 4.57, 4.58, 4.61 Yazgi v Permanent Custodians Ltd (2007) NSWCA 240 …. 8.46, 8.47, 8.48, 8.49, 8.50, 8.197 Yearworth v North Bristol NHS Trust [2009] 3 WLR 118; [2009] EWCA Civ 37 …. 1.64, 1.65 Yeoman’s Row Management Ltd v Cobbe [2008] 4 All ER 713 …. 6.41 Yerkey v Jones (1939) 63 CLR 649 …. 14.42 Yip v Frolich (2004) 89 SASR 467 …. 12.36 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504 …. 12.34 Yorkshire Bank plc v Hall [1999] 1 All ER 879 …. 14.105

lvii

Property Law in New South Wales Yorta Yorta Aboriginal Community v Victoria [1998] FCA 1606 …. 4.28, 4.29 — v — (2001) 110 FCR 244; 180 ALR 655 …. 4.29 — v — (2002) 214 CLR 422; 194 ALR 538 …. 4.31, 4.32, 4.56, 4.66 Young v Hichens (1844) 6 QB 606 …. 2.40, 2.63 — v Hoger (2002) Q ConvR 54-557 …. 8.71 — v Owners Strata Plan No 3529 (2001) 54 NSWLR 60; [2001] NSWSC 1135 …. 9.110 — v Richmond Valley Council [2021] NSWCA 255 …. 5.70

Z Zahl, Re [1931] St R Qd 1 …. 10.14 Zanzoul v Westpac Banking Corp (1995) NSW ConvR ¶55-749 …. 14.57 Zapletal v Wright [1957] Tas SR 211 …. 3.45, 3.116, 3.117, 3.118 Zegir v Woop [1955] VLR 394 …. 11.15 Zeutmint Pty Ltd v Scottish Amicable Life Assurance Society [1984] 3 NSWLR 293 …. 14.119 Zhang v Metcalf [2020] NSWCA 228 …. 6.29 Zisti v Ryde Joinery Pty Ltd (1996) 7 BPR 15,217 …. 8.173

lviii

Table of Statutes References are to paragraph numbers

Commonwealth

s 45B …. 14.36 s 47 …. 14.25 s 131A …. 14.36 Sch 2 …. 14.36 Corporations Act 2001 s 39(1B) …. 8.191 s 39(1g) …. 8.191 s 129 …. 8.191 s 420A …. 14.108 s 588FL …. 14.6 s 588FL(4) …. 14.6 s 588FM …. 14.6 s 1346 …. 10.58 Credit Act 1984 …. 14.13 Family Law Act 1975 …. 6.47, 8.142, 9.17, 9.47, 9.132, 9.133 s 4AA(2) …. 6.51 s 79 …. 6.51, 6.52, 9.47 s 79(1) …. 6.51 s 79(2) …. 6.51 s 79(4)(a)–(c) …. 6.52 s 79(4)(d) …. 6.52 s 87 …. 9.47 Judiciary Act 1903 s 23 …. 4.58 s 35(3)(b) …. 1.72 National Consumer Credit Protection Act 2009 …. 14.13, 14.36 National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Act 2011 …. 14.13 National Consumer Credit Protection Regulations 2010 reg 79A …. 14.29 National Credit Code …. 14.41 Pt 3, Div 2 …. 14.144 Pt 3–2A …. 14.13 Pt 3–2B …. 14.13 s 3 …. 14.13 s 5 …. 14.38, 14.144 s 5(1)(b) …. 14.38 s 5(1)(b)(i) …. 14.13 s 5(1)(b)(ii) …. 14.13 s 5(1)(b)(iii) …. 14.13 s 5(1)(d) …. 14.13

Aboriginal Land Rights (Northern Territory) Act 1976 …. 4.11 Aged Care Act 1997 …. 11.103 Australia Act 1986 …. 3.29 Australian Bicentennial Act 1980 …. 1.74 s 22 …. 1.74 s 22(1)(a) …. 1.74 s 22(6)(d)(i) …. 1.74 s 22(6)(d)(ii) …. 1.74 Australian Consumer Law …. 14.41 Pt 2–2 …. 14.36 Pt 2–3 …. 14.36 s 12BAA(7)(a) …. 14.36 s 18 …. 14.36 s 23(3)(b) …. 14.36 s 26(1) …. 14.36 Australian Securities and Investments Commission Act 2001 Pt 2, Div 2 …. 14.36 Pt 2, Div 2 Subdiv BA …. 14.36 s 12BAA …. 14.36 s 12CB …. 14.36 s 12DA(1) …. 14.36 s 12GF …. 14.36 s 12GM …. 14.36 Bankruptcy Act 1966 …. 3.30 s 58(1) …. 9.52 s 58(2) …. 9.52 s 121 …. 6.29, 9.53 s 121(1) …. 9.53 s 121(9)(b) …. 9.53 s 133(9) …. 14.18 s 135 …. 7.39 Bills of Exchange Act 1909 s 29 …. 8.205 Cheques and Payment Orders Act 1986 s 32 …. 8.205 Commonwealth of Australia Constitution Act 1901 s 51(xxxi) …. 1.59, 4.33, 4.50, 14.10 s 116 …. 4.1, 4.86 Competition and Consumer Act 2010 …. 14.36 s 4 …. 14.36 s 45 …. 14.36

lix

Property Law in New South Wales s 24OA …. 4.70 s 26 …. 4.72 s 26(1)(c)(iii) …. 4.80 s 26A–26C …. 4.80 s 31 …. 4.83 s 43 …. 4.72 s 43A …. 4.72, 4.80 s 47C …. 4.68, 4.83 s 51(1) …. 4.70 s 51(3) …. 4.70 s 51(6) …. 4.70 s 51A …. 4.79, 4.87 s 51A(2) …. 4.79 s 53 …. 4.79, 4.87 s 201 …. 4.65 s 211 …. 4.21, 4.34 s 212(2) …. 4.34 s 223 …. 4.29, 4.30, 4.31, 4.32, 4.65, 4.66, 4.84 s 223(1) …. 4.36 s 223(1)(c) …. 4.66 s 228 …. 4.68 s 229 …. 4.68 s 230 …. 4.68 s 231 …. 4.68 s 232 …. 4.68 s 238 …. 4.68, 4.71 s 240 …. 4.70 s 249C …. 4.76 s 253 …. 4.34 Native Title Amendment Act 1998 …. 4.4, 4.9, 4.71, 4.74, 4.75, 4.77, 4.79 Native Title Amendment Act (No 1) 2010 …. 4.82 Native Title Amendment (Indigenous Land Use Agreements) Act 2017 …. 4.32 Native Title Legislation Amendment Act 2021 …. 4.32, 4.82, 4.83 Personal Property Securities Act 2009 …. 14.4 Ch 4 …. 14.11, 14.13 Pt 2 …. 14.4 Pt 2.5 …. 14.11 Pt 5.3 …. 14.6 s 6(2) …. 14.5 s 8 …. 14.6, 14.9 s 8(1)(j) …. 14.9 s 10 …. 14.5, 14.9 s 12(1) …. 14.6, 14.7 s 12(2)(e) …. 14.13 s 12(3) …. 14.7, 14.8 s 13 …. 14.7 s 13(2)(a) …. 14.7 s 13(3) …. 14.7 s 19(2) …. 14.6 s 19(5) …. 14.6 s 20 …. 14.6

National Credit Code — cont’d s 5(7) …. 14.38 s 7 …. 14.13, 14.38 s 14(1) …. 14.13 s 15 …. 14.13 s 42 …. 14.13 s 42(1) …. 14.38 s 42(2)(b) …. 14.38 s 42(4) …. 14.17 s 76 …. 14.38 s 82 …. 14.29 s 88(2) …. 14.97 s 88(4) …. 14.97 Native Title Act 1993 …. 4.4, 4.9, 4.32, 4.49, 4.51, 4.58, 4.63 Pt 2 Div 2A …. 4.75 Pt 2 Div 2B …. 4.76 Pt 2 Div 3 …. 4.70 Pt 2 Div 3 Subdiv B …. 4.67 Pt 2 Div 3 Subdiv C …. 4.67 Pt 2 Div 3 Subdiv D …. 4.67 Pt 2 Div 3 Subdiv E …. 4.67 Pt 2 Div 3 Subdiv G …. 4.77 Pt 2 Div 3 Subdiv J …. 4.77 Pt 2 Div 3 Subdiv JA …. 4.82 Pt 2 Div 3 Subdiv P …. 4.72 Pt 8A …. 4.67 s 7(2) …. 4.65 ss 15–16 …. 4.68 s 15(1)(d) …. 4.68 s 17 …. 4.70 s 17(2) …. 4.70 s 17(2)(a) …. 4.70 s 17(3) …. 4.70 s 18(1) …. 4.70 s 19 …. 4.68 s 19ff …. 4.68 s 20 …. 4.70 ss 21–22H …. 4.75 s 23A–23JA …. 4.76 s 24 …. 4.71 s 24AA(4) …. 4.70 s 24AA(4)(a)–(k) …. 4.70 s 24AB …. 4.71 s 24EB(3) …. 4.71 s 24GA–24GE …. 4.77 s 24GB …. 4.71 s 24GB(6) …. 4.71 s 24HA …. 4.78 s 24JA–24JB …. 4.77 s 24JAA …. 4.82 s 24JB(2) …. 4.71 s 24MD …. 4.33 s 24MD(6B) …. 4.80

lx

Table of Statutes Catchment Management Authorities Act 2003 Sch 4 …. 8.201 Civil and Administrative Tribunal Act 2013 …. 9.112, 9.117, 9.125, 11.126, 11.144 s 7 …. 11.126 s 32 …. 9.125 s 34(1)(a) …. 11.130 s 36(1) …. 11.126 s 37 …. 11.126 s 38(2) …. 11.126 s 38(3)(b) …. 11.126 s 38(4) …. 9.120, 11.126 s 41 …. 11.130 s 45 …. 9.120 s 45(1)(a) …. 11.128 s 45(1)(b) …. 11.128 s 45(4) …. 11.128 s 49 …. 11.127 s 50(2) …. 11.127 s 54(1) …. 11.130 s 54(2) …. 11.130 s 54(4) …. 11.130 s 55 …. 11.127 s 59(1) …. 11.126 s 60 …. 9.120 s 60(1) …. 11.128 s 60(2) …. 11.128 s 60(3) …. 11.128 s 60(3)(e) …. 9.120 s 60(5) …. 11.128 s 67 …. 11.126 s 80(1) …. 11.130 s 80(2)(b) …. 9.125, 11.130 s 80(3) …. 11.130 s 82(3) …. 9.125, 9.127 s 83 …. 9.125 s 83(1) …. 11.130 s 83(3) …. 11.130 Sch 4 …. 11.126, 11.144 Sch 4 cl 3(1) …. 9.112, 9.125 Sch 4 cl 12 …. 9.125 Sch 4 Pt 5 cl 3 …. 11.126 Sch 4 Pt 5 cl 4 …. 11.126 Sch 4 Pt 6 cl 12(1) …. 11.130 Sch 4 Pt 6 cl 12(2)(b) …. 11.130 Civil and Administrative Tribunal Rules 2014 r 31 …. 11.128 Civil Liability Act 2002 Pt 12 …. 2.8 s 72(1) …. 2.8 s 73 …. 2.8 Civil Procedure Act 2005 s 20 …. 2.34, 5.26, 5.28

s 20(2) …. 14.6 s 21 …. 14.6 s 21(2) …. 14.6 s 43 …. 14.11 s 44 …. 14.11 s 46 …. 14.11 s 55 …. 14.6 s 55(3) …. 14.6 s 73 …. 14.6 ss 107–144 …. 14.11 s 109(1) …. 14.11 s 119 …. 14.13 s 267 …. 14.7, 14.8, 14.10 s 308 …. 14.6 s 311 …. 14.6 s 320 …. 14.6 s 322(3) …. 14.6 Personal Property Securities Amendment (PPS Leases) Act 2017 …. 14.7 Personal Property Securities Regulations 2010 Pt 4 …. 14.13 reg 9.2 …. 14.6 Plant Breeder’s Rights Act 1994 …. 1.70 Plant Variety Rights Act 1987 …. 1.70 Racial Discrimination Act 1975 …. 4.23, 4.35, 4.63, 4.68 s 8 …. 4.64 s 10 …. 4.14 Statute of Westminster Adoption Act 1942 …. 3.28

Australian Capital Territory Human Rights Act 2004 s 12 …. 1.78 Real Property Ordinance 1925 s 94(5) …. 14.138

New South Wales Aboriginal Land Rights Act 1983 …. 4.12 Access to Neighbouring Land Act 2000 …. 2.8 s 7 …. 12.74 s 11 …. 12.74 s 12 …. 12.74 s 17(c) …. 12.74 s 21 …. 12.74 s 26 …. 12.74 Administration of Estates Act 1954 …. 3.30 Administrative Decisions Review Act 1997 …. 11.130 Agricultural Tenancies Act 1990 …. 2.28 s 10 …. 2.28 s 13 …. 11.27

lxi

Property Law in New South Wales s 23D(2) …. 6.6, 8.129, 8.161, 11.6, 11.8, 11.10, 11.131 s 23E …. 14.17 s 23E(c) …. 5.69, 6.6 s 23E(d) …. 6.10, 12.17, 13.38 s 23G(1b) …. 8.6 s 24 …. 9.40 s 26 …. 9.15, 9.20, 9.21, 9.22, 9.23, 9.24, 9.133 s 26(1) …. 9.20, 9.21, 9.22, 9.23 s 26(2) …. 9.20, 9.21, 9.23 s 31 …. 10.56 s 31A …. 10.56 s 35 …. 9.8 s 36 …. 10.37, 10.45 s 36A …. 9.65 s 36C …. 13.10, 13.31, 13.53 s 37A …. 7.15 s 38 …. 6.5, 9.40, 14.16 s 38(1) …. 6.5 s 38(3) …. 6.5 s 44(2) …. 3.112, 3.114, 3.115, 9.7, 9.40, 10.10 s 45A …. 12.19 s 46 …. 12.16, 14.16 s 47 …. 3.71, 3.88 s 47(1) …. 3.71, 3.75 s 47(2) …. 3.75, 3.79 s 50(1) …. 3.47, 3.53, 3.102 s 53 …. 5.30, 7.43 s 53(1) …. 7.23 s 53(3) …. 7.23 s 54A …. 6.8, 6.9, 6.10, 6.22, 6.23, 9.43, 9.46, 11.7, 12.14, 12.68 s 54A(1) …. 6.8, 6.22, 12.17 s 54A(2) …. 6.10, 12.17, 14.17 s 54A(4) …. 6.8 s 66G …. 9.64, 9.132, 9.133 s 66G(1) …. 9.63 s 66G(4) …. 9.64 s 66K …. 6.16 s 66L …. 6.16 s 66M …. 6.16 s 67 …. 12.25, 12.27, 12.28, 13.9 s 67(1) …. 12.27 s 67(5) …. 12.27 s 68 …. 13.9 s 69 …. 12.22, 12.23 s 70 …. 13.4 s 70(1) …. 13.4, 13.5, 13.9, 13.12, 13.25, 13.31, 13.52 s 70A …. 11.44, 13.15 s 70A(1) …. 11.48, 13.12, 13.21, 13.52 s 74 …. 11.87 s 74(2) …. 11.28, 11.32 s 78(1)(D) …. 14.18

Coal Acquisition Act 1981 s 5(4) …. 8.201 Coastal Management Act 2016 s 28 …. 2.14 Community Land Development Act 1989 …. 9.70 Community Land Development Act 2021 …. 9.70 Confiscation of Proceeds of Crime Amendment Act 2005 …. 9.51 Consumer Credit (New South Wales) Act 1995 …. 14.13, 14.37 Consumer Credit Code s 70 …. 14.37 Contracts Review Act 1980 …. 14.36, 14.37, 14.38, 14.41 s 6(1) …. 14.37 s 6(2) …. 14.37 s 7(1) …. 14.37 s 9(1) …. 14.37 s 9(2) …. 14.37 s 9(4) …. 14.37 Conveyancing Act 1919 …. 3.27, 3.113, 3.115, 14.19, 14.127 Pt 2 Div 3C …. 8.191 Pt 23 …. 7.36, 14.80 Pt 23 Div 1 …. 14.127, 14.136 s 3(1) …. 12.28 s 7 …. 6.5, 6.53, 14.16 s 7(1) …. 6.5 s 12 …. 11.44, 13.8 s 16(1) …. 3.112 s 17 …. 3.89 s 19 …. 3.58, 3.78 s 19(1) …. 3.75, 3.77 s 19(2) …. 3.77 s 19A …. 3.77 s 21 …. 3.62 s 23A …. 10.5 s 23A(1) …. 10.5 s 23B …. 6.23, 14.16 s 23B(1) …. 6.5, 9.29, 9.40, 11.6, 11.76, 12.16, 12.55, 12.67 s 23B(2)(c) …. 11.76 s 23B(2)(d) …. 6.6, 11.6 s 23B(3) …. 6.5 s 23C …. 6.22, 6.23, 6.46, 6.53, 14.16 s 23C(1) …. 6.22, 6.23, 6.53, 12.17, 12.68, 13.38, 13.43 s 23C(1)(a) …. 6.22, 6.23, 6.24, 6.53, 9.34, 11.7 s 23C(1)(b) …. 6.24, 6.46, 9.42 s 23C(1)(c) …. 6.24, 6.53, 13.29 s 23C(2) …. 6.25 s 23D(1) …. 11.13

lxii

Table of Statutes s 84 …. 11.28, 14.61 s 84(1)(a) …. 11.30 s 84(1)(b) …. 11.29 s 85 …. 11.28 s 85(1)(a) …. 11.31 s 85(1)(b) …. 11.31 s 85(1)(c) …. 11.31 s 85(1)(d) …. 11.32, 11.33, 11.58, 11.62, 11.63, 11.64 s 87A …. 12.65 s 88 …. 13.37 s 88(1) …. 12.23, 13.7, 13.16, 13.22, 13.27, 13.31, 13.35, 13.36, 13.38 s 88(1)(c) …. 12.23 s 88(1)(d) …. 12.23 s 88(3) …. 13.19 s 88(3)(a) …. 13.43 s 88(3)(c) …. 13.19, 13.36 s 88A …. 12.4 s 88A(1) …. 12.75 s 88A(1)–(1C) …. 12.4 s 88A(3) …. 12.4 s 88AA …. 12.66 s 88AB …. 12.65 s 88B …. 12.2, 12.6, 12.22, 12.59, 13.37, 13.40, 13.45, 13.47 s 88B(3)(c) …. 13.40 s 88B(3)(c)(ii) …. 12.6 s 88B(3)(c)(iii) …. 12.6, 13.45 s 88B(3A) …. 12.22 s 88B(4) …. 13.40 s 88BA …. 12.37 s 88BB …. 12.40 s 88D …. 13.20 s 88E …. 13.20 s 88K …. 2.8, 5.160, 12.2, 12.34, 12.76 s 88K(1) …. 12.34 s 88K(2)(a) …. 12.34 s 88K(2)(b) …. 12.34 s 88K(2)(c) …. 12.34 s 88K(4) …. 12.34 s 89 …. 5.160, 8.201, 12.62, 12.63, 13.46 s 89(1) …. 12.56, 12.59, 12.62, 13.42, 13.46 s 89(1)(a) …. 12.61 s 89(1)(b) …. 12.62, 13.44 s 89(1)(c) …. 12.63, 13.50 s 89(1A) …. 12.62 s 89(3) …. 12.56, 12.62 s 89(8) …. 12.59, 13.46 s 91(1) …. 14.59, 14.80 s 91(3) …. 14.80 s 91(3)(a) …. 14.80 s 91(4) …. 14.59 s 91(5) …. 14.80

lxiii

s 91(6) …. 14.59 s 92 …. 14.89 s 92(1) …. 14.49 s 92(2) …. 14.49 s 92(3) …. 14.49 s 92(4) …. 14.49 s 93 …. 14.35 s 94(1) …. 14.80 s 96 …. 8.18 s 96A …. 9.18 s 98 …. 14.82 s 99 …. 9.18 s 100 …. 14.70, 14.74 s 100(1) …. 14.78 s 100(2) …. 14.78 s 102 …. 14.48, 14.75 s 103(2) …. 14.70, 14.116 s 106 …. 14.61, 14.62, 14.63, 14.64, 14.65 s 106(1) …. 14.63, 14.65 s 106(3) …. 14.61 s 106(6) …. 14.61 s 106(7) …. 14.61 s 106(8) …. 14.61 s 106(8A) …. 14.61 s 106(11) …. 14.61 s 106(17) …. 14.64, 14.65 s 108(1) …. 14.99 s 109 …. 14.68, 14.94 s 109(1) …. 14.85 s 109(1)(a) …. 14.85, 14.92, 14.93, 14.99, 14.100 s 109(1)(c) …. 14.68 s 109(1)(e) …. 14.85, 14.99 s 109(1)(f) …. 14.85, 14.99 s 109(2) …. 14.87 s 109(3) …. 14.68, 14.85 s 109(5) …. 14.68, 14.99, 14.100 s 110 …. 14.85, 14.94 s 110(4) …. 14.85, 14.99 s 111 …. 14.85, 14.90 s 111(2) …. 14.86 s 111(2)(a) …. 14.86, 14.87 s 111(2)(b) …. 14.89, 14.91 s 111(2)(b1) …. 14.87, 14.89 s 111(2)(c) …. 14.87 s 111(2)(d) …. 14.89 s 111(3) …. 14.90 s 111(3)(a) …. 14.89 s 111(3)(b)(i) …. 14.89 s 111(3)(c) …. 14.89 s 111(4) …. 14.91, 14.98 s 111A …. 14.103, 14.109 s 111A(4) …. 14.109 s 111A(5) …. 14.109 s 111A(6) …. 14.109

Property Law in New South Wales Conveyancing Act 1919 — cont’d s 112 …. 14.138 s 112(1) …. 14.93 s 112(2) …. 14.18 s 112(3) …. 14.140 s 112(3)(b) …. 14.138 s 112(4) …. 14.123, 14.124 s 112(9) …. 14.124, 14.138 s 113(3) …. 14.87 s 115(3) …. 14.68 s 115(6) …. 14.68 s 115(7) …. 14.68 s 115(8) …. 14.68 s 115A(2)(c) …. 14.68 s 116 …. 11.51 s 117 …. 11.51, 11.53, 11.55, 11.69, 11.86 s 117(1) …. 11.51 s 118 …. 11.51, 11.52, 11.53, 11.55, 11.86 s 119 …. 11.53 s 120 …. 11.66 s 120A(3) …. 11.19 s 120A(5) …. 11.18 s 127 …. 6.6, 8.57, 8.129, 11.4, 11.14, 11.40, 11.56, 11.85 s 127(1) …. 11.14 s 128 …. 11.64, 11.86 s 129 …. 11.64, 11.65, 11.72 s 129(1) …. 11.64 s 129(2) …. 11.72, 11.73 s 129(6)(a) …. 11.64, 11.73 s 129(8) …. 11.64, 11.71 s 129(10) …. 11.64 s 130 …. 11.74, 14.18 s 130(1) …. 11.74 s 132 …. 11.42 s 133A …. 11.79 s 133B …. 11.42 s 133B(2) …. 2.26 s 164 …. 7.15, 7.23, 7.24 s 164(1)(b) …. 7.24 s 170 …. 14.91 s 170(1)(b1) …. 14.91 s 177 …. 12.8, 12.11, 12.40 s 177(3) …. 12.11 s 177(4) …. 12.11 s 177(5)–(7) …. 12.11 s 178 …. 12.33 s 179 …. 12.33 s 181B(1) …. 12.40 s 184B(1) …. 7.37 s 184C …. 7.37 s 184D(1) …. 14.80 s 184G …. 2.23, 7.37

s 184G(1) …. 7.37, 7.38, 7.39, 7.40, 14.127 s 184G(2) …. 7.39 Conveyancing and Law of Property Act 1898 …. 10.2 s 68 …. 3.91 s 69 …. 3.91 COVID-19 Legislation Amendment (Emergency Measures) Act 2020 (repealed) …. 1.1 Credit (Commonwealth Powers) Act 2010 …. 14.144 s 3(1) …. 14.144 Crimes (Sentencing Procedure) Act 1999 s 17 …. 9.85, 11.104 Criminal Law Amendment Act 1883 …. 3.30 Crown Land Management Act 2016 …. 2.9 s 13.3 …. 2.13 s 13.3(3) …. 2.14 Crown Lands Act 1884 …. 2.9 Crown Lands Act 1989 …. 11.94 s 170 …. 5.30, 5.70, 5.71 s 170(5) …. 5.70 Crown Lands (Combined Tenures) Act 1989 …. 11.94 Crown Lands Consolidation Act 1913 s 145A(6A) …. 14.24 s 261A …. 14.24 s 270(3) …. 14.24 s 274(3) …. 14.24 Crown Land Management Act 2016 s 1.7 …. 5.70 s 13.1 …. 5.70 s 13.1(1)(a)(i) …. 5.70 s 13.1(1)(a)(ii) …. 5.70 s 13.1(1)(a)(iii) …. 5.70 s 13.1(1)(b) …. 5.70 s 13.1(1)(c). …. 5.70 s 13.1(2) …. 5.70 s 13.1(3)(b) …. 5.70 s 13.2 …. 5.70 Crown Lands Occupation Act 1839 …. 3.24 Damage by Aircraft Act 1952 …. 2.8 s 72 …. 2.8 Deeds Registration Act 1898 …. 8.1 Dividing Fences Act 1991 s 10 …. 12.41 Dower Act 1837 …. 3.62 Drug Misuse and Trafficking Act 1985 …. 11.125 Duties Act 1997 s 147A …. 2.2

lxiv

Table of Statutes Electronic Conveyancing (Adoption of National Law) Act 2012 …. 8.17 Electronic Conveyancing National Law …. 8.17 s 22 …. 8.17 s 23 …. 8.17 Electronic Transactions Act 2000 …. 6.8 Environmental Planning and Assessment Act 1979 Pt 4 …. 2.7 s 1.4 …. 2.2, 2.6 s 1.5(1)(b) …. 9.63 s 6.2(1)(a) …. 9.63 s 6.34 …. 11.112 s 28(2) …. 12.64, 13.42, 13.51 Environmental Planning and Assessment Amendment (Short-term Rental Accommodation) Regulation 2021 …. 9.109 Fair Trading Act 1987 …. 11.127, 14.36, 14.41 s 18 …. 11.127 Fair Trading Amendment (Short-term Rental Accommodation) Act 2018 …. 9.109 Farm Debt Mediation Act 1994 …. 8.114 Fisheries Management Act 1994 …. 8.7 Forfeiture Act 1995 Pt 3 …. 9.51 s 4 …. 9.51 s 5 …. 9.51 s 5(2) …. 9.51 s 5(3) …. 9.51 ss 10–14 …. 9.51 Holiday Parks (Long-term Casual Occupation) Act 2002 …. 11.90 s 3 …. 11.90 s 5 …. 11.90 Human Tissue Act 1983 s 32 …. 1.62 Imperial Acts Application Act 1969 …. 3.6, 3.58, 3.77, 3.112, 9.133 s 8 …. 6.7, 9.60 s 18 …. 2.37, 11.69 ss 18–20 …. 2.37 s 32 …. 3.64, 3.66 s 32(1) …. 11.37 s 32(3) …. 11.37 Inclosed Lands Protection Act 1901 s 3 …. 2.38 s 4 …. 2.38 s 4(1) …. 2.38 Industrial Arbitration Act 1940 s 88B …. 8.108 s 88F …. 14.39 Industrial Relations Act 1996 …. 14.36 s 106 …. 14.39

Land and Environment Court Act 1979 s 40 …. 12.2, 12.34 s 40(4) …. 12.34 Landlord and Tenant (Amendment) Act 1948 …. 11.87, 11.103 Limitation Act 1939 …. 5.97 s 28 …. 5.94 Limitation Act 1969 …. 3.46, 4.35, 5.86 s 11(1) …. 5.146 s 11(3)(a) …. 5.79 s 11(3)(b)(i) …. 5.79 s 11(3)(b)(ii) …. 5.79 s 11(3)(b)(iii) …. 5.79 s 11(3)(b)(iv) …. 5.79 s 15(6) …. 5.119 s 27 …. 5.69 s 27(1) …. 5.70, 5.138 s 27(2) …. 5.2, 5.69, 5.73 s 28 …. 5.69, 5.73, 5.74 s 29 …. 5.78 s 30 …. 5.78 s 31 …. 5.75, 5.78 s 38 …. 5.74 s 38(1) …. 5.69, 5.73, 5.74 s 38(2) …. 5.139 s 38(3) …. 5.135, 5.140 s 38(4)(a) …. 5.86 s 38(5) …. 5.121, 9.62 s 39 …. 5.144 s 42 …. 14.50 s 43 …. 14.50 s 51 …. 5.85 s 52 …. 5.79 s 52(e) …. 5.80 s 54(4) …. 5.83 s 55 …. 5.81 s 65 …. 5.56, 5.148 s 65(1) …. 5.145 Sch 1 para 8(4) …. 5.119 Local Government Act 1919 s 45 …. 8.112 s 398 …. 5.129, 8.108 Local Government Act 1993 s 45(1) …. 8.110 Mining Act 1992 …. 2.9 Nature Conservation Trust Act 2001 …. 13.1 New South Wales Public Health (COVID-19 General) Order (No 2) 2021 cl 6(1)(b) …. 9.135 Perpetuities Act 1984 …. 3.99, 10.7, 10.57, 10.64 s 3 …. 10.37 s 3(1) …. 10.41 s 3(2) …. 10.41

lxv

Property Law in New South Wales Perpetuities Act 1984 — cont’d s 4(3) …. 10.15, 10.37, 10.41, 10.43, 10.53, 10.64 s 6(1) …. 10.57 s 7 …. 10.6, 10.43, 10.56 s 8 …. 10.24, 10.44, 10.46, 10.47, 10.48, 10.56 s 8(1) …. 10.44, 10.46 s 8(10) …. 10.47 s 9 …. 10.45, 10.48 s 9(1) …. 10.44, 10.45, 10.46, 10.47 s 9(4) …. 10.17, 10.24, 10.44, 10.45, 10.46, 10.48 s 10 …. 10.46, 10.47, 10.48 s 13 …. 10.58 s 14 …. 10.55 s 14(2) …. 10.54, 10.55 s 15 …. 10.42 s 17(1) …. 10.52 s 18 …. 10.56 s 18(1) …. 10.56 s 19 …. 10.37, 10.56 s 20(2) …. 10.37 Sch 1 …. 10.37, 10.56 Personal Property Securities (Commonwealth Powers) Act 2009 …. 14.5 Personal Property Securities (Commonwealth Powers) Amendment Act 2009 s 4 …. 14.4 Petroleum (Onshore) Act 1991 …. 2.9 Probate Act 1890 …. 10.10 Probate and Administration Act 1898 …. 3.19 s 40 …. 3.61 s 44 …. 14.141 s 52 …. 3.62, 3.63 Property (Relationships) Act 1984 …. 6.47, 6.51, 8.142, 9.132, 9.133 s 4(1) …. 6.48 s 4(2) …. 6.48, 6.49 s 4(2)(e) …. 6.49 s 4(2)(f) …. 6.49 s 4(3) …. 6.48 s 5 …. 6.48 s 5(1)(b) …. 6.50 s 5(2) …. 6.50 s 17 …. 6.50 s 18(1) …. 6.48 s 20 …. 6.13, 6.48, 6.50 s 20(1) …. 6.48 s 20(1)(b) …. 6.48 Property and Stock Agents Act 2002 …. 9.80 Property Legislation Amendment Act 2005 …. 13.45 Protection of the Environment Operation Act 1997 Pt 5.4 …. 2.7 Real Estate (Limitation of Actions) Act 1837 (8 Will IV No 3). …. 5.69

Real Estate of Intestates Distribution Act 1862 (Lang’s Act) (26 Vic No 20) …. 3.27, 3.90, 3.91 Real Property Act 1862 …. 3.27, 8.5 Real Property Act 1900 …. 3.113, 3.115, 5.30, 5.56, 5.70, 5.145, 5.147, 5.150, 5.157, 5.160, 5.161, 6.5, 8.11, 8.25, 8.110, 8.111, 11.104, 12.53, 14.49, 14.128 Pt 3 …. 8.155 Pt 4 …. 8.6 Pt 4A …. 8.6 Pt 4B …. 8.6 Pt 6A …. 5.7, 5.56, 5.69, 5.147, 5.149, 5.156, 5.157, 5.159, 8.106 Pt 7A …. 5.153, 8.131, 8.136, 8.160 Pt 7B …. 8.157, 8.160 Pt 14 …. 8.183, 8.198 s 3 …. 8.159, 14.23, 14.125 s 3(1) …. 2.2, 8.13, 8.33, 8.155, 8.159 s 3(1)(a) …. 8.19, 11.51, 11.54 s 3C …. 14.22 s 12(1) …. 8.6 s 12(1)(d) …. 8.116 s 12(1)(e) …. 8.132, 8.191 s 12(1)(f) …. 8.133, 8.191 s 12(1A) …. 8.6 s 12(3) …. 8.118 s 12(3)(b) …. 8.117 s 12(3)(d) …. 8.117 s 12A …. 8.197 s 12A(2) …. 9.33, 9.131 s 12A(3) …. 9.33 s 12C …. 8.207 s 12D …. 8.12 s 12E …. 8.182 s 13 …. 14.24 s 13D(3) …. 8.7 s 13J …. 3.38 s 14(2) …. 8.15 s 14(2)(b) …. 8.6 s 17(1) …. 8.6 s 17(2) …. 8.6 s 17(3) …. 8.6 s 20 …. 5.46 s 23(2) …. 8.6 s 28A …. 5.148, 8.7 s 28C–28EA …. 8.155 s 28O …. 8.196 s 28P(1)(d) …. 5.148, 8.7 s 28T …. 8.7, 8.155 s 28T(7) …. 5.148 s 31B …. 8.14 s 31B(2) …. 8.12 s 31B(3) …. 8.12 s 32(1) …. 8.13, 8.14

lxvi

Table of Statutes s 32(3) …. 8.15 s 32(7) …. 8.12 s 33A …. 8.18, 8.201 s 34(1) …. 8.18 s 36(1A) …. 8.19 s 36(1B) …. 8.137 s 36(1C) …. 8.19 s 36(5) …. 8.23, 14.128 s 36(6A) …. 12.50 s 36(9) …. 8.23, 14.128, 14.135 s 36(11) …. 8.19, 14.68 s 39 …. 14.22 s 39(1B) …. 8.19, 8.189 s 39(2) …. 8.19 s 39(3) …. 8.19 s 39C …. 14.22 s 40 …. 8.19, 8.25 s 40(1) …. 8.19 s 40(1A)(a) …. 8.19 s 40(1A)(b) …. 8.19 s 40(1B)–(3) …. 8.19 s 41 …. 1.4, 8.25, 12.50 s 41(1) …. 8.128 s 42 …. 8.27, 8.36, 8.44, 8.52, 8.61, 8.62, 8.63, 8.66, 8.80, 8.81, 8.97, 8.98, 8.103, 8.104, 8.112, 8.113, 8.124, 8.125, 8.201, 11.8, 12.18, 12.46, 12.69, 13.19, 13.36, 14.59, 14.128, 14.135, 14.140 s 42(1) …. 8.25, 8.60, 8.61 s 42(1)(a) …. 8.83 s 42(1)(a1) …. 8.84, 8.85, 12.18, 12.47, 12.48, 12.50, 12.51 s 42(1)(b) …. 8.85, 8.123, 12.70 s 42(1)(c) …. 8.83, 8.87 s 42(1)(d) …. 8.88, 8.90, 8.91, 11.131, 14.65 s 42(3) …. 8.113, 8.114, 8.201 s 43 …. 8.25, 8.27, 8.61, 8.65, 8.97, 8.124, 8.172, 8.179 s 43(1) …. 8.67 s 43A …. 8.90, 8.159, 8.171, 8.172, 8.173, 8.174, 8.175, 8.177, 8.179, 8.181, 8.182, 8.208, 14.139, 14.140 s 43A(1) …. 8.90 s 44 …. 8.25 s 45(1) …. 8.25 s 45(2) …. 8.25, 8.63 s 45B(1) …. 5.149 s 45B–45G …. 5.49, 8.106 s 45C …. 5.56, 5.148, 5.156 s 45C(1) …. 5.157 s 45C(2) …. 5.148 s 45C–45E …. 5.148 s 45D …. 5.71, 5.148, 5.151 s 45D(1) …. 5.148, 5.149, 5.150, 5.151, 8.154

lxvii

s 45D(1)–(2) …. 5.151 s 45D(1)(b) …. 5.112 s 45D(1)(b)–(c) …. 5.151 s 45D(2) …. 5.151 s 45D(2)(b) …. 5.151 s 45D(2A) …. 5.150, 5.151, 5.161 s 45D(2B) …. 5.150, 5.161 s 45D(3) …. 5.70, 5.151, 5.155 s 45D(3)(d) …. 5.150 s 45D(4) …. 5.112, 5.151, 5.155 s 45D(5) …. 5.150 s 45D(6) …. 5.149 s 45D(6)(a) …. 5.151 s 45D(8) …. 5.155 s 45D(9) …. 5.155 s 45D(3). …. 5.70 s 45E …. 8.189 s 45E(1) …. 5.148 s 45E(3) …. 5.148 s 46 …. 12.18, 12.50 s 46A …. 12.6, 13.39 s 47(1) …. 12.18, 12.50, 12.55, 12.69, 13.19, 13.39 s 47(6) …. 12.55, 12.58 s 47(7) …. 12.6, 13.45 s 49 …. 12.56, 12.62 s 49(2) …. 12.56 s 51 …. 11.51, 11.54, 11.55, 12.28, 13.9, 14.59 s 52 …. 11.54, 11.55, 14.59 s 53 …. 8.89, 8.91, 11.8 s 53(3) …. 8.43 s 53(4) …. 11.131, 14.65 s 54(1) …. 11.76 s 54(3) …. 11.76 s 56(1) …. 14.19 s 56C …. 8.34, 8.44, 8.56, 8.79, 8.122, 8.197, 8.203, 8.205, 14.21, 14.37 s 56C(6) …. 14.21 s 57 …. 14.19, 14.23, 14.57, 14.78, 14.85, 14.94 s 57(1) …. 14.19, 14.22 s 57(2) …. 14.140 s 57(2)(a) …. 8.48, 14.94 s 57(2)(b) …. 14.95 s 57(2)(b)(ii) …. 14.94 s 57(2)(b1) …. 14.94 s 57(3) …. 14.90, 14.95, 14.97 s 57(5) …. 14.98 s 58 …. 14.85, 14.94 s 58(1) …. 14.99, 14.100, 14.140 s 58(2) …. 14.140 s 58(3) …. 14.124, 14.125 s 58A …. 14.85, 14.94 s 59 …. 14.140

Property Law in New South Wales s 74V(2)(a) …. 8.160 s 74V(2)(b) …. 8.160 s 74V(2)(c) …. 8.160 s 74V(3) …. 8.159 s 74V(4) …. 8.159 s 74W(1) …. 8.159 s 74W(2) …. 8.159 s 74W(3) …. 8.160 s 74X(1) …. 8.160 s 74X(2)(a) …. 8.159 s 74X(2)(b) …. 8.160 s 74X(2)(d) …. 8.160 s 74Y …. 8.160 s 74Z …. 8.160 s 76 …. 14.51 s 82 …. 8.128, 8.132 s 82(1) …. 8.19 s 82(2) …. 8.19 s 82(3) …. 8.19, 8.132 s 97 …. 9.33, 9.34, 9.131 s 97(1A) …. 8.136 s 97(2)(b) …. 9.33 s 97(5) …. 9.33, 9.131 s 100(1) …. 9.23 s 100(2) …. 3.99, 8.15 s 104(1) …. 8.19 s 104(2) …. 8.19 s 117(2) …. 8.19 s 118 …. 8.25 s 118(1)(d)(ii) …. 8.62, 8.63, 8.125, 8.127, 8.206 s 120 …. 8.188, 8.189, 8.191 s 120(1) …. 8.188 s 120(2) …. 8.188 s 120(2)(a) …. 8.188 s 120(2)(b) …. 8.188 s 121 …. 8.23 s 122 …. 8.23 s 129 …. 8.188, 8.189, 8.191, 8.193, 8.208 s 129(1) …. 8.190, 8.193, 8.203 s 129(1)(e) …. 8.194 s 129(2) …. 8.191, 8.193 s 129(2)(a) …. 8.195 s 129(2)(c) …. 8.195 s 129(2)(g) …. 8.207 s 129(2)(h) …. 8.196 s 129(3)(a) …. 8.207 s 131 …. 8.198 s 131(2) …. 8.199 s 131(6) …. 8.199 s 131(7) …. 8.199 s 131(7)(a) …. 8.199 s 131(7A) …. 8.199 s 131(9) …. 8.199 s 131(10) …. 8.199

Real Property Act 1900 — cont’d s 60 …. 14.20, 14.57, 14.64 s 61 …. 14.77, 14.78 s 61(1) …. 14.78 s 61(2)(b) …. 14.78 s 61(2)(c) …. 14.78 s 62 …. 14.78 s 62(1) …. 14.78 s 62(3) …. 14.78, 14.81 s 64 …. 14.23 s 65(1) …. 14.81 s 74A(1) …. 8.136 s 74A(2)(b) …. 8.136 s 74B …. 8.134 s 74B(1) …. 8.6 s 74C …. 8.134 s 74F …. 8.135, 8.136, 8.141, 8.153, 8.156 s 74F(1) …. 8.128, 8.129, 8.131 s 74F(2) …. 8.141 s 74F(3) …. 5.153, 8.152, 8.153, 8.154 s 74F(4) …. 8.153, 8.155 s 74F(5) …. 8.135, 8.136 s 74F(6) …. 8.136 s 74G …. 8.135, 8.136 s 74H(1)(b) …. 8.139 s 74H(3) …. 8.155 s 74H(4) …. 8.139 s 74H(5) …. 8.139 s 74I …. 8.135, 8.147, 8.150 s 74I(1) …. 8.136, 8.147, 8.148 s 74I(5) …. 8.147 s 74J …. 8.150 s 74J(1) …. 8.136, 8.147, 8.148 s 74J(4) …. 8.147 s 74K …. 8.135 s 74K(2) …. 8.150, 8.151 s 74L …. 8.136 s 74MA …. 8.135, 8.136, 8.148, 8.151 s 74MA(1) …. 8.148 s 74MA(2) …. 8.151 s 74N …. 8.160 s 74O …. 8.135 s 74P …. 8.135, 8.152, 8.160 s 74P(1)(a) …. 8.152 s 74P(1)(b) …. 8.152 s 74P(1)(c) …. 8.152 s 74Q …. 8.135, 8.136 s 74R …. 8.135, 8.141 s 74T …. 8.159 s 74T(1) …. 8.159 s 74T(5) …. 8.160 s 74U …. 8.159 s 74V(1)(a) …. 8.159 s 74V(1)(b) …. 8.159

lxviii

Table of Statutes s 132 …. 8.198 s 132(1) …. 8.198 s 132(2)(a) …. 8.198 s 132(2)(b) …. 8.198 s 132(2A) …. 8.198 s 133(2)(a) …. 8.200 s 134 …. 8.187 s 135 …. 8.123 s 135(2) …. 8.200 s 136 …. 8.121 s 137 …. 8.121 s 138 …. 8.121 s 138(1) …. 8.119, 8.120 s 138(3) …. 8.119 Schedule 3 cl 31 …. 8.17 Real Property (Amendment) Act 1970 …. 8.16, 8.17 Real Property (Computer Register) Amendment Act 1979 …. 8.11, 8.16 Real Property Amendment (Compensation) Act 2000 …. 8.187, 8.198, 8.207 Real Property Amendment (Electronic Conveyancing) Act 2015 …. 8.157 s 33AAA …. 8.17 Real Property Amendment (Certificates of Title) Act 2021 …. 8.16 Real Property and Conveyancing Amendment Act 2009 …. 8.113 Sch 3 …. 8.107 Real Property and Conveyancing Legislation Amendment Act 1999 …. 8.119 Real Property and Conveyancing Legislation Amendment Act 2009 Sch 2, cl 4 …. 14.109 Registration of Interests in Goods Act 1986 …. 14.4 s 3 …. 14.4 Registration of Interests in Goods Regulation 2004 cl 10 …. 14.4 Residential Tenancies Act 1987 …. 3.90, 11.87, 11.123, 11.136 s 16(2)(d)(iii) …. 11.129 s 33 …. 11.136 s 68(2) …. 11.125 s 76 …. 11.131 Residential Tenancies Act 2010 …. 1.1, 3.90, 11.4, 11.24, 11.87, 11.97, 11.98, 11.100, 11.102, 11.115, 11.132, 11.136 Pt 3 …. 11.107, 11.109 Pt 7 …. 11.88 s 4 …. 11.88 s 7 …. 11.88, 11.89, 11.103 s 8 …. 11.89 s 8(1)(a) …. 11.90

lxix

s 8(1)(b) …. 11.91 s 8(1)(c) …. 11.90, 11.92 s 8(1)(d) …. 11.93 s 8(1)(e) …. 11.94 s 8(1)(f) …. 11.95 s 8(1)(g) …. 11.96 s 8(1)(h) …. 11.97 s 8(1)(i) …. 11.98 s 8(1)(j) …. 11.99 s 9 …. 11.88 s 9(2) …. 11.88 s 10 …. 11.101 s 13 …. 11.88, 11.100, 11.131 s 13(2) …. 11.104 s 14 …. 11.104 s 14(3) …. 11.104 s 15 …. 11.104 s 15(4) …. 11.104 s 18 …. 11.106 s 21(1) …. 11.104 s 21(2) …. 11.104 s 22 …. 11.104 s 29(1) …. 11.105 s 29(1)–(3) …. 11.105 s 29(4) …. 11.105 s 29(6) …. 11.105 s 41(1) …. 11.116 s 41(1A) …. 11.116 s 41(1B) …. 11.116 s 41(9) …. 11.116 s 42(1) …. 11.116 s 42(2) …. 11.116 s 42(3) …. 11.116 s 43(1) …. 11.117 s 43(2) …. 11.117, 11.121 s 43(4) …. 11.117 s 44(1) …. 11.116 s 44(5) …. 11.116 s 44(6) …. 11.116 s 47 …. 11.116 s 50 …. 11.108 s 50(2) …. 11.108 s 50(3) …. 11.108 s 51(2)(a) …. 11.109 s 51(2)(b) …. 11.109 s 51(3)(b) …. 11.109 s 51(3)(c) …. 11.109 s 51(4) …. 11.109 s 52 …. 11.109 s 62 …. 11.109, 11.110 s 63 …. 11.109 s 63(2) …. 11.109 s 63(3) …. 11.109 s 64 …. 11.110

Property Law in New South Wales Residential Tenancies Act 2010 — cont’d s 66(1) …. 11.111 s 66(2) …. 2.26, 11.111 s 66(3) …. 2.26 s 67 …. 2.28, 11.111 s 67(2) …. 2.28 s 68 …. 11.111 s 69 …. 11.111 s 70 …. 11.112 s 71 …. 11.112 s 74 …. 11.113 s 75 …. 11.113 s 75(2) …. 11.113 s 77 …. 11.101, 11.114, 11.134 s 77(5) …. 11.114 s 81 …. 11.118 s 81(1) …. 11.118 s 81(2) …. 11.119 s 81(4) …. 11.131 s 81(4)(a) …. 11.131 s 81(4)(b) …. 11.131 s 81(4)(c) …. 11.131 s 83 …. 11.119 s 84 …. 11.106 s 84(3) …. 11.123 s 85 …. 11.106 s 85(3) …. 11.123 s 86 …. 11.106 s 86(1)(2)(3) …. 11.122 s 86(4) …. 11.123 s 87(1) …. 11.120 s 87(2) …. 11.120 s 87(4) …. 11.123 s 87(5) …. 11.123 s 88(1) …. 11.120 s 89(2) …. 11.124 s 90(1) …. 11.125 s 90(2) …. 11.125 s 90(3) …. 11.125 s 90(5) …. 11.125 s 91(1)(a) …. 11.125 s 91(1)(b) …. 11.125 s 91(4) …. 11.125 s 92(3) …. 11.125 s 93(1) …. 11.125 s 93(2) …. 11.125 s 93(3) …. 11.125 s 96 …. 11.106 s 97 …. 11.106 s 98(1) …. 11.120 s 104 …. 11.125 s 104(2) …. 11.125 s 104(3) …. 11.125 s 109 …. 11.121

s 113 …. 11.123 s 114 …. 11.124 s 115 …. 11.124 s 119 …. 11.119 s 120(1) …. 2.36, 11.119 s 125 …. 11.131 s 125(4) …. 11.131 s 138 …. 11.88 ss 143–154 …. 11.88 s 187(1)(a) …. 11.129 s 187(1)(b) …. 11.129 s 187(1)(c) …. 11.129 s 187(1)(d) …. 11.129 s 187(1)(i) …. 11.129 s 187(4)(a) …. 11.126 ss 192–195 …. 11.127 s 196(1) …. 11.127 s 219(1) …. 11.104 Residential Tenancies Act 2019 s 15(5) …. 11.104 Residential Tenancies (COVID-19 Pandemic Emergency Response) Amendment Regulation 2021 …. 1.1 Residential Tenancies Regulation 2019 …. 1.1 reg 4(1) …. 11.104 reg 4(2) …. 11.104 reg 7 …. 11.105 reg 16 …. 11.102 reg 25(1) …. 11.93 reg 25(5) …. 11.93 reg 27 …. 11.102 reg 28 …. 11.102 reg 30 …. 11.102 reg 31 …. 11.102 reg 32 …. 11.105 reg 39(1) …. 11.116 reg 40 …. 11.126 Sch 1 …. 11.104, 11.112 Sch 2 …. 11.105 Retail and Other Commercial Leases (Covid 19) Regulation (No 3) 2020 …. 1.1 Retail and Other Commercial Leases (Covid-19) Regulation 2021 reg 6D …. 11.137 Retail Leases Act 1994 …. 1.1, 11.137 Pt 2 …. 11.139 Pt 2A …. 11.139 Pt 8 …. 11.143 Pt 8, Div 3 …. 11.144 s 3 …. 11.138, 11.139 s 3(a) …. 11.138 s 3(b) …. 11.138 s 3(b)(c) …. 11.138

lxx

Table of Statutes s 7 …. 11.139 s 9 …. 11.139 s 11 …. 11.139 s 11A …. 11.139 s 14 …. 11.139 s 14(1) …. 11.139 s 18(2) …. 11.140 s 18(3) …. 11.140 s 18(4) …. 11.140 s 19 …. 11.140 s 19A …. 11.140 s 20(1) …. 11.140 s 20(4) …. 11.140 ss 22–30 …. 11.140 s 34A …. 11.142 s 35 …. 11.142 s 36 …. 11.140 s 39 …. 11.141 s 39(1)(a) …. 11.141 s 39(1)(b) …. 11.141 s 39(2) …. 11.141 s 40(1) …. 11.141 s 40(3) …. 11.141 s 41(g)–(h) …. 11.141 s 41A …. 11.141 s 42 …. 11.141 s 44(1) …. 11.142 s 44(2) …. 11.142 s 44(3) …. 11.142 s 44(4) …. 11.142 s 58 …. 11.142 s 62B(8) …. 11.144 s 63 …. 11.144 s 66 …. 11.143 s 68 …. 11.143 s 68(3) …. 11.143 s 70 …. 11.144 s 71 …. 11.144 s 71A …. 11.144 s 72(1) …. 11.144 s 72AA …. 11.144 s 73(1) …. 11.144 s 75(1) …. 11.144 s 77 …. 11.144 s 79 …. 11.138 Sch 1 …. 11.138 Sch 1A …. 11.138 Retirement Villages Act 1999 …. 11.91 s 5 …. 11.91 Roads Act 1993 s 6(1) …. 12.31 Sale of Goods Act 1898 …. 14.4 Security Interests in Goods Act 2005 …. 14.4 s 5(3) …. 14.4

s 31(1) …. 14.4 s 31(2) …. 14.4 s 31(3) …. 14.4 s 31(4) …. 14.4 State Revenue Legislation Amendment Act 2010 …. 8.187 Strata Schemes (Freehold Development) Act 1973 …. 9.69, 9.71, 9.74, 9.108 s 5 …. 9.76 s 5(1) …. 9.71, 9.72, 9.73 s 7 …. 9.73 s 8(1) …. 9.73 s 8(1)(a) …. 9.73 s 8(4) …. 9.73 s 8(4B) …. 9.74, 9.107 s 9(3A) …. 9.75 s 13(3A) …. 9.75 s 18(1) …. 9.76 s 18(2) …. 9.76 s 19 …. 9.76 s 20 …. 9.73, 9.76 s 20(b) …. 9.76 s 21 …. 9.76 s 24 …. 9.78 s 26 …. 9.77 s 28(4) …. 9.75 s 51(1) …. 9.128 s 51(4) …. 9.128 s 51(6) …. 9.128 s 51A …. 9.128 s 51A(3) …. 9.128 Strata Schemes (Leasehold Development) Act 1986 …. 9.70 Strata Schemes Development Act 2015 …. 9.69, 9.75 Pt 3 …. 9.70 Pt 5 …. 9.70 Pt 6 …. 9.70 Pt 10 …. 9.97, 9.129, 9.134 s 4(1) …. 9.71, 9.72, 9.73, 9.76 s 4(1)(a) …. 9.71 s 4(1)(b) …. 9.71 s 4(1)(c) …. 9.71 s 9(4) …. 9.73 s 10(1)(a) …. 9.73 s 10(1)(b) …. 9.73, 9.107 s 13(4) …. 9.75 s 17(3) …. 9.75 s 23 …. 9.76 s 24(2)(a) …. 9.76 s 24(3) …. 9.76 s 25 …. 9.76 s 28 …. 9.73, 9.78 s 28(1) …. 9.76

lxxi

Property Law in New South Wales Strata Schemes Development Act 2015 — cont’d s 33 …. 9.77 s 34 …. 9.77 s 36(2) …. 9.75 s 132B …. 9.77 s 135 …. 9.128 s 136 …. 9.128 s 142 …. 9.128 s 142(3) …. 9.128 s 153(2) …. 9.129 s 154 …. 9.129 s 158 …. 9.129 s 160 …. 9.129 s 171(2) …. 9.129 s 176(3) …. 9.129 s 182(1)(e) …. 9.129 Sch 2 cl 2 …. 9.73 Sch 8 …. 9.97 Dictionary …. 9.135 Strata Schemes Management Act 1973 s 6 …. 9.74 s 50 …. 9.74 s 50(2) …. 9.75 s 50(3) …. 9.75 s 54 …. 9.78 s 61(2)(a) …. 9.78 s 62(1) …. 9.78 s 62(3) …. 9.78 s 65A …. 9.78 s 78(2) …. 9.73 s 106 …. 9.75 s 113(1) …. 9.74 s 113(2) …. 9.75 s 113(3) …. 9.75 Dictionary …. 9.74 Strata Schemes Management Act 1996 …. 9.69, 13.1 Ch 2 Pt 4A …. 9.81 Ch 4 …. 9.101 s 8(2) …. 9.79 s 11 …. 9.79 s 13 …. 9.79 s 16(4) …. 9.79 s 18 …. 9.79 s 21(1) …. 9.79 s 21(2) …. 9.79 s 21(3) …. 9.79 s 21(4) …. 9.79 s 26 …. 9.80 s 27 …. 9.80 s 28(3) …. 9.80 s 28(7) …. 9.80 s 41 …. 9.105 s 42 …. 9.105 s 43(4) …. 9.105

lxxii

s 44(1) …. 9.106 s 44(2) …. 9.106 s 45 …. 9.126 s 45(1) …. 9.111 s 45(2) …. 9.111 s 45(3) …. 9.111 s 46 …. 9.106 s 47 …. 9.107 s 48(1) …. 9.107 s 48(2) …. 9.107 s 49 …. 9.108 s 49(1) …. 9.108 s 49(3) …. 9.109 s 49(4) …. 9.109 s 51(1) …. 9.110 s 52 …. 9.110 s 53 …. 9.110 s 54 …. 9.110 s 55 …. 9.110 s 62 …. 9.84 s 63 …. 9.84 s 64 …. 9.84 s 65(2) …. 9.85 s 65(3) …. 9.85 s 65(5) …. 9.85 s 66 …. 9.87 s 67 …. 9.87 s 68(1) …. 9.88 s 69(2) …. 9.89 s 70 …. 9.89 s 71 …. 9.90 s 72(1) …. 9.90 s 72(2) …. 9.90 s 75(1) …. 9.88 s 75(5) …. 9.100 s 75A(1) …. 9.91 s 76(1) …. 9.92 s 76(2) …. 9.92 s 76(4) …. 9.92 s 78(1) …. 9.92 s 78(2) …. 9.92 s 78(3) …. 9.92 s 79(2) …. 9.92 s 79(3) …. 9.92 s 80 …. 9.92 s 80A …. 9.100 s 80C …. 9.100 s 80D …. 9.111 s 82 …. 9.93 s 85 …. 9.94 s 87(1)(a) …. 9.95 s 87(1)(b) …. 9.95 s 87(2) …. 9.95 s 89(1) …. 9.95

Table of Statutes Pt 5 …. 9.83 Pt 5 Div 3 …. 9.98 Pt 6 …. 9.83 Pt 7 Div 3 …. 9.110 Pt 8 …. 9.101 Pt 9 …. 9.83 Pt 10 …. 9.83 Pt 11 …. 9.69, 9.83, 9.86 Pt 11 Div 3A …. 9.86 Pt 12 …. 9.117 s 4(1) …. 9.74, 9.95, 9.98, 9.115 s 5(1) …. 9.77 s 5(1)(b)(ii) …. 9.77 s 6 …. 9.100 s 8 …. 9.79 s 9 …. 9.79 s 13 …. 9.79 s 22 …. 9.96, 9.103 s 26 …. 9.74, 9.75 s 27 …. 9.121 s 27(3) …. 9.121 s 27(4) …. 9.121 s 29 …. 9.79 s 36 …. 9.79 s 36(2) …. 9.79, 9.80 s 36(4) …. 9.79 s 40B(2)(a) …. 9.75 s 41 …. 9.79 s 43 …. 9.104 s 49 …. 9.80 s 52 …. 9.80 s 53(3) …. 9.80 s 66 …. 9.81 s 68(1) …. 9.75 s 72 …. 9.124 s 73 …. 9.87 s 74(1) …. 9.89 s 74(2) …. 9.89 s 74(4) …. 9.88, 9.90 s 74(5) …. 9.89 s 77 …. 9.90 s 79 …. 9.92 s 79(6) …. 9.100 s 80 …. 9.91 s 81 …. 9.92 s 81(4) …. 9.92 s 83(1) …. 9.92 s 83(2) …. 9.73, 9.92 s 84(1) …. 9.92 s 85 …. 9.92 s 86 …. 9.92 s 95 …. 9.100 s 100 …. 9.82 s 102 …. 9.100

s 95(2) …. 9.95 s 96 …. 9.96 s 97(1) …. 9.96 s 98(2) …. 9.97 s 101 …. 9.98 s 102 …. 9.98 s 106 …. 9.98 s 107(2) …. 9.100 s 108(2) …. 9.99 s 110 …. 9.82 s 111 …. 9.82 s 113(1)(c). …. 9.75 s 116(1) …. 9.101 s 116(2) …. 9.101 s 117(1)(a) …. 9.102 s 117(1)(b) …. 9.102 s 117(1)(c) …. 9.102 s 118 …. 9.96 s 118(1) …. 9.103 s 119 …. 9.96, 9.103 s 120 …. 9.103 s 125(1)(a) …. 9.114 s 125(1)(b) …. 9.114 s 125(1)(c) …. 9.114 s 125(3) …. 9.114 s 127 …. 9.114 s 128 …. 9.115 s 130 …. 9.115 s 132 …. 9.115 s 133(c) …. 9.115 s 176 …. 9.127 s 182(1) …. 9.121 s 182(2) …. 9.121 s 182(4) …. 9.121 s 183 …. 9.122 s 183(2) …. 9.122 s 183(3)–(5) …. 9.122 s 183(6) …. 9.122 s 183(8) …. 9.123 s 183A …. 9.124 s 183B …. 9.124 s 186(2) …. 9.120 s 192 …. 9.120 s 193(2) …. 9.120 s 199 …. 9.127 s 200(1) …. 9.127 s 200(2) …. 9.127 s 203 …. 9.111 s 203(1) …. 9.126 s 206 …. 9.126 Sch 3 cl 6(1) …. 9.100 Dictionary Pt 2 cl 5 …. 9.100 Strata Schemes Management Act 2015 …. 9.69, 9.74, 9.75, 9.92, 9.94, 13.52

lxxiii

Property Law in New South Wales Strata Schemes Management Act 2015 — cont’d s 102(4) …. 9.100 s 103 …. 9.111 s 103(2) …. 9.111 s 103(4) …. 9.111 s 106 …. 9.78, 9.84 s 106(3) …. 9.78 s 106(5) …. 9.84 s 108 …. 9.78 s 117 …. 9.82 s 119 …. 9.84 s 120 …. 9.84, 9.85 s 122(2) …. 9.85 s 122(3) …. 9.85 s 122(5) …. 9.85 s 134(1) …. 9.105 s 134(2) …. 9.105 s 134(3) …. 9.105 s 135(1) …. 9.106 s 135(2) …. 9.106 s 136 …. 9.104 s 136(2) …. 9.105 s 137 …. 9.109, 9.126 s 137A …. 9.109 s 137B …. 9.108 s 139 …. 9.108, 9.109 s 139(1) …. 9.108 s 139(2) …. 9.108 s 139(4) …. 9.109 s 139(5) …. 9.109 s 139(6) …. 9.109 s 140 …. 9.75 s 140(1) …. 9.74 s 141(1) …. 9.107 s 141(2) …. 9.107 s 141(4) …. 9.107 s 143(1) …. 9.110 s 143(2) …. 9.110 s 145 …. 9.110 s 146 …. 9.111, 9.126 s 146(3) …. 9.111 s 146(4) …. 9.111 s 147 …. 9.111, 9.126 s 147(2) …. 9.126 s 147(3) …. 9.126 s 147A …. 9.126 s 150 …. 9.108 s 151 …. 9.101 s 152 …. 9.101 s 153 …. 9.102 s 153(1) …. 9.102 s 153(1)(b) …. 9.102 s 153(1)(c) …. 9.102 s 160 …. 9.93 s 160(4) …. 9.93

s 161(1) …. 9.93 s 161(3) …. 9.93 s 161(4) …. 9.93 s 164 …. 9.95 s 164(2) …. 9.95 s 167 …. 9.95 s 177 …. 9.96 s 178 …. 9.96 s 178(2) …. 9.97 s 179 …. 9.98 s 180(1)(b) …. 9.98 s 180(1)(c) …. 9.98 s 182 …. 9.99 s 186 …. 9.106 s 199 …. 9.86 s 201 …. 9.86 s 207 …. 9.86 s 209 …. 9.86 s 216 …. 9.112 s 217 …. 9.114 s 218(1) …. 9.115 s 218(3) …. 9.115 s 223 …. 9.115 s 224(c) …. 9.115 s 227(1) …. 9.114 s 227(1)(c) …. 9.114 s 227(2) …. 9.114 s 227(4) …. 9.114 s 228 …. 9.118 s 228(2)(c) …. 9.118 s 236 …. 9.122, 9.123 s 236(1) …. 9.122 s 236(3) …. 9.123 s 236(4) …. 9.122 s 236(5) …. 9.122 s 236(6) …. 9.122 s 237 …. 9.124 s 239 …. 9.127 s 242 …. 9.119 s 248 …. 9.126 s 258 …. 9.96, 9.103 s 259 …. 9.103 Sch 1 …. 9.105 Sch 2 cl 4(1) …. 9.100 Sch 2 cl 4(2) …. 9.100 Sch 3 cl 16 …. 9.86 Strata Schemes Management Amendment (Building Defects Scheme) Act 2018 No 49 …. 9.86 Strata Schemes Management Amendment (Sustainability Infrastructure) Act 2021 …. 9.77, 9.108, 9.118 Strata Schemes Management Regulation 2010 cl 15 …. 9.111 Sch 1 item 9 …. 9.99

lxxiv

Table of Statutes Strata Schemes Management Regulation 2016 (SSMR) cl 26(1) …. 9.111 cl 26(2) …. 9.111 cl 30 …. 9.135 cl 36 …. 9.109 Sch 3 cl 5 …. 9.108 Strata Titles Act 1973 …. 9.69, 9.113 Strata Titles (Part Strata) Amendment Act 1992 …. 9.70 Strata Titles (Staged Development) Amendment Act 1993 …. 9.70 Succession Act 2006 …. 3.19, 3.63, 14.141 Ch 4 …. 3.43 Pt 3 …. 3.63 Pt 4.2 …. 3.43 Pt 4.3 …. 3.43 Pt 4.4 …. 3.43 s 4 …. 3.61, 3.102 s 4(1) …. 3.47 s 38 …. 10.17 s 38(1) …. 3.76, 3.80 s 41 …. 10.1 s 136 …. 3.19, 3.43 s 137 …. 3.43 Sch 1 Pt 2 …. 3.19 Supreme Court Act 1970 …. 5.46 s 23 …. 14.73 s 58 …. 14.73 s 70 …. 5.26 s 73 …. 11.70 s 79 …. 5.26 Supreme Court Rules 1970 Pt 42 …. 2.35 r 4(2) …. 2.35 Sydney Water Act 1994 s 37(4) …. 8.201 Trustee Act 1925 s 12 …. 8.139 s 77 …. 14.76 Uniform Civil Procedure Rules 2005 …. 5.28 r 1.12 …. 2.35 r 6.8 …. 5.46 r 10.15 …. 5.46 r 14.5 …. 5.46 r 16.4 …. 5.46 r 36.5 …. 2.35 r 36.8 …. 5.46 Water Industry Competition Act 2006 s 64(2) …. 8.201 Water Management Act 2000 …. 12.11 s 55 …. 4.19 s 173(3) …. 8.201

Sch 1A Pt 1, 2 (2) …. 1.4 Western Lands Act 1901 …. 4.62, 11.94 Wills, Probate and Administration Act 1898 …. 3.19 s 5 …. 3.47, 3.61 s 24 …. 3.76, 3.80 s 61B(7) …. 3.19

Northern Territory Electronic Conveyancing (National Uniform Legislation) Act 2013 …. 8.17

Queensland Consumer Credit (Queensland) Act 1994 …. 14.13 Electronic Conveyancing National Law (Queensland) Act 2013 …. 8.17 Fisheries Act 1994 s 14 …. 4.28 Human Rights Act 2019 s 24(2) …. 1.78 Land Act 1994 sch 4 …. 8.157 Land and Other Legislation Amendment Act 2017 Pt 7A …. 8.157 Land Title Act 1994 s 185(1)(a) …. 8.92 Property Law Act 1974 s 13(1) …. 13.53 s 43(1) …. 9.133 s 55 …. 13.53 s 97 …. 14.75 ss 195–198 …. 2.67 s 197 …. 2.67 s 209(1) …. 10.61 s 210 …. 10.44 s 213 …. 10.44 Queensland Coast Islands Declaratory Act 1985 s 3 …. 4.14 Real Property Act 1861 …. 11.43 Stamp Act 1894 s 53(5) …. 8.30

South Australia Electronic Conveyancing National Law (South Australia) Act 2013 …. 8.17 Law of Property Act 1936 …. 10.62 s 61 …. 10.62 s 62(1) …. 10.62 s 62(2) …. 10.62 s 62(4) …. 10.62

lxxv

Property Law in New South Wales Western Australian Land (Titles and Traditional Usage) Act 1993 …. 4.67

Natural Resources Management Act 2004 s 146(8) …. 1.4 Real Property Act 1886 …. 8.3, 8.107 Pt 13A …. 8.157 s 6 …. 8.114

Brazil Constitution of the Federative Republic of Brazil Art 5(xxiii) …. 5.52, 5.53 Art 183 …. 5.53

Tasmania Electronic Conveyancing (Adoption of National Law) Act 2013 …. 8.17 Land Titles Act 1980 s 52 …. 8.157 s 63 …. 9.131 s 138U …. 5.107, 5.148 Mining Act 1929 …. 1.75 s 15C(1) …. 1.75 Water Management Act 1999 s 60 …. 1.4

Ireland Ireland Land and Conveyancing Reform Act 2009 s 9(2) …. 3.119

Malaysia National Land Code 1965 s 340 …. 8.35

New Zealand Personal Property Securities Act 1999 …. 14.5 Property Law Act 2007 s 57(1) …. 3.119 s 212 …. 11.4 Standard Residential Tenancies Agreement cl 42 …. 11.112 cl 44 …. 11.112

Victoria Charter of Human Rights and Responsibilities Act 2006 …. 5.14, 5.62 s 20 …. 1.78 Electronic Conveyancing (Adoption of National Law) Act 2013 …. 8.17 Limitation of Actions Act 1958 s 14(1) …. 5.122 s 14(4) …. 9.9 Perpetuities and Accumulations Act 1968 s 5 …. 10.61 Transfer of Land Act 1958 …. 8.141 Pt V Div 1B …. 8.157 s 43 …. 8.203 s 44(1) …. 8.32 s 77 …. 14.107

United Kingdom

Western Australia Electronic Conveyancing Act 2014 …. 8.17 Land Act 1898 s 109 …. 4.59 Land Act 1933 …. 4.58 s 32 …. 4.62 s 109 …. 4.59 Noongar (Koorah, Nitja, Boordahwan) (Past, Present, Future) Recognition Act 2016 …. 4.32 Property Law Act 1969 s 34(1)(a) …. 6.22 Public Works Act 1902 …. 4.58, 4.59 s 18 …. 4.59 Rights in Water and Irrigation Act 1914 s 3 …. 4.59 Titles Validation Act 1995 …. 4.67

Abolition of Feudal Tenure etc (Scotland) Act 2000 …. 3.119 Accumulations Act 1800 …. 10.56 Administration of Justice Act 1705 (Imp) …. 9.133 Australia Act 1986 …. 3.28, 3.29 Australian Courts Act 1828 (9 Geo IV c 83) …. 3.6 Common Law Procedure Act 1852 …. 5.28 Contracts (Rights of Third Parties) Act 1999 …. 13.53 s 1 …. 13.53 s 1(3) …. 13.53 Crown Suits Act 1769 …. 3.12, 5.138 Forfeiture Act 1870 (Imp) …. 3.30 Human Rights Act 1998 …. 1.76 Inclosure Act 1773 …. 3.16 Judicature Act 1873 …. 3.83, 11.50 Land Registration Act 1925 …. 3.28 Land Registration Act 2002 …. 5.60, 5.159 Pt 9 and Sch 6 …. 5.65 Landlord and Tenant (Covenants) Act 1995 …. 11.86 Law of Property Act 1922 …. 3.16 Law of Property Act 1925 …. 3.28, 3.30 s 36 …. 9.131 s 56(1) …. 13.10

lxxvi

Table of Statutes s 62 …. 12.27 s 78 …. 13.4 s 79 …. 13.52 s 79(1) …. 13.12 Limitation Act 1980 s 15(6) …. 5.115 Sch 1 para 8(4) …. 5.115 Magna Carta 1215 …. 3.17 ch 34 …. 5.20 New South Wales Constitution Act 1855 (Imp) …. 3.25, 3.26 Nullum Tempus Act …. 3.36 Prescription Act 1832 …. 12.32 Proceeds of Crime Act 2002 …. 1.3 Real Property Limitation Act 1833 …. 5.28 Sale of Waste Lands Act 1842 (Imp) …. 3.24 Settled Land Act 1925 …. 3.28 Statute of De Donis Conditionalibus 1285 …. 3.58, 3.77, 10.3 Statute of Frauds 1677 …. 3.61, 6.7, 6.8 s 1 …. 11.13 Statute of Marlborough 1267 …. 3.64, 3.66 Statute of Quia Emptores 1290 …. 3.17, 3.43, 10.3 Statute of Uses 1535 …. 1.3, 3.108, 3.110, 6.3, 10.5 Statute of Westminster 1931 …. 3.28 Statute of Wills 1540 …. 3.17, 3.43, 3.76, 3.108, 10.5 Statutes of Forcible Entry …. 2.37 Tenures Abolition Act 1660 (12 Car 2 c 24) …. 3.18 Torts (Interference with Goods) Act 1977 s 7 …. 2.68 Trustee Act 1925 …. 3.28

Wills Act 1837 (Imp) s 28 …. 3.76 s 34 …. 3.76

United States of America Constitution Fifth Amendment …. 1.15 Fourteenth Amendment …. 1.15 Consumer Protection Act 1968 …. 14.13 Texas Trust Code s 112.036 …. 10.63 Uniform Commercial Code Art 9 …. 14.5

International European Community Directive on Unfair Terms in Consumer Contracts (EC Directive 93/13) …. 14.141 European Convention on Human Rights …. 5.60 Art 1 …. 1.78, 5.14 Art 8 …. 5.14, 5.63 European Convention on Human Rights–Protocol No 1 …. 5.60, 5.61 Art 1 …. 1.76, 5.61, 5.160 Art 8 …. 5.14 International Covenant on Civil and Political Rights …. 1.76, 4.86 International Covenant on Economic, Social and Cultural Rights (ICESCR) …. 1.76, 4.86 Art 11 …. 5.63 Universal Declaration of Human Rights Art 17 …. 1.78

lxxvii

Chapter 1

The Concept of Property Connections to Property 1.1  Property, and in particular real property, plays a significant role in all our daily lives.1 For a start we all live somewhere, whether it be in a house, apartment, shed, tent, caravan or simply on the bare earth itself.2 Some people own the property they live in, while others may be tenants, guests or squatters. Others still simply have a right to use another’s property as a shortcut to get to places such as the beach, bus stop or baker’s. Additionally, lenders may take security over one’s property to reduce their risk or developers may decide to place ongoing restrictions on the height or use of materials in certain developments.3 In short, the range and strength of property interests are extensive.4 In most societies, certainly capitalist ones, the accumulation of property is also generally associated with wealth and power. People with few or no property rights are likely to become part of an underclass linked to poverty.5 However, what is clear is that every day we engage with property6 and are expected not to violate the property rights of others, just as we expect them not to violate ours. Real property (also known as realty) includes land, buildings, fixtures, easements and profits à prendre, for example. See Chapter 2, Figure 2.1. 2. On the socio-legal nature of housing and property in the UK context, see D Cowan, Housing Law and Policy, Cambridge University Press, Cambridge, 2011. See also J Gray, ‘Home Sweet Home-Happiness, Housing and the Law’ (2018) 13 (2) Journal of Comparative Law 57–84 at 57. 3. See N Blomley, ‘Precarious Territory: Property Law, Housing and the Socio-Spatial Order’, (2020) 52 (1) Antipode, 33–57 for a discussion of the different terms on which people live inside ‘the territory of property’ (p 37), a concept Blomley describes as ‘organis[ing] forms of conditional space access’ rather than simply ‘an in/out binary space’ (p 37). 4. The range of property interests may include easements, mortgages and restrictive covenants, for example. 5. For a discussion on poverty, see  A Durbach, B Edgeworth and V Sentas, Law and Poverty in Australia: 40 Years after the Poverty Commission, The Federation Press, Sydney, 2017, particularly C Goldie and B Edgeworth, ‘Law, Poverty and Inequality in Contemporary Australia’, Ch  5, p 73. Note N Blomley, ‘Precarious Territory: Property Law, Housing and the Socio-Spatial Order’, (2020) 52 (1) Antipode, 33–57 at 37 speaks of ‘the profound relationship between housing, law, race and poverty’. 6. We engage with property in land (an immoveable, known as real property) and with other non-land; that is, moveable property (known as either personal property, personalty or choses, such as cars, chairs or shares). The term ‘personal property’ is not to be confused with the term ‘personal right’. The latter, 1.

1

1.1

Property Law in New South Wales

The capacity of property — and especially real property in the form of housing — to inform, guide, influence and possibly even determine the direction of our lives, is vast. Safe and affordable housing is, for example, related to better health outcomes and a heightened sense of security.7 It also ‘can help … enhance equality of opportunity, social inclusion and mobility’,8 while awareness of the importance of ‘home’ (a concept closely related to real property and housing) is on the increase.9 ‘Home is the place where we live, that we face, go out into, and engage with, the world. Our relationship with the space in which we are housed and the place we call “home” informs how we function in society.’10 In the 1980s, Radin observed the deep relationship between people and their homes when she stated: It would be an insult for the state to invade one’s home because it is the scene of one’s history and future, one’s life and growth … one embodies or constitutes oneself there. The home is affirmatively part of oneself — property of personhood — and not just the agreed-on locale for protection from outside interference.’11

Yet, clearly property’s significance is not limited to its association with, and relationship to housing and the concept of home. Property and property law are also significant in relation to office blocks, farms, industrial sites, shopping centres, holiday resorts, public buildings, commercial sites, traditional lands belonging to Indigenous Australians, shares, copyright and patents, for example. Given property’s importance, it is perhaps unsurprising that disputes over property are both common and bitterly contested.12 Further, debate around property issues often dominates political and social agendas. For example, in Australia, particularly in the eastern capital cities of Sydney and Melbourne, the question of housing affordability and, especially the way in which law, policy and governance impact on the capacity of young people to access the housing market, has been very topical for several years.13 During the COVID 19

7. 8.

9. 10.

11. 12. 13.

although sounding similar to ‘personal property’, actually denotes a non-proprietary interest such as a licence (which may, but will not necessarily, relate to land). See  M Desmond and R Tolbert Kimbro, ‘Evictions Fallout: Housing, Hardship and Health’ (2015) 94 Social Forces 1-30; D Madden and P Marcuse, In Defense of Housing: The Politics of Crisis, Verso, London, 2016, pp 36–38. Australian Institute of Health and Welfare, Housing Affordability 30 June 2021, available at . Accessed 10  July  2021, citing N Gurran, K Hulse, J Dodson, M Pill, R Dowling, M Reynolds & S Maalsen, 2021. Urban Productivity and Affordable Rental Housing Supply in Australian Cities and Regions, AHURI Final Report No 353, Melbourne. M Allen Fox, Home — A Very Short Introduction, Oxford University Press, Oxford, 2016. J Gray, ‘Home Sweet Home: Happiness, Housing and the Law’ (2018) 13(2) Journal of Comparative Law 57–84 at  57. For a discussion of home see  L Fox, Conceptualising Home: Theories, laws and Policies, Hart Publishing, Oxford, 2007; L Fox O’Mahony, ‘The Meaning of Home: From Theory to Practice’ (2013) 5(2) International Journal of Law in the Built Environment 156. MJ Radin, ‘Property and Personhood’ (1981-1982) 34 (5) Stanford Law Review 957, 992. G Alexander and E Penalver, An Introduction to Property Theory, Cambridge University Press, New York, 2012, p 1. As an example, see Hardy v Sidoti [2020] NSWSC 1057, where a dispute over a tiny section of land 0.88 metres x 3.81 metres went all the way to the Supreme Court of New South Wales. V Milligan, J Yates and H Pawson, Submission to the Council for Federal Financial Relations Affordable Housing Working Group, City Futures Research Centre, Faculty of Built Environment, University of NSW Australia,

2



The Concept of Property

1.2

pandemic, the role and application of property rights, particularly in the context of leases (both residential and commercial) and mortgages, has also been (and continues to be) a key focus.14 Should lessors be prevented from evicting non-rent paying tenants in order to help stem an increase in homelessness (a condition that is both likely to contribute to community transmission of COVID 19 and elevate the risk of homeless people’s exposure to the virus)?15 Should the law be amended so that COVID-impacted tenants are able to negotiate rent reductions when their hours of work are reduced and what implications might such reductions have on lessors, who may, in turn, be dependent on rental income?16 These are some of the many COVID-related property law and policy questions that the pandemic has raised. 1.2  The question of the compulsory acquisition, by government, of privately owned land, for public benefit remains another issue of concern. For example, the resumption Sydney, 2016; C Martin, Submission to the Review of the Residential Tenancies Act 2010 (NSW), City Futures Research Centre, Faculty of Built Environment, University of NSW Australia, Sydney, 2016; H Pawson and S Herath, Disadvantaged Places in Urban Australia: Residential Mobility, Place Attachment and Social Exclusion, AHURI Final Report No 243, Australian Housing and Urban Research Institute Limited, Melbourne (accessed 29 May 2017), . More broadly, see also T Burke, C Nygaard and L Ralston, L (2020) Australian Home Ownership: Past Reflections, Future Directions, AHURI Final Report No 328, Australian Housing and Urban Research Institute Limited, Melbourne (accessed 10 May 2021), See Aussie–Core Logic, 25 Years of Housing Trends (accessed 26  July  2021), ; Domain, June 2021 House Price Report (accessed 2  August  2021), , which demonstrates that Sydney house prices soared by almost $1200 per day in the June 2021 quarter. 14. See for example, amendments to the Residential Tenancies Act 2010 (NSW) and the Residential Tenancies Regulation (NSW) 2019 made pursuant to the COVID-19 Legislation Amendment (Emergency Measures) Act 2020 (repealed) and the powers that Act gave to the Minister to recommend to the Governor temporary (six-month) regulations. The key amendments included a moratorium on evictions, the requirement of good faith negotiations, longer notice periods for non-rent terminations and the definition of ‘impacted’ tenant, in relation to the lessor’s recovery of possession and the termination of the lease. Similar amendments were introduced during later COVID lockdowns. See  Residential  Tenancies  (COVID-19 Pandemic Emergency Response) Amendment Regulation 2021 (NSW) (accessed 2  August  2021), . For 2020–2021 COVID-related commercial and retail lease amendments see Retail and Other Commercial Leases (Covid 19) Regulation (No 3) 2020 and Retail and Other Commercial Leases Regulation 2021 under the Retail Leases Act 1994 (accessed 2  August  2021), . See  also E Baker, R Bentley, A Beer and L Daniel (2020) Renting in the Time of COVID-19: Understanding the Impacts, AHURI Final Report No. 340, Australian Housing and Urban Research Institute Limited, Melbourne (accessed 10 July 2021), . 15. Note the New  South  Wales Government strategy to place homeless people in hotels during the Sydney, 2020 and 2021 lockdowns; NCOSS and Homelessness NSW Joint Press Release, 28 June, 2021, Government Must Support the Most Vulnerable and Those on the Frontline during Lockdown (accessed 29 July, 2021), . 16. For a discussion of COVID-related tenancy law reforms see C Martin,‘Australian Residential Tenancies Law in the Covid-19 Pandemic: Considerations of Housing and Property Rights’ (2021) 44 (1) University of New South Wales Law Review 197–226. Consider also how some groups (eg, self-funded retirees) may be exposed to loss of, or reduction in rental income that they cannot mitigate, by way of land tax (or other) set-offs.

3

1.2

Property Law in New South Wales

of private land to build motorways or tunnels aimed at decreasing traffic congestion for the wider community continues to be the subject of robust debate.17 So, too, has been the issue of the privatisation of New South Wales’s land titling services, the running of which is the subject of a 35-year concession in favour of a private operator.18 Given that the security of registered land titles is the cornerstone of the New South Wales Torrens land titling system, the move to privatisation raises several concerns.These include: whether the integrity of the titling system would be compromised; the likelihood of increased costs for home buyers;19 and whether the extensive and specific expertise of the former Land Property Information’s (LPI’s) skilled workforce would be lost.20 Hence, we can see that property issues are commonly connected to social, legal and political arrangements. 1.3  However, the importance of property and its capacity to excite great passion is hardly a new phenomenon. Historically, wars have been fought over property, particularly land,21 but arguably also over property in oil22 and water.23 Political and legal decisions have also been made as to who is eligible to hold property rights with married women,24 Indigenous Australians25 and criminals26 at times being prevented from doing so. Further, marriages have been organised on the basis of prior property holdings and potential entitlements.27 Kings, queens, the legislature and the Church have all, at various times, 17. See, for example, the land resumptions associated with the WestConnex motorway in Sydney’s south west (accessed 2 April 2017), . For the ongoing nature of concern see City Hub–Inner West Independent, WestConnex Substrata Acquisition Cheats Residents out of Receiving Fair Compensation (accessed 29  July  2021), . 18. Legislation approving the sale of land titling services in New South Wales was passed in September 2016, and the concession is expected to commence in 2017. Land Property Information (LPI) (a division of a larger government department) is responsible for land titling services. Other land-related services such as valuations and titling have been privatised previously. 19. Note that in the United States, title insurance is common. If such insurance became necessary in New South Wales, it would be likely to increase costs for property owners. 20. See, for example,The Law Society of New South Wales, Baird Government should follow UK & abandon LPI ‘cash grab’, Sydney, 5 December 2016 (accessed 1 March 2017), . 21. Nazi Germany’s policies of expansion before and during World War II were commonly explained as a quest for more land, or ‘lebensraum’ (living space). 22. For example, ownership of oil was a factor in the Iraqi and Kuwaiti conflicts of the 1990s. 23. Water lies at  the heart of aspects of conflict in the Middle East. See, for example, M Zeitoun, ‘The Influence of Narratives on Negotiations over and Resolution of the Upper Jordan River Conflict’ (2013) 18(2) International Negotiation 293–322. 24. RF Atherton, ‘Expectation Without Right: Testamentary Freedom and the Position of Women in 19th Century New South Wales’ (1988) 11 University of New South Wales Law Journal 133. 25. Prior to the recognition of native title in 1992, Indigenous people’s traditional ownership of land was unrecognised by the common law (Mabo v Queensland (No 2) (1992) 175 CLR 1; 141 ALR 129). 26. Historically, the property of a felon escheated to the Crown under the doctrine of bona vacantia.The felon could not hold it. See ND Ing, Bona Vacantia, Butterworths, London, 1971. A Hayworth, ‘Bona Vacantia’ (1924) 2 Canadian Bar Review 250; Proceeds of Crime Act 2002 (Cth). 27. See the marriages of European royalty and, more generally, the concept of the marriage settlement and contract. See D Wilson, Women, Marriage and Property in Wealthy Landed Families in Ireland, 1750–1850, Manchester University Press, Manchester, 2008; BJ Harris, English Aristocratic Women, 1450–1550: Marriage and Family, Property and Careers, Oxford University Press, Oxford, 2002.

4



The Concept of Property

1.3

come into conflict over the distribution of property and the taxes that are commonly associated with it.28 The state has also been at  odds with individuals over property, particularly in relation to the preservation of historic and cultural sites,29 as well as in relation to the selling off of public housing.30 Yet, what we mean by ‘property’ is often not clearly spelt out. Indeed, the term’s meaning may vary according to who is using it and in what context it is being used. Several scholars point out that property is a complex and contested term,31 while, according to others, it may even defy definition.32 Despite such difficulties, it is helpful to explore ideas about property’s definition and the various theoretical justifications for property given that property is so fundamental to society’s functioning, in many cases acting as a tool of social organisation and being closely connected to the notion of democracy.33 Real property has assumed a place of great importance in the property pantheon with ‘property regimes [extending] to regulate the use, distribution, and disposal of the resources that constitute the habitats in which they are embedded’.34 Unlike contract rights that are enforceable as and between the parties to the contract, property rights are enforceable against all the world. Hence, I do not need to have a special agreement with an individual not to harm my land. I am entitled to expect that everyone will uphold my property rights in my land. Further, the remedies for breach of a real property right historically have been more extensive than for some other rights, such as personal property rights, contractual rights or rights in tort. This is the case because remedies for real property relied on ‘real actions’. Real actions permitted a breach of a real property right to sound in restoration of the res (Latin for ‘the thing’) itself. Hence, if person A forcibly evicted person B from person B’s freehold land, person B could obtain an order that the land be returned to him or her. He or she did not have to settle for damages. The freeholder could get back the res, that is, the particular block of land itself.35

28. See, for example, the rationale for the introduction of the English Statute of Uses 1535. The statute was designed to limit the effect of the use (a precursor to the modern day trust) because putting property behind a use limited the King’s capacity to collect taxes. (Seisin was absent and it was on the basis of seisin that taxes were collected.) See F W Maitland, Equity, Cambridge University Press, Cambridge, 1949, p 34, for a discussion on the statute. See Chapter 6 at 6.3. 29. As observed above, conflict between the state and individuals concerning property is also evident in relation to compulsory acquisitions; an issue that has been explored in popular culture, in films such as The Castle. 30. B Kontiminas, Sydney’s Iconic Sirius Building Sold to Developers for $150 million, Australian Broadcasting Commission, 28 June 2019 (accessed 8 July 2021), . 31. CM Rose, Property and Persuasion: Essays on the History, Theory, Rhetoric of Ownership, Westview Press, Boulder, 1994, discusses how property either defies definition or is a contested term. 32. J Waldron, The Right to Private Property, Clarendon Press, Oxford, 1998, p 26. 33. JW Singer, ‘Property as the Law of Democracy’ (2014) 63 Duke Law Journal 1287–1335. 34. M Davies, L Godden and N Graham, ‘Situating Property within Habitat: Reintegrating Place, People, and the Law’ (2021) 6 Journal of Law, Property, and Society, 1–50 at 2. 35. C Harpum, S Bridge and M Dixon, Megarry and Wade:The Law of Real Property, 7th ed, Sweet and Maxwell, London, 2008, pp 6, 93.

5

1.3

Property Law in New South Wales

That the remedy for deprivation of land was a return of the land itself was thought appropriate because land was regarded as both unique and valuable. As no two pieces of land are the same, damages were not regarded as adequate compensation for loss of, or infringement to, real property rights. Historically, land was also the most valuable asset anyone would have been likely to hold.36 Therefore, it made sense to protect real property rights by way of extensive remedies over and above the protection afforded to other rights, such as personal property and personal (non-proprietary) rights, breach of which sounded in damages.37 Cooke argues that the public aspects of land ownership have also been responsible for land law being treated as special. She observes that, ‘arguably, if rights in land become chaotic, the resulting disruption is greater than if other forms of ownership are threatened’.38 Although referring to a non-common law jurisdiction,39 Fitzpatrick’s work on land rights’ disruption in East Timor (including the destruction of official land records) offers some support for Cooke’s proposition.40 Property, therefore, is important in a political and economic sense. A secure property system arguably helps enhance order. However, property is also important environmentally, culturally and socially. Additionally, we engage with property both directly and indirectly. Kevin Gray notably underscores property’s importance when he states that land [real property] ‘is where life begins and where life ends’.41 To some, particularly Indigenous Australians, property may also have a spiritual element. They see themselves as belonging to the land and the land belonging to them.42 With this general understanding of our connectedness to property in mind, we now turn to a more specific and theoretical consideration of the concept of property, especially property’s definition and the justifications for property.

Introduction to the Concept 1.4  In 1765, in his influential Commentaries on the Laws of England, Sir William Blackstone offered the following definition of property: 36. Today, other forms of property such as intellectual property, may be more valuable than real property. Further, the kinds of property and the very notion of whether something should be characterised as property at all, are in a constant state of flux and recalibration. See, for example, digital assets. 37. Note that, within the sphere of property, there is a range of subcategories (diagrammatically represented in Chapter 2 at 2.1). The range includes real property and personal property. As Cooke explains, the law also upholds personal rights that are not proprietary at all. She observes that the overlap in terminology is unfortunate. See E Cooke, Land Law, 2nd ed, Clarendon Press, Oxford, 2012, p 6. 38. E Cooke, Land Law, note 37 above, p 6. 39. None of the pre-colonial, Portuguese colonial nor Indonesian eras of rule in East Timor relied on a common law system. 40. D Fitzpatrick, Land Claims in East Timor, Asia Pacific Press, Canberra, 2002; D Fitzpatrick, A McWilliam and S Barnes, Property and Social Resilience in Times of Conflict: Land, Custom and Law in East Timor, Ashgate, Aldershot, 2012. 41. K Gray and S Francis Gray, Elements of Land Law, 5th ed, Oxford University Press, Oxford, 2009, p 2. 42. See Chapter 4.

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The Concept of Property

1.4

Property is that sole and despotic dominion which one man claims and exercises over the external things of the world, in total exclusion of the right of any other individual in the universe.43

A little further on in this work, he was moved to add: ‘There is nothing which so generally strikes the imagination, and engages the affections of mankind, as the right of property’.44 Little difficulty arises in trying to identify the different character of these statements. The first is in the nature of a description that purports to identify what the essential elements of property are and what distinguishes property from other areas of substantive law. The latter is a prescriptive or evaluative assessment, which expresses the author’s moral or political approval of the institution. Each statement is an aspect of the conceptual analysis of property. By contrast, an examination of the concrete rules of property law is a different form of inquiry again. While it is important to keep these questions separate, it is nonetheless evident, as will be seen in the following chapters, that conceptual questions as to the nature of property law, and evaluative assessments as to the appropriate boundary of property rights, repeatedly intrude into the judicial and legislative elaboration of those doctrinal rules.45 For this reason, it is important to examine these conceptual questions; a fuller, critical understanding of those rules should follow from a study of both descriptive and evaluative aspects of property law. For instance, when a legislature enacts a statute regulating rights over water access,46 it is expressing some clear values about appropriate levels of ‘dominion’ and ‘exclusion’. Similarly, where it falls to a court to determine whether ownership of land allows the proprietor to prevent aircraft from flying overhead in light of common law rules developed long before the invention of mechanised flight, judges are forced to develop principles which, in turn, reflect some underlying, evaluative concept of property, such as assessments about the ‘ordinary’ uses of land.47

43. W Blackstone, Commentaries on the Laws of England, Dawsons, London, 1966,Vol II, p 2. 44. Blackstone, note 43 above,Vol II, p 2. 45. See  Hocking v  Director-General of the National Archives of Australia [2020] HCA 19; 94 ALJR 569; 379 ALR 395; [2020] ALMD 2194, where the court considered if letters between the British monarch, Queen Elizabeth II and former Governor-General of Australia, Sir John Kerr, were the property of the Commonwealth or were private. 46. See, for example, Water Management Act 2000 (NSW); ICM Agriculture Pty Ltd v Commonwealth (2009) 240 CLR 140. See J Gray and L Lee, ‘National Water Initiative Styled Water Entitlements as Property: Legal and Practical Perspectives’ (2016) 33 Environmental Planning and Law Journal 284; J Gray and L Lee, ‘Water Entitlements as Property: A Work in Progress or Watertight Already?’ in C Holley and D Sinclair, Reforming Water Law and Governance: Lessons from Leading-Edge Australian Water Strategy, Springer, Singapore, 2018, pp 101–122. Note that in Tasmania and Queensland, unlike New South Wales, the legislature specifically declares that a water licence is the personal property of the licensee. In New South Wales, a note in Water Management Act 2000 (NSW) Sch 1A Pt 1, 2 (2) states that registration of dealings in water access licences has the same effect as registration of estates or interests under the Real Property Act 1900, s 41. See Natural Resources Management Act 2004 (SA) s 146(8); Water Management Act 1999 (Tas) s 60. More generally, see A Scott, The Evolution of Resource Property Rights, Oxford University Press, 2008, Oxford. 47. See, for example, Griffiths J in Bernstein v Skyviews & General Ltd [1978] QB 479 at 488. See also Chapter 8. This question is explored in detail in S Grattan, ‘Judicial Reasoning and the Adjudication of Airspace Trespass’ (1996) 4 Australian Property Law Journal 128.

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1.4

Property Law in New South Wales

There are, therefore, basically three dimensions to the concept of property. These dimensions are: 1. Analytical. What do we mean by the term ‘property’? 2. Philosophical. What justifications are there for a particular regime of property rights? 3. Doctrinal. What are the legal rules that classify, define and delimit property rights, and so mark out the boundary between property rights and other rights? The purpose of this chapter is to explore in parallel fashion these three aspects of conceptual inquiry, and to examine how they bear in a general way on the more specific, doctrinal rules internal to property law to be canvassed in detail in later chapters.

Analytical Dimension What do we mean by the term ‘property’? 1.5  As observed above, the definition of the term ‘property’ has been, and continues to be, the subject of intense debate among philosophers, political theorists and economists. The debate has not been far from the concerns of lawyers either.The chief reason for this is that every definition of property has direct consequences for questions of the distribution of economic wealth and power, the role of governments and the autonomy of citizens. This is demonstrated by an example offered by Bowles and Gintis.48 They point to an episode in 1960 in North Carolina where four Black students refused to leave a café after being refused service on racial grounds. The authors emphasise that this act of defiance was not merely an instance of civil disobedience. It was, at a deeper level, a clash of two qualitatively different classes of rights: the civil rights of the customers as citizens and the property rights of the owner. Likewise, in Davis v Commonwealth.49 In each of these instances, a broad definition of the rights of the property holder will reduce correspondingly the civil rights, or liberties, of others; a narrow one will tip the balance in favour of the non-proprietors, or the public. The drawing of the boundary of property rights is, therefore, commonly an exercise that extends far beyond the question of what an owner may do with his or her property.50 And this issue sometimes raises controversial questions of power and responsibility.51 We will examine the various arguments that suggest where this line ought to be drawn later in this chapter. As a preliminary approach to addressing the question of the boundary between property rights and other forms of rights, it is necessary to determine as an analytical matter the

48. S Bowles and H Gintis, Democracy and Capitalism: Property, Community and the Contradictions of Modern Social Thought, Routledge, London, 1986, p 27. 49. Davis v Commonwealth (1988) 166 CLR 79; 82 ALR 633. See 1.74. 50. Please see preface note as to the use of pronouns in this edition. 51. See, for example, JW Singer, The Edges of the Field: Lessons on the Obligations of Ownership, Beacon Press, Massachusetts, 2000; JW Singer, Entitlements:The Paradoxes of Property,Yale University Press,Yale, 2000.

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The Concept of Property

1.8

general nature of a property right. Blackstone’s definition above (at 1.4) is a useful starting point. It involves the identification of three basic elements in any property right.They are: 1. dominion; 2. exclusion; and 3. external things. 1.6  First, the term ‘property’ directs attention to the dominion or control exercised by a person or legal subject over an object. Dominion denotes some form of legally authorised power. The rights I exercise in relation to my bicycle, my books or my bag clearly fall within this category. This ‘bundle of rights’, as Kevin Gray describes them,52 is necessarily concentrated in one or more specific persons; it makes little sense to say that everyone has dominion. It follows that the term ‘property’ is inappropriate to describe my rights of access and use of the local public library or park. Because these rights are widely enjoyed and distributed among citizens generally, they cannot be described as private property.53 1.7  Second, a supplement to this right of dominion is the right to exclude others from enjoying the same rights or interfering with the property holder’s rights. If there is no right to exclude, it is inappropriate to describe anyone as having dominion. In turn, this means that there are no property rights in existence in relation to the thing.54 In so far as the property holder can call on the state to enforce those rights of dominion and exclusion, it can be concluded that property is a matter of law, rather than physical power. As Jeremy Bentham put it: The savage who has killed a deer may hope to keep it for himself … How miserable and precarious is such a possession! … Property and law were born together and die together. Before laws there was no property; take away laws and property ceases.55

1.8  The third element of property is a ‘thing’56 or, in Blackstone’s words, ‘the external things of the universe’. This may be a physical thing, or chattel, such as a car, horse or painting. The term also extends to land, which includes airspace, and to intangible things such as shares (the ownership of rights in a corporation), patents (the right to develop an invention exclusively) and copyright (the right to reproduce an original work). One further standard feature of a property right, glossed over by Blackstone, is the right to 52. K Gray, ‘Property in Thin Air’ (1991) 50 Cam LJ 252. 53. Stow v  Mineral Holdings (Australia) Pty Ltd (1977) 180 CLR 295; 14 ALR 397. For further discussion of this case, see  1.75. However, it should be noted that increased rights of access, according to scholars such as Gray, may be characterised as a new form of property. See K Gray, ‘Regulatory Property and the Jurisprudence of Quasi-Public Trust’ (2010) 32 Sydney Law Review 22. 54. In the modern era, Merrill is the most well-known proponent of the view that the right to exclude is the sine qua non of property. See TW Merrill, ‘Property and the Right to Exclude’ (1998) 77 Nebraska Law Review  730. HE Smith, although an exclusionary theorist, does not see  exclusion as having the ‘ontological status’ attributed to it by Merrill. See  HE Smith, ‘The Thing about Exclusion’(2014) 3 Brigham-Kanner Property Rights Conference Journal, 95. 55. J Bentham, Principles of the Civil Code, CK Ogden (ed), 1931, Ch  VIII; cited in CB Macpherson (ed), Property: Mainstream and Critical Positions, Blackwell, Oxford, 1978, p 52. 56. HE Smith, ‘The Thing about Exclusion’(2014) 3 Brigham-Kanner Property Rights Conference Journal, 95 observes that ‘property is the law of things’.

9

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Property Law in New South Wales

transfer, or alienate, the thing. This was noted by Blackburn J in Milirrpum v  Nabalco57 where the issue before the court was whether Aboriginal customary rights over land qualified as property. His Honour argued as follows: I think that property in its many forms, generally implies the right to use or enjoy, the right to exclude others, and the right to alienate. I do not say that all these rights must co-exist before there can be a proprietary interest, or deny that each of them may be subject to qualifications.58

It followed from this definition that the Aboriginal plaintiffs, who held the land in accordance with traditional customs that, among other things, prohibited transfer, could not be said to have property rights in their land.59 1.9  As a result of this analysis, it is possible to identify, as Snare does, a set of rules that must be present for ownership to arise.60 Thus, if we say ‘A owns P’, we imply that: 1. A has the right to use P; 2. others may use P if, and only if, A consents; and 3. A may permanently transfer the rights under 1 and 2 to other, specific persons by consent. These primary rules are commonly supplemented by other rules from the areas of criminal law and tort. They can be summarised as: 4. punishment rules, which detail what may happen to B if he or she wrongfully interferes with A’s use of P; 5. damage rules, which require B to pay compensation if he or she damages P without A’s consent; and 6. liability rules, which specify that if A’s use of P results in damage to others he or she will be held responsible. 1.10  Property law is conventionally concerned with the first three of these sets of rules, though in spelling out the consequences of different types of transactions (such as an instance of double dealing where A purports to sell P to both B and C), the liabilities, damages and punishment that the unsuccessful party may incur are often addressed. Equally, certain damage rules may both be relevant to questions of responsibility to others 57. Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141. 58. Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 at 171. As will be seen later, on the issue of the recognition of Indigenous people’s rights to land, this case was overturned by Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1 (Mabo (No 2)), but some the court’s statements outside the native title context remain relevant. 59. For the present law in relation to native title, see Chapter 4. 60. F Snare, ‘The Concept of Property’ (1972) 9 American Philosophical Quarterly 200 at  202–4. See  also G Calabresi and A Douglas Melamed, ‘Property Rules, Liability Rules, and Inalienability: One View of the Cathedral’ (1972) 85 Harvard Law Review 1089. This enormously influential theoretical framework was celebrated in the 1997 special issue of the Yale Law Journal: (1997) 106(7) Yale Law Journal. The relevant articles come from a symposium: Property Rules, Liability Rules, and Inalienability: A Twenty-Five Year Retrospective, pp 2083–213.

10



The Concept of Property

1.12

and constitute the basis for a person’s right to ownership. Thus, where A takes possession of land without the consent of the owner and remains in occupation for 12  years, he or she may use that wrongful act to claim property rights against others, including the former owner. This book will follow a broadly similar course, with a central focus on rules in categories 1–3, and only tangential treatment of the remaining categories of rules. The basic reason for this is one of convenience: the latter set of rules is remedial, or consequential, on the former. They are appropriately dealt with in specialised works. 1.11  Honoré provides a more detailed analysis of the substantive elements of property. He identifies no fewer than 11 elements that may form the basis of a property right. Like Blackstone, his analysis also contains clear, evaluative elements. This is not a criticism in itself; it is merely to acknowledge that evaluation is never far from the surface of legal analysis, however objective it presents itself as being. For Honoré, these 11 elements are the mark of any ‘mature’ legal system.61 The elements comprise the following: 1. The right to possess. This is the right to exclusive physical control of a thing over which ownership is claimed. For non-physical things, such as copyright, control denotes enjoyment in the sense of being able to reap the rewards of using the thing and prevent others from doing so. 2. The right to use. This is the right to actually make use of or enjoy the thing. 3. The right to manage. This is the right to determine who may use a thing and how. 4. The right to the income. This is the right to the value generated by the thing. 5. The right to the capital. This is the right to consume, waste or destroy. 6. The right to security. This is the right to exclude others, including the state. 7. The power of transmissibility. This is the right to transfer the thing to others, either inter vivos (ie, during one’s lifetime), or on death. 8. The absence of term. This is the right to enjoy the thing indefinitely. 9. The prohibition of harmful use. This is the duty to refrain from using the thing in ways that interfere with the property or personal rights of others. 10. Liability to execution. This is the liability to have the thing taken away for the satisfaction of debts. 11. Residuary rights. These are rights that govern the entitlements of other persons to the thing when present ownership has lapsed. 1.12  As we will see in the following chapters, it is not necessary for all of these rights to exist for it to be possible to say that a property right exists. Indeed, the study of property law involves an examination of how these various rights can be divided up between different persons. Honoré emphasises that in most instances of property ownership an owner will be able to demonstrate only some of these rights. Where a building is leased, for example, both landlord and tenant can point to some of these rights, but not others. 61. AM Honoré, ‘Ownership’, in Oxford Essays in Jurisprudence, AG Guest (ed), Clarendon Press, Oxford, 1961, pp 107–47.

11

1.12

Property Law in New South Wales

However, it is the mark of ‘mature’ or ‘liberal’ legal systems that they accommodate this particular, complex patchwork of rights. Why only liberal systems have such a wide range of elements in the property list will be explored below. A preliminary question, however, is whether property is about things or relations. Moreover, a secondary question arises: Does this definition have any political consequences?

Is property a relationship or a thing? 1.13  When we talk about rights to exclude as an integral element of property, we focus on the rights the property holder may exercise with respect to third parties and, conversely, the limitations on the rights of third parties in relation to that object. If we talk about property as essentially a legal relationship between a person (the property holder) and a thing, or indeed as a thing itself (for instance, when we say ‘this is my property’), two habits of thought tend to follow. First, we obscure the extent to which rights over property are almost always limited. In Snare’s and Honoré’s lists, for example, property rights invariably involve prohibitions against certain classes of harmful use. This is the case with land, if it is developed in such a way as to cause environmental damage; where chattels are used recklessly, such as cars driven dangerously; and even intangible property, if directed to harmful ends, as in the case of tobacco trademarks or computer malware. Put another way, these obligations demonstrate both the impossibility and undesirability of absolute or unlimited property rights. Second, where property is seen predominantly as thing–ownership, as it is in Blackstone’s work, it may, on one reading at least, downplay the ‘public interest’ side of property; that is, the fact that property rights are invariably modified by the rights of others. Property as thing–ownership emphasises instead the rights exercisable by the property holder over the thing. It follows from this perspective that attempts to restrict these rights will be seen in light of this theory as a restriction on freedom rather than a balancing of private and public interest. 1.14  These tendencies inherent in the thing–ownership view of property led to a range of critiques of this definition of property in the early part of the 20th century by a group of American jurists known as the ‘legal realists’.62 One such critique was advanced by Hohfeld. He objected to the idea that the concept of property was about things at all. His central contention was that all rights, including property rights, are not concerned with things but legal relations. Thus, to own property is to stand in a particular relationship with others. This relationship can be broken down into powers, duties, rights, immunities and so on. In this way, Hohfeld rejected two elements of Blackstone’s theory: first, its notion of property as an absolute right; and second, its characterisation of property as a physical thing. Thus, he concluded:

62. See, generally,W Twining, Karl Llewellyn and the Realist Movement,Weidenfeld and Nicolson, London, 1973.

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The Concept of Property

1.17

Since all legal interests are ‘incorporeal’ — consisting, as they do, of more or less limited aggregates of abstract legal relations — such a supposed contrast as that sought to be shown by Blackstone can but serve to mislead the unwary.63

1.15  This debate was as much political as academic. Around the time that Hohfeld was writing, Blackstone’s ‘physicalist’ and John Locke’s ‘labour’64 theories of property were having considerable influence on the development of property law by the United States Supreme Court. This process began in the late 19th century and continued until the late 1930s. To some extent, this was due to the fact that the drafting of the United States Constitution was undertaken by people who were heavily influenced by Locke’s labour theory. In particular, the Fifth Amendment, and later the Fourteenth, offered protection to citizens against appropriation of property ‘without due process of law’.65 This meant that property could not be taken by the state (for instance, in cases of compulsory acquisition) unless appropriate compensation had been paid. Originally drafted to restrict state acquisition of property for public purposes without full compensation, the concept of property in the Amendments was expanded in later decisions along Blackstonian lines, to the effect that property rights were absolute and, further, that any interference by the state was, therefore, a curtailment of those rights. 1.16  A sequence of judicial decisions extended this principle — which came to be known as ‘substantive due process’ — to legislation that purported to regulate business activities, particularly in relation to the setting of prices.66 In the leading case of Lochner v  New York,67 legislation regulating working hours was struck down on the basis that it amounted to a constitutionally invalid interference with freedom of contract. Later, Pitney J of the United States Supreme Court summed up the philosophy behind such decisions as follows: It is impossible to uphold freedom of contract and the right of private property without at the same time recognizing as legitimate those inequalities of fortune that are the necessary result of those rights.68

For Keynes, this represents the emergence of ‘fidelity to laissez-faire constitutionalism’.69 1.17  Another realist, Felix Cohen, described this approach as the ‘thingification’ of property, on the ground that it presumed to derive legal principles from the nature of the thing itself.70 Yet to argue in this way was to invert the process by which property rules 63. W Hohfeld, ‘Some Fundamental Legal Conceptions As Applied in Judicial Reasoning’ (1913) 23 Yale Law Journal 16 at 24. 64. For details of this theory, see 1.23–1.26. 65. See the Fourteenth Amendment, US Constitution: ‘No individual can be deprived of property without due process of law’. 66. For an excellent discussion of this and related issues, see E Keynes, Liberty, Property and Privacy: Toward a Jurisprudence of Substantive Due Process, Pennsylvania State University Press, Pennsylvania, 1996, especially Chs 5 and 6. 67. Lochner v New York 198 US 45 (1905). 68. Coppage v Kansas 236 US 1 at 17 (1915). 69. Keynes, Liberty, Property and Privacy, note 66 above, p 128. 70. F Cohen, ‘Transcendental Nonsense and the Functional Approach’ (1935) 35 Columbia Law Review 809.

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developed. First, a policy was decided in relation to how a thing should be enjoyed; later, a rule was devised to regulate that thing. In other words, political choices gave rise to legal rules. They did not issue from the nature of things. Moreover, if property was seen in a broader way as a set of legal relations among many people, the social impact of particular rules would be more readily brought into focus. In this way, private right and public interest could be more effectively balanced. The United States Supreme Court eventually abandoned this approach. In 1937, after threats that the court might be stacked to ensure New Deal legislation would not be ruled unconstitutional, the court overturned earlier authority which had heavily restricted the regulation of private property.71 This can be seen as a triumph of the relational view of property. Equally, it better accords with the totality of rights and obligations listed under the definition of ‘property’ by Snare and Honoré. 1.18  An argument similar to this relational one was advanced by the realist Morris Cohen who sought to attack a different aspect of the thesis of property as thing–ownership.72 Cohen focused on how our legal thinking tends to draw a broad distinction between property and sovereignty; the former is an element of civil or private law, whereas the latter properly belongs to the sphere of the political, or public law. In parallel fashion, the underlying principle of the first is dominium, or control over things.73 The latter by contrast is underpinned by the principle of imperium, or rule over citizens.This is a modern idea, Cohen emphasises. Feudalism was characterised by a fusion of these two principles: ownership of land meant direct control over tenants, evidenced by oaths of fealty, and rights on the part of lords, such as power to consent to the tenant’s marriage or to be the local magistrate. But on closer examination, Cohen adds, while political power and property ownership have been formally and institutionally separated in law in highly industrialised societies, they often continue to involve analogous exercises of rules by property owners. Thus, he gives the example of the power that ‘bankers and financiers exercise when they determine the flow of investment’, dramatically evident in the case of ‘needy countries’.74 It follows that ‘[t]here can be no doubt that our property laws do confer sovereign power on our captains of industry and even more so on our captains of finance’. He concluded that this

71. See, for example, West Coast Hotel Co v Parrish 300 US 379 (1937). For a detailed account of this period, see Keynes, Liberty, Property and Privacy, note 66 above, Ch 6. 72. M Cohen, ‘Property and Sovereignty’ (1927) 13 Cornell Law Review 8. 73. For a discussion of the interaction between the public and private realms in the context of the built environment, see J Pomeroy,‘The Public Realm, Civility and Community’ in The Skycourt and the Skygarden: Greening the Urban Habitat, Routledge, Abingdon, UK, and New York, USA, 2014. Pomeroy observes at p 15, ‘[T]he street and square have traditionally formed the built manifestation of the public realm and the focus of civil society’s cultural formation, political practice and social encounter. Predominantly owned, governed and managed by the state, they have provided an environment for citizens to socially engage without fear of revealing one’s character, and born out of the necessary tensions between public (state) and private (civil society) to convert space into place.’ 74. Cohen, ‘Property and Sovereignty’, note 72 above, at 14.

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ought to be restricted in the same way that autocratic rules have been curbed by the public law of liberal democratic societies. 1.19  A further criticism of the notion of property as thing–ownership is largely historical. It addresses the dramatic changes in property over time. While the notion of property as thing–ownership mirrored patterns of resource distribution in the pre-industrial era, where small-scale, individual ownership of goods and enterprises was the dominant form of property, industrialised societies are organised along completely different lines. In the latter societies, the great proportion of industrial property is held by corporations, where legal control is fragmented into very specific entitlements spread across large numbers of individuals and institutions, such as managers, directors, shareholders, debenture-holders, mortgagees, unions, workers, insurers and so on. In this context, property as thing – ownership begins to look increasingly implausible.75 Perhaps it is closer to the mark to conclude that the variety of property rights — and, therefore, the boundary between property rights and other rights — makes it more difficult to identify a set of core characteristics than it was in Blackstone’s time. This idea is not so novel. It is reflected in most law curricula: corporations law, securities law and industrial relations law, to take a few examples, are not widely seen as sub-branches of property law, but rather as distinct areas of legal relations underpinned by principles which are unhelpfully reduced to notions of ownership, even if some elements of ownership illuminate aspects of these laws (for instance, in relation to the transfer of shares). 1.20  Political and philosophical justifications of property have become a little hazier too, given this changed landscape of property rights. Grey exaggerates when he says that ‘[t]he dissolution of the traditional conception of property erodes the moral basis of capitalism’.76 He bases his argument on the powerful force that flows from seeing property as an individual’s exclusive right over a thing he or she has made, bought, or derives a livelihood from. However, there is a germ of truth in his assessment: it is surely the case that the moral claims that an individual worker has in the fruits of his or her labour are generally seen as more justifiable and, therefore, generate more popular resistance to any state interference, than the very different bundles of rights owned by shareholders, creditors, mortgagees, and managers of large corporations. More topically, these differences can be seen in relation to current political debates around aged care user-pays policies, which impinge on rights over ‘the family home’. These distinctions and others feature prominently in the philosophical arguments about property which are the subject of the next section. 1.21  Despite the weaknesses of the ‘thing-ownership’ approach to property outlined above and despite the considerable support for Alexander’s view that ‘[n]o expression better 75. On this general point, see TC Grey, ‘The Disintegration of Property’ in JR Pennock and JW Chapman (eds), Nomos XXII: Property, New York University Press, New York, 1980, pp 69–85; and, from a Marxist perspective, K Renner, The Institutions of Private Law in Relation to their Social Function, O Kahn-Freund (ed), A Schwarzschild (trans), Routledge, London, 1949. 76. Grey, ‘The Disintegration of Property’, note 75 above, pp 76–77.

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captures the modern legal understanding of ownership than the metaphor of property as a bundle of rights’,77 the thing-ownership approach to property has undergone somewhat of a revival in recent times.78 Proponents of a means-based (rather than ends-based) approach to property have played an important part in this revival. Means-based theorists focus on the tools or strategies of property while ends-based theorists focus on the outcomes that property is to serve, and the values, such as democracy and/or human flourishing, which underpin those outcomes. Baron observes that means-based theorists emphasise the ‘mechanics of how property operates’, including property’s ‘use of qualities such as “modularity”79 or “boundaries”80 or “residual managerial authority”81 to solve problems of social organization and information economy’.82 Means-based property theorists also argue that the bundle of rights approach obscures critical features of property such as the right of exclusion, indirectness and the in rem nature (or ‘thingness’) of property.83 Heller alluded to this obscurity when he observed that: … while the modern bundle-of-legal relations metaphor reflects well the possibility of complex relational fragmentation, it gives a weak sense of the ‘thingness’ of private property.84

Yet ‘thingness’ may be important. In the environmental sphere, a focus on ‘thingness’ may prove attractive. It may serve to help emphasise the physicality and materiality of natural resources, leading to enhanced environmental awareness and improved ecologically sustainable outcomes. The ‘thingification’ of property may arguably help refocus attention on the object or thing itself, meaning that property is not seen as a series of disaggregated

77. G Alexander, Commodity and Proprietary: Competing Visions of Property in American Legal Thought, University of Chicago, Chicago, 1997, p 19. Note also that Penner observes that ‘[t]he currently prevailing understanding of property in what might be called mainstream Anglo-American legal philosophy is that property is best understood as a “bundle of rights”’ in JE Penner, ‘The “Bundle of Rights” Picture of Property’ (1995) 43 University of California Los Angeles Law Review 711 at 712. 78. Key proponents of property as the law of things include Smith and Penner. See HE Smith, ‘Property as the Law of Things’ (2012) 125 Harvard Law Review 1691; JE Penner, The Idea of Property in Law, Clarendon Press, Oxford, 1997, pp 68–73. See also RC Ellickson, ‘Two Cheers for the Bundle-of-Sticks Metaphor, Three Cheers for Merrill and Smith’ (2011) 8 (3) Econ Journal Watch 215. Note that other scholars such as Merrill have chosen to emphasise one stick in the bundle of rights as being paramount. Merrill emphasises the exclusion stick alone rather than a bundle of sticks. See  TW Merrill, ‘Property and the Right to Exclude’ (1998) 77(4) Nebraska Law Review 730; TW Merrill, ‘Property and the Right to Exclude II’ (2014) 3 Brigham-Kanner Property Rights Conference Journal 1. 79. For example, see HE Smith, ‘Institutions and Indirectness in Intellectual Property’ (2009) 157 University of Pennsylvania Law Review 2083 as cited in J Baron, ‘Rescuing the Bundle of Rights Metaphor’ (2014) (82) 1 Cincinnati Law Review 57. 80. HE Smith, ‘Property as the Law of Things’ (2012) 125 Harvard Law Review 1691 at 1703, as cited in Baron, ‘Rescuing the Bundle of Rights Metaphor’, note 79 above. 81. TW Merrill, ‘The Property Strategy’ (2012) 160 University of Pennsylvania Law Review 2061. 82. J Baron, ‘Rescuing the Bundle of Rights Metaphor’ (2014) (82) 1 Cincinnati Law Review 57 at 59. 83. Baron, ‘Rescuing the Bundle of Rights Metaphor’, note 79 above. 84. M Heller, ‘Boundaries of Private Property’ (1997) 108 Yale Law Journal 1163 at 1193.

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rights disconnected from the ‘thing’ those rights govern.85 Accordingly, recasting focus on the ‘thing’ may help direct attention to the status and condition of the natural resources themselves and facilitate easier recognition of environmental harm.86

Philosophical Bases of Property 1.22  In addition to the question of what we mean when we use the term ‘property’, there is the question of our evaluation of it. Property is always a reflection of some of the most deeply held values in any society. This is unsurprising given that property is the institution which determines the precise nature and distribution of the means of production, consumption and exchange. In doing so, it is also the primary determinant of wealth and the means of sustenance, and much more besides. Furthermore, as Macpherson argues, it may be more accurate to suggest that it is the ideas and values of the dominant classes that determine the meaning and ambit of ‘property’ at any time.87 This statement is as true of Blackstone’s theory as any other.The Blackstonian definition of ‘property’ (at 1.4) contains many clear resonances with the philosopher John Locke’s earlier ‘labour theory’ of property. As one of the dominant modern theories of property, the labour theory will be examined first.

Labour theory of property 1.23  This theory owes its existence to the philosophy of John Locke as the first philosopher to ground the institution of private property exclusively in labour. The basic idea of this theory is that people are entitled to own both what they produce by means of their own efforts and whatever they have laboured on. Central to this argument is its individualism. Thus, for Locke, the starting point in justifying the institution of private property was the individual human being. In so far as an individual has an inviolable property right in his or her own person, that individual has an analogous right in his or her labour. Equally, individuals have a property right in the external things of the world with which they have ‘mixed their labour’. So, the catching of a wild animal, or the staking out of a field for agriculture, gives rise to a property right in the animal and field respectively: For this labour being the unquestionable property of the labourer, no man but he can have a right to what that is once joyned to, at least where there is enough, and as good, left in common for others.88

85. See N Graham, ‘Dephysicalisation and Entitlement: Legal and Cultural Discourses of Place as Property’ in B Jessup and K Rubenstein (eds), Environmental Discourses in Public and International Law, Cambridge University Press, Cambridge, 2012; E Freyfogle, On Private Property: Finding Common Ground on the Ownership of Land, Beacon Press, Boston, 2007, p vii. 86. For a discussion of property as a thing, see Smith, ‘Property as the Law of Things’, note 80 above, at 1691. For a discussion of the weaknesses in the bundle of sticks approach as it applies to land, see N Graham, Lawscape, Routledge, Abingdon, 2011. See also N Graham, ‘Dephysicalised Property and Shadow Places’ in R Bartel and J Carter (eds), Handbook of Space, Place and Law, 2021, Edward Elgar Publishing, Cheltenham, UK, pp 281–91; M Davies, L Godden and N Graham ‘Situating Property within Habitat: Reintegrating Place, People, and Law’, (2021) 6 Journal of Law, Property, and Society, 1–50. 87. Macpherson (ed), Property: Mainstream and Critical Positions, note 55 above. 88. J Locke, Second Treatise on Government, P Laslett (ed), Cambridge University Press, Cambridge, 1964, [28].

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The labourer is justified in keeping the things worked on because he or she has ‘added something to them more than nature … had done’.89 Locke’s theory is based on ‘natural rights’. Legal rights to property, to the extent that they derive from these natural acts, pre-exist the positive laws of any state. They originate in the act of appropriation or creation of an object. This act is protected by the law of nature which gave property rights to individuals. On Locke’s reasoning, individuals later came together to form states premised on the protection of these pre-existing rights. A further element of this theory is that it applies universally: any individual can, at  least in principle, become a property holder. This marks it out from earlier theories which confined property to certain classes or groups. 1.24  Locke suggests that individuals may appropriate as much property as they can by labouring on it, subject to two limits. First, there must be ‘enough, and as good, left in common for others’;90 that is, as long as others suffer no reduced opportunities to acquire property as a result of the initial appropriation. Second, no one should appropriate so much property as would ‘spoil’ in his or her possession. Taken together, these would both seem to impose considerable restrictions on individual wealth maximisation and at the same time introduce a significant egalitarian counterweight to the otherwise unlimited individualism of this theory.Yet Locke imposes significant limitations on each. In relation to the first proviso, there is no objection to unlimited acquisition of land, for example, because — far from worsening the position of others — such appropriation actually improves their situations.Why? Because in order to provide for his or her own sustenance, a person would need to enclose and cultivate, say, a 10-acre block of land. The same person might need 100 acres of uncultivated land to provide food to live on. Accordingly, such an act of appropriation actually increases the amount of land available to others. Locke concludes that in effect it involves giving ‘ninety acres to Mankind’.91 In the case of spoilage, the conversion of perishable foodstuffs into money will ensure that the producer will not commit any unacceptable offence to principles of property. First, money does not spoil; second, the surplus produce will be for the benefit of others. 1.25  These arguments give rise to many difficulties. First, Locke makes no distinction between the mixing of labour with something and the mere act of appropriation. If it is the former that yields a strong moral argument in favour of affording an individual a property right, because labour gives an object the impress of the labourer’s personality, the same cannot be said of the appropriator who does no meaningful mixing of labour at all; for example, someone who merely encloses land. This is particularly so in light of Locke’s other rationale for giving property rights to the ‘labourer’; namely, that the labourer has added value to the thing. It is hard to avoid the conclusion here that his theory operates to justify the unlimited private expropriation of land and goods held in common.This seems especially true in light of the contrast he consistently draws between individual enclosure 89. Locke, Second Treatise on Government, note 88 above, [28]. 90. Locke, Second Treatise on Government, note 88 above, [27]–[28]. 91. Locke, Second Treatise on Government, note 88 above, [37].

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and collective waste. He returns again and again to the image of hunter–gatherers on ‘waste’ land on the one hand, and individuals cultivating and, therefore, making productive use of land on the other. In the former case, there is no question of property rights coming into existence. Locke’s theory, therefore, seems blind to the possibility of collective or communal productive use of land beyond the narrow example of individual agriculture. 1.26  Such inconsistencies may be explained by the fact that Locke’s theory was written at a time of the enclosure movement in Britain and imperial expansion abroad. Both these exercises involved the removal of traditional owners from their land. These owners had shared characteristics.They held the land in some form of collective ownership.They used the land in traditional ways such as hunting, gathering and small-scale crop production, which was very different from methods of modern agriculture and intensive farming. Clearly, a labour theory of Locke’s hue tends to de-legitimate these forms of landholding. This point is underscored by the fact that, throughout his work, Locke makes use of the examples of the indigenous ‘Indians’ (First Nations people) in North America and the Europeans who had settled there. While he had no difficulty in seeing how the ‘Indians’ could acquire rights over animals killed or fruit picked, he rejected the idea that they might have property in the land.92 This has led Williams to conclude that this theory provided a ready-made justification for the appropriation of the land of American ‘Indians’.93 1.27  Another difficulty with Locke’s theory is the selectivity of persons capable of ownership. He says that the ‘turves my servant has dug’ belong, not to the servant, but to the owner. It is not clear why this should be so, given that his theory is based on the personality of the appropriator. If this is a problem in the context of servants and agricultural labour, there are even greater difficulties in modern societies, where the dominant form of economic activity is industrial production. Industrial production is characterised by massive division of labour in the manufacture of goods. A labour theory based on individual appropriation gives little guidance in these cases. Much the same argument applies to the position of women. The domestic labour of married women, for example, appears to give rise to property rights for their husbands. Yet, as Clark suggests, this is another example of the longstanding sexism in political and social theory: ‘In regarding marriage as he does, Locke is clearly making the relationship between men and women subservient to the needs of ensuring certainty of ownership under male control’.94 This theory also runs into difficulties in relation to his own provisos limiting the amount of property that an individual may acquire. Locke’s conclusion that enclosure actually leads to more land being available to others greatly exaggerates the benefits that the private 92. Locke, Second Treatise on Government, note 88 above, [26]. 93. RA Williams, The American Indian in Western Legal Thought: The Discourses of Conquest, Oxford University Press, Oxford, 1990. 94. LMG Clark, ‘Women and Locke: Who Owns the Apples in the Garden of Eden?’ in LMG Clark and L  Lange (eds), The Sexism of Social and Political Theory: Women and Reproduction from Plato to Nietzsche, University of Toronto Press, Toronto, 1979, p 33; see also C Nyland, ‘John Locke and the Social Position of Women, (1993) 25 (1) History of Political Economy, 39–63.

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property of one person has for others. Where one person effectively acquires a monopoly, the opportunities for others are dramatically reduced. Further, the vast holdings of one person can lead to power to dominate others. Locke’s argument derives some superficial plausibility from his examples of the unlimited expanses of land in North America. The argument seems less convincing where, as in most cases, there is not enough to go around.At a deeper level, it tends to delegitimate non-economic values by placing an unqualified faith in the productive use of land: unused land, or wilderness, is waste, lacking in value, which can only be introduced by labour. Environmental values have no place in this productivist theory. Moreover, land is something to be exploited or owned. The notion of some symbiotic relationship with land, as exists in many pre-modern societies, is implicitly rejected. 1.28  Despite these weaknesses, Locke provides a powerful, and popular, moral argument for property rights. The notion that a labourer ought to receive the fruits of his or her efforts expresses a profound justification for private property, and one not necessarily confined to the property regimes of advanced Western liberal democracies. Arguments in favour of Indigenous land rights and rights to cultural heritage are often articulated, and compellingly so, in terms of the labour exerted in the use, custodianship and production of such property. Its flaws may make it an unsatisfactory single rationale for a just property regime; but this does not undermine its claim to offer one basis among many for a particular distribution of property rights.

Utilitarian justifications for private property 1.29  The utilitarian justification for private property starts by rejecting the natural rights argument as too unstable a basis for justifying a private property regime. A more secure footing is the empirically more verifiable proposition that the objective of all human beings is to maximise their own happiness. This leads to the normative claim that the good society ought to be organised in such a way as to achieve the greatest happiness for the greatest number of its people. Thus, for Jeremy Bentham, utilitarianism’s most famous proponent, property is conceived as a means to achieving happiness, because people need and want to possess and consume various things to achieve some measure of happiness.This utilitarian objective of protecting property yields four subsidiary principles: subsistence, security, abundance and equality. Of these, it is security that is pre-eminent and, therefore, this, for Bentham, is the principal object of law. Unlike Locke, he sees the state of nature as a lawless one which leads to endless wasteful conflict for resources. The insecurity of the lawless state of nature undermines any possibility of industry, for its fruits may be appropriated by those who have not laboured. If law comes to guarantee security in the fruits of labour, then industry will flourish. It is, therefore, law that creates property, not labour. In this way, Bentham develops an idea taken up more systematically in the work of the efficiency theorists (see  1.32–1.35); he presents an image of the individual as a selfish, rational calculator who needs incentives protected by law to foster industriousness. 1.30  Bentham is keen to emphasise that legislators should not seek to achieve equality in the distribution of property, even though it is one of his property principles. The 20



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major reason for this is that the benefit conferred on the person to whom property is redistributed will always be less than pain caused. Why? Because the pain will be felt by all property holders: An attack upon the property of an individual excites alarm among other proprietors. This sentiment spreads from neighbour to neighbour, till at last the contagion possesses the entire body of the state.95

The principle of equality is achieved in a different way under a private property regime. Where people are secure in the fruits of their labour, subsistence and abundance will increase.This will lead in turn to a greater level of overall equality among citizens.To prove his point, Bentham draws a comparison between feudalism and 19th-century capitalist societies. In the former, a far greater level of inequality prevailed, as evidenced by the vast number of serfs under a small number of large land-holders. In capitalist societies, by contrast, a more equal distribution of wealth prevails, with greater access for all. This theory articulates a persuasive set of arguments justifying private property; but it also presents difficulties. First, the traditional utilitarian calculus ignores the question of marginal utility. Taking some small amount of property from a millionaire (for instance, in the form of taxes) and giving it to the destitute may involve only a minor level of pain for the former but a considerably greater increase in pleasure for the latter. In this way, the argument that security of property is paramount and inviolable is weakened. Second, it is not necessarily the case that redistributive policies of government cause uniform anxiety among all property holders. Wealth taxes, for example, are sometimes supported by more affluent citizens. Third, no distinction is drawn in this theory between different types of property. The security afforded by food, clothing, housing and basic commodities will undoubtedly deliver significant measures of utilitarian happiness.Yet it is difficult to extend this argument to those commodities that are merely forms of conspicuous consumption. 1.31  A related argument can be applied to the pattern of property rights identified by Honoré.96 Does property in the utilitarian scheme require the maximum of this list of property rights, or will some lesser proportion do? It is arguable that if more individuals have some property rights over a particular thing, rather than one person having all of those rights to the exclusion of others, this will generally increase the overall sum of happiness that property can deliver.These objections and others have led to a range of refinements of the utilitarian position. These are represented in the law and economics literature.

Economic justification for private property 1.32  The economic justification for private property lies in the objective of promoting the twin goals of efficiency and wealth maximisation. These are seen to be rather more concrete and measurable than the utilitarian’s ‘greatest happiness of the greatest number’, though the emphasis on the need for the law to provide incentives for a wealth-maximising 95. J Bentham, The Theory of Legislation, CK Ogden (ed), Kegan Paul, London, 1931, Ch X; cited in Macpherson (ed), Property: Mainstream and Critical Positions, note 55 above, p 55. 96. See 1.11.

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individual, in conjunction with the belief that increases in overall wealth redound to the benefit of all society, indicates clear affinities between the two schools of thought. Munzer sees the differences in the following way: [U]tility and efficiency both have something in common and differ in a key respect. What they have in common is the concept of individual preference-satisfaction. They differ in that the principle of utility, but not efficiency, supposes that interpersonal comparisons of individual preference-satisfaction are possible.97

In other words, the economic or efficiency theorists avoid the sort of calculation of individuals’ comparative happiness so common in, for instance, Bentham’s work. 1.33  For the economic theorist, there are three conditions necessary for an efficient and, therefore, wealth-maximising property regime. First, owners of property ought to have an exclusivity of ownership protected by law. My ownership, in other words, must be protected from infringement by the state. Second, the rights associated with my ownership must be legally transferable, either in sum or in part. This is said to further the objective of efficiency as follows: transferability allows acquisition by the person most capable of putting the property to most efficient use. Posner, one of the leading proponents of an economic theory of law, offers the following example of a farmer to demonstrate the practical operation of this principle. Farmer A makes $100 a year from working his land, and that leads him to value the land at $1000. Farmer B feels that he could make more than this, and so values the land at $1500. At a price of $1250, both would be better off: Thus there are strong incentives for the parties voluntarily to exchange A’s land for B’s money, and if B is as he believes a better farmer than A, the transfer will result in an increase in the productivity of the land.Through a succession of transfers, resources are shifted to their most valuable uses and efficiency in the use of economic resources is thereby maximised.98

The third principle follows directly from this argument. Given the objective of the maximisation of wealth and the fact that private property with the characteristics of untrammelled rights to exclude and alienate furthers efficient use, the more private property, the more efficiency and, consequently, the greater the increase in wealth. Thus, the law should guarantee a universality of property. All things should be privately owned, with the exception of things so plentiful that common ownership will not jeopardise the rights of others. Examples include sunshine and air. This argument warns against regimes of common property on grounds of inefficiency of use. It originates in the economic theorist’s view of the individual as an individual wealth-maximiser, which is strikingly similar to that of the utilitarians. Where there is common property, such as the medieval commons used for the public grazing of livestock, over-use and ultimately degradation of such land invariably occurs. Why? Because there is an incentive for a particular rightholder to increase the number of livestock on the commons without regard to the ultimately damaging effects. In a collective regime, the benefits of this activity will accrue 97. SR Munzer, A Theory of Property, Cambridge University Press, Cambridge, 1990, p 203. 98. R Posner, Economic Analysis of Law, Little, Brown & Co, Boston, 1973, p 11. For an excellent brief introduction to the economic analysis and justification of property rights, see A Clarke and P Kohler, Property Law: Commentary and Materials, Cambridge University Press, Cambridge, 2005, pp 42–50.

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to the over-grazer in the form of higher livestock sales, while the cost will be spread over all the right-holders. As this cost to the individual will in most instances be considerably less than the benefit he or she gains, this practice will proliferate.99 1.34  This is a powerful argument, and supported by various studies examining the comparative levels of efficiency of private and common property regimes.100 Yet, it also has its weaknesses and many objections have been voiced against it. One of these is advanced by Carter, who suggests that the problem here is not so much the collective ownership of the commons, as the private ownership of livestock.101 Another is that this argument misdescribes the way in which commons were actually regulated. There were detailed customary rules about unfair use that Nobel Laureate, Ostrom102 and others103 highlight — which might explain why this type of property holding lasted for much longer than our present property regime has done so far. A related counter-argument is that it is the very unregulated nature of some commons that was the root cause of the over-grazing and degradation. A parallel might be drawn with public parks. Restrictions on what people may do in public parks ensure that they and the amenities they offer remain undiminished for all. The commons versus private property analogy also plays down the extent to which private property has its own (public) costs in terms of public policing of protection and preservation of property which are paid for by all, and private insurance to achieve the same results, the costs of which are, in commercial property, passed on to all in the form of increased prices for commodities. The policy question then becomes: Which form of regulation — private ownership or a regulated system of public use — is the most efficient? This type of argument has particular relevance for the debate about the privatisation of state-owned and, therefore, collectively held assets, such as utility services and utility infrastructure.104 1.35  Whatever answer is given to the broader questions of social justice in the case of particular exercises of privatisation policy, there is something clearly counter to the public interest in too vigorous an application of the universality principle, the third principle 99. This is explored in detail by G Hardin, ‘The Tragedy of the Commons’ in B Ackerman (ed), Economic Foundations of Property Rights, Little, Brown & Co, Boston, 1975, p 4ff. 100. See, for example, GG Stevenson, Common Property Economics: A General Theory of Land Use Applications, Cambridge University Press, Cambridge, 1990. 101. A Carter, The Philosophical Foundations of Property Rights, Harvester, New York, 1989, p 68. See also B Ziff, Principles of Property Law, 6th ed, Carswell, Ontario, 2014; E Ostrom, Governing the Commons, Cambridge University Press, New York, originally published 1990, reprinted 2015. 102. See  E Ostrom, Governing the Commons; The Evolution of Institutions for Collective Action, Cambridge University Press, Cambridge, UK, 1990, where the author considered the local management of common pool resources by those close to them. 103. See DW Bromley, Environment and Economy: Property Rights and Public Policy, Blackwell, Oxford, 1991. 104. In relation to telecommunications, see  K Gray, ‘Regulatory Property and the Jurisprudence of QuasiPublic Trust’ (2010) 3 Sydney Law Review 2. In relation to sewerage infrastructure, see J Gray and A Gardner, ‘Legal Access to Sewage and the Re-invention of Wastewater’ (2008) 12(2) Australasian Journal of Natural Resources Law and Policy 115–59. More generally, see also J Stiglitz, The Price of Inequality, Penguin, London, 2013, especially Ch 4; T Picketty, Capital in the Twenty First Century, Arthur Goldhammer (trans), Harvard University Press, Cambridge, MA, 2014.

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in the economic justification argument. If all roads, schools, hospitals and social services were in private hands, it is difficult to see  how provision for the most disadvantaged citizens would improve.105 Markets depend on exchange to operate. Where certain individuals have nothing to exchange, the market has nothing to offer them.106 This latter point exposes something of a blind spot in the economic theories: they are generally unconcerned about redistribution. No limits to the amount of property are imposed, and vast inequalities of wealth are consistent with their proposals, even where the poorest in society are destitute. This general problem with the market and its productive and distributive mechanisms forms the basis of another set of property theories which have equality as their primary value.

Justice and equality 1.36  Many theorists have asserted that principles of justice and equality ought to be the primary goals in any property regime. This has led to the proposal of a number of different solutions. Perhaps the most famous is that of Karl Marx, who saw private property, particularly in its most developed form in capitalist societies, not so much as a means of wealth maximisation, but primarily as a tool of oppression. In class societies where some people own economic resources, or the ‘means of production’, and others own only their labour, a striking power imbalance arises. This is because the property owners can dictate the terms of employment, including wages, under which workers are engaged. This continues to be the case where workers become unionised, for at the same time capital becomes even more powerful.107 The need for owners to make a profit ensures that labourers never get a return for their work commensurate with the value of what they produce. Accordingly, the gap between what they receive in wages and the value of what they produce — the ‘surplus value’ — is extracted by the employer. Moreover, some of this value will be reinvested in more private property (eg, factories) that in turn form the basis of even more exploitation of workers. The result for Marx is an ever-increasing cycle of exploitation.108 This will produce periodic crises that provide opportunities for workers collectively as a class to revolt and institute a system that, ultimately, is the only way of breaking the link between property and exploitation: a communist society where the means of production would be owned by all. 1.37  The history of the 20th century bears witness to many attempts to put this theory into practice. By the time of the fall of the Berlin Wall in 1989, however, even those who had most fervently advocated such reforms felt compelled to admit failure on a number of grounds. This economic and political model was incapable of delivering meaningful 105. So, for example, in the United States, where there are more of these services in private hands than in any other of the advanced capitalist countries, there is extensive poverty, despite the fact that it is one of the wealthiest societies. 106. Further, in the water trading sector many sellers have been characterised as ‘unwilling sellers’. They have little real freedom to decide if they will sell their privatised water entitlements. Decisions to sell have commonly been driven by drought and ensuing weak financial positions. 107. See, generally, H Braverman, Labor and Monopoly Capital, Monthly Review Press, New York, 1974. 108. K Marx, Theories of Surplus Value, Lawrence and Wishart, London, 1969.

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justice, equality or efficiency. Principles of justice were offended both by the preferential treatment in terms of property entitlement given to party elites and the denial of rights to the produce arising from forms of individual enterprise. Equality was undermined by tolerance of wide disparities of wealth distribution — even though these were dwarfed by patterns of unequal distribution in capitalist societies — and power. Efficiency was compromised significantly by a centralised, command economy that choked private initiative and discouraged foreign investment of resources and information.109 1.38  One theory that proposes a less revolutionary version of this critique is that put forward by Tawney. He suggested that it was not the institution of private property generally, but ‘the unregulated operation, under modern conditions of industrial production, of the institution of private property’ that caused economic evils. The moral justification that allowed small producers property rights in their smallholdings and produce was irrefutable; its extension to types of property such as capital, interest and rent is indefensible. The former is active and productive; the latter by contrast is passive, unproductive and inefficient: There is no more fatal obstacle to efficiency than the revelation that idleness has the same privileges as industry, and that for every additional blow with the pick or hammer an additional profit will be distributed among shareholders who wield neither.110

Accordingly, he suggested a function-based justification for private property. Private property for smallholders fulfils a positive function utterly lacking in the case of capital, interest and rent. This too is a powerful critique in its central message: more protection ought to be given to property that is created than that which merely yields income to its owner. No loss of efficiency would result if some of this were redistributed to the needy. And it avoids the objections that are fatal to Marxist accounts of private property. Present tax laws that treat income derived from investment property differently from, say, wages or the residential home, demonstrate this principle at work. 1.39  Yet Tawney’s theory oversimplifies the position of ‘passive’ property if it suggests that such property does not play any useful role. In a highly industrialised and internationalised economic system, ‘capital flight’ is a real problem for the development of active, productive property. Such passive property is often necessary for active property to get off the ground. Take the example of a small, income-strapped information technology company wishing to expand. It needs investment to do so. Denying such investors profits may lead to the loss of this source of capital altogether. Tawney’s individual, self-employed and self-reliant labourer producing a livelihood represents a small fraction of economic activity today. A further development that undermines the force of this argument is the fact that most ‘passive’ property holders are now institutional investors who hold workers’ funds in the form of superannuation, life insurance, and so on. In this way, a form of socialisation of the economy is taking place.111 Of course, this suggests the desirability of greater levels 109. See Z Bauman, ‘Communism: A Postmortem’ in Intimations of Postmodernity, Routledge, London, 1992. 110. RH Tawney, The Sickness of an Acquisitive Society, Allen & Unwin, London, 1920; cited in Macpherson (ed), Property: Mainstream and Critical Positions, note 55 above, p 150. 111. R Knieper, ‘Property and Contract’ (1980) 4 International Journal of the Society of Law 423.

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of regulation to ensure that socially beneficial investment is encouraged.112 But to deny it the protection of property would be to disadvantage many of those ‘active’ property holders Tawney would seek to protect. Nonetheless, his central philosophical project of drawing distinctions between the different types of property, and the different principles that should regulate them, remains a persuasive one for those who see present distributions of property as indefensibly unequal. This line of argument spells out values that seem to underpin the critiques of the realists above.113 1.40  Values have also been a key concern of another school of property theorists. That school is concerned with ‘progressive property’. It argues that property ‘implicates plural and incommensurable values’.114 Some of those values promote ‘individual interests, wants, needs, desires and preferences while others promote social interests including environmental stewardship, civic responsibility, and aggregate wealth’.115 Other values still govern human interaction permitting people to interact with each other respectfully. According to this school, values can generate moral demands and obligations that underpin judgments about where the limits of property lie; that is, of what is and is not within the proprietary paradigm. The values with which property is concerned include ‘life and human flourishing, the protection of physical security, the ability to acquire knowledge and make choices, the freedom to live one’s life on one’s own terms … wealth, happiness, and other aspects of individual and social well-being’.116 Alexander, a key proponent of progressive property, offers a neo-Aristotelian approach to the moral foundation of property when he argues that the goal of all law, including property law, is to promote human flourishing for every single member of society.117 In summary, Alexander argues that we all have the right to be the authors of our own lives and we do this through our human relationships; relationships that allow us to develop our capabilities and values. To Alexander, such values are objective, rather than subjective. They are good in and of themselves and are not simply preferences. Further, the values that promote human flourishing are many (plural) and do not exist on a single metric. Hence, to be understood, values need to be interpreted through introspection, conversation and story-telling, for example.118

112. Note that socially beneficial investment has become a topical issue in the superannuation context. 113. For an extended discussion of the political preferences of the realists, see A Hunt, The Sociological Movement in Law, Macmillan, London, 1978, Ch 3. 114. GS Alexander, EM Penalver, JW Singer and LS Underkuffler, ‘A Statement of Progressive Property’ (2009) 94 Cornell Law Review 743. 115. Alexander, Penalver, Singer and Underkuffler, ‘A Statement of Progressive Property’, note 114 above. 116. Alexander, Penalver, Singer and Underkuffler, ‘A Statement of Progressive Property’, note 114 above. For further consideration of progressive property, see JA Lovett,‘Progressive Property in Action:The Land Reform (Scotland) Act 2003’ (2011) 89(4) Nebraska Law Review 739; E Rosser, ‘The Ambition and Transformative Potential of Progressive Property’ (2013) 101(1) California Law Review 107. In response to Rosser, see TM Mulvaney, ‘Progressive Property Moving Forward’ (2014) 5 California Law Review Circuit 349. 117. G Alexander, Property and Human Flourishing, Oxford University Press, Oxford, 2018. 118. G Alexander, Property and Human Flourishing, Oxford University Press, Oxford, 2018.

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Alexander’s ideas and those of other progressive property theorists are at the forefront of a new wave of American property law theory that forges links with lived experience and a range of disciplines beyond law.

Women and property 1.41  A further set of theoretical analyses of property law has come from feminism. These approaches to property have tended to focus on three separate aspects of property law. First, in relation to the philosophical debates, some feminists have argued that these accounts ignore the ways in which women are systematically disadvantaged by the law of property in patriarchal societies, and offer no reasons to redress this. A good example of this line of critique is that of Clark, who points out the gender-blindness of Locke’s labour theory and, by implication, other labour and desert theories that ignore the way in which women have traditionally laboured. Not only are women generally invisible in this work, either as labourers or creators of property, but their position in the social division of labour (in which they are more likely to be restricted to various forms of domestic labour) is completely ignored.119 1.42  A second strand of theory examines doctrinal questions and, in particular, analyses how particular legal principles contribute to gender-based inequality.120 The general trajectory of feminist doctrinal critique is an examination of how the detailed rules of property law specifically work against women. They are considered to operate to this effect in two different ways. First, the critique identifies how the formal rules are actually different for men and women. Thus, Otto describes how the rules in relation to constructive trusts over matrimonial property have been systematically stacked against women.121 A second, more common line of critique focuses on how the rules, though formally the same for men and women, are insufficiently sensitive to the different and, crucially, unequal positions of the parties to various transactions. This is a version of the anti-discrimination notion that to treat unequals equally is to perpetuate inequality. So, Neave concludes that one consequence of the operation of traditional property rules in the domestic setting is to unfairly compensate women for the labour they contribute.122 1.43  A third approach to women and property might be described as a functional approach. This category of critique attempts to look at the outcomes of current regimes of property law. In particular, these analyses attempt to show how the modern operation

119. Clark, ‘Women and Locke: Who Owns the Apples in the Garden of Eden?’, note 94 above, p 33. 120. For practical examples of how the application of property principles contribute to gender-based inequality, see S Moa, A Human Rights Approach to Women’s Land Rights in Tonga, PhD thesis, Faculty of Law, University of NSW Australia, Sydney, Australia, awarded 2018. 121. M Otto, ‘A Barren Future? Equity’s Conscience and Women’s Inequality’ (1992) 18 Melbourne University Law Review 808. 122. M Neave, ‘From Difference to Sameness — Law and Women’s Work’ (1992) 18 Melbourne University Law Review 768.

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of property rules creates a general condition where women own far less property than men. As Rose puts it: A quite common perception about women and property is that women do not have much, at least in comparison to men … In the ordinary course of things, we are surprised to find women of great wealth, just as we are surprised to find women who lead Fortune 500 companies.123

One aspect of this process is captured by the notion of ‘the feminisation of poverty’, where studies have found that women seem to outnumber men significantly in the ranks of the officially recognised poor.124 These analyses generally attempt to show how the present matrix of property laws contributes to create a general condition of disadvantage for women.125 1.44  This is not to suggest that there is an uncontested unitary feminist approach to questions of property law.As with feminist approaches to law and society generally, feminist approaches to property law retain an enriching diversity of perspectives and opinions. 1.45  Hunter, McGlynn and Rackley note that there is no one single feminist position on legal issues arising in any one case; rather, there are multiple feminist positions that will take different approaches and yield different results when put into practice. This was one of the key lessons from the Feminist Judgments Project.126 1.46  West seeks to show significant incompatibilities between different feminist approaches by identifying a basic distinction between liberal and radical feminists.127 The former seek, by means of laws such as anti-discrimination law, to be treated as formally equal 123. CM Rose, ‘Women and Property: Gaining and Losing Ground’ (1992) 78 Virginia Law Review 421–2. 124. B Cass, ‘The Feminisation of Poverty’ in B Caine, EA Grosz, and M de Lepervanche (eds), Crossing Boundaries: Feminisms and the Critique of Knowledges, Allen & Unwin, Sydney, 1988; see Australian Human Rights Commission, Older Women’s Risk of Homelessness: Background Paper (2019) (accessed 9 January 2022), . 125. For a discussion on how the land acquisition process, which is formally gender neutral, fails to consider the ways in which women may be disadvantaged by land acquisition, see M Manuchehri, ‘Large-Scale Land Acquisitions and Applying a Gender Lens to Supply Chain Reform’ (2016) 25(2) Washington International Law Journal 365. One of Manuchehri’s arguments is that while companies consider international legal norms about free, prior and informed consent and the United Nations Guiding Principles on Business and Human Rights so as to avoid ‘land grabs’ in the Global South, they do not specifically consult with women. She concludes that if women were consulted, there would be fewer adverse effects on communities. 126. The original Feminist Judgment Project was undertaken by a group of socio-legal scholars in the United Kingdom. They took a selection of significant English judgments and rewrote alternative feminist judgments. The material is published in R Hunter, C McGlynn and E Rackley (eds), Feminist Judgments: From Theory to Practice, Hart Publishing, Oxford, 2010. In particular, see pp 12–13. Note that the book includes a ‘property and markets’ section featuring the following cases: Royal Bank of Scotland v Etridge (No 2) [2001] 4 All ER 449; Baird Textile Holdings v Marks & Spencer Plc [2001] EWCA Civ 274. See also R Hunter, ‘Can Feminist Judges Make a Difference?’ (2008) 15 International Journal of the Legal Profession 7; H Douglas, F Bartlett, T Luker and R Hunter (eds), Australian Feminist Judgments: Righting and Rewriting Law, Hart Publishing, Oxford, 2014. Note that the latter reference contains an equity judgment but not a property law judgment specifically. 127. R West, ‘Jurisprudence and Gender’ (1988) 55 University of Chicago Law Review 1.

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to men, and presume that this will be enough to ensure a general level of sex equality. Other feminists, by contrast, suggest that this will merely perpetuate a patriarchal order; its peculiar values of a selfish competitive individualism, as extolled by Locke and others, would remain untouched. An example of this in the area of land law is Green’s characterisation of various key concepts as either masculine or feminine.128 So landscapes, she argues, are commonly conceived as feminine — local, physical, emotional — while land is conceived in masculine terms as space — transparent, infinitely knowable, real, natural and unproblematic. Modern land law’s registration systems can be seen as reflecting this by means of their ‘distancing from the material and subjectively known (feminine) place to an intellectual (masculine) space’.129 A similar argument is advanced by Schroeder. She concludes that the definition of property as a ‘bundle of rights’ is a phallic metaphor for property.130 1.47  Against this style of critique, liberal and other feminists suggest that such an argument over-simplifies matters because it presumes an essential and unshifting set of characteristics of the feminine and masculine.131 They add that men and women change as cultural expectations and social environments and opportunities change. Consequently, the sharp contrasts drawn between men and women are exaggerated and politically unhelpful. It follows that to suggest, as does Green, that the rule certainty required by the market is essentially masculine, and therefore at odds with a different set of feminine values, reduces a much more complex phenomenon to a purely gendered one; both the principle and reality of market efficiency embrace many more factors than this. Also, what follows politically from this critique? That feminists should oppose the market? Would uncertainty be a virtue? This type of feminist theorising appears to say very little about these important questions. Meanwhile, Carr and Wong seek to apply feminist approaches to very practical issues encountered in the legal system. They explore the distinctiveness of feminist approaches to property law and the role that feminist approaches can play in exposing the gendered dimension of what would appear to be a neutral project. They focus on: (a) how feminist scholarship has interrogated the assumption that the home is a domain free from state and commercial interference; and (b) judicial responses to claims on the family home made by former cohabitants in consequence of relationship breakdowns.132 Carr and Wong conclude that feminist approaches to property law help unravel the gendered consequences of the contemporary redistribution of property, which they see as being closely connected to the prevailing neoliberal ideology.133 128. K Green, ‘Being Here — What Can a Woman Say About Land Law?’ in A Bottomley (ed), Feminist Perspectives on the Law Curriculum, Cavendish, London, 1996, p 95. 129. Green,‘Being Here — What Can a Woman Say About Land Law?’ note 128 above, p 95 (italics in original). 130. JL Schroeder, ‘Chix Nix Bundle-O-Stix: A Feminist Critique of the Disaggregation of Property’ (1994) 93 Michigan Law Review 239. 131. See, for example, C Smart, ‘Feminist Jurisprudence’ in P Fitzpatrick (ed), Dangerous Supplements, Pluto Press, London, 1991, pp 133–58. 132. H Carr and S Wong, ‘Feminist Approaches to Property Law Research’ (2014) 3 Property Law Review 247. 133. For other feminist approaches to a range of property interactions see  C Grant Bowman, ‘Path from Feminist Legal Theory to Environmental Law and Policy’ (2013) 22(3) Cornell Journal of Law and Public Policy 641; H Lim and A Bottomley, Feminist Perspectives on Land Law, Routledge, Abingdon, 2007.

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A pluralist approach? 1.48  One question that immediately arises in the context of the above discussion is: Does one have to choose between the various theories of property? Is it being merely eclectic, or worse, incoherent, to rely on a number of justifications to support particular property rules? For example, is the privatisation of energy infrastructure justifiable only in Lockean terms? Or will utilitarian terms suffice? Is it possible to advance both at the same time? Each of these theories regularly surfaces in popular and legal justifications for private property, yet, as we have seen, all are subject to their separate deficiencies. Can a defensible case be made to amalgamate the best elements of the best of these theories while simultaneously avoiding the worst? Munzer attempts just such a project. Munzer commences his thesis with the claim that there are three main pillars of property justification theory: 1. utility and efficiency; 2. justice and equality; and 3. labour and desert. He argues that the virtues of each of these pillars, or principles — and each of them expresses some important virtues that the others omit — can be combined in ways that blunt the ills to which each is separately prone. In particular, he accepts the force of the first as providing a level of wealth which allows for much social benefit. It follows that those critiques — from Rousseau and Proudhon to Marx — that emphasise the injustice and inequality of the market are at their weakest in failing to attend to the importance of providing incentives to increased levels of production. They are too single-mindedly and exclusively distribution oriented. 1.49  A justice and equality principle mitigates the harshness of this principle in practice. This principle is derived primarily from the Kantian idea of the equal moral worth of all human beings, though supplemented with some ‘Aristotelian and Marxian bricks’.134 It leads Munzer to develop two theses: (i) the ‘floor’ thesis; and (ii) the ‘gap’ thesis. In every society, he concludes, a generalised respect for a principle of equal moral worth would lead to a distribution of property that would ensure a basic minimum below which no person would be allowed to fall (the floor thesis).135 Second, in order to ensure a fully human life, the gap between the very rich and poor should not be too great, because ‘inequalities that are extreme and visible can wound self-esteem and create justified moral resentment’ and ‘the wide inequalities rest on no differences in moral merit and are instead an affront to equal moral worth’.136 Dramatic inequalities also ‘can distort the legal and political process and reinforce myths offensive to equal moral worth’. Finally, Munzer preserves a form of Locke’s labour or desert theory, but revises it by imposing limitations on those 134. Munzer, A Theory of Property, note 97 above, p 247. 135. This line of argument echoes that of John Rawls generally in relation to social justice: see  J Rawls, A Theory of Justice, Harvard University Press, Cambridge, Mass, 1971. For a more recent elaboration, see M Nussbaum, Frontiers of Justice, Harvard University Press, Cambridge, Massachusetts, 2006. 136. Munzer, A Theory of Property, note 97 above, p 249.

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property rights in some situations; for example, in times of scarcity.This principle is further modified by the operation of the other master principles above. Having developed in detail his justifications for the institution of private property, Munzer puts it to work in three controversial problem areas: (i) business enterprise in capitalist and socialist economies; (ii) the justifiability of the taxation of gifts and bequests; and (iii) government powers to acquire or resume private property. In doing so, his property regime resembles somewhat the distributional practices of social-democratic states where incentives for private enterprise and the abolition of poverty or propertylessness form twin, and equally important, public policy objectives. One important point about pluralist analyses is that they are expressly context dependent. Pluralist analysis is a philosophy that must be tailored to the circumstances of particular economies and societies at particular stages of their development. Thus, one might expect a greater emphasis on the question of redistribution in an economy of vast disparities of wealth where the poor are in abject poverty, than would be the case, even using Munzer’s general criteria, in a society where there was a great level of underdevelopment yet a broadly equal economic distribution.

Historical Changes in the Nature and Function of Property 1.50  The philosopher C B Macpherson has attempted an historical sketch of the way in which property has changed from the period of early feudalism to the latter part of the 20th century. He sees feudalism as marked by forms of property that were inclusive in nature. Property was largely both perceived to be, and in reality was, a right of access to the accumulated productive resources of society. He adduces much evidence to support this claim. First, economic production was organised on a predominantly collective basis; property rights gave expression to this in the form of rights of access to land. Second, land was held in common; the notion of common property was, therefore, widely current.Third, the right to exclude, far from being central to the meaning of property, was peripheral to it. Fourth, land was not readily marketable. This further militated against seeing property in terms of exclusion. A dramatic change in the concept of property occurred in the ‘liberal seventeenth century’.137 For the first time in history, the concept of property was narrowed. It came to be seen in individualist terms and was no longer something that was owned collectively. Property shifted from being a right not to be excluded to a right to exclude others. And this, Macpherson argues, originates with the labour theory. In so far as this view of labour is exclusively individualist, any rights that derive from it will inevitably be so. This change was intimately bound up with, and fostered, the rise of market-based production and consumption. It resulted in habits of thought that focused exclusively on an individual’s rights to the ‘thing’ at the expense of how those rights intersected with the rights of other individuals. As a result, Macpherson concluded, in 1973: 137. Macpherson (ed), Property: Mainstream and Critical Positions, note 55 above, p 206.

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Property, nowadays, in the general understanding, at all levels from the usage of social and political theorists to that of the ordinary newspaper writer and reader, is usually equated with private property … So much is this the case that the very notion of  ‘common property’ is almost a contradiction in terms.138

This development is directly traceable to what he calls ‘the modern world of the full capitalist economy’.139 1.51  By the middle of the 20th century, a change occurred in this conception of property. It was caused by the emergence of the welfare state. The characteristic of this state is that it fulfils many of the roles that were traditionally performed by private property. Thus, income is provided as of right to those individuals who cannot find employment offered by the owners of private property or who cannot produce their own wealth. Also, the state itself becomes an employer of vast numbers of people in its own right. This development is accompanied by the exponential increase in government contracts, so that more and more citizens depend indirectly on the state for their living. Finally, the state as regulator confers, through licences, the power on individuals to be able to work in particular trades and occupations. How do these changes impact on property? Here, Macpherson follows the work of Reich.140 Reich argued that the myriad of ways in which the state impacts on citizens in their productive lives requires much greater levels of protection against the arbitrary withdrawal of the means of subsistence.To the extent that the state could do this, it could tyrannise the people. In consequence, constitutional protection similar to that preventing the expropriation of other forms of property by the state was in order. 1.52  Macpherson concludes that these changes suggest that we are witnessing the emergence of a new concept of property where the dominant element is not a right to exclude (as it was in the height of liberal capitalism), but a right not to be excluded from a share in the collective productive resources of society: ‘The rise of the welfare state has created new forms of property and distributed them widely — all of them being rights to revenue’.141 This reflects an element of the concept of property in pre-capitalist, feudal times. This concept should be expanded, he argues, to embrace the right to a fully human life. This would entail seeing property as not merely a right to an income, but a right to the means of labour or a job. Writing in the 1960s and early 1970s, Macpherson identified democratic pressures nudging governments in this direction. Further, as Grey notes,142 while seeing property as a bundle of rights undermines unqualified proposals for unregulated private property, this more complex vision is not convincing enough to induce electorates to vote for political parties proposing to provide further protections for the poor.

138. CB Macpherson, Democratic Theory: Essays in Retrieval, Clarendon, Oxford, 1973, p 123. 139. Macpherson, Democratic Theory: Essays in Retrieval, note 138 above, p 125. 140. C Reich, ‘The New Property’ (1964) 73 Yale Law Journal 733. 141. CB Macpherson, ‘A Political Theory of Property’ in Macpherson, Democratic Theory: Essays in Retrieval, note 138 above, p 131. 142. TC Grey, ‘The Disintegration of Property’ in Pennock and Chapman (eds), Nomos XXII: Property, note 75 above, pp 69–85.

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1.53  Kamenka and Tay have argued in a similar way.143 They focus on the ideologically less significant role that the concept of property now plays. Where property rights have become so complex that in more developed societies even the poorer classes have some private property, older ideological claims such as the Marxist call to abolish private property completely, or the laissez faire idea that it should remain completely free from governmental interference, have diminishing appeal. Where most members of society have a stake in the regime of property rights, and a parallel interest in not being unduly affected by the damaging effects of the unregulated property rights of others, it becomes impossible to say simply that one is either ‘for’ or ‘against’ private property. Or, as one of Seabrook’s respondents tersely and cynically put it: ‘When we had nowt we threatened the rich. Now we act like they did’.144 1.54  These arguments have a somewhat dated feel to them now. Written during a time of welfare state expansion and unparalleled economic growth, promises that property rights might afford all an opportunity to share in the collective goods of society seemed quite plausible. But, at present, notions of public ownership guaranteeing all citizens access to socially created wealth appear to have given way to policies favouring privatisation and deregulation, with attendant high levels of economic inequality and social exclusion. An ascendant neo-liberal philosophy prevails in most developed states today, with an attendant valorisation of private property over common, or public, property and commonly accompanied by a rejection of ‘big government’ and market regulation (even when that regulation may be of assistance to those individuals who reject it).145 Accordingly, governments increasingly transfer state-owned industries, enterprises and services to private ownership in the belief that increased efficiency and quality of service delivery will result. A pervasive sense of property as a right to exclude is now the dominant idea of property, as the sheer scale of private ownership overtakes public property.146 In this climate, pinning so much on the positive value attached to private property may not be enough to provide strong political justifications for a property right in one’s work, or in rights of access to accumulated resources, as Macpherson suggested. However, if Kevin Gray is correct, the focus on property as a right to exclude may be undergoing some radical changes. He argues that expanding rights of access where monopoly service infrastructure has been opened up to third party competition has resulted in the birth of a new form of property — regulatory property.147

143. A Erh-Soon Tay and E Kamenka, ‘Introduction: Some Theses on Property’ (1988) 11 University of New South Wales Law Journal 1. 144. J Seabrook, What Went Wrong?,Victor Gollancz, London, 1978, p 31. 145. In the US context see A Hochschild, Strangers in Their Own Land, The New Press, New York, 2017. 146. T Prosser and M Moran, Privatization and Regulatory Change in Europe, Open University Press, Buckingham, 1994; Note, however, Gray’s proposition that a new kind of more democratic property has been born, that is, regulatory property. This type of property is underpinned by a right of access. See K Gray, ‘Regulatory Property and the Jurisprudence of Quasi-Public Trust’ (2010) 32 Sydney Law Review 22. 147. K Gray, ‘Regulatory Property and the Jurisprudence of Quasi-Public Trust’ (2010) 32 Sydney Law Review R 22.

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1.55  Many of these points of philosophical argument and historical change may be examined and tested in specific legal contexts where courts and legislators have been asked to extend or narrow the rights to be accorded property holders, on the one hand, and other citizens, on the other. Another way of putting this point is this: On what basis are the relations between property holders and others to be drawn, or what is the extent of the property owner’s right to exclude others as compared with the (emerging) rights of others?

Doctrinal Dimension — The Boundary Between Property and Other Rights Property and contract 1.56  An enforceable contract entitles a party to the contract to sue for damages in the event of breach by the other. This basic remedy is intended to make good any damage suffered by the innocent party. The right in question is a right, not to any specific thing (even if the transfer of a thing is the subject matter of the contract), but a personal right enforceable against the other party to get damages for breach of an obligation. As a general principle, this right is not enforceable against third parties. This contrasts with a property right, which confers a right over a thing. A property right is enforceable against third parties. For instance, where the remedy of specific performance of a contract is available, and the contract involves a promise to transfer or create rights over things, the plaintiff may be said to have acquired a proprietary interest. In consequence, the plaintiff has two separate remedies: (i) a contractual remedy against the original party; and (ii) a proprietary remedy against a third party. So, where a landlord agrees to grant me a lease, and this agreement attracts the remedy of specific performance, but before I take possession of the premises he or she grants a lease to a third party who knows of my agreement, I have two very different remedies available to me. I can either: sue the landlord for damages on the grounds of breach of contract; or sue the third party under the principles of property law on the basis that the contract gave me a property right that confers protection against those with whom I have not contracted. The former remedy is personal, the latter proprietary.148 1.57  Even where contracts purport to confer rights over things, there may be some question as to whether those rights are proprietary or not. In order to be proprietary rights, they must come under one of the recognised categories of proprietary rights. If they do not, only personal remedies will be available against the person who purported to grant them. An example of the former is the purchase of a cinema ticket. The owner contracts to admit the purchaser to the cinema for a single showing of a film. However, even though this gives rights of access to property, it does not confer property rights on the patron. This is because he or she cannot assert any temporary rights over the cinema itself. The only remedy available, in the event that the cinema owner does not make good his

148. See further, Chapter 11.

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or her promise, is to sue in damages. Thus, in Cowell v Rosehill Racecourse,149 a patron who was forcibly ejected from a racecourse argued that his licence had been invalidly revoked. The High Court held that a court would not grant decrees of specific performance in relation to such contracts. 1.58  A further example of this principle at work is the case of King v David Allen.150 The appellant gave the respondent a right to use the side of a theatre wall for affixing bills and posters for a period of five years. The appellant then granted a lease of the premises to a tenant who refused to acknowledge this right. The House of Lords held that the respondent had no property right to enforce against the tenant. The rights conferred by the original contract were purely contractual. They gave the respondent a right to use the wall — a licence — but did not purport to grant any rights to the property itself. The only remedy against the theatre owner was a right in damages. To achieve the latter the contract would have had to expressly give something in the nature of a lease, which is a recognisable proprietary interest. This principle was affirmed in the New South Wales Supreme Court decision in Georgeski v Owners Corp SP49833.151 The plaintiff, who was the grantee of a licence over the foreshore and an adjacent stretch of water in the Georges River, was held to have no right to sue third parties who trespassed on the land. Two propositions emerge from these cases. First, a licence is not a recognised proprietary interest and cannot be enforced against third parties.152 Secondly, even if a contract purports to transfer a recognised proprietary interest, such an interest will only arise if the remedy of specific performance can be obtained.153

Property and Indigenous rights 1.59  As explained in Chapter 4, Indigenous people’s occupation of mainland Australia pre-dated European colonisation by hundreds of thousands of years, yet Australian law did not recognise Indigenous ownership of land until statutory land rights were introduced and native title was recognised. Indeed, in the 1971 case of Milirrpum v Nabalco Pty Ltd,154 Blackburn J concluded that it was impossible to find that the traditional rights of the Indigenous people — however much those rights were identifiable legal rights over their own land according to their own customs — were property within the Anglo-Australian meaning of the term. This culturally denigratory authority was ultimately swept aside by Mabo v Queensland (No 2) (Mabo (No 2)),155 where a majority of the High Court held that native title was recognised by the common law. It followed that it did not matter that 149. Cowell v Rosehill Racecourse Co Ltd (1969) 56 CLR 605; 43 ALR 69. 150. King v David Allen & Sons, Billposting Ltd [1916] 2 AC 54. 151. Georgeski v Owners Corp SP49833 (2004) 62 NSWLR 534. 152. This is known as the numerus clausus [closed list] principle that limits the creation of new interests, particularly in land. See further, B Edgeworth, ‘The Numerus Clausus Principle in Australian Property Law’ (2006) 32 Monash University Law Review 387. 153. On this point, see further Chapter 6. 154. Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 at 272. See Chapter 4 more generally for discussion of this case and Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1. 155. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1.

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particular aspects of native title — such as the right to collective use of land for purely spiritual purposes — did not neatly fit into a Western definition of property rights for it to be enforceable. If a right were established under traditional custom,156 it would be recognised by the common law without being ‘of ’ the common law. The result is that common law native title as detailed in Mabo, has some features not shared by other forms of property. First, it is not generally alienable. It can be passed from one generation of an Indigenous group to another pursuant to customary rules, and can be surrendered to the Crown in accordance with the Crown’s right of pre-emption. But it cannot be transferred to others. Second, native title is vulnerable to the Crown’s right to extinguish it by the exercise of its radical title.Yet, it is still a special form of property, as Brennan J emphasised: Whether or not land is owned by individual members of a community, a community which asserts and asserts effectively that none but its members has any right to occupy or use the land has an interest in the land that must be proprietary in nature: there is no other proprietor. It would be wrong, in my opinion, to point to the inalienability of land by that community and, by importing definitions of  ’property’ which require alienability under the municipal laws of our society … to deny that the indigenous people owned their land.157

In a similar vein, Bartlett argues that the various dimensions of native title rights make it appropriate to describe them as, in aggregate, amounting to property rights, even by reference to a strict criterion of what constitutes property. He concludes that the fact that native title can form the basis for compensation under s 51(xxxi) of the Commonwealth of Australia Constitution Act 1901 (Cth) (the Constitution), that it allows rights to exclude others by means of a variety of equitable and common law remedies, and that it is a burden on the title of the Crown, all point to the rights being proprietary, rather than personal.158 Nonetheless, it might be concluded from this that there is a dualistic property regime in Australia: a Western model premised on the individualistic principles of modern markets; and a traditional model based on customary, communal forms of social organisation where the meaning of property does not require rights of exclusion or alienation, and may indeed include particular bundles of personal rights as identified in King v David Allen.159 With this in mind, native title may be seen as one of the methods by which property rights in Australia are fragmented.

Body parts and property rights 1.60  Advances in technology and science have put pressure on concepts of property in relation to body parts, such as organs and cells, by making it feasible to transplant them from one person to another, or use them for research purposes.160 This problem arose in 156. The exercise of the custom or tradition also needed to continuously stretch back to pre-contact times. 157. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 36; 107 ALR 1 at 36. 158. RH Bartlett, ‘The Proprietary Nature of Native Title’ (1998) 6 Australian Property Law Journal 77. 159. King v David Allen & Sons, Billposting Ltd [1916] 2 AC 54. 160. See, for example, BG Hanneman, ‘Body Parts and Property Rights: A New Commodity for the 1990s’ (1993) 22 Southwestern University Law Review 399. For a wide-ranging and insightful analysis, see M Davies and N Naffine, Are Persons Property? Legal Debates about Property and Personality, Ashgate, Aldershot, 2001.

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the Californian case of Moore v Regents of the University of California.161 In this case, a team of medical researchers removed the diseased spleen of the plaintiff. Unbeknown to him, it was used to develop a cell-line that proved to be enormously valuable in the manufacture of pharmaceutical products. Estimates suggested that, from the time of registration of the patent of the cell-line in 1984, until 1990 when the Supreme Court of California came to hear the matter, the value of the cell-line had increased to US$3 billion. The question for the court was: Is it possible to have property rights in human tissue — and therefore to be the owner of the cell-line? Moore claimed to own the cells as chattels and that their removal and use for a purpose to which he did not consent gave him a right to sue the wrongdoer for conversion. 1.61  The majority of the Supreme Court held that there was a complete absence of authority for the proposition that excised cells are sufficiently like chattels to support an action in conversion. Statutory provisions that governed the disposal of such tissue were held to further undermine this argument. Also, wrongful publicity cases — where famous persons’ likenesses are deployed without consent for advertising purposes — did not extend to cases such as this. It followed that Moore had no proprietary remedy against the Regents. He did have a personal remedy, though: he was awarded damages against the defendants for breach of their fiduciary duty to inform him in advance about what they proposed to do with the cells and why. It followed that the defendants had exclusive property rights over the cell-line, in the form of patents. It is interesting to observe the important and, arguably, decisive part played by philosophical arguments in the various judgments. For the majority, an efficiency argument largely prevailed. If researchers were not protected in cases such as this, the community as a whole would lose a valuable resource because, deprived of the possible profits, a significant disincentive would be placed in the path of such research. The minority emphasised the dual philosophical issues of ownership of property in one’s ‘body and its products’ in the Lockean sense, and the unethical nature of this practice through non-disclosure.162 They also argued that the economic arguments of the majority were weak, on the basis that the cell-lines could still be sold if the plaintiff succeeded. Research could, therefore, proceed once a sale price was concluded. 1.62  There are doubts about whether this case is good law in New  South  Wales. In New South Wales, s 32 of the Human Tissue Act 1983 (NSW) prohibits the sale of human tissue while a person is living or dead except in designated circumstances, which include the tissue having been processed or treated and the sale or supply being for the purpose of enabling the tissue to be used for therapeutic, medical or scientific purposes.163 161. Moore v Regents of the University of California 793 P 2d 479 (1990). 162. See, for example, Moore v Regents of the University of California 793 P 2d 479 (1990) at 510 per Mosk J. 163. For a discussion of the pros and cons of the propertisation of human body parts, see Australian Law Reform Commission, Essentially Yours: The Protection of Human Genetic Information in Australia, ALRC Report 96, Ch  20 (accessed 12  June  2017), . See also M Pawlowski, ‘Ashes to Ashes, Dust to Dust: Property Rights in Body Parts’ (2021) 171 (7932) New Law Journal 15–16.

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1.63  The leading Australian common law authority on property in body parts is the High Court decision in Doodeward v Spence.164 The appellant purchased the preserved body of a two-headed baby for the purpose of display for profit. After police confiscated the item, the appellant sued to recover it. The High Court held that, unlike a corpse awaiting burial in respect of which there can be no rights of property, where a body or body part had had the ‘lawful exercise of work or skill’ performed on it, the person in whose possession it lies can bring an action to recover it.165 1.64  English case law has also considered related issues. In Yearworth v North Bristol NHS Trust,166 the Court of Appeal of England and Wales recognised human sperm, stored on behalf of men undergoing chemotherapy, as an object of property. The court held that the men owned their sperm because they ‘had generated and ejaculated’ it for the sole purpose of using it for their own benefit. The Court of Appeal stated that, while it could find that the men had property in their sperm based on the Australian case of Doodeward v Spence, it preferred to base its decision on a broader principle that did not rely on the exercise of work or skill. 1.65  In New South Wales, the basis for proprietary rights in human sperm, and other tissue, was examined in the case of Edwards; Re the Estate of Edwards.167 The court relied on Doodeward to find that sperm stored for the purposes of fertility treatment was property on the basis of the work and skill applied to preserve and store it. A few years later, the Supreme Court of the Australian Capital Territory considered, in Roblin v  the Public Trustee for the Australian Capital Territory and Labservices Pty Ltd, whether semen is personal property.168 However, as this case distinguished between sperm taken with consent prior to death and sperm taken after death, the court in Roblin did not rely on Doodeward.169 It did, however, conclude that the case law is uniform in its view that stored sperm provided by a man prior to his death is property (relying on Roche v  Douglas,170 Yearworth v  North Bristol NHS Trust171 and Bazley v  Wesley Monash IVF Pty Ltd172). 164. Doodeward v Spence (1908) 6 CLR 406. 165. For the general principles involved in protecting personal property rights, see Chapter 2. 166. Yearworth v North Bristol NHS Trust [2009] 3 WLR 118 at [45]. 167. Edwards; Re  the Estate of Edwards [2011] NSWSC 478. For a general discussion, see  L Bennett Moses, ‘Property in Sperm’ (2011) 1 Property Law Review 135–9. 168. Roblin v the Public Trustee for the Australian Capital Territory and Labservices Pty Ltd [2015] ACTSC 100. 169. Doodeward v Spence (1908) 6 CLR 406. 170. Roche v Douglas [2000] WASC 146. 171. Yearworth v North Bristol NHS Trust [2009] EWCA Civ 37. 172. Bazley v Wesley Monash IVF Pty Ltd [2011] 2 Qd R 207. See M Quigley, ‘Property in Human Biomaterials — Separating Persons and Things?’ (2012) 32(4) Oxford Journal of Legal Studies 659. Quigley summarises the English law on property in human biomaterials and argues that separation from a person as a criterion for determining whether something is property is philosophically problematic. See also N Rolf, ‘Making Something into Nothing: Reforming the “No Property” Rule for Human Tissue’ (2013) 21 Journal of Law and Medicine 312, which compares the legal position in Australia regarding property in regenerative tissue to the legal position in the United States and United Kingdom, and proposes a framework for property rights at common law. See W Bonython and B Baer Arnold, ‘Beyond the Corporeal: Extending Propertisation of Body Parts to Derivative Information’ (2016) 23 Journal of Law and Medicine 688 for the proposition that body parts may be considered information arising from corporeal forms; M Quigley, Self

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Finally, as the concept of sustainability gathers momentum, so does the issue of property in human bodily waste (as opposed to human body parts). Human bodily waste may be re-used, for example, by treating faeces for application as a fertiliser to grow corn, while nitrogen, phosphorous and potassium may be extracted from urine also for application as agricultural fertilisers. These examples demonstrate how waste products, formerly considered to be outside or not relevant to the property paradigm, are now open to re-classification and to being brought within the property paradigm as part of society’s changing attitudes.173 Case law has already considered another less controversial bodily product, hair.174 In some contexts hair may be considered ‘waste’ with few or no proprietary claims made over it (such as when it is thrown out as rubbish by a hairdressing salon), but in other contexts, human hair has been regarded as a valuable commodity exhibiting proprietary characteristics.Wig-makers, for example, seek to procure human hair for business purposes and are willing to purchase it as a necessary business resource.175 Accordingly, courts have found hair to be property;176 as they have also found stolen bodily fluids to be.177

Is there property in a spectacle? 1.66  In 1937, the High  Court in Victoria Park Racing and Recreation Grounds Co Ltd v Taylor178 had to determine whether the owners of a racecourse could prevent, by means of an injunction, an unauthorised broadcast of races and results from a platform erected on adjacent land. By a majority of three to two, the High  Court held that there was no cause of action at common law protecting the plaintiffs’ rights. Unlike some United States authorities, who found a ‘quasi-property’ in cases where an individual has expended considerable effort and incurred significant expense in creating something of value, the Ownership, Property Rights and the Human Body — A Legal and Philosophical Analysis, Cambridge University Press, Cambridge, 2020. 173. L Bennett Moses, ‘Property in Sperm (2011) 1 Property Law Review 135; see also L Bennett Moses, 2014, ‘The Problem with Alternatives: The Importance of Property Law in Regulating Excised Human Tissue and In Vitro Human Embryos’, in I Goold, J Herring, K Greasley and L Skene (eds), Persons, Parts and Property, Hart Pub Limited, Oxford, pp 197–214; J Edelman, ‘Property Rights to Our Bodies and Their Products (2015) 39 University of Western Australia Law Review WA47; K Falconer, ‘Dismantling Doodeward: Guided Discretion as the Superior Basis for Property Rights in Human Biological Material’ (2019) 42 University of New South Wales Law Review 899. Note that in another jurisdiction, Queensland, the court found that sperm removed from a man was property, irrespective of any work or labour used to produce it. See R v Cresswell [2019] 1 Qd R 403. 174. Hair is a collection of dead cells. 175. Gray refers to both hair and urine in her work on property, sewage and recycled water. See J Gray, ‘Mine or Ours? Sewage, Recycled Water and Property’ in K Bosselmann and V Tava (eds) Water Rights and Sustainability, NZCEL Publishing (New Zealand Centre for Environmental Law), Auckland, 2011; J Gray and A Gardner, ‘Legal Access to Sewage and th Re-invention of Wastewater’, (2008) 12 (2) Australasian Journal of Natural Resources Law and Policy, 115-59, especially fn 148; J Gray and A Gardner, ‘Exploiting the Unspeakable; Third Party Access to Sewage and Public Sector Sewage Infrastructure’ in Troy, P (ed) Troubled Waters, ANU ePress, July, 2008. 176. R v Herbert [1961] JPLGR 12. 177. R v Rothery [1976] Crim LR 69; R v Welsh [1974] RTR 478. 178. Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479 at 507.

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majority held that there was no such principle of property law in Anglo-Australian law. As Dixon J in the majority concluded: Briefly, the answer is that it is not because the individual has by his efforts put himself in a position to obtain value for what he can give that this right to give it becomes protected by law and so assumes the exclusiveness of property, but because the intangible or incorporeal right he claims falls within a recognised category to which legal or equitable protection attaches.179

1.67  It is clear that Dixon J sees a basic philosophical difference between the law of ‘British jurisdictions’ and that of the United States in its treatment of the concept of property. The United States courts have tended to give protection of ‘broadcasting rights’ on the basis that they constitute ‘quasi-property’ where the plaintiff demonstrates enterprise, organisation and labour. In doing so, his Honour suggested that they have developed the concept of property ‘under a wide generalisation’. As has been noted above, this concept originates in, or at the very least is consonant with, a Lockean or utilitarian philosophy. By contrast, courts in ‘British’ jurisdictions have not given protection to all ‘intangible elements of value, that is, value in exchange’ where enterprise and labour have been shown, but have instead proceeded on a much more incremental basis by developing the ‘special heads of protected interests’ such as copyright, trademarks, and so on. Furthermore, this practice has unfolded without reference to broader policy or philosophical justifications. These divergent approaches to the definition of property and judicial reasoning indicate important differences between the jurisprudence of the United States Supreme Court and courts in other former British colonies and Britain itself. 1.68  By contrast, Evatt J, in dissent in Victoria Park Racing, was inclined to consider precisely these broader justificatory or philosophical issues in determining the appropriate boundaries of property rights.Accordingly, this was a case where the defendant ‘endeavoured to reap where it had not sown’ and also ‘cannot be regarded as honest’. Rich J added that the law needed to keep pace with technological developments and, therefore, protection of the plaintiff was consistent with the policy underlying nuisance law. The result of the decision was to declare legal the defendants’ activities on their land. But the message from the court was that, as a property holder, the appellant was not left defenceless in this situation: as a property holder, it was in a position to protect itself by building a fence tall enough to prevent ‘overlooking’ by the respondent. 1.69  The general principle underpinning the approach of courts to these questions was affirmed in Moorgate Tobacco Pty Ltd v  Philip Morris Pty Ltd,180 where Deane J concluded that: Neither legal principle nor social utility requires or warrants the obliteration of that boundary [between legal restraint and unrestricted competition] by the importation of a cause of 179. Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479 at 507. 180. Moorgate Tobacco Pty Ltd v  Philip Morris Pty Ltd (1984) 156 CLR 414 at  445–6; 56 ALR 193 at  214. See further, K Gray, ‘Property in Thin Air’ (1991) 50 Cambridge Law Journal 252.

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action whose main characteristic is the scope it allows, under high-sounding generalisations, for judicial indulgence of idiosyncratic notions of what is fair in the market place.

As in many such boundary disputes, a comprehensive legislative solution, where all possible policy implications and interests can be considered, represents a preferable expression of public policy. It has resulted, for example, in the enactment of broadcasting services legislation.

Property and information 1.70  In the context of what is commonly described as an ‘information’ society, courts and legislatures are regularly called on to confer property rights on certain forms of knowledge and information, or to expand existing protections to cover new forms of intellectual creation.181 Thus, original literary and artistic works in material form are protected by copyright, original inventions by patents, and business reputation and goodwill by the tort of passing off.These categories of ‘intangible property’ have been long protected by statute and common law. For example, the Commonwealth enacted the Plant Variety Rights Act 1987 (Cth) (replaced by the Plant Breeder’s Rights Act 1994 (Cth)) to create property rights in newly propagated varieties of plants. It is an example of a new form of property rights. Obviously, in the process of enacting this legislation, many of the philosophical arguments canvassed above were ventilated.182 1.71  An example of the judicial development of this area of property law is the case of Foster v Mountford.183 The plaintiff successfully sought an injunction to prevent publication of a book that contained details of Aboriginal tribal secrets given in confidence to the defendant, an anthropologist.The court relied on a series of earlier cases where there were unauthorised uses of confidential information in commercial settings and plaintiffs were able to get equitable relief.184 It would seem to follow that, in so far as legally protected confidential information affords the right to transfer it, the right to enjoy it — for instance, in cases of commercial exploitation, if desired — and the right to exclude others from unauthorised use, then, as recognised in these cases, it is a form of proprietary right. This was acknowledged by Gummow J in Smith, Kline & French Laboratories (Australia) Ltd v Secretary, Department of Community Services and Health,185 where he concluded:

181. See M Walpole and J Gray, ‘Taxing Virtually Everything: Cyberspace Profits, Property Law and Taxation Liability’ (2010) 39 Australian Taxation Review 1. 182. For an overview of these arguments, see  D Ellinson, ‘A New “Breed” of Intellectual Property Rights’ (1988) 62 Law Institute Journal 742. 183. Foster v Mountford (1976) 14 ALR 71. 184. For instance, Seager v Copydex Ltd [1967] 2 All ER 415 (information about an invention). 185. Smith, Kline & French Laboratories (Australia) Ltd v Secretary, Department of Community Services and Health (1990) 95 ALR 87 at 135. For a discussion of the relevance of property in information in the privacy, freedom of information, archiving, policing and evidence law contexts, see L Bennett Moses, ‘Who Owns Information?: Law Enforcement Information Sharing as a Case Study in Conceptual Confusion’ 43 (2) (2020) University of New South Wales Law Journal 615.

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The degree of protection afforded by equitable doctrines and remedies to what equity considers confidential information makes it appropriate to describe it as having a proprietary character.

Interest in bringing information within the proprietary paradigm has, at  least in a scholarly sense, increased with the growth of digital data. Big data developed by way of the generation, collection and analysis of digital data is a potentially valuable resource for which businesses are prepared to pay so as to enhance the sale of products or services. Some scholars, such as Lessig, argue that such information should be characterised as property.186

Property and the right to work 1.72  As noted above, the law has traditionally drawn a distinction between property rights and other types of rights. For present purposes, however, it is important to note that property rights are usually defined in contradistinction to personal or contractual rights, on the one hand, and political or civil rights on the other. The issue of where to draw the boundary between these discrete categories arose in the case of Dorman v Rogers.187 The appellant had been struck off the Register of Medical Practitioners in New South Wales after having been convicted of making dishonest claims for payment of medical services. He appealed to the High Court, relying on s 35(3)(b) of the Judiciary Act 1903 (Cth), which provided an appeal of right to the High Court where a Supreme Court judgment involved ‘directly or indirectly a … question … respecting any property or any civil right amounting to or of the value of $20,000 or upwards’. The respondents argued, among other things, that it was not a property right. 1.73  A majority of the High Court in Dorman agreed. Gibbs CJ cited the unanimous judgment of the High Court in Clyne v NSW Bar Association,188 which concluded that, in the case of a right to practise a profession, ‘[t]here is no “property” that can be said to be involved’. He added that:

186. L Lessig, ‘Privacy as Property’ (2002) 69 (1) Social Research: An International Quarterly of Social Sciences, 247–69. Note digital data is collected in an extensive range of circumstances including from fitness devices, medical equipment such as CPAP machines and social media platforms such as Facebook. Note that in 2017 the German Federal Court heard a case in which a mother sought access to her deceased daughter’s Facebook account so that the mother might better understand whether her daughter had committed suicide. The court found in favour of the mother, concluding that the Facebook account formed part of the daughter’s estate. M Dittman, ‘Berlin District Court: Facebook Must Grant Heirs Access to a Deceased Person’s Account, (2016) (retrieved 18 December 2019); M Dittman, ‘Berlin Court of Appeals: Facebook is Not Obliged to Grant Heirs Access to a Deceased Person’s Account’ (2017) (retrieved 18 December 2019); M Dittman,‘German Federal Court of Justice: Facebook Must Grant Heirs Full Access to a Deceased Person’s Account’ (2017) (retrieved 18 December 2019) as cited in NSW Law Reform Commission, Access to Digital Records on Death or Incapacity, 147, 2019. Accessed 22 January 2022 via link at: . 187. Dorman v Rogers (1982) 148 CLR 365. 188. Clyne v NSW Bar Association (1960) 104 CLR 186 at 205.

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What is valuable is the person’s own earning capacity, which is personal to him. The right is, of course, not transmissible, and the financial consequences of possessing the right will depend on the skill, ability and fortune of the individual concerned.189

The necessary requirement of transferability of the interest was also the basis of the judgment of Stephen J (Brennan and Mason JJ concurring), who drew a sharp contrast between rights to practise law and medicine and rights to ‘conduct hotels or lotteries or the growing of certain primary products where quota limits on production exist’.190 He noted that the former derived exclusively from the possession of personal qualities. By contrast: The latter have value not by virtue of registration which is merely certification of the possession of personal qualities inherently incapable of transfer to another, whereas the right to enter upon and share in an activity, entry to which is controlled by the state and is not dependent merely upon the personal qualities of an intending entrant, will be readily transferable, and its scarcity value realizable, so long as the law permits such transfer.191

As this judgment suggests, the concept of property as evidenced in prevailing legal doctrine does not extend to purely personal rights — such as the right to reputation or the right to work — or civil rights in the broader sense, such as the right to vote, freedom of association and freedom of speech.192

Property and civil rights 1.74 In Davis v Commonwealth,193 the High Court was asked to decide where to draw the line between the property rights of the defendant and the civil rights — specifically the right to freedom of speech — of the plaintiff. This was evidenced in an assertion by the  defendant  that its rights as owners of designs under the Australian Bicentennial Act 1980 (Cth) were infringed by the production of shirts with designs ‘bearing a discernible similarity’, as the court found, to the official symbols of the Australian Bicentennial Authority (the Authority). The symbols in question were the figures ‘1788’ and ‘1988’. The inner symbol was surrounded by an outer ring containing the words ‘200 years of suppression and depression’.The plaintiffs had already been refused consent by the Authority to use the symbols produced on the shirts. The Authority relied on s 22 of the Act, which made it an offence to use a symbol ‘capable of being mistaken for’ official symbols.

189. Dorman v Rogers (1982) 148 CLR 365 at 367. 190. Dorman v Rogers (1982) 148 CLR 365 at 369. 191. Dorman v Rogers (1982) 148 CLR 365 at 370. 192. Note that in Cunningham v Commonwealth of Australia [2016] HCA 39, the High Court considered whether a politician’s retirement allowance (as opposed to a right to work) was property. French CJ and Kiefel and Bell JJ concluded that ‘if a right or entitlement was always, of its nature, liable to variation, apart from the fact that it was created by statute, a variation later effected cannot properly be described as an acquisition of property’: at [46]. 193. Davis v Commonwealth (1988) 166 CLR 79; 82 ALR 633. See also 1.5.

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The High Court unanimously accepted the plaintiffs’ argument, holding that: … the framework of regulation created by s 22(1)(a) with s 22(6)(d)(i) and (ii) reached far beyond the legitimate objects sought to be achieved and impinges on freedom of expression by enabling the Authority to regulate the use of common expressions …194

The court went on to consider a range of possible uses of these symbols, such as ‘Melbourne 1988’ to illustrate the ‘extraordinary power to regulate the use of everyday expressions in this country’. The framework was, therefore, beyond the power of the Commonwealth. However, it may be that freedom of expression as a civil right will give way to rights of the Commonwealth where those rights are ‘reasonably and appropriately adapted to achieve the ends that lie within the limits of constitutional power’.

Public property, private property, common property 1.75  The case of Stow v Mineral Holdings (Australia) Pty Ltd195 demonstrates the essentially private, or privative, nature of property rights. The appellants lodged objections under the Mining Act  1929 (Tas) with the warden to mining and prospecting activity in an area adjoining Tasmania’s South-West National Park. The respondents opposed this action on the ground that the appellants had no jurisdiction under the Act to object because they did not have any estate or interest in the land within s 15C(1) of the Mining Act. The High  Court had to consider whether the appellants as bushwalkers, campers and naturalists had a sufficient proprietary interest to make an objection. A majority held that they did not.Though the Act offered no definition of ‘interest in land’, it was held to be of a proprietary nature that does ‘not embrace interests in which the person concerned has no greater claim than any other member of the public’. In this way, the rights of the bushwalkers and others are to be seen as ‘public rights’. Moreover, the greater use of these rights by some people, as in the case of keen bushwalkers, ‘does not elevate that which is a public right enjoyed by all members of the public equally into a private right capable of being described as an estate or interest in the land’.196 In this scheme, therefore, property may be private if held by an individual; it may be public if held by a public institution, or by the state; but the notion of common property seems to be a contradiction in terms. This would suggest that we are as far away as ever from Macpherson’s claim that a notion of property is emerging which is ‘a right not to be excluded’.197 Does this mean that we devalue the rights of the public against those who hold private property? Questions such as these have arisen in many contexts, including in the environmental context, particularly as scholars, members of civil society and others search for appropriate legal mechanisms to support sustainability goals and protect against the negative effects of 194. Davis v Commonwealth (1988) 166 CLR 79 at 100; 82 ALR 633 at 645 per Mason CJ, Deane and Gaudron JJ. 195. Stow v Mineral Holdings (Australia) Pty Ltd (1977) 180 CLR 295; 14 ALR 397. 196. Stow v Mineral Holdings (Australia) Pty Ltd (1977) 180 CLR 295 at 312; 14 ALR 397 at 411 per Aickin J. 197. See 1.5. Clarke and Kohler, Property Law: Commentary and Materials, note 98 above, add a further refinement by distinguishing between ‘open access communal property’ and ‘state property’: at pp 35–41. Public rights are relevant to the former but not the latter.

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climate change. One such emerging legal mechanism that re-valorises the public element (raised above) is the public trust doctrine;198 a doctrine that in the modern era, has been applied to natural resources, by Joseph Sax199 and to nature more generally, by Mary Christina Wood.200 The subject matter of all trusts is some form of property.

Property rights and human rights 1.76  To the extent that property rights entail a right to exclude and to use and enjoy, they have the potential to impact adversely on the human rights of others.201 Davis v Commonwealth202 (referred to at 1.5 above) provides a clear example of how property rights that unreasonably impact on the civil rights of others, may be curtailed by the courts. Civil rights are not only protected by municipal law. They are also protected by international instruments, including the International Covenant on Civil and Political Rights, and the International Covenant on Economic, Social and Cultural Rights.Article 1 of Protocol No 1 to the European Convention on Human Rights (ECHR) 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 conditions 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 and penalties.

As these instruments gather force in the domestic law of nation states, international human rights law is beginning to have some bearing on the boundaries of property rights. This has been particularly the case in the European Union where the ECHR binds member states. Some member states have proceeded to incorporate the Convention directly into their own domestic law. For example, when the United Kingdom was part of the European Union (ie, before ‘Brexit’) that nation enacted the Human Rights Act 1998 (UK) to achieve this objective. The case of Pye v United Kingdom203 decided in the European Court of Human Rights (ECtHR), demonstrates how human rights and property law have the potential to intersect. That case had a domestic history in the United Kingdom, before the documentary title 198. L Butterly, NR Hasimi, E Johnson and R Koroglu, ‘Could the Public Trust Doctrine Be Used For Climate Litigation in Australia; The Modernisation of the Public Trust Doctrine in the US and Canada in the Context of the Climate Emergency’(2020) 35 (1) Australian Environment Review 15. 199. J Sax, ‘The Public Trust Doctrine in Natural Resource Law: Effective Judicial Intervention’ 68 (1970) Michigan Law Review 471. 200. MC Wood, Nature’s Trust: Environmental Law for a New Ecological Age, CUP, Cambridge, 2013; see  also public trust discussion in J Gray, ‘A Global Update on the Ambit of Unconventional Gas Mining and an Alternative Framework for Mediating Energy Demands’  in L Westra, K Bosselmann,  J Gray  and K Gwaizdon (eds), Ecological Integrity, Law and Governance, Routledge, Abingdon, UK, 2018. 201. As an aside, it can be noted that there are proponents of property rights for wild animals as well as for humans. See J Hadley, Animal Property Rights: A Theory of Habitat Rights for Wild Animals, Lexington Books, Lanham, MD, 2015. 202. Davis v Commonwealth (1988) 166 CLR 79; 82 ALR 633. 203. JA Pye (Oxford) Ltd v United Kingdom [2005] ECHR 291.

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holder appealed the (domestic) House of Lords decision to the ECtHR. The House of Lords found the adverse possessor (the squatter), who had been in possession of the relevant land for 12  years, successfully extinguished the documentary owner’s title.204 However, when the case first went on appeal to the ECtHR, a narrow majority of that court found that the House of Lords’ decision offended Art 1 of Protocol No 1 of the ECHR — largely because no compensation was payable to the documentary owner for the extinguishment of title. Ultimately, the first ECtHR decision was overturned by the Grand Chamber.205 The Grand Chamber found that the United Kingdom domestic law permitting extinguishment without compensation was in fact, compliant with the ECHR. 1.77  The Grand Chamber decision in Pye contrasts with the decision of the ECtHR in Connors v United Kingdom,206 where a family of ‘gypsies’ was evicted from a local authority site by the owner. In that case, the court held that there were insufficient procedural protections of the family’s rights in the local law as required by Art 8. The family was awarded compensation for its loss of the site. The above cases, therefore, serve as examples of how human rights and property rights may interact when an international human rights instrument is at play.207 Australia is, of course, not a signatory to the ECHR, but international developments in human rights may nevertheless still have an impact on judicial reasoning and the exercise of judicial discretion, particularly in ‘hard’ cases, as Mabo (No 2) demonstrated.208 It is anticipated that the way international jurisdictions attempt to reconcile human rights and property rights will continue to be of relevance to legal decision-making in Australia and will also feed into policy discussions that help determine the limits of property rights. The importance of protecting human rights through property rights (especially rights to home and housing) has been highlighted by the COVID pandemic. As noted at  1.1 the COVID pandemic has thrown a light on the connection between housing vulnerability and the rights to both shelter and health. In some Australian jurisdictions, specific human rights legislation has been passed, which may prove to have a bearing on the intersection between property rights and human rights. 1.78  For example, inVictoria, there is the Charter of Human Rights and Responsibilities Act 2006 (Vic) (the Victorian Charter). Section 20 of that Act (which deals with Property Rights) bears some resemblance to Art 17 of the Universal Declaration of Human Rights and Art 1 of the ECHR. Section 20 of the Victorian Charter states: ‘A person must not be deprived of his or her property other than in accordance with law’.This means that courts will be required to interpret legislation consistently with the Victorian Charter, as long as doing so does not disturb the purpose behind the legislation. The European authorities, therefore, appear to be directly relevant to the interpretation of this provision. 204. JA Pye (Oxford) Ltd and Others v Graham and Another [2002] UKHL 30. 205. JA Pye (Oxford) Ltd and JA Pye (Oxford) Land Ltd v United Kingdom [2007] ECHR 700. 206. Connors v United Kingdom [2004] EHRR 189. 207. Whether post-Brexit, the United Kingdom is able to maintain the same reach of human rights within the property domain is uncertain. 208. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 42; 107 ALR 1. See further, Chapter 4.

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The Concept of Property

1.79

While the Australian Capital Territory and Queensland209 also have specific human rights legislation, New South Wales is lagging behind. It does not yet have specific human rights legislation, but the political pressure to adopt such legislation continues, so that the overseas jurisprudence may have increasing relevance here.

Conclusion 1.79  The rights considered above as property rights involved an examination of the boundary between property rights and other sorts of rights external to property law. It follows that property law can be seen as a subcategory of private law, and as such is concerned with the rights individuals have over things. Further, one party’s property rights may directly impact on the property rights of others. Property rights may also simultaneously impact on the civil and human rights of others. By contrast to the external boundaries of property law, there is a host of distinctions internal to property law, whereby property rights are classified depending on the nature of the thing over which rights are claimed, and the nature of the rights claimed. This is the subject of the Chapter 2, which will outline the divisions governing the principles that underpin the layout of this book.

209. The Australian Capital Territory has the Human Rights Act 2004 (ACT) (of which s 12 protects the right of a person ‘not to have his or her privacy, family, home [emphasis added] or correspondence interfered with unlawfully or arbitrarily’). Meanwhile, Queensland has the Human Rights Act 2019 of which s 24(2) states that ‘a person must not be arbitrarily deprived of the person’s property’.

47

Chapter 2

Land, Fixtures and Chattels Introduction 2.1  The common law has traditionally classified property rights by reference to the nature of the object over which rights are held, on the one hand, and the specific bundle of rights that are asserted in respect to it, on the other. The objects of property have been divided into two basic categories: 1. real property, or realty; and 2. personal property, or personalty. These have been further subdivided, as illustrated in Figure 2.1.1 Figure 2.1:  Categories of property Private property Realty Corporeal For example, land, buildings and fixtures

Personalty Incorporeal

For example, easements and profits

Pure personalty (chattels personal)

Choses in possession (tangibles); for example, a car

Choses in action (intangibles); for example, shares, patents and copyright

Chattels real Leases; for example, fixed-term, periodic, at sufferance and at will

Land 2.2  Land, also known as ‘realty’ or ‘real property’, is defined as rights over land and anything annexed to it. It may also include a quantum of airspace. This particular 1.

Based on a table devised by JH Baker in An Introduction to English Legal History, Butterworths, London, 1971, p 137.

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Property Law in New South Wales

category of property is also known, for obvious reasons, as ‘immovables’. The distinct physical features of land, including its immovability, in conjunction with its economic and social significance, have given rise to a particular pattern of legal regulation. As can be seen from  Figure 2.1, realty is itself divided into two separate categories: corporeal and incorporeal. Corporeal property, or ‘hereditaments’,2 refers to rights to the land itself. Incorporeal property, by contrast, relates to rights over the land. The distinction is somewhat artificial: even someone who owns the land itself generally only values the rights over that land. Still, in so far as the distinction identifies different orders of rights — such as a right of occupation, as opposed to a right of way — it is a useful heuristic device for ranking different types of rights. As a preliminary matter, we need to define ‘land’. Subject to statutory modification,3 in addition to the physical earth, it is generally considered to include anything attached to it, and the airspace above it. Land also includes fixtures; that is, those chattels which have become part of the realty. A chattel will be considered to be affixed to the realty — and therefore a part of it — if it is annexed to the realty. The detailed rules relating to the definition of land, and the doctrine of fixtures, will be discussed below.4

Personalty 2.3 As Figure 2.1 illustrates, there are two distinct classes of personalty, or personal property: chattels real, or leaseholds, and pure personalty. The first category, leaseholds, is more naturally a part of real property and will be treated as such later.5 Leaseholds have been classified as personalty for historical rather than conceptual reasons. Within the framework of the common law, the lease was originally conceived as affording personal rights only on the lessee. It followed that if, for example, the lessee was dispossessed by a third party, his or her only remedy was an action of damages, which was the same limited remedy as was available in respect of other chattels. To this extent, the lease resembled chattels more than land.6 By contrast, an essential feature of real property was a right to repossession of the land or thing (in Latin, res). The feudal prejudice against the lease disappeared by the middle of the 17th century, but too late to affect the system of classification of property rights that had already developed. Distinguishing between land and chattels on the basis of available remedies has also been largely superseded, since it is now possible to get an order for repossession of a chattel in much the same way as for land.7

2.

This ancient term was used to describe land because in feudal times only land was capable of passing to an heir on intestacy. 3. See, for example, the differing definitions of ‘land’ in s 1.4 of the Environment Planning and Assessment Act 1979 (NSW), s 3(1) of the Real Property Act (NSW); and s 147A of the Duties Act 1997 (NSW). 4. See 2.6–2.30. 5. See Chapter 9. 6. For a further discussion, see Chapter 7. 7. See, for example, McKeown v Cavalier Yachts Pty Ltd (1988) 13 NSWLR 303 (order granted for specific restitution of a yacht).

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2.6

Choses in possession 2.4  The words ‘choses in possession’, ‘chattels’ and ‘goods’ denote tangible personal property. The terms refer to physical things that are not land, such as cars, paintings and clothing. The tangible nature of such property has direct consequences for the manner in which certain types of proprietary rights are created over it. So, for example, if a person takes a thing into his or her physical possession, he or she will have some proprietary rights over it. Of course, these rights may be limited if superior rights lie in someone else, as in the case where an owner loses an object and a stranger finds it.8

Choses in action 2.5  Choses in action are property rights over intangible things, covering rights as diverse as intellectual property (copyright, patents, industrial designs and confidential information), shares, rights to payment of debts, and money. Clearly, it is not possible to acquire rights over intangible property in the same manner as over tangible property. For instance, intangible property cannot be possessed physically, so it cannot give rise to possessory rights. Similar considerations apply to the transfer of rights over such property. As the economies of advanced industrialised societies become increasingly information based, this area of property has assumed growing social, financial and economic significance. One useful way of distinguishing between the two sets of rights (tangible and intangible) is by comparing ownership of a book with ownership of the right to make copies of the book.9 The former is an example of a chose in possession, or chattel; the latter is a form of intangible property. There is no physical thing over which the copyright owner has rights; the owner only has a right of reproduction.

What is Land? 2.6  The meaning of this term is not self-evident. Subject to statutory modification,10 in addition to the physical earth, it is generally considered to include the airspace above it, as well as the minerals, vegetation and buildings on it. Furthermore, even if the earth is removed, the owner of the land still retains rights to the space it once occupied. The airspace can be sold as land in its own right.11 This sense of land as including both airspace and subsoil is captured in the Latin expression cuius est solum eius est usque ad coelum et usque ad inferos — ownership of land extends up to heaven and down to the centre of the earth.12 The courts and legislatures have significantly trimmed the expanse of rights implied in the Latin ‘fanciful phrase’.13 To confer such broad rights on owners would clearly impact 8. 9. 10. 11. 12. 13.

As to the rights of finders, see 2.64–2.67. For a case which raised the distinction, see Pacific Film Laboratories Pty Ltd v Federal Commissioner for Taxation (1970) 121 CLR 154 (different rights over film prints and the right to produce copies). See for example, the definition of ‘land’ in s 1.4 of the Environment Planning and Assessment Act 1979 (NSW). Under that Act, ‘land’ is defined to include water. Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73, discussed at 8.38–8.39. Strata schemes legislation is a further example of the principle; see generally Chapter 10. See extensive discussion in Star Energy Weald Basin Ltd v Bocardo SA [2011] AC 380. Wandsworth Board of Works v United Telephone Co (1884) 13 QBD 904 at 915 per Brett MR.

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adversely on others and the public generally, who might have a legitimate need to use the land’s airspace and subsoil.14

Airspace 2.7  Subject to legislated environment and planning laws,15 the owners of land may use their airspace to build to any height and for any purpose.16 As for excluding others, he or she is entitled to use so much of the airspace as is necessary for the reasonable enjoyment of the land. In Bernstein of Leigh (Baron) v Skyviews and General Ltd,17 the owner of land objected to aircraft flying some hundreds of feet over his property for sightseeing purposes. The court held that to allow trespass18 in respect of this type of activity would be an unreasonable use of the land, concluding that the owner has exclusive rights to the airspace ‘to such height as is necessary for the ordinary use of the land and the structures upon it’.19 Moreover, in 1937 in Victoria Park Racing Co v Taylor the High Court held that inspecting land and watching activities taking place on it, such as sporting events, from an adjacent property, is not actionable either as a trespass or nuisance.20 2.8  Invasions of the airspace over which the owner has exclusive rights, however transient, are actionable as trespass. So, where a horse bit and kicked another through a fence, the defendant was held liable.21 It was once thought that firing a bullet through the airspace of an owner’s land would not of itself amount to trespass, but would if it struck buildings or the land.22 However, in Davies v Bennison,23 where the defendant shot a cat sitting on a shed, it was held that even if the bullet touched nothing on the owner’s land it would be trespass. If the jib of a crane on land intrudes into a neighbour’s airspace, it will constitute trespass.24 The plaintiff may be entitled to an injunction to stop the interference.25 A court may refuse to grant an injunction if the trespass is trivial26 or where 14. For an exploration of the competing moral arguments courts have deployed to address this question in a number of jurisdictions, see S Grattan, ‘Judicial Reasoning and the Adjudication of Airspace Trespass’ (1996) 4 Australian Property Law Journal 128. The competing interests and philosophies are also discussed in relation to environmental regulation and disputes in Kate Holden The Winter Road, Black Inc Books, Melbourne, 2021. 15. See, for example, Pt 4 (development assessment and consent) under the Environment Planning and Assessment Act 1979 (NSW) or Pt 5.4 (air pollution) under the Protection of the Environment Operation Act 1997 (NSW). On the implications for special wildlife of the complex legal regulation in Australia and New Zealand airspace, see further P Wallace and J Holman, ‘Aeroconservation: Challenges for Law and Policy’ (2019) 36 Environmental and Planning Law Journal 692. 16. Victoria Park Racing Co v Taylor (1937) 58 CLR 479. 17. Bernstein of Leigh (Baron) v Skyviews and General Ltd [1978] QB 479. 18. For the requirements necessary to establish this tort, see 2.31. 19. Bernstein of Leigh (Baron) v Skyviews and General Ltd [1978] QB 479 at 488 per Griffith J. 20. Victoria Park Racing Co v Taylor (1937) 58 CLR 479. 21. Ellis v Loftus Iron Co (1874) LR 10 CP 10. 22. Pickering v Rudd (1815) 4 Camp 219. 23. Davies v Bennison (1927) 22 Tas LR 52. 24. Woollerton v Costain [1970] 1 WLR 411; Graham v KD Morris & Sons Pty Ltd [1974] Qd R 1; Bendal Pty Ltd v Mirvac Project Pty Ltd (1991) 23 NSWLR 464. 25. Graham v KD Morris & Sons Pty Ltd [1974] Qd R 1; Jaggard v Sawyer [1995] 1 WLR 269. 26. Attorney-General v Mosman Council (1910) 11 SR (NSW) 113.

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Land, Fixtures and Chattels

2.9

the owner has rejected reasonable offers of compensation. Statute now provides that courts may grant easements over land28 or rights of access over land,29 for the purposes of building, repair or maintenance of adjoining land. 27

Other examples of trespass are advertising signs protruding into a neighbour’s airspace,30 overhead electric cables31 and encroaching walls.32 Overhanging trees, however, do not constitute trespass.The intrusion caused by trees is considered to be a consequential rather than direct encroachment. Therefore, the remedy is in nuisance.33 By s 72(1) of the Civil Liability Act 2002 (NSW) (contained within Part 12 ‘Trespass or nuisance by Aircraft’), there is no right to sue in trespass for flight over property at a height: … above the ground that is reasonable (having regard to wind, weather and all the circumstances of the case) so long as the Air Navigation Regulations are complied with.34

This provision is clearly consistent with the extent of the right to sue in trespass spelled out in Bernstein. Section 73 imposes strict liability for any ‘material loss or damage’ caused by overflying aircraft. It has been held that damage resulting from vibrations caused by aircraft is covered by the equivalent English provision.35

Subsoil 2.9  Scant authority exists about the extent of the rights of an owner below the surface. There is no reason why the same policy reasons that impose limits on airspace rights should not equally apply to the subsoil. Yet one Kentucky case held that, where a cave entrance on land held by A extended under land held by B at a point 350 feet below the surface, it was trespass for A to use it at that point.36 The UK decision in Star Energy considered the issues arising in a case of trespass below the surface in some detail.37 In the absence of a specific statutory restriction or a reservation to the Crown in the original Crown grant, the owner has a general right to extract minerals below the surface.38 In New South Wales, original Crown grants usually reserved rights to minerals. These reservations continue to operate today, even in respect of Torrens title land, as restrictions noted on the registered title.39 According to Bradbrook, a more comprehensive policy of reserving minerals to LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1989) 24 NSWLR 490. Conveyancing Act 1919 (NSW), s 88K. Access to Neighbouring Land Act 2000 (NSW); see further 12.74. Kelsen v Imperial Tobacco Co Ltd [1957] 2 QB 334. Barker v Corporation of the City of Adelaide [1900] SALR 29. Williamson v Friend (1901) 1 SR (NSW) (Eq) 23. Lemmon v Webb [1895] AC 1. Part 12 of the Civil Liability Act 2002 re-enacted and renamed the Damage by Aircraft Act 1952. On the application of s 72, in a range of arguments in relation to flights of the Royal Australian Air Force, see Steepe v The Commonwealth [2021] NSWSC 368. 35. Steel-Maitland v British Airways [1981] SLT 110. 36. Edwards v Sims 24 SW 2d 619 (Ky 1929). 37. Star Energy Weald Basin Ltd v Bocardo SA [2011] AC 380. 38. Bulli Coal Mining Co v Osborne [1899] AC 351. 39. See 8.37.

27. 28. 29. 30. 31. 32. 33. 34.

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Property Law in New South Wales

the Crown was introduced by the Crown Lands Act 1884 (NSW) and continued in later legislation.40 Specific legislation has since been passed conferring rights over specific resources such as coal, petroleum and atomic substances.41

Natural rights 2.10  Ownership of land brings with it a number of ‘natural’ rights, such as the right to support from adjacent landowners, and certain rights to water. As these rights are similar in some respects to particular types of easements, they will be dealt with in Chapter 13.42

Boundaries of Land 2.11  Land may have either artificial or natural boundaries. Artificial boundaries are fixed until such time as the adjacent owners agree to shift them, and remain unaffected by movements in the land itself. Natural boundaries may shift from time to time by the operation of natural forces, especially where the boundary is water. Different rules apply depending on whether the water is tidal or non-tidal.

Land bounded by tidal waters 2.12  If land is bounded by tidal waters, either because it is situated by the sea, or by a tidal river or lake, at common law the owner owns the land up to the mean high-water mark. The mean high-water mark is the mean, assessed on an annual basis, of the highest and lowest high tides of each lunar month of the year.43 The rule applies to land held under the Torrens system.44 Land below the mark belongs to the Crown in right of the state.45

Land bounded by non-tidal waters 2.13  At common law, if land contains non-tidal waters (whether in the form of a river or lake) the owner retains exclusive rights to the bed, the alveus.46 But if land is bounded by non-tidal waters, ownership of the land confers rights up to the ‘middle line’ (in Latin, the medium filum) of the water.47 The rule has been held to apply to Torrens title land.48 The common law rule is effectively obsolete in regard to both non-tidal lakes and rivers

40. See, for example, Crown Land Management Act 2016 (NSW). 41. For example, the Mining Act 1992 (NSW) and the Petroleum (Onshore) Act 1991 (NSW), the latter of which expressly reserves ownership of ‘petroleum, helium and carbon dioxide existing in a natural state on or below the surface of any land’ as the property of the Crown. See further A Bradbrook, ‘The Relevance of the Cuius Est Solum Doctrine to the Landowner’s Claims to Natural Resources Located Above and Beneath the Land’ (1988) 11 Adelaide Law Review 462. 42. See 12.11. 43. Attorney-General v Chambers (1854) 4 De GM & G 206. 44. Verrall v Nott (1939) 39 SR (NSW) 89. 45. Hill v Lyne (1893) 14 LR (NSW) 449. 46. Orr Ewing v Colquhoun (1877) 2 App Cas 839. 47. Lord v Commissioners for the City of Sydney (1859) 12 Moo PC 473; 14 ER 991. 48. Lanyon Pty Ltd v Canberra Washed Sand Pty Ltd (1966) 115 CLR 342.

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2.15

by virtue of s 13.3 of the Crown Land Management Act 2016 (NSW), so that the owner’s rights end where land and water meet.49

Accretion and erosion 2.14  Though the natural processes of accretion and erosion have the effect of modifying the physical boundaries of land, the legal boundaries will only change if the following requirements are met. The erosion or accretion must be so gradual as to be imperceptible to the naked eye.50 Rapid transformations of boundaries — for instance, by avulsion, earthquake or flood — will not affect legal boundaries. In the case of land bounded by the sea, where accretion occurs, title to the increase in land will be in the landowner.51 The principle of erosion works in a parallel way, so that any decrease in land will accrue to the Crown.52 The principles of accretion and erosion apply equally to tidal and non-tidal land, so that the rights of private, adjacent landowners will be modified in the same way. These principles have been modified by s 13.3(3) of the Crown Land Management Act (NSW): they no longer apply to non-tidal lakes. In Southern Centre of Theosophy Inc v South Australia,53 the Privy Council held that the doctrine applies to both old system and Torrens title land, but may be excluded by agreement. In that case, the Privy Council upheld a finding that an accretion of 20 acres of land accrued to the owner of land adjacent to water. It was held that the accretion was caused by the gradual and imperceptible deposit of sand by wind and water over a period of some 70 years, notwithstanding some sudden movements of dunes at one point in the boundary. The limitations on the doctrine of accretion can be varied in the conveyance so as to include any changes in the boundaries by the operation of natural forces.54 Such a grant is known as a ‘movable freehold’.55

Fixtures Introduction 2.15  Land includes fixtures. Fixtures are chattels that have become part of the realty by virtue of having been attached to it in a particular way, or annexed to it. Where the owner of the chattel and the owner of the land are one and the same, it is ‘a matter of perfect

49. See generally B Edgeworth in Butt’s Land Law, 7th ed, 2017, pp 95-6. See discussion of the Crown ownership of riverbeds in Gordon v Lever (No 2) [2019] NSWCA 275 at [55]. 50. Gifford v Lord Yarborough (1828) 5 Bing 163; 130 ER 1023; Hazlett v Presnell (1982) 43 ALR 1 at 7; Elroa Nominees Pty Ltd v Registrar of Titles [2003] QCA 165 at [37]. 51. Note, however, the provisions of s 28 of the Coastal Management Act 2016 (NSW), restricting the circumstances in which a court may make a declaration about the increase by way of accretion of an area of private land adjacent to the coast. 52. Hill v Lyne (1893) 14 LR (NSW) 449. 53. Southern Centre of Theosophy Inc v South Australia [1982] AC 706. 54. Baxendale v Instow PC [1981] 2 All ER 620. 55. For difficulties that arise in relation to these interests, and an argument that they should be abolished, see R Annand, ‘Movable Fees’ [1982] Conv 208.

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Property Law in New South Wales

indifference whether you call the things chattels or whether you call them parts of the house’.56 But annexation becomes very important where, for example: • There is a sale of land. A contract of sale will only confer rights to the land; rights over any chattels on the land will remain with the vendor, unless the contract provides otherwise. • A life tenancy comes to an end and the tenant leaves chattels by will. The remainder person will be entitled to fixtures. • The owner of land gives a mortgage over the land, and later annexes chattels to the land. Who has rights over the chattels? • After a mortgage is granted, the owner annexes chattels belonging to another person; for instance, pursuant to a bailment. If the mortgagee enforces the security, does the bailor retain rights over the chattels? • Fixtures are annexed by a tenant. Do they become part of the landlord’s property, or do they remain the tenant’s?

General principles 2.16  It is unsurprising that many of the leading authorities on the contemporary law of fixtures appear in the middle of the 19th century. Historically, this is the very time of the eclipse of agricultural production by industrial production. The emergence of the factory and its need for machinery with an often comparatively short useful working life gave rise to a requirement that these chattels be readily removable. Unlike agricultural fixtures such as fences, gables and barns, which were annexed in ways that paralleled the ways that buildings were constructed, and were therefore easily seen as part of the land itself, industrial machinery tended to be bolted into place. The purpose of the nut and bolt is nothing more than to annex a chattel in a way that also allows it to be easily detached. The facility of removal, however, is not necessarily conclusive as to the key question with which the law of fixtures is concerned: is the chattel to be considered part of the land, or does it retain its status as a chattel? To answer this question, more recent authorities have come to place a greater measure of reliance on parties’ intentions, objectively construed, than was the case under the old law.57 2.17  The general principle governing fixtures is: quicquid plantatur solo, solo cedit (whatever is attached to the soil becomes part of the soil).58 So, building materials delivered to a site remain chattels until they form part of a building on the land, at which time they will be part of the land. When they are severed from the land, they return to their former state

56. Re Whaley [1908] 1 Ch 615 at 620 per Neville J. 57. See, for example, Palumberi v Palumberi (1986) NSW ConvR ¶55-287 per Kearney J at 596; May v Ceedive Pty Ltd (2006) 13 BPR 24,147 per Santow JA at [66]. For a commentary see R Abbs,‘The Law of Fixtures: Informed Principle or Independent Predilection?’ (2004) 11 Australian Property Law Journal 31. 58. Minshall v Lloyd (1837) 2 M & W 450 at 459 per Parke B. See TEC Desert Pty Ltd v Commissioner of State Revenue (2010) 241 CLR 576 at [23]. For a general discussion of this principle, see B Collier, ‘Distinguishing Chattels and Fixtures: Intent and Annexation’ (1994) 2 Australian Property Law Journal 45.

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2.18

as chattels. In the leading case Holland v Hodgson,59 two tests were held to be necessary to determine whether a chattel had been annexed to the land. The court will look, first, to the degree of annexation of the chattel; and second, to the object, or purpose, of annexation. The degree of annexation is a purely physical matter. Some doubt exists as to the true nature of the test for the object of annexation. There is authority that suggests that it is purely subjective.60 However, from Holland v Hodgson the court found that the circumstances surrounding the annexation will indicate the object of annexation. That formulation indicates an objective test, rather than actual intention.61 In National Australia Bank Ltd v Blacker, Conti J set out a number of considerations, later described as ‘useful guides’, to determine the object of annexation. These include whether the attachment is for the better enjoyment of the item or for the land itself; the nature of the item; the purpose of the annexation; and whether the item was to be in position temporarily or permanently.62 2.18 In Agripower Barraba Pty Ltd v Blomfield, Sackville AJA (with whom Bathurst CJ and Beazley P agreed) noted that greater emphasis has been placed on the ‘more amorphous concept of the purpose or object of annexation’ over the degree of annexation.63 However, the degree of annexation remains central to determining the onus of proof. If the chattel is attached in any way, however slight, there is a presumption that it is a fixture. The question then becomes: is the intention clear enough to rebut the presumption? The presumption in favour of an object being a fixture will increase in proportion to the degree of attachment.64 A corresponding presumption operates if the chattel is unattached: it is presumed to remain a chattel. As Blackburn J’s oft-quoted dictum in Holland v Hodgson states: Perhaps the true rule is, that articles not otherwise attached to the land than by their own weight are not to be considered part of the land, unless the circumstances are such as to show that they were intended to be part of the land, the onus of showing that they were so intended lying on those who assert that they have ceased to be chattels, and that, on the contrary, an article which is affixed to the land even slightly is to be considered as part of the land, unless the circumstances are such as to show that it was intended all along to continue as a chattel, the onus lying on those who contend it is a chattel.65

In Holland v Hodgson, the owner of land installed looms in a mill by means of nails hammered into wooden beams. It was held that the circumstances indicated that they were to be part of the land. Tapestries were the subject of a number of cases; their differing outcomes illustrating the importance of the facts and surrounding circumstances of a case in applying the Holland 59. 60. 61. 62. 63. 64. 65.

Holland v Hodgson (1872) LR 7 CP 328. Ball-Guymer v Livantes (1990) 102 FLR 327. Vopak Terminal Darwin Pty Ltd v Natural Fuels Darwin Pty Ltd (2009) 258 ALR 89. National Australia Bank Ltd v Blacker (2000) 179 ALR 97 at [13]-[14] per Conti J. Agripower Barraba Pty Ltd v Blomfield (2015) 317 ALR 202 at [76] per Sackville AJA. Spyer v Phillipson [1931] 2 Ch 183. Holland v Hodgson (1872) LR 7 CP 328 at 335; May v Ceedive Pty Ltd (2006) 13 BPR 24,147.

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test. In Leigh v Taylor,66 a life tenant had attached valuable tapestries to the walls by means of mounting them on wooden frames that were then nailed onto the walls.The life tenant died before removing them and the question arose as to whether the tapestries passed as part of the deceased’s personal estate, or whether they formed part of the realty, and so passed to the remainder-person. The House of Lords held that the object of annexation was to enjoy the tapestries as chattels, not to annex them to the realty. Further factors indicating that they were to remain as chattels were that they could be removed without causing damage to the walls, and that a life tenant would not be expected to make such an improvement to the land. Leigh v Taylor was distinguished in Re Whaley, where tapestries affixed by the owner were held to be fixtures on the basis that because they were affixed by an owner, it would be reasonable to assume that an owner would want the land to be improved by their presence; and the tapestries were designed to enhance the Elizabethan character of the room in which they were displayed.67 Also, in Norton v Dashwood,68 tapestries were held to be fixtures because they could not be removed without damaging the brickwork, tearing the fabric and leaving the room ‘maimed and disfigured’. 2.19 In Hobson v Gorringe,69 a contest arose between a mortgagee and the owner of a gas engine that had been hired to the landowner as part of a hire–purchase agreement. Clearly, as the engine was bolted and cemented into place, there was a strong presumption that it was a fixture. As for the object of annexation, the complicating factor was the agreement between the owner of the engine and the owner of the land, which expressly declared that the chattel would not become the property of the landowner until all instalments were paid and the option to purchase had been exercised. The land was mortgaged and, on default, the mortgagee, Gorringe, claimed ownership of the chattel. The court held that the engine was a fixture because the object of attaching the engine, evident from the circumstances that were ‘patent for all to see’, was to annex it to the land. The ‘chance agreement’ between the parties was not relevant to determining the purpose of annexation. The case is further authority of the objective nature of the ‘object of annexation’ test. Likewise, a belief on the part of a purchaser that he was buying a chattel, rather than a fixture, will not change the fixture’s status.70 2.20  Standard social or architectural practices in relation to the use of certain chattels may form part of the circumstances that indicate whether the object of annexation is to enhance the realty, or to enjoy the chattels as chattels. In Belgrave Nominees Pty Ltd v Barlin-Scott Air-conditioning (Australia) Pty Ltd,71 for example, the disputed chattel was an air-conditioning system.The court held that such systems are common features of modern high-rise office buildings and, therefore, on being attached to the realty, become fixtures. Other relevant circumstances in Belgrave were the relationship of the party making the 66. 67. 68. 69. 70. 71.

Leigh v Taylor [1902] 1 Ch 523. Re Whaley [1908] 1 Ch 615. Norton v Dashwood [1896] 2 Ch 497 at 501 per Chitty J. Hobson v Gorringe [1897] 1 Ch 182. May v Ceedive Pty Ltd (2006) 13 BPR 24,147. Belgrave Nominees Pty Ltd v Barlin-Scott Air-conditioning (Australia) Pty Ltd [1984] VR 947.

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2.21

annexation vis-à-vis the owner or possessor of the land, the mode of annexation, and the purpose for which the chattel was fixed.72 Similarly, the House of Lords in Elitestone Ltd v Morris73 emphasised the significance of the physical bonding between chattel and land, the practicability of removal of the fixture and its later reconstitution, and the generic character of the building. In SPIC Pacific Hydro Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 395 similar factors pointed to wind turbines being fixtures, as they were strongly affixed to the land and their removal would also have caused significant damage to the land, including the digging up of extensive underground cabling. Likewise, in Reid v Smith a house built on brick piers, though not attached to the realty, evidenced an intention to annex where buildings were not generally physically annexed to the land in the area (North Queensland) because of white ant infestations.74 In contrast, in Attorney-General (Cth) v R T Co Pty Ltd (No 2),75 it was held that printing presses bolted onto the floor of a basement were chattels because the intention of annexation was to steady them, not make them part of the building. In Agripower Barraba Pty Ltd v Blomfield76 the NSW Court of Appeal distinguished between items stored inside and out of a shed in a processing facility. The items outside the shed were fixtures, bolted to the metal bases and frames as part of an integrated processing facility. The items inside the shed were connected to the plant and equipment but generally could be easily disconnected and were held to be chattels. In National Australia Bank Ltd v Blacker,77 items of irrigation equipment were held not to be fixtures, since the electric pumps and sprinkler heads rested on their own weight for operational purposes, and special valves connected to hosing could be easily removed. They were not ‘integers of the irrigation system’ because the intention was that they could be moved around the property when the need arose. Likewise, in Chelsea Yacht & Boat Co Ltd v Pope78 a houseboat moored next to, and connected to, an electrical circuit board that could be readily disconnected was held not to be a fixture.79 2.21 In Palumberi v Palumberi,80 a stove and carpets were held to be fixtures on the sale of land, whereas a television antenna was held to be a chattel. All objects were attached to a small degree, but the purpose of annexation differed from chattel to chattel. So, the stove and carpet were intended to form part of the land, whereas the antenna was intended to enhance enjoyment of the television (another chattel) and, therefore, was not intended Belgrave Nominees Pty Ltd v Barlin-Scott Air-conditioning (Australia) Pty Ltd [1984] VR 947 at 951 per Kaye J. Elitestone Ltd v Morris [1997] 1 WLR 687. Reid v Smith (1905) 3 CLR 656. Attorney-General (Cth) v R T Co Pty Ltd (No 2) (1957) 97 CLR 146. (2015) 317 ALR 202. National Australia Bank Ltd v Blacker (2000) 179 ALR 97. ChelseaYacht & Boat Co Ltd v Pope [2000] 1 WLR 1941. See also Tristmire Ltd v Mew [2012] 1 WLR 852 (three houseboats, originally capable of floating, but later resting on their own weight platforms set into the seabed, were found to be chattels), discussed in P Butt ‘Is a houseboat a fixture’ (2013) 87 Australian Law Journal 163. 79. In contrast, the boathouse and jetties in Hyde Park, London, were found to be fixtures in Royal Parks v Bluebird Boats Ltd [2021] EWHC 2278. 80. Palumberi v Palumberi (1986) NSW ConvR ¶55-287. 72. 73. 74. 75. 76. 77. 78.

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to be a fixture. The question of dishwashers arose in the cases of Hawkins v Farley81 and Segal v Obsborne.82 In Hawkins, kitchen cabinets had been constructed to incorporate the dishwasher, and tiling fitted with the dishwasher, in situ. The court found in that case that although the degree of annexation was slight, the gap left by its removal would be ‘unsightly’, and the custom-design of the kitchen around the dishwasher meant that it was a fixture. Darke J in Segal distinguished Hawkins, to find that the dishwasher was not a fixture. It was noted that although dishwashers may be intended to remain in position for some years, in contemporary Australia they were considered replaceable, portable items and it was ‘not uncommon nowadays’ for dishwashers to be removed and reinstalled in another property. The dishwasher was located in a space designed to accommodate dishwashers generally, rather than in a custom-design, and no suggestion that its removal had damaged the property or the dishwasher. In Australian Provincial Co Ltd v Coroneo,83 a theatre contained rows of seats that were bolted to the floors and fastened together. The Court of Appeal refused to interfere with a finding that they remained chattels because the seats were regularly moved — the best seats went to the back for picture shows and to the front for concerts. By contrast, in Vaudeville Electric Cinema Ltd v Muriset,84 where the premises were used exclusively as a cinema, cinema chairs that were bolted in place by the owner were held to be fixtures because the object of annexation was to provide a permanent benefit for the building. Each of these examples indicate how the particular circumstances of each case have a critical effect on whether chattels become fixtures.85 2.22  All chattels annexed to the realty before a contract of sale pass to the purchaser, subject to contrary agreement.86 Where land passes by will or on intestacy, all fixtures are included.87 In the case of mortgages, the mortgagee’s rights extend to fixtures whether they are annexed before or after the execution of the mortgage, unless the agreement provides otherwise.88 2.23  If the fixtures are the property, not of the mortgagor, but of a third party (for instance, where A hires machinery to mortgagor B), A will have a right of entry to remove the fixture, but only if the bailment agreement confers such a right. This right is an equitable interest in the land.89 As noted above,90 a mortgagee will also acquire an interest 81. [1997] 2 Qd R 361. 82. [2016] NSWSC 941. 83. Australian Provincial Co Ltd v Coroneo (1938) 38 SR (NSW) 700. For further examples, see A Moore, S Grattan and L Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, 6th ed, Thomson Reuters, Sydney, 2016, pp 794-801. 84. Vaudeville Electric Cinema Ltd v Muriset [1923] 2 Ch 74. 85. On this point, see L Griggs, ‘The Doctrine of Fixtures: Questionable Origin, Debatable History, and a Future that is Past!’ (2001) 9 Australian Property Law Journal 51. 86. Phillips v Lamdin [1949] 2 KB 33. 87. Norton v Dashwood [1896] 2 Ch 497. 88. Re New South Wales Co-operative Ice & Cold Storage Co (1891) 12 LR (NSW) Eq 87. 89. Re Samuel Allen & Sons Ltd [1907] 1 Ch 575. 90. See 2.16.

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2.25

in the fixture, whether the mortgage was created before the chattel was annexed to the land or after.91 In the case of old system land, the right of the owner of the chattel may take priority over the mortgagee, but only if the mortgagee had notice.92 If the mortgagee has no notice, he or she will take priority.93 However, if the mortgagee’s interest is equitable, the chattel owner’s right of entry will usually take priority irrespective of notice, in accordance with general equitable principles.94 The position of the equitable interest holder under the Torrens system depends on whether or not the mortgage is registered.95

Tenant’s fixtures 2.24  The law of fixtures poses a particularly acute problem for tenants who annex chattels to the land, for the reason that, once the lease ends, any right to enjoy the fixture, being part of the land, automatically terminates with it. Equally, in the absence of an agreement between the parties, annexing chattels to the land may be a breach of a repairing covenant, as may be the subsequent removal of any fixtures.96 In order to obviate hardship to tenants, the common law developed rules that allowed tenants to remove certain fixtures annexed during the tenancy. These fixtures have come to be known as ‘tenant’s fixtures’. In Penton v Robart,97 the court based the rules on the rationale that, if the rule were otherwise, the purpose of the letting would often be defeated. During the currency of the lease, the landlord is deemed to be the owner of the fixture (as it is part of the land), but is subject to the tenant’s right to remove it.98

Trade, domestic or ornamental fixtures 2.25  The basic rule is that a tenant may remove fixtures if they are of a trade, domestic or ornamental kind; and the tenant did not intend to make a permanent improvement to the property.99 In determining the tenant’s intention, relevant factors considered are whether removal would cause material injury to the land or would cause destruction of the fixture.100 So, if a tenant puts new doors and windows into the premises, even for trade purposes, they will become part of the land (ie, they will be treated as the landlord’s, rather than the tenant’s, fixtures) and cannot be removed.101 The rules governing tenant’s fixtures apply equally as between life tenants and remainder-persons, so that trade, domestic and ornamental fixtures may be removed prior to the death of the life tenant.102 Hobson v Gorringe [1897] 1 Ch 182; Reynolds v Ashby & Son [1904] AC 466. Re Morrison, Jones & Taylor Ltd [1914] 1 Ch 50. Hobson v Gorringe [1897] 1 Ch 182. Re Morrison, Jones & Taylor Ltd [1914] 1 Ch 50. The position is further complicated by s 184G of the Conveyancing Act. See generally Chapter 7. 95. See generally Chapter 8. 96. See 11.39, 11.102. 97. Penton v Robart (1801) 2 East 88 at 91; 102 ER 302 at 303 per Kenyon CJ. 98. Bain v Brand (1876) 1 App Cas 762 at 772. 99. Spyer v Phillipson [1931] 2 Ch 183. 100. Greita Sebea v Territory of Papua (1941) 67 CLR 544. 101. Climie v Wood (1869) LR Ex 328. 102. Lawton v Lawton (1743) 3 Atk 13. 91. 92. 93. 94.

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Authorities suggest that the rights of the tenant for life to remove are different from those of the leasehold tenant, but how different is unclear. In Norton v Dashwood, Chitty J held that his or her rights were less; whereas in Penton v Robart, Lord Kenyon CJ held that they were greater.103 The category of trade fixtures includes petrol pumps at a garage;104 fittings in a public house;105 shelves and counters;106 and shrubs planted by a market gardener.107 Examples of domestic and ornamental fixtures include stoves and kitchen ranges;108 ornamental chimney-pieces (but not brick pillars resting on a dairy floor to support pans);109 bells, and wires to operate them;110 and wood panelling and period fireplaces.111 2.26  By s 133B(2) of the Conveyancing Act, if a right to make improvements, such as annexing fixtures, is granted in the lease, but is expressed to be subject to the landlord’s consent, the consent must not be unreasonably withheld. Similarly, a landlord of residential premises must not unreasonably withhold consent to annexing a fixture that is ‘of a minor nature’.112 However, no such restriction applies to landlords to ‘any other’ fixture.113

Time for removal 2.27  Subject to any agreement to the contrary, the tenant may exercise the right to remove the fixtures at any time prior to the termination of the lease.114 If the tenant does not do so, ‘the law presumes that he voluntarily relinquishes his claim in favour of the landlord’.115 In order to avoid hardship to tenants, there are two exceptions to this rule. First, in tenancies of uncertain duration, such as a tenancy at will or a short-term periodic tenancy, a tenant has a reasonable time after the termination of the tenancy to remove fixtures.116 Second, if the lease is brought to an end by forfeiture or surrender, the tenant may remove fixtures as long as he or she remains in possession ‘under colour of right’, such as by virtue of a new tenancy, a tenancy at sufferance,117 or under a belief that there is a right to remain (eg, where the tenant claims a right under an assignment that is later

103. Norton v Dashwood [1896] 2 Ch 497 at 500; Penton v Robart (1801) 2 East 88 at 91; 102 ER 302 at 303. 104. Smith v City Petroleum Co Ltd [1940] 1 All ER 260. 105. Elliott v Bishop (1854) 10 Exch 496; 156 ER 534. 106. Harding v National Insurance Co (1871) 2 AJR 67. 107. Wardell v Usher (1841) 10 LJCP 316. 108. Darby v Harris (1841) 1 QB 895. 109. Leach v Thomas (1835) 7 C & P 327; 173 ER 145. 110. Lyde v Russell (1830) 1 B & Ad 394; 109 ER 834. 111. Spyer v Phillipson [1931] 2 Ch 183. 112. Residential Tenancies Act 2010 (NSW) s 66(2). 113. Residential Tenancies Act 2010 (NSW) s 66(3). 114. D’Arcy v Burelli Investments Pty Ltd (1987) 8 NSWLR 317; Vopak Terminal v Natural Fuels Darwin Pty Ltd (2009) 258 ALR 89. 115. Lyde v Russell (1830) 1 B & Ad 394 at 395; 109 ER 834 at 834 per Tenterden CJ. 116. Ex parte Brook; Re Roberts (1878) 10 Ch D 100; Smith v City Petroleum Co Ltd [1940] 1 All ER 260. 117. New Zealand Government Property Corp v H M & S Ltd [1982] 1 All ER 624.

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held to be invalid).118 Once the tenant has quit the premises, he or she loses all rights to remove fixtures.119 The tenant’s right to remove fixtures is subject to a mortgagee’s general rights over the land, whether or not the mortgage was granted before or after the chattels were affixed.120

Exceptions 2.28  The common law rules governing tenant’s fixtures do not apply to certain agricultural tenancies or residential tenancies. The rights of parties under these types of tenancies are governed by statute. In the case of agricultural tenancies, the tenant has a right to remove fixtures.121 However, this right is subject to the landlord’s right to purchase the fixtures at a reasonable price. In the case of agricultural tenancies not covered by the Agricultural Tenancies Act 1990 (basically, those where the tenancy is over land less than one hectare in size, or where the land is not used solely or mostly for agricultural purposes), the common law rule in Elwes v Maw122 applies: the tenant has no right to remove fixtures. Residential tenants may remove fixtures from the premises, if they were annexed in accordance with a term of the agreement, or with the landlord’s written consent, before the premises are vacated.123 If the tenant causes damage by the removal of the fixture affixed by the tenant, the tenant must notify the landlord without delay and provide compensation.124 Chattels annexed by mistake or by a person with no title 2.29  What is the position where a chattel is annexed to the land by mistake? A person may annex a chattel to a parcel of land, erroneously believing that he or she owns it. This happened in Brand v Chris Building Co Pty Ltd,125 where a house was built, by mistake, on a block of land not owned by the plaintiff. The court held that, in the absence of an equity of acquiescence, the plaintiff had no remedy.126 The fact that the chattels in question — building materials — had become attached to the realty ensured that they became the property of the owner of the realty. Developments in the law of unjust enrichment may come to render this decision doubtful, but do not appear to have modified it yet.127 118. Concept Projects Ltd v McKay [1984] 1 NZLR 560. This right is sometimes referred to as an ‘excrescence on the term’: Mackintosh v Trotter (1838) 3 M & W 184 at 186; 150 ER 1108 at 1109. For a discussion of the history of the term, see D’Arcy v Burelli Investments Pty Ltd (1987) 8 NSWLR 317 at 321 per Young J. 119. D’Arcy v Burelli Investments Pty Ltd (1987) 8 NSWLR 317. 120. Re New South Wales Co-Operative Ice & Cold Storage Co (1891) 12 LR (NSW) Eq 87; see also 2.23. 121. Agricultural Tenancies Act, s 10. 122. Elwes v Maw (1802) 3 East 38; 102 ER 510. 123. Residential Tenancies Act, s 67. 124. Residential Tenancies Act, s 67(2). As to this obligation, see 11.102. 125. Brand v Chris Building Co Pty Ltd [1957] VR 625. 126. For discussion of the equity of acquiescence, see 6.37. 127. See, for instance, Lumbers v W Cook Builders Pty Ltd (2008) 232 CLR 635; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221. For a discussion of relevant case law, see S Degeling and B Edgeworth, ‘Improvements to Land Belonging to Another’, in Property and Security: Selected Essays, L Bennett Moses, B Edgeworth and C Sherry (eds), Thomson Reuters, Sydney, 2010, pp 277–90.

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The same principle applies to a chattel that has been innocently misappropriated or stolen, and is later annexed to the land of another innocent person. In this case, the person who affixes the chattel has no title to it; it becomes the property of the landowner.128

Protection of Property Interests in Land Trespass to land — tort 2.30  Trespass to land is established by an intentional unauthorised entry onto land in the actual possession of another person, or remaining on such land after the withdrawal or expiry of permission.129 Land for this purpose includes anything attached to the soil, or a profit à prendre.130 Because of the requirement of possession, a contractual licensee cannot sue in trespass. The intentional propulsion of objects onto another’s land is also trespass.131 But if no volition can be established (for instance, if A has a seizure and falls onto another’s land), no liability ensues.132 The interference must also be direct; so, for example, water that ultimately reaches a plaintiff ’s land after crossing somebody else’s land is not trespass but nuisance. 133 There is no defence of necessity to an action for trespass— whether based on homelessness or some other reason.134 Nor does a defence of honest and reasonable mistake apply.135 2.31  Where the trespass to land is so extensive that it amounts to possession, the trespasser has a title, a possessory title, to the land.136 Possession will be established by physical control over the land to the extent that others are excluded, coupled with an intention to possess it (animus possidendi). Trivial acts of trespass, such as tethering ponies and children playing, will not constitute possession.137 The trespasser–possessor can assert this title against all the world except the true owner.138 As we shall see later, this possessory title, or ‘squatter’s title’, will defeat even the title of the documentary owner after a certain period of time.139

128. Reynolds v Ashby & Son [1904] AC 466 at 475 per Lord Lindley. Of course, the owner of the chattel can sue the thief in conversion: see 2.49–2.50. 129. Port Stephens Shire Council v Tellamist Pty Ltd [2004] NSWCA 353 per Santow JA at [189]–[190]. Special leave to appeal to the High Court was refused: Port Stephens Shire Council v Tellamist Pty Ltd [2005] HCATrans 365. 130. See, for example, Wellaway v Courtier [1918] 1 KB 200 (the removal of turnips); Mason v Clarke [1955] AC 778 (HL) (the right to take rabbits). 131. Rigby v Chief Constable [1985] 1 WLR 1242. 132. Public Transport Commission (NSW) v Perry (1977) 137 CLR 107. 133. Reynolds v Clarke (1725) 2 Ld Raym 1399. For further examples, see generally, R Balkin and J Davis Law of Torts LexisNexis, 2013, Chapter 5. 134. London Borough of Southwark v Williams [1971] Ch 734. 135. Basely v Clarkson (1681) 3 Lev 37. 136. Perry v Clissold [1907] AC 73. 137. Tecbild Ltd v Chamberlain (1969) 20 P & CR 633. 138. Perry v Clissold [1907] AC 73. 139. See generally Chapter 5.

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Title to sue General 2.32  The tort of trespass is concerned to protect actual possession of the land.Accordingly, persons out of possession of the land at the time of the wrongful invasion cannot sue. So, a purchaser under a contract of sale cannot sue for trespass until title (and the right to possession) passes.140 Likewise, a landlord cannot sue in trespass during the currency of the lease, but can sue to protect the reversionary interest (ie, the right to future possession), if he or she can prove permanent injury to the land.141 A licence to occupy land, without a right of exclusive possession, will not give the licensee a right to sue in trespass.142 However, if the licence is coupled with the grant of an interest in land, such as a profit à prendre, the owner of the right can sue in trespass for interference with the interest.143

Dispossessors 2.33  Even a person who has dispossessed another can sue in trespass.144 The defendant cannot set up the dispossessed owner’s title (or previous possessor’s title) as a defence. In other words, the defendant cannot plead the jus tertii (the right of a third person).145 Of course, the dispossessed owner, or prior possessor, can sue the ‘squatter’ in trespass for the act of dispossession and continuing acts of trespass. Further, he or she can sue anyone else who trespassed on the land since the time of the original dispossession, by the fiction of trespass by relation.146 In this case, the title to sue is not possession, but the owner’s or prior possessor’s right to immediate possession. It is an exception to the general rule that trespass exclusively protects possession. The fact that the trespasser has forcibly entered the property and may, therefore, be criminally liable147 has no bearing on whether he or she has possession and, therefore, a possessory title.

Recovery of possession 2.34  By s 20 of the Civil Procedure Act (2005) (NSW), a person who has been dispossessed may make a claim for judgment for possession of land. This remedy replaces the older action of ejectment that was originally a form of the action of trespass.148 All that 140. Cousins v Wilson [1994] NZLR 463. 141. Loxton v Waterhouse (1891) 7 WN (NSW) 98. 142. Hill v Tupper (1863) 2 H & C 121; Georgeski v Owners Corp SP 49833 (2004) 62 NSWLR 534; 12 BPR 22,573. 143. Mason v Clarke [1955] AC 778. 144. Graham v Peat (1801) 1 East 244; 102 ER 95. 145. For this defence, see 5.19. See 2.54–2.57 for the defence in relation to chattels. 146. Wynne v Green (1901) 1 SR (NSW) 40; see also Sappideen and Vines (eds), Fleming’s Law of Torts, 10th ed, LawBook Co, 2011, p 50. 147. As to which, see 2.38–2.39. 148. Sappideen and Vines (eds), Fleming’s Law of Torts, note 146 above, p 49.

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is necessary for the plaintiff to establish this is that he or she has a better right to possession of the land than the defendant.149 Of course, the best way to do this is by establishing full ownership; that is, by being the registered proprietor of Torrens title land,150 by establishing an unbroken chain of documentary old system title back to the original Crown grant,151 or by having been in adverse possession for the statutory period (normally 12 years).152 But any lesser period of possession will do.153 In addition to recovering possession, the plaintiff may seek mesne profits from the trespasser for the loss of the land.154 Mesne profits include the rental value of the property for the period of dispossession, and may even include lost interest on a premium offered by a prospective tenant.155 2.35  The courts have discretion to order a stay of execution of the writ for possession. By rr 1.12 and 36.5 of the Uniform Civil Procedure Rules 2005 (NSW), a judgment for possession may specify the time for compliance. In Sydney City Council v Parker,156 the court, interpreting a similarly worded provision,157 balanced the hardship to the trespassers in possession of the plaintiff ’s land, who were in receipt of pensions and were homeless, against the council’s need for immediate possession of the premises. The court suspended the time for compliance with the judgment for two months to allow the squatters time to find alternative accommodation.

Self-help 2.36  In addition to the right to sue for trespass and recovery of possession, an owner or possessor of land may exercise the right of self-help to remove a trespasser from the land. In Hemmings v Stoke Poges Golf Club,158 where an overholding tenant was physically evicted, it was held that the owner would not incur liability if he or she used only so much force as was reasonably necessary to remove the trespasser. The right has been affirmed by the New South Wales Court of Appeal in MacIntosh v Lobel.159 It may be exercised before the institution of court proceedings, or afterwards (as it was in that case), if the court determines that the occupant is a trespasser and has no right to remain. Alternatively, the plaintiff may obtain a writ of possession and have it executed by the sheriff. There is no such right of physically recovering possession, however, from an overholding tenant of residential premises after the termination of a residential tenancy agreement, in 149. Perry v Clissold [1907] AC 73. For a discussion of the question of relativity of titles, see Chapter 5. 150. See Chapter 8. 151. See Chapter 4. 152. See Chapter 5. 153. Perry v Clissold [1907] AC 73. 154. Nilan v Nilan (1951) 68 WN (NSW) 271. 155. Lee v Blakeney (1887) 8 LR (NSW) 141. 156. Sydney City Council v Parker (unreported, SC(NSW), Cantor J, 1 March 1984). For a discussion of this case, see P Ryan, ‘Squatters’ (1985) 2 EPLJ 52. 157. Supreme Court Rules 1970 (NSW), Pt 42, r 4(2). 158. Hemmings v Stoke Poges Golf Club [1920] 1 KB 720. 159. MacIntosh v Lobel (1993) 30 NSWLR 441.

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the absence of a judgment, warrant or order of a court, or an order of the NSW Civil and Administrative Tribunal. Breach of this provision is punishable by a penalty.160

Trespass to land — statutory penalties Forcible entry 2.37  Although a trespasser who has taken possession of land has a title to the land, the act of trespass may give rise to criminal penalties in addition to liability in tort. Interference with land has had a long history of protection by means of the Statutes of Forcible Entry (UK), which date from the 14th century. The relevant provisions have been re-enacted in New South Wales.161 Section 18 of the Imperial Acts Application Act 1969 (NSW) provides: No person shall make any entry into any land except where such entry is given by law and, in such case, with no more force than is reasonably necessary.

The prohibition contained in s 18 does not restrict the owner’s, or prior possessor’s, right to exercise self-help.162

Inclosed lands 2.38  By s 4(1) of the Inclosed Lands Protection Act 1901 (NSW): Any person who, without lawful excuse … enters into inclosed lands without the consent of the owner, occupier or person apparently in charge of those lands, or who remains on those lands after being requested by the owner, occupier or person apparently in charge of those lands to leave those lands, is liable to a penalty …

‘Inclosed lands’ means any lands, either public or private, inclosed or surrounded by a fence, wall or other erection.163 ‘Lawful excuse’ in s 4 is not established merely by proving that he or she had a mistaken belief, whether the belief is reasonable or not. Rather, a mistaken belief will be a defence only if the circumstances that the trespasser believes to be true would, if in fact true, give a lawful right to enter the premises.164 Accordingly, a person who entered a clinic with a view to gathering information in relation to activity suspected of being illegal, but not actually so, does not enter with lawful excuse because no one has a right to enter premises under such suspicion. A claim of a right to possession of the land is a lawful excuse, but only if it is made bona fide, and with a reasonable foundation on substantial grounds. The claim must be known to, and not impossible in, the law.165

160. Residential Tenancies Act, s 120(1). For residential tenancies generally, see 11.85–11.126. 161. Imperial Acts Application Act, ss 18–20. 162. Macintosh v Lobel (1993) 30 NSWLR 441. 163. Inclosed Lands Protection Act, s 3. 164. Darcey v Pre-Term Foundation Clinic [1983] 2 NSWLR 497. 165. Barns v Edwards [1993] 31 NSWLR 714.

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In McDermott v Boggs,166 ‘occupier’ for the purposes of s 4(1) was held to include a tenant who occupies a part of premises. It followed that the landlord committed an offence by being on that part of the premises without the tenant’s consent.

Chattels Introduction 2.39  As in the case of land, there are a number of different possible proprietary interests in chattels.167 These particular interests are protected by a variety of tort remedies that are specific to the property interest in question. Equally, there are different types of unauthorised acts that may be committed in relation to a chattel, from the most trivial interference to outright destruction.These various infringements also give rise to different actions. The first question to be addressed in determining what remedy the holder of a proprietary interest has in relation to a particular unauthorised act is: what is the precise property interest that has been infringed? These interests are analogous to the different property interests over land.The chattel interests will be examined separately, and the torts devised to protect them will follow.168

Property interests in chattels Actual possession 2.40  Actual possession, in law, is established when two conditions are met. First, there must be de facto control over the chattel. Second, the possessor must show an intention to possess it, or animus possidendi. These elements, which parallel those necessary to establish a possessory title to land,169 can be seen in the following cases. In Young v Hichens,170 two competing fishing vessels were attempting to catch a shoal of fish.The plaintiff sued the defendant in trespass, alleging that the defendants had interfered with their possession of the fish. It was held that the plaintiffs, who had partially enclosed their net around the fish, did not have possession because they did not have custody or control of them. By contrast, in The Tubantia,171 a salvage company was held to have possession of a sunken ship and its contents where it had laid buoys and lights around the site where the ship was located, and had cut access holes in the ship’s hull. The type of control necessary will vary with the nature of the chattel.

166. McDermott v Boggs (unreported, SC(NSW), Carruthers J, 12 March 1991). 167. For the variety of interests in land, see 2.1. 168. For a general discussion, see S Green and J Randall, The Tort of Conversion, Hart Publishing, UK, 2009, pp 94–118; S Douglas, Liability for Wrongful Interference with Chattels, Hart Publishing, UK, 2011; N Foster, Torts Cases and Commentary Supplement: Defamation and Wrongful Interference with Goods, 2nd ed, LexisNexis Butterworths, Chatswood, 2019, ch 3. 169. As to which, see 5.40–5.63. 170. Young v Hichens (1844) 6 QB 606. 171. The Tubantia [1924] P 78.

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2.41  Possession, rather than full ownership, can arise in many different situations. Some of the more common examples are: • • • •

bailment, where the owner grants a temporary right of possession to another;172 hire–purchase agreements; contracts for the sale of a chattel where the seller retains custody of the chattel; and cases where a stranger finds a lost or mislaid chattel.

In The Tubantia, discussed at 2.40, the possession acquired by the plaintiffs for practical purposes amounted to ownership, since there was no better title to the chattels in anyone else; it was an example of original possession, or discovery. The law gives protection to the possessor, however limited his or her rights are, for a good reason. If only the true owner could sue in cases of wrongful interference there would be a free-for-all, as no possessory title could be safe. As Lord Campbell CJ put it in Jeffries v Great Western Railway Co, ‘I think it most reasonable law, and essential to the interests of society, that peaceable possession should not be disturbed by wrongdoers’.173 An employee who has custody of goods on behalf of an employer is not treated in law as a possessor. In this situation, the employer has ‘constructive possession’ of the chattel, and has title to sue if the chattel is wrongfully dealt or interfered with.

Right to immediate possession 2.42  A person will have a right to immediate possession where he or she is presently out of possession, and has a right to take possession of the chattel immediately.174 So, if A hires her car to B for a week, B has actual possession during the week. A has a right to immediate possession only at the end of the period. However, even though B will have no superior right to possession against A at this time, B will still have actual possession. As we have seen above, actual possession is a proprietary interest that will form the basis for an action in tort against persons, other than A, who wrongfully interfere with the chattel. Right to future possession, or reversionary interest 2.43  A mere right to future possession, as distinct from actual possession or a right to immediate possession, refers to the right that a person has to possess the chattel at the conclusion of the rights of someone who is presently entitled to possession. By analogy with the landlord’s interest in the law of leases, this right is sometimes referred to as a ‘reversionary’ interest; the right to immediate possession of the chattel reverts to the owner or a person with superior rights to the present possessor at some designated time in the

172. For different types of bailment, see 2.46–2.47. 173. Jeffries v Great Western Railway Co (1856) 5 E & B 802 at 805; 119 ER 680 at 681. 174. The expressions ‘right to immediate possession’ and ‘immediate right to possession’ are both commonly used to describe this right, and are sometimes used interchangeably. See, for example, United States of America and Republic of France v Dollfus Mieg et Compagnie SA and Bank of England [1952] AC 582 at 605 per Earl Jowitt. The former placing of the epithet seems more appropriate.

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future. As we shall see below, the holder of a reversionary interest in chattels has limited rights to sue.

Ownership 2.44  At common law, the complicated question about ownership arising from the doctrine of tenure — that is, whether a person other than the Crown could ‘own’ land — was not relevant to chattels. Accordingly, it has always been possible to own a chattel absolutely. In the most common situation, the owner will be in possession, and so will have all the rights outlined above subsumed within his or her ownership. Only where ownership rights are fragmented will the question of the precise lesser proprietary interest of the party alleging the wrongful act be of importance. It follows that ownership is not technically relevant to whether it is possible to bring a particular action to protect one’s rights to the chattel (in trespass, detinue, conversion or negligence).175 Rather, the key question is whether the owner, or any other person who was in possession at the time of the wrongful act, had an immediate right to possession, or had merely a reversionary interest in the chattel. There is one situation where ownership of the chattel may be important: where the defendant defends the action on the basis that the plaintiff ’s title is in some way inferior to that of a third person who is not a party to the action. This defence is known as the jus tertii. It will be discussed below.176 First, it may be useful to look at one typical way in which property rights over chattels are fragmented.

Fragmented property interests — bailment177 Types of bailment 2.45  Bailment is one of the most common ways in which property interests in chattels are fragmented. A bailment arises where there is a delivery of chattels by the owner, or a person with a right to possession, into the possession of another person upon an express or implied promise that the chattels will be redelivered to the bailor or dealt with in a stipulated way.178 So, where A hires a car for a month from B, the contract of hire will detail the terms of the bailment. Bailments may be for a fixed term or may be at will. A fixed-term bailment confers possession on the bailee and a right to future possession on the bailor. At the end of the term, the bailor has an immediate right to possession, which matures into possession on redelivery of the chattel. By contrast, in the case of a bailment at will, the bailor may demand the return of the chattel at any time. It follows that throughout the currency of the bailment the bailor has an immediate right to possession. Bailments can be created by contract, and the terms of the 175. As to these torts, see 2.48–2.52. For a general discussion, see Green and Randall, The Tort of Conversion, note 168 above, ch 4; S Douglas, Liability for Wrongful Interference with Chattels, note 168 above. 176. See 2.54–2.56. 177. For a rigorous discussion of the proprietary nature of a bailment, see A Clarke and P Kohler, Property Law: Commentary and Materials, Cambridge University Press, Cambridge, 2005, pp 653–6. 178. Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 at 238.

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contract will usually specify certain events that will bring the bailment to an end (such as using the chattel in an unauthorised way). When such an event occurs, the bailor will get an immediate right to possession. In Penfolds Wines v Elliott,179 allowing bottles to be filled by another wine producer was expressed in the contract of bailment as a factor bringing the bailment to an end.

Bailments at will and gratuitous bailments 2.46  A gratuitous bailment is one that is not for reward or consideration. Only one party (bailor or bailee) benefits: the other party receives nothing in return for the bailment. A gratuitous bailment may be for a specified term or it may be at will (in which case the chattel must be returned immediately upon the owner’s request). By contrast, the defining feature of a bailment at will is that it is never for a specified term. The basis of the bailment is that the bailee may retain the goods only until the bailor demands their return. A bailment at will may be gratuitous or it may be for reward, as shown in Figure 2.2 below. Figure 2.2:  Bailments at will and gratuitous bailments Gratuitous bailment For a term No specified term Not for reward

Bailment at will For reward

Whether the bailment is gratuitous or for reward does not affect the bailor’s standing to sue.180 The determining factor in relation to the remedies available to a bailor is the bailor’s right to possession. In a bailment at will, the bailor always has a right of immediate possession and has a sufficient title to sue in conversion and detinue, irrespective of whether the bailment was one for reward or not.181 We now turn to the different actions available to a person with an interest in chattels in the event of wrongful interference.

179. Penfolds Wines v Elliott (1946) 74 CLR 204. See also Pangallo Estate Pty Ltd v Killara 10 Pty Ltd [2007] NSWSC 1528. Contrast Marvoe Management Pty Ltd t/as The Sweet Life v Plantation Management Services (WA) Pty Ltd (No 5) [2017] NSWSC 1167, where watermelon seeds were delivered to a company to plant and grow seedlings. Distinguishing Pangallo the court held that this a contract for the sale of goods (seedlings) not a bailment. See further discussion in N Foster,  Torts Cases and Commentary Supplement: Defamation and Wrongful Interference with Goods, 2nd ed, LexisNexis Butterworths, Chatswood, 2019, 93. 180. Houghland v R R Low (Luxury Coaches) Ltd [1962] 1 QB 694; [1962] 2 All ER 159. 181. United States of America and Republic of France v Dollfus Mieg et Compagnie SA and Bank of England [1952] AC 582.

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Actions in tort to protect proprietary interests in chattels Trespass 2.47  The gist of the tort of trespass to goods is wrongful intentional direct interference with a chattel in the possession of another.182 Thus, as Dixon J noted in Penfolds Wines Pty Ltd v Elliott ‘trespass is a wrong to possession’.183 Persons with merely a deferred, or reversionary, right to possession (such as a bailor during the currency of the bailment), or persons with a right to immediate possession (for instance, where the bailment has come to an end but the bailor has not physically recovered the chattel), cannot sue in trespass. In so far as this tort is directed at protecting possession, only a plaintiff who has possession at the time of the interference may sue. There is one exception to this general rule. There may be an action by the bailor who has a mere right to immediate possession (rather than actual possession) where a third party (the defendant) has committed an act of trespass against the bailee in actual possession of the chattel.184 In Wilson v Lombank185 it was held that, where a bailor had a standing credit arrangement with a bailee (car repairer) and could repossess a car at any time, he had sufficient title to maintain an action in trespass against a third party who took the car from the bailee. Interference is established when physical contact, however slight, is made with a chattel in the possession of another. While there has been some doubt as to whether trespass to chattels is actionable without proof of actual damage,186 more recent authority seems to say that trespass can be established in such cases.187

Conversion 2.48  The tort of conversion ‘consists in an act intentionally done inconsistent with the owner’s right, though the doer may not know of, or intend to challenge, the property or possession of the true owner’.188 The tort is a ‘tort of strict liability’. That is, the defendant may commit conversion ‘without any fault on their part’.189 Innocence and ignorance of

182. See further, R Balkin and J Davis, Law of Torts, LexisNexis, Sydney, 2013, pp 94–101. 183. Penfolds Wines v Elliott (1946) 74 CLR 204 at 225 per Dixon J. See also Allianz Australia Insurance Ltd v Lo-Guidice [2012] NSWSC 145 at 27. 184. See Penfolds Wines, above n 183, per Dixon J at 226: ‘where there has been a trespass de bonis an action lies against the person committing the trespass not only at the suit of the person in possession, but also at the suit of a person immediately entitled to possession’. See also United States of America and Republic of France v Dollfus Mieg et Compagnie SA and Bank of England [1952] AC 582. In other words, the bailee is in the position of an agent or employee. This ‘possession’ is sometimes known as ‘constructive possession’. Compare the rationale offered by Lord Porter (at 611), who concluded that the bailor has possession. 185. Wilson v Lombank [1963] 1 WLR 1294. 186. Sappideen and Vines (eds), Fleming’s Law of Torts, note 146 above, p 50. 187. Cressy v Johnson (No 3) [2009] VSC 52 at [217]. 188. Caxton Publishing v Sutherland Publishing [1939] AC 178 at 202 per Lord Porter; OBG Ltd v Allen [2008] 1 AC 1. 189. Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd (2003) 9 VR 171 at 151. See, for example, Safari 4x4 Engineering Pty Ltd v Doncaster Motors Pty Ltd [2006] VSC 460.

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the plaintiff ’s rights is therefore no defence.Thus a person who in good faith buys and sells goods not known to be stolen is nevertheless liable in conversion.190 However, not all wrongful intentional acts will amount to conversion. There must be some dealing with the plaintiff ’s goods, or an act of dominion (such as taking them for one’s own use), which is adverse to the plaintiff ’s title or right to use or possess. So, mere removal of the goods is not enough to constitute conversion.This principle was established in the leading case, Fouldes v Willoughby.191 The defendant was the master of a ferry boat. After a dispute with the plaintiff, he turned the plaintiff ’s horses off the ferry. The plaintiff claimed that this unauthorised act amounted to conversion.The court held that, while the defendant might have been liable in trespass, there was no conversion. A simple removal of the goods, without an intention to make further use of the chattel, did not challenge the property or dominion of the true owner. Conversion is also known by the older name of ‘trover’. Acts that have been held to amount to acts of dominion inconsistent with the plaintiff ’s title include mutilation of the chattel,192 unauthorised sale193 and pawning the chattel.194 2.49  In order to be successful, the plaintiff must have been in possession at the time of the original unauthorised act, or have had a right to immediate possession.195 The facts of Penfolds Wines v Elliott demonstrate some of the key distinctions between this tort and trespass.196 The appellants were wine producers and sold their wines in bottles which were supplied on condition that they were returned as soon as the contents had been consumed. The effect of this contractual condition was to bring to an end the purchaser’s, or bailee’s, right to possession from the time the wine was drunk. From that moment, therefore, the owner, or bailor, acquired a right to immediate possession. The respondent was the owner of a hotel that sold bulk wine to purchasers who supplied their own bottles. Many of these bottles belonged to the plaintiffs. Was filling the wine bottles trespass, conversion, or both? By majority, the High Court held that the appellants could not sue in trespass because they did not have actual possession of the bottles at the time of the allegedly tortious act. While there was clearly interference with the chattels, the possession that was interfered with at that time was the possession of the bailee, not that of themselves, as bailors. Furthermore, the bailee would not be able to bring an action in trespass because the interference was authorised. As for conversion, the court, again by majority, held that the acts of the respondent amounted to conversion because they constituted an assertion of dominion over the chattels. The filling of bottles provided by 190. Hollins v Fowler (1875) LR 7 HL 757. 191. Fouldes v Willoughby (1848) 8 M&W 438. 192. M’Leod v M’Ghie (1841) 2 Man & G 326. 193. Glass v Hollander (1935) 35 SR (NSW) 304. 194. Singer Co v Clark (1879) 5 Ex D 37. 195. Penfolds Wines v Elliott (1946) 74 CLR 204; Reef Health Pty v Vines [2014] NSWSC 70. 196. For a further example, see discussion of Fouldes v Willoughby (1841) 8 M & W 540 in N Foster,  Torts Cases and Commentary Supplement: Defamation and Wrongful Interference with Goods, 2nd  ed, LexisNexis Butterworths, Chatswood, 2019, pp 117–18.

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the appellant’s bailees was for the purposes of the respondent’s trade that, far from being a casual interference with proprietary rights, was quite inconsistent with recognition of the appellant’s title.197

Detinue 2.50  Detinue is the tortious or wrongful detention of goods and refusal to hand them over to a person with a right to immediate possession who has formally demanded their return.198 The right exists irrespective of whether the manner of the original acquisition was wrongful or not. The right of action accrues at the time of the refusal to hand over, not at the time of the original acquisition, even if that acquisition is wrongful.199 As in the case of conversion, a person with only contractual rights to possession, without a right to immediate possession, has no right to sue in detinue. Furthermore, a plaintiff without a right to immediate possession, as in the case of a bailor during the term of the bailment, cannot sue in detinue.200 Negligence 2.51  Unlike the torts of trespass, conversion and detinue, negligence is not an intentional tort. Negligence is established if the defendant has breached a duty of care owed to the plaintiff and this breach has caused reasonably foreseeable damage to the chattel. In order to be able to sue in negligence, the plaintiff can be in possession of the chattel, so that a bailee, for example, can sue in negligence.201 It is also possible to sue if the plaintiff has an immediate right to possession of the chattel, or has a reversionary interest.202

Overlapping of remedies 2.52  One act of a wrongdoer may amount to two different intentional torts. Thus, if a thief takes a bicycle that is in my possession, I will be able to sue him or her in either trespass or conversion. The act would amount to an intentional interference with my possession of the chattel, as well as an act of dominion inconsistent with my title. Equally, it is possible for the torts of conversion and detinue to overlap, as where a bailee, at the end of a bailment, uses a chattel as his or her own instead of returning it. In this case, if the bailee makes a demand for return of the chattel, he or she can sue in either detinue or 197. For a discussion of the difficulties of determining the ratio decidendi of this case, see G Paton and G Sawer, ‘Case Note: Penfolds Wines v Elliott’ (1956) 63 Law Quarterly Review 461 at 469–70. While a majority of judges found that there had been an act of conversion, a different majority dismissed Penfolds’ claim for an injunction to prevent similar breaches in the future. It is also significant that the highly respected common law judge Dixon J held that there had been no act of conversion. The respect afforded to the decisions of Dixon J over the years means that his Honour’s views on the matter are usually regarded as correct today. 198. Spackman v Foster (1883) 11 QBD 99. See Grant v YYH Holdings Pty Ltd [2012] NSWCA 360. See further, R Balkin and J Davis, Law of Torts, LexisNexis, Sydney, 2013, pp 101–07. 199. John F Goulding Pty Ltd v Victorian Railways Commissioners (1932) 48 CLR 157. 200. On the operation of the limitation of actions statutes, and the cause of action, see Grant v YYH Holdings Pty Ltd [2012] NSWCA 360. 201. British Road Services Ltd v Arthur V Crutchley & Co Ltd [1968] 1 All ER 811; The Winkfield [1902] P 42. 202. See 2.60.

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conversion. But for obvious reasons, it is never possible to sue both in trespass or detinue in relation to the same facts; for detinue to arise, the chattel must be in the possession of the wrongdoer. And, because that means that the plaintiff is out of possession (since one or other of the plaintiff and defendant must be in possession at the time of the wrongful act), no action in trespass could arise.This interlinking of torts is illustrated in Figure 2.3.203 Figure 2.3:  Interlinking of torts Trespass Wrongful, intentional interference Conversion Unauthorised act of dominion Detinue Wrongful refusal to return

The jus tertii defence 2.53 The jus tertii defence has already been examined in the context of title to land. It is a defence whereby a defendant claims that the plaintiff has no cause of action because a third party (the tertius in Latin) has a better title than the plaintiff has.The way the defence works is best illustrated by an example. Suppose A is the owner of a chattel. B becomes his or her bailee for a term.The term has expired. Before A takes action to recover the chattel, C takes it without A’s consent. B sues C in conversion. The jus tertii defence would allow the defect in B’s title — the superior right in A — to be pleaded as a defence to the action. 2.54  The availability of the jus tertii defence arose in Jeffries v Great Western Railway Co.204 The defendants seized trucks in the plaintiff ’s possession. In fact, the title of the plaintiff was possibly defective because the person who sold him the trucks had been declared bankrupt. The defendant attempted to assert the superior title of those who took under the order of the Court of Bankruptcy as a defence to an action in conversion. The court held that such evidence was inadmissible, on the ground that possession is title in an action against a wrongdoer. The case is, therefore, authority for the proposition that the jus tertii defence is not available in such actions. However, as Wightman J noted,‘[i]n some cases the plaintiff was not in actual possession; and, when that is the case, it may well be that the defendant may shew the jus tertii’.205 The cases are reducible to three distinct situations where the rights of a third party will be of 203. This diagram is a variation of one produced by H Luntz, D Hambly and R Hayes in Torts: Commentary and Materials, 2nd ed, Butterworths, Sydney, 1985, p 996. 204. Jeffries v Great Western Railway Co (1856) 5 E & B 802; 119 ER 680. 205. Jeffries v Great Western Railway Co (1856) 5 E & B 802 at 807; 119 ER 680 at 681.

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direct assistance to an otherwise ‘wrongful’ defendant. A superior right of possession arises when: • the wrongdoer defends the action on behalf of, or with the authority of, the true owner; or • the conduct causing the injury to the chattel was authorised by the true owner; or • the wrongdoer has, since the injury to the chattel occurred, become the true owner.206 2.55  In each of these instances, the rights of the third party are relevant to the defence to this extent: the defendant is able to justify his or her actions on the basis that they were directly traceable to the superior right to immediate possession of the third party. But, defined in this way, this defence is much more restricted than the traditional understanding of the jus tertii defence. It follows that the phrase is unfortunate and only serves to mislead. A better way of describing the defence available to a wrongdoer in these circumstances is to say: if the alleged wrongdoer is in fact shielded by the rights of a person who has a better right to possession than the plaintiff he or she would not be liable in either trespass, conversion, detinue or negligence.To use the facts of Jeffries to illustrate: if the persons who took under the bankruptcy order in Jeffries case had engaged Jeffries to take possession of the trucks, the act of taking possession is performed under a better right to possess than the present possessor. Wightman J’s point in Jeffries, that the plaintiff out of possession must overcome the jus tertii, is therefore a specific example of the relevance of third-party rights; the plaintiff out of possession must show a right to immediate possession, which is better than the right to possess of the alleged tortfeasor. In such a contest, the existence of better rights in a third party, behind whom the defendant can shield, will be decisive to the defence. 2.56  As noted at 1.48, there is a fundamental conceptual distinction between contractual and proprietary rights. This has clear consequences for the right to bring actions in either trespass or conversion. Thus, where A contracts to purchase a car from B, but the car is taken from B’s possession by C prior to formal transfer of ownership or delivery, A has only contractual remedies against B. A cannot sue C in trespass because, at the time of the wrongful act, the car was in the possession of B. Also, though A had a contractual right to compel B to deliver the car, he had no immediate right to possession of it, since at that time he had not been given any proprietary rights under the terms of the contract.207 Of course, the terms of the contract may provide otherwise.

An exception — permanent loss or damage to a reversionary interest General rule 2.57  As we have seen above, the basic rule is that a person with a right to future possession, as opposed to immediate possession, such as a bailor during the currency of the bailment, cannot sue a third party in trespass, conversion, detinue or negligence while the bailment 206. B Edgeworth, C Rossiter, M Stone and P O’Connor, Sackville & Neave: Australian Property Law, 11th ed, LexisNexis, 2021, pp 8491. See also Edwards v Amos (1945) 62 WN (NSW) 204. 207. International Factors v Rodriguez [1979] QB 351.

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is subsisting. Because this person, the reversionary interest holder, has neither actual possession nor a right to immediate possession, he or she has no sufficient proprietary interest capable of protection. Thus, if A lends her car to B for three months, A has no legal possession or right to possession during the term of the bailment. Accordingly, if B immediately lends the car to C for a week, and C causes damage to it, A cannot sue B or C in trespass, conversion, detinue or negligence during the three-month period of the bailment. So, in Donald v Suckling,208 A deposited debentures with B as security for money owed to B. Before the money was tendered to B, B pledged them with C. The court held that A could not maintain detinue against C for recovery of the debentures without having paid or tendered the amounts owing to B. The bailment between A and B was still subsisting and was not affected by the pledge by B to C. It was held in Lord v Price209 that, where goods remain in the possession of the vendor after purchase, subject to the vendor’s lien for unpaid purchase money, the purchaser cannot maintain an action of conversion against a wrongdoer. In the above example of the loan of the car, the result would be otherwise if a term of the contract of bailment both prohibited sub-bailments and declared the bailment at an end if the bailee acted in breach of any of its terms. Upon the loan (sub-bailment) to C, the bailor A would have a right to immediate possession. Also, the act of sub-bailment would be an act of dominion inconsistent with the rights of the bailor and would give the bailor a right to sue the bailee in conversion. Note that there would be no right to sue in trespass in this case, as the bailor was not in possession at the time of the wrongful act. 2.58  Regardless of whether there had been a prohibition on sub-bailments, B as bailee would be able to sue C in conversion or detinue if, for example, she sold the car to D.210 D would also be liable in conversion and detinue as a result of his purchase, even without notice of C’s defective title.211 Thus, the bailor has three options if he or she wishes to pursue one of the above actions to compensate for the loss or damage to a chattel: 1. wait until the term of the bailment expires and the right to immediate possession arises; 2. pursue an action on the basis that the actions of the bailee (in causing the loss or damage to the chattel) are repugnant to and have, therefore, determined the bailment, and hence the bailor’s right to immediate possession arises; or 3. if the damage or loss to his or her chattel is permanent, pursue an action on the case for the damage to his or her reversionary interest. It is to the last of these remedies that we now turn. 208. Donald v Suckling (1866) LR 1 QB 585. 209. Lord v Price (1874) LR 9 Ex 54. 210. As for the rights of bailees, see 2.61–2.62. 211. Hollins v Fowler (1875) LR 7 HL 757. It is important to note that legislation in all states protects innocent purchasers in D’s position from liability in certain circumstances.

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The nature of the exception 2.59  In special circumstances, the holder of a reversionary interest may have what many authors describe as an action on the case.212 In Penfolds Wines v Elliott, Dixon J remarked that it is: … a special action on the case and does not depend on the plaintiff ’s having immediate right to possession … the foundation of the action is the damage and ‘permanent’ damage to the chattel must have occurred, that is damage which would enure to the reversioner.213

The leading case is Mears v London and South Western Railway Co.214 Mears owned a barge and hired it to Russell. During the term of the hire, Russell employed the defendants to unload a boiler from the barge and their negligence in carrying out this operation caused the boiler to drop through the bottom of the barge. As a result, the barge was out of commission for some considerable time. In answer to the defendants’ argument that there was no precedent for an action by a reversioner for any damage to a chattel, Williams J said that, unlike the case of a temporary injury, ‘where there is a permanent injury, the owner may maintain an action against the person whose wrongful act has caused that injury’.215 Trindade and Cane conclude that, although the damage in Mears was caused by negligence, the principle of the case also extends to intentional damage, and that even where the injury to the chattel is caused by negligence, the action still appears to be framed as an action on the case.216 The decision in Mears was applied by the Supreme Court of Victoria in Dee Trading Co Pty Ltd v Baldwin.217 In that case, the owner of a motor vehicle was able to sue a third party for damage caused to the vehicle, despite the fact that the car was actually in the possession of a bailee under a hire–purchase agreement.The court found that the fact that the owner also had a right to recover the damages from the bailee did not preclude him from pursuing an action on the case for the damage caused to his reversionary interest in the vehicle. But the nature of such an injury must be clearly demonstrated.218 A ‘mere wrongful taking’ may not be sufficient to ground such an action because the loss (and thus the damage to the reversionary interest) must be permanent.219

Rights of a bailee 2.60  The fragmentation of interests and the types of remedy available for wrongful interference with chattels intersect in the context of bailment. The issue is particularly 212. E Tyler and N Palmer (eds), Crossley Vaines on Personal Property, 5th ed, Butterworths, 1973, pp 75–6; F Trindade and P Cane, The Law of Torts in Australia, Oxford University Press, Melbourne, 1985, pp 139–40. 213. Penfolds Wines v Elliott (1946) 74 CLR 204 at 230. 214. Mears v London and South Western Railway Co (1862) 11 CBNS 850. 215. Mears v London and South Western Railway Co (1862) 11 CBNS 850 at 854–5. 216. Trindade and Cane, The Law of Torts in Australia, note 212 above, p 139. Sappideen and Vines (eds), Fleming’s Law of Torts, note 146 above, p 86. 217. Dee Trading Co Pty Ltd v Baldwin [1938] VLR 173. 218. Tancred v Allgood (1859) 4 H & N 438; 157 ER 910. 219. Trindade and Cane, The Law of Torts in Australia, note 212 above, pp 139–40.

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acute in an action for damages for conversion. The measure of damages for conversion is the full value of the chattel. There is a special rule in the case of documents that evidence title to a debt: the converter is liable for the face value of the document rather than the piece of paper.220 Thus, each person who interferes with the chattel to the extent that he or she would be treated in law as claiming ownership is, in effect, compelled to pay the full purchase price. The leading case establishing the bailee’s right of action based on his or her possessory interest is The Winkfield.221 The Winkfield collided with a mail steamer, the Mexican, which sank; most of its cargo of mail and parcels was lost. The Postmaster-General (the bailee) sued the owners of The Winkfield for the total value of the mail lost.222 The court found that: … the law is that in an action against a stranger for loss of goods caused by his negligence, the bailee in possession can recover the value of the goods. This is the case even though the bailee would have had a good answer to an action by the bailor for damages for loss of the thing bailed.223

Where the defendant has paid full damages to the bailee, he or she has a complete defence against a further claim by the bailor.224 2.61  On the authority of The Winkfield, therefore, not only can a bailee in possession of a chattel sue in trespass, conversion or detinue, but he or she can also sue in negligence.225 In Anderson Group Pty Ltd v Tynan Motors Pty Ltd226 a bailee was able to sue the sub-bailee for the full value of the car when it was stolen from the sub-bailee’s premises in circumstances where the sub-bailee had failed to take reasonable care of the car. This was the case even though the bailee was in breach of the terms of a bailment of a car. Additionally, the bailee can sue the bailor for wrongful acts during the currency of the term of bailment. In City Motors v Southern Aerial Super Service,227 a bailor repossessed a truck in circumstances not authorised under the hire–purchase agreement.The High Court held that the bailee could sue in detinue. A bailee in possession may sue for any injury to the chattel and, in the case of acts which constitute conversion, may recover the full value, irrespective of whether: • the chattel has been destroyed or seriously damaged;228 • the damage to the chattel exceeds the value of the bailee’s own limited interest;

220. Morison v London, County and Westminster Bank Ltd [1914] 3 KB 356; OBG Ltd v Allen [2008] 1 AC 1. 221. The Winkfield [1902] P 42. 222. The defendants did not raise the question of how it was that the Postmaster-General was deemed to be bailee (that is, in actual possession of the chattels), rather than the owners and operators of the Mexican, until it was too late and the court refused to consider the issue. 223. The Winkfield [1902] P 42 at 54 per Collins MR. 224. The Winkfield [1902] P 42 at 61. 225. See also British Road Services Ltd v Arthur V Crutchley & Co Ltd [1968] 1 All ER 811. 226. Anderson Group Pty Ltd v Tynan Motors Pty Ltd [2006] NSWCA 22. 227. City Motors (1933) Pty Ltd v Southern Aerial Super Service Pty Ltd (1961) 106 CLR 477. 228. McCauley v Karooz (1944) 61 WN (NSW) 165.

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• the bailee is answerable to the bailor for the damage or loss in question;229 or • the bailee is a bailee at will or a bailee for a term which is still subsisting when the wrong occurred.230

Self-help 2.62  A person who has committed trespass by taking a chattel from the possession of another is subject to the remedy of ‘recaption’, or the physical recapture of the chattel.231 This remedy, which parallels the self-help remedy in relation to land,232 is equally available in conversion and detinue. In Blades v Higgs,233 the defendant’s servants forcibly recovered rabbits from a dealer who purchased them from a trespasser. The trespasser had shot them on the defendant’s land.The court held that the remedy of recaption applied to the dealer’s refusal to hand them over in the same way as to a trespassory taking.The New South Wales Court of Appeal in Toyota Finance v Dennis,234 however, decided that the right of forcible recaption is restricted to trespassory takings of chattels ‘that that person knows he or she is not entitled to’. The owner may use such force as is reasonably necessary to repossess the chattel,235 or may lawfully recover the chattel by means of a trick.236 The self-help remedy extends to a right to enter onto the land of the wrongdoer to retake the chattel.237

Finders 2.63  Particular problems arise in the context of cases where chattels are lost and later found by strangers. As we have seen above, the starting point for determining whether a right to sue in trespass, conversion, detinue or negligence has arisen is the question of the plaintiff ’s possession or immediate right to possession. In the case of bailment, this is a relatively straightforward matter because of the express or implied terms relating to the right to possession. It is a more difficult question where original possession is at issue — that is, where chattels are taken from a state of nature — as the case of Young v Hichens shows.238 More complex still are cases where the chattel was first reduced into possession on private land. The basic principle governing the rights of finders was established in Armory v Delamirie.239 In that case, a boy employed by a chimney sweep found a jewel. He took it to a goldsmith 229. The Winkfield [1902] P 42. 230. Millar v Candy (1981) 58 FLR 145. 231. Blades v Higgs (1861) 10 CBNS 713; 142 ER 634. See C Hawes, ‘Recaption of Chattels:  The Use of Force against the Person’ (2006) 12 Canterbury Law Review 253; J O’Hara, ‘The Nature of Recaption’ (2019) 93 Australian Law Journal 866. 232. See 2.37. 233. Blades v Higgs (1861) 10 CBNS 713; 142 ER 634. 234. Toyota Finance Australia Ltd v Dennis (2002) 58 NSWLR 101. 235. R v Mitton (1827) 3 C & P 31; 172 ER 309. 236. Suttons Motors (Temora) Pty Ltd v Hollywood Motors Pty Ltd [1971] VR 684. 237. Cox v Bath (1893) 14 LR (NSW) 263. 238. Young v Hichens (1844) 6 QB 606. 239. Armory v Delamirie (1722) 1 Strange 506; 93 ER 664.

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for valuation. The goldsmith refused to hand it back. The boy sued in conversion, and was successful. The court concluded that a finder in actual possession of a chattel, though not an owner, has a sufficient title to sue a stranger. The case is also authority for a narrow definition of the jus tertii defence because the clear defect in the finder’s title was no bar to success in an action in conversion. While Armory v Delamirie settled the question of a finder’s rights in a contest with a complete stranger, it had no direct bearing on the issue of the rights of the employer of the finder, or the rights of the owner of the land on which the chattel was found. In the case of employees, the rights of the finder will be determined by the terms of the employment relationship. In the case of occupiers, the degree of attachment of the chattel to the land becomes crucial.

Finder versus employer or principal 2.64  Where the employee or agent finds a chattel in the course of employment or agency, he or she does so on behalf of his or her employer or principal. The latter acquires finder’s rights superior to those of the actual finder.240 However, if the employment or agency is wholly incidental or collateral to the finding, the employee or agent will hold as against all but the true owner.241 So, where a boatswain found contraband coins on a ship and passed them immediately to customs officials, he did not have the requisite possession to maintain an action against the officials when the owner of the coins (unsurprisingly) failed to claim them.242 In Burnett v Randwick City Council [2006] NSWCA 196, possession of gymnasium equipment was held to be vested in the company, not in the directors who were physically in possession. Tobias JA observed in that case that while ‘[a]n officer may well carry on the company’s business and his or her decisions may control the manner in which the company’s property is held, used, acquired or disposed of. … this does not vest in that officer … such control and dominion over the property of the company as to change the physical custody of that property from the possession of the company to the possession of the officer’. 243

Finder versus occupier 2.65  As we have seen above, where a chattel has become a fixture, it becomes part of the realty.244 It follows that, if that chattel has been lost and is later annexed by someone other than the owner of the land without the landowner’s knowledge or consent, then the owner of the realty has best title to it, even in a contest with the owner.245 In relation to finders, the general rule is that an occupier of land has rights superior to those of a finder 240. Willey v Synan (1937) 57 CLR 200. 241. Byrne v Hoare [1965] Qd R 135. 242. Willey v Synan (1937) 57 CLR 200. 243. Burnett v Randwick City Council [2006] NSWCA 196 at 96. See further discussion in N Foster,  Torts Cases and Commentary Supplement: Defamation and Wrongful Interference with Goods, 2nd  ed, LexisNexis Butterworths, Chatswood, 2019, p 94. 244. See 2.16–2.30. 245. Brand v Chris Building Co Pty Ltd [1957] VR 625.

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over chattels in or attached to the land if he or she has manifested an intention to exercise control over the area where the chattel was found. Where the chattels are attached to or buried in the land, such an intention is presumed, even though the occupier is unaware of the presence of the chattel. So, where banknotes were found under the foundations of a house,246 a ring was found in a pool,247 a prehistoric boat was discovered embedded in soil,248 or a brooch was found 22.5 centimetres below the surface in a public park by means of a metal detector,249 the occupier of the land prevailed. 2.66  The occupier will also have superior rights to the finder with regard to chattels found upon, but not in or attached to, the land if he or she has manifested an intention to exercise control over the land and the things upon it or in it before the chattel is found. The intention is a question of fact, and is indicated, for example, by the nature of the land. Where the relevant land was the executive lounge of an airport, or where banknotes were found on the floor of a shop by a customer, the finder was successful.250 An ‘occupier’ of a chattel such as a ship, motor car, caravan or aircraft is to be treated as if he or she were the occupier of a building for the purposes of the foregoing rules.251 In Flack v Chairperson, National Crime Authority,252 the National Crime Authority searched the house occupied by the plaintiff, suspecting that drugs were stored there. The searchers found a large sum of money in a bag in a wardrobe. The plaintiff claimed to know nothing about the bag or its contents. The defendants took it away. No person was charged in relation to the money, so the plaintiff brought an action seeking the return of the bag and the money. It was held that an intention to exercise control over land will be presumed in the case of residential premises where the occupier has exclusive possession. The plaintiff was successful. A finder of a chattel cannot prevail over an occupier if he or she takes possession with dishonest intent or in the course of trespassing. In Hibbert v McKiernan,253 trespassers on a golf course were held to have no rights to lost balls. In Parker v British Airways Board,254 trespassers or dishonest finders were held to have ‘very limited rights’. However, it is arguable that as against a complete stranger who is not an occupier of the land on which the chattel is found, the trespasser would have sufficient possession to prevail.255

246. Ranger v Giffin (1968) 87 WN (Pt 1) NSW 531. 247. South Staffordshire Water Co v Sharman [1896] 2 QB 44. 248. Elwes v Brigg Gas Co (1886) 33 Ch D 562. 249. Waverley Borough Council v Fletcher [1996] QB 334. 250. Parker v British Airways Board [1982] 1 QB 1004; [1982] 1 All ER 834; Bridges v Hawkesworth (1851) 21 LJQB 75; [1843–60] All ER Rep 122. 251. Parker v British Airways Board [1982] 1 QB 1004; [1982] 1 All ER 834. 252. Flack v Chairperson, National Crime Authority (1997) 150 ALR 153. 253. Hibbert v McKiernan [1948] 2 KB 142. 254. Parker v British Airways Board [1982] 1 QB 1004 at 1017; [1982] 1 All ER 834 at 843 per Donaldson LJ. 255. For a discussion of reform of the law of finding, see J Tooher, ‘Jubilant Jamie and the Elephant Egg: Acquisition of Title by Finding’ (1998) 6 Australian Property Law Journal 117.

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Rights over a chattel will be lost where the chattel is physically abandoned; that is, left with a renunciation of rights over it, but only if another person acquires a possessory title over it.256 Until that time, the chattel remains the property of the prior possessor.

Reform Fixtures by mistake 2.67  The obvious injustice of the rule that if someone annexes chattels to land by mistake he or she will lose all rights over them should be remedied.There is no good reason supporting the windfall to the landowner in these circumstances, or the disproportionate penalty to the mistaken party. One valuable reform would be to adopt ss  195–198 of the Property Law Act 1974 (Qld). These provisions confer a wide discretion on the court to apportion rights between the parties. By s 196, where a person makes a lasting improvement on land owned by another in the genuine but mistaken belief that such land is his or her property, or is the property of someone on whose behalf he or she makes the improvement, the court may make a variety of orders. The orders include vesting the land, or part of it, in the improver; removing the improvement; compensation; or granting possession of the land on specified terms and conditions.257

Right to implead a third party in an action in conversion 2.68  It is arguable that the extensive protection offered to persons with possession, or an immediate right to possession (as manifested in the right to sue in conversion all those who wrongfully exercise dominion over the chattel, and to get damages to the full value of the chattel), is far too great.Thus, where a bailee X, in breach of the terms of the bailment, disposes of the chattel to Y, both X and Y are liable in conversion, and both are liable to pay damages to the full value of the chattel (subject to an obligation on one to account to the other where both are involved in the same litigation).258 The plaintiff may also sometimes. The plaintiff may also sometimes be compensated in a way that may far exceed his or her actual loss.259 Likewise, a finder of a ring embedded in soil on A’s land who removes it is liable to both A and the true owner. In its report on detinue and conversion, the English Law Commission identified three objects which the law should aim to meet: 1. to avoid a multiplicity of actions by giving any interested party the right to be joined in an action for wrongful interference; 2. to protect defendants, so far as practicable, from the risk of double liability; and 3. to limit the plaintiff ’s damage to his or her actual loss.260 256. Haynes Case (1614) 12 Co Rep 113; 77 ER 1389; Munday v Australian Capital Territory (2000) 173 ALR 1. 257. Property Law Act, s 197. See further, S Degeling and B Edgeworth, ‘Improvements to Land Belonging to Another’, in L Bennett Moses, B Edgeworth and C Sherry (eds), Property and Security: Selected Essays, Thomson Reuters, Sydney, 2010, pp 277–90. 258. See Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 3] [2009] WASC 52 at [214]. 259. See Tettenborn, ‘Damages in Conversion — Exception or Anomaly?’ [1993] Cambridge Law Journal 128. 260. United Kingdom Law Commission, Detinue and Conversion, 18th Report, Command 4774, 1971, pp 21–22.

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There is some limited protection for the wrongdoer. As we have seen above, if sued by a bailee, the wrongdoer has a defence to any further action from the bailor, and the bailee must generally account to the bailor for any excess over his or her own interest.261 As Fleming notes,262 s 7 of the Torts (Interference with Goods) Act 1977 (UK), which largely implemented the recommendations of the Commission, has effectively resolved these problems. While not significantly removing the complexity of this area of law, it is a desirable and overdue reform that would strike a more appropriate balance between property owners and those who interfere with chattels, often unwittingly.

261. The Winkfield [1902] P 42. 262. Sappideen and Vines (eds), Fleming’s Law of Torts, note 146 above, p 79.

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Chapter 3

Fundamental Principles — Tenure and Estates Introduction 3.1  Common law property doctrines are relatively recent phenomena in the Australian context. They were introduced when the British Crown claimed sovereignty over Australia a little more than 230 years ago. The imported English common law (both in terms of judge-made law and statute) together with enactments of the local legislature and decisions of local courts (both of which were also based on English common law principles) historically provided the recognised sources of property law in Australia. 3.2  In 1992, this position changed to the extent that the landmark decision of Mabo v  Queensland (No 2)1 recognised an ongoing Indigenous connection to land as giving rise to a form of title known as ‘native title’.2 With the Mabo decision, the common law recognised rights and interests in relation to land that went beyond its previous understandings. However, how native title is to be understood has proved complex, in part because native title rights are grounded in a very different legal system and the Indigenous customs and traditions on which the rights are based vary between region (commonly because of differences in geography). According to Pearson, native title, a non-Indigenous construct, provides the tool by which the common law can interpret a parallel system of law contained in Indigenous traditions and customs as far as they relate to land and water.3 Native title, then, is rather like a mirror that reflects different understandings.Yet, whether 1. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1 (Mabo (No 2)). Native title was recognised by a 6:1 majority. 2. It is worth remembering that prior to Mabo (No 2), Indigenous Australians did not refer to their interests in land and water, as native title. Many would not refer to their interests as native title post-Mabo (No 2), either. Native title is a concept and term employed by the common law. 3. See N Pearson, ‘The Concept of Native Title at Common Law’ in Land Rights — Past, Present and Future, Northern and Central Land Councils Conference, Darwin and Alice Springs, 1996, pp 118–23. Note that native title has also been held to apply to some aspects of water: Commonwealth v Yarmirr (2001) 208 CLR 1. See also V Marshall, Overturning Aqua Nullius: Securing Aboriginal Water Rights, Aboriginal Studies Press, Canberra, 2017, which argues that Aboriginal water rights require legal recognition as property. Native title also extends to the sea country adjacent to mainland Australia, as well as several off-shore islands.

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native title is simply a new form of property right, or something beyond that, has been the subject of considerable legal debate and analysis.4 Some decisions of the High Court have found that native title is a sui generis form of interest in relation to land,5 while others have emphasised its strong spiritual element.6 All, however, rely on the premise that native title is recognised by the common law but is not ‘of ’ the common law.7 Accordingly, it lies outside the doctrines of tenure and estates.8 (Native title will be explored more fully in Chapter 4.) 3.3  It follows from the above that today our legal system recognises three basic sources of rights in or in relation to land in New South Wales. They are: 1. the common law brought from England; 2. enactments of the local legislature and decisions of the local courts; and 3. native title.9 The focus of this chapter is limited to a discussion of the doctrines of tenure and estates: two fundamental property doctrines operating within the common law. In particular, this chapter will explore how the various sources of property law have impacted on or been shaped by these doctrines. The chapter commences with a consideration of the principles of reception.

International Law, Common Law and Principles of Reception 3.4  With the great voyages of European discovery came the era of colonialism in which European discoverers claimed and divided up newly discovered inhabited and uninhabited

4.

See J Webber, ‘Beyond Regret: Mabo’s Implications for Australian Constitutionalism’ in D Ivison, P Patton and W Sanders, Political Theory and The Rights of Indigenous Peoples, Cambridge University Press, Cambridge, 2000, p 61. Discussion of this point may be found at 4.36–4.50; P Lane, ‘The End of Property As We Know It’ (2000) 8 Australian Property Law Journal 1; R Bartlett, ‘The Proprietary Nature of Native Title’ (1998) 6 Australian Property Law Journal 77; J Gray, ‘Is Native Title a Proprietary Right?’ (2002) 3 Murdoch eLaw Journal, (accessed 21 March 2011), . 5. See Fejo v Northern Territory (1998) 195 CLR 96 at 128–30; Yanner v Eaton (1999) 201 CLR 351 at [75]–[76] per Gummow J. 6. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1 (Mabo (No 2)); Warrie (formerly TJ) (on behalf of the Yindjibarndi People) v State of Western Australia [2017] FCA 803. 7. Fejo v Northern Territory (1998) 195 CLR 96 at 128; Yanner v Eaton (1999) 201 CLR 351 at [75]–[76]. 8. S Dorsett,‘“Since Time Immemorial”: A Story of the Common Law Jurisdiction, Native Title and the Case of Tanistry’ (2002) 26 Melbourne University Law Review 32 at 33 notes that it is important to remember that ‘native title is not really a descriptor of Indigenous relationships to country, but a category of White law’. See B Edgeworth, ‘The Mabo “Vibe” and its Many Resonances on Property Law’ in S Brennan, M Davis, B Edgeworth and L Terrill (eds), Native Title From Mabo to Akiba: A Vehicle for Change and Empowerment?, The Federation Press, Sydney, 2015. 9. This is not to suggest that native title is the same as a tenured estate. As the material in Chapter  4 demonstrates, native title is, in some ways, an inferior title to that of a tenured estate. Yet it would be incorrect to see native title as simply as another form of land holding.

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3.5

territories for their European sovereigns.10 International law characterised the acquisition of new territories according to three key modes: (a) conquest; (b) cession; (c) and where the territory was terra nullius,11 occupation. These modes of acquisition are important because they determine which law applied in the newly acquired territory. 3.5  To explain, although the question of whether the Crown acquired a territory in the first place is not justiciable in municipal courts,12 municipal courts have the jurisdiction to determine the consequences of the particular mode of acquisition.13 In other words, it was up to municipal courts (here English common law courts) to determine the body of law that was to operate in the new territory because ‘sovereignty imports internal legal authority’.14 Accordingly, Brennan J was led to observe that ‘the common law has had to march in step with international law in order to provide the body of law to apply in a territory newly acquired by the Crown’.15 By the common law,16 if land were acquired as the result of conquest or ceded by treaty, the laws of the conquered or dispossessed remained in place until such time as those laws were replaced by the laws of the conqueror or dispossessor (ie, the coloniser).17 However, in the case of land that was terra nullius and was acquired by occupation (or ‘settlement’ as the common law called it), as much of the law of England as was applicable to the colonists’ own ‘situation and the condition of the infant colony’ was ‘received’.18 It was as though the colonisers’ laws had to fill a legal vacuum in an empty and uninhabited land. Indeed, as far as the common law was concerned, it was the birthright of English ‘settlers’ (in acquired territories) to live under the English common law.19 10. Worcester v Georgia [1832] USSC 39; (1832) 6 Pet 515, at pp 543–544 (31 US 350, at p 369) as cited in Mabo v Queensland (No 2) (1992) 175 CLR 1 at para 32; 107 ALR 1 (Mabo (No 2). 11. Terra nullius is an international law concept. It means that the land is unoccupied. It is land belonging to no-one.The common law counterpart of the terra nullius doctrine is the ‘desert and uninhabited’ doctrine. 12. Mabo v Queensland (No 2) (1992) 175 CLR 1 at para 32; 107 ALR 1 (Mabo (No 2). 13. Mabo v Queensland (No 2) (1992) 175 CLR 1 at para 32; 107 ALR 1 (Mabo (No 2). 14. See A James, Sovereign Statehood, (1986), pp 3ff, 203–09, as cited in Mabo v Queensland (No 2) (1992) 175 CLR 1 at para 36; 107 ALR 1 (Mabo (No 2). 15. Mabo v Queensland (No 2) (1992) 175 CLR 1 at para 32; 107 ALR 1 (Mabo (No 2). 16. For a discussion of the history of the common law, see TFT Plucknett, Concise History of the Common Law, 5th ed, Butterworths, London, 1956; AWB Simpson, A History of the Land Law, Oxford University Press, Oxford, 1986. For an abbreviated version, see also S Dorsett, ‘“Since Time Immemorial”: A Story of the Common Law Jurisdiction, Native Title and the Case of Tanistry’, note 8 above. 17. The Privy Council’s memorandum from an anonymous case indicates the acceptance of these international constitutional principles justifying the application of English common law to new territories. See  Anonymous (1722) 2 P Wms 75 at  75–6; 24 ER 646 at  646. See  also M Walters, ‘British Imperial Constitutional Law and Aboriginal Rights: A Comment on Delgamuukw v  British Columbia’ (1992) 17 Queens Law Journal 350 at 359–63. Mabo v Queensland (No 2) (1992) 175 CLR 1 at para 32; 107 ALR 1 (Mabo (No 2). See also S Hepburn, ‘Disinterested Truth: Legitimation of the Doctrine of Tenure Post-Mabo’ (2005) 29 Melbourne University Law Review 1. 18. W Blackstone, Commentaries on the Laws of England, 14th ed, T Caddell and W Davies, London, 1803, p 107. See also A C Castles, An Australian Legal History, Law Book Co, Sydney, 1982, pp 9–13. 19. See U Secher, ‘The Reception of Land Law into the Australian Colonies Post-Mabo: The Continuity and Recognition Doctrines Revisited and the Emergence of the Doctrine of Continuity Pro Tempore’ (2004) 27(3) University of New  South  Wales Law Journal 703; U Secher, ‘The Doctrine of Tenure in Australia

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Turning to the specific position in Australia, it was clear that the land was already physically inhabited when the British Crown claimed sovereignty over it. Indeed, Indigenous people had inhabited Australia for what is believed to be in excess of 60,000 years before the arrival of Europeans.20 Australia could, therefore, not be considered factually, as land belonging to no one. It was not factually terra nullius. Hence, if the occupation/settlement mode of acquisition were to be applied to alreadyinhabited territories, such as Australia, it was necessary for international law to extend the legal doctrine of terra nullius to cover those already-inhabited territories. But on what basis could the terra nullius doctrine be extended? The short answer was it could be extended legally (as opposed to factually) if the Indigenous inhabitants were found to be ‘backward’, a status said to be demonstrated by their not being ‘organised in a society that was united permanently for political action’.21 Many justifications for the acquisition of land from ‘backward’ people were proffered. They included the need to extend the benefits of Christianity to ‘backward’ people22 and the need to bring uncultivated lands into production.23 Although the eminent jurist, Blackstone, did not have any difficulty in finding that where a territory was ‘desert’ and ‘uninhabited’ it could be acquired under the settlement/ occupation mode of acquisition and that the laws of England would become the laws of the acquired territory, he had more difficulty finding the consequences of the settlement/ occupation doctrine applied where the land in question was not ‘desert uninhabited’ at the time the Crown acquired sovereignty. In the latter circumstances, he found himself ‘unable to declare any rule’ whereby the laws of England became the laws of the acquired

20.

21. 22. 23.

Post-Mabo: Replacing the “Feudal Fiction” with the “Mere Radical Title Fiction” — Part 1’ (2006) 13(2) Australian Property Law Journal 107; Mabo v Queensland (No 2) (1992) 175 CLR 1 at para 34; 107 ALR 1 (Mabo (No 2). Although Indigenous ways of living on Australian soil have been contested, there is general agreement that Indigenous people lived in Australia prior to the British Crown claiming sovereignty. AIATSIS, Australia’s First People, available at  (accessed 15 March 2022); and the Australian National Museum, Aboriginal Occupation, available at  (accessed 15  March  2022). Both sources state that Indigenous Australians have lived on country for upwards of 60,000 years. See also B Pascoe, Dark Emu, Magabala Books, Broome, 2014; P Sutton and K Walshe, Farmers or Hunters-Gatherer — The Dark Emu Debate, Melbourne University Press, Melbourne, 2021; and Australian Government, Australian Law Reform Commission, Recognition Of Aboriginal Customary Laws (ALRC Report 31); ‘Pt 4. Aboriginal Customary Laws And Anglo-Australian Law After 1788’, available at  (accessed 15 March 2022). MF Lindley, The Acquisition and Government of Backward Territory in International Law (1926), Chs III and IV as cited in Mabo v Queensland (No 2) (1992) 175 CLR 1 at para 34; 107 ALR 1. See RA Williams, The American Indian in Western Legal Thought, (1990), pp 78ff; and Johnson v McIntosh [1823] USSC 22; (1823) 8 Wheat 543, at p 573 (21 US 240, at p 253) as cited in Mabo v Queensland (No 2) (1992) 175 CLR 1 at para 33; 107 ALR 1. See E de Vattel, The Law of Nations (1797), Bk I, pp 100-101. See AC Castles, An Australian Legal History, (1982), pp 16–17 as cited in Mabo v Queensland (No 2) (1992) 175 CLR 1 at para 33; 107 ALR 1.

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territory.24 Nevertheless, as Brennan J explained in Mabo, ‘[t]he view was taken that, when sovereignty of a territory could be acquired under the enlarged notion of terra nullius, for the purposes of the municipal law that territory (though inhabited) could be treated as a “desert uninhabited” country.’25 Consequently, under the enlarged doctrine of terra nullius, the laws of England would be received into the colony according to the conditions of the colony. Nowadays, history, anthropology and law have all demonstrated that Australia was not terra nullius and that the legal application of the terra nullius doctrine in either its ordinary or extended form was incorrect.26 Therefore, it follows that the categorisation of Australia as a settled colony, was incorrect.27 However, that erroneous categorisation is unlikely to be over-turned. 3.6  Turning to the issue of reception and bearing in mind that Australia was acquired on the basis of occupation/settlement, it is useful to inquire into which aspects of English law were applicable to Australian conditions. To explain, it is arguable that as English and Australian conditions were so vastly different from each other, very little English law would have been applicable to the infant colony. England was moving towards a political democracy, and in Australia a large antipodean prison was being imposed on a traditional native society.28 Yet, judging from the amount of English law that found its way into the Australian jurisdiction, it would seem that this interpretation of events was either contested or ignored.29 A further question is when was the relevant ‘cut-off ’ date for assessing the applicability of English law? The answer remained unclarified until 1828, when the British Parliament passed the Australian Courts Act 1828.30 That statute declared that all the laws and statutes which were in force 24. Mabo v Queensland (No 2) (1992) 175 CLR 1 at para 34; 107 ALR 1 (Mabo (No 2)); Blackstone, Commentaries on the Laws of England, note 18 above; See also Attorney-General v Brown (1847) 1 Legge 312; Cooper v Stuart (1889) 14 App Cas 286. 25. Mabo v Queensland (No 2) (1992) 175 CLR 1 at para 36; 107 ALR 1; Cooper v Stuart (1889) 14 App Cas 286 at 291; Attorney-General v Brown (1847) 1 Legge 312 accepted that Australia was terra nullius and, hence, the principle of settlement was applied. 26. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1 overturned the terra nullius doctrine in the Australian context. 27. Note that Brennan J observed in Mabo v Queensland (No 2) (1992) 175 CLR 1 at 31; 107 ALR 1 at 20 that the issue of sovereignty was not justiciable in a municipal court (and that issue is linked to the issue of acquisition). See also U Secher, ‘The Mabo Decision — Preserving the Distinction Between “Settled” and “Conquered or Ceded” Territories’ (2005) 24 University of Queensland Law Journal 36. 28. See Mabo v Queensland (No 2) (1992) 175 CLR 1 at 81; 107 ALR 1 at 60, where Deane and Gaudron JJ commented that if the High Court were starting afresh ‘there would be something to be said for the view that the English system of land law was not, in 1788, appropriate for application to the circumstances of a British penal colony’. 29. For example, much English water law found its way into Australian water law despite the fact that English rivers are often wide with deep banks while Australian rivers commonly have shallow banks and dry up altogether on occasions throughout the year. See  Gartner v  Kidman (1961-62) 108 CLR 12 at  23 per Windeyer J. See  also A Gardner, R Bartlett and J Gray, Water Resources Law, LexisNexis Butterworths, Sydney, 2009, p 151. 30. 9 Geo IV c 83.

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in England on 25  July  1828 were to be applied if they were relevant to the particular Australian circumstances. It was not until the passing of the Imperial Acts Application Act  1969 (NSW) that the question of which pre-1828 statutes were relevant in the circumstances, was resolved.31 3.7  More specifically, the question arose as to whether the two fundamental doctrines of tenure and estates (being English common law doctrines) were part of the law applicable to the infant colony. Decisions such as Attorney-General v Brown, Cooper v Stuart and, later, Mabo v Queensland (No 2) and Wik Peoples v Queensland 32 all confirmed the view that these two fundamental doctrines became part of the law applicable to the infant colony. As they are so entrenched in Australian property law, the doctrines of tenure and estates both deserve further examination, albeit that today the doctrine of tenure is of diminishing practical importance.33

Doctrine of Tenure Background and history 3.8  According to Pollock and Maitland, the doctrine of tenure is a system of land holding where ‘the King himself holds land which is in every sense his own’.34 They continue: The person who we may call its owner, the person who has the right to use and abuse the land, to cultivate it or leave it uncultivated, to keep all the others off it, holds the land of the King either immediately or mediately. In the simplest case he holds it immediately of the King; only the King and he have rights in it. But it well may happen that between him and the King there stand other persons.35

Another key element of the doctrine is that it provided a basis for ‘dependent land holding’.36 Each owner was dependent on an overlord (and ultimately the Crown) for the grant of land. The holding of land was also dependent on the rendering of services. 3.9  The doctrine has its roots in feudalism. Feudalism was the key structure of social organisation in the Middle Ages and was itself a response to the chaos in which Western 31. Of course, over time, the body of ‘received’ law did not remain static. It was altered and modified by judge-made law, along with the local statutes of the colony (including Commonwealth statutes after Federation in 1901). For a discussion of the impact of imperial statutes, see HB Bignold, Imperial Statutes in Force in New South Wales, Law Book Co, Sydney, 1914,Vol 2, pp 10–17; A Castles, ‘The Paramount Force of Commonwealth Legislation since the Statute of Westminster’ (1962) 35 Australian Law Journal 402; B Edgeworth, Butt’s, Land Law, 7th ed, Thomson Reuters, Sydney, 2017, p 109, note 19. 32. Attorney-General v Brown (1847) 1 Legge 312; Cooper v Stuart (1889) 14 App Cas 286; Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1; Wik Peoples v Queensland (1996) 187 CLR 1; 141 ALR 129. 33. S Hepburn, ‘Feudal Tenure and Native Title: Revising an Enduring Fiction’ (2005) 27(1) Sydney Law Review 49 at 52–3; S Hepburn, ‘Disininterested Truth: Legitimation of the Doctrine of Tenure Post Mabo’ (2005) 29(1) Melbourne Law Review, 1 at 31–2; J Devereux and S Dorsett, ‘Towards a Reconsideration of the Doctrines of Estates and Tenure’ (1996) 4(10 Australian Property Law Journal 30 at 40. 34. F Pollock and FW Maitland, The History of English Law (Before the Time of Edward I), 2nd ed, Cambridge University Press, Cambridge, 1924,Vol 1, p 232. 35. Pollock and Maitland, The History of English Law, note 34 above, p 232. 36. AWB Simpson, A History of the Land Law, 2nd ed, Oxford University Press, Oxford, 1986, p 2.

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Europe found itself after the decline of the Roman Empire.37 The post-Roman period was marked by regular marauding and a general debilitating decline in political, commercial and social stability. In such circumstances (where the state failed to provide protection), it is not surprising that the weak looked to their wealthy and powerful neighbours for physical protection, entering into a bond with them under which the weaker party (later, termed the ‘vassal’) provided assistance to the stronger party (the neighbour, later the ‘lord’) in return for protection. This practice involving the mutual duties of support and protection, came to be known as ‘commendation’. In time, the same principle of mutual obligation was extended to land, whereby the vassal surrendered his or her land to a stronger and more powerful lord in return for protection. The vassal’s land was thought to be returned to him if agreed to be bound to labour on the lord’s land or provide a food rent, for example.38 The ‘granting of benefice’ (a landed estate) was dependent on assistance being faithfully provided.39 Should it not have been so provided, the vassal stood ultimately to lose his land. The vassal’s benefice came to be called a ‘feudum’, or in English, a ‘fee’,40 (a term still used in modern land law). And so there developed a unique system of enmeshing personal ties with ties to the land. This marked the beginnings of feudalism. 3.10  There is dispute as to how much feudalism existed in England before the Norman Conquest in 1066. Maitland41 asserted that feudalism existed in England before the conquest, but others have noted that: Nothing precisely like the fief [or fee] existed in pre conquest England. There, land was usually held either by immemorial inheritance, without specific service, or by an outright grant from the Crown, or else under a lease which, while it would normally require some service from the lessee, did not, like the enfeoffment, burden the land itself with a fixed, permanent (and often military) service.42

37. P Anderson, Passages from Antiquity to Feudalism,Verso Editions, London, 1978; Plucknett, Concise History of the Common Law, note 8 above, pp 509–15. For useful discussion of feudalism, see also RA Brown, Origins of English Feudalism, Barnes and Noble, New York, 1973. 38. Note the singular, male pronoun is used here because that is the language of the relevant literature and is likely to reflect the reality of land arrangements in medieval times. Note further that at the time of the Norman Conquest, not all peasants held land. Some peasants were slaves and consequently were themselves the property of some Saxon lord. Others were free men who had a lord but whose land was not held ‘of their lord’.Their personal obligations to their lord were independent of the enjoyment of land. Meanwhile, another group still was regarded as being tenants of their lord.This group of peasants or vassals were obliged by custom to perform duties of a public nature (eg, repairing bridges) for their lord in whose village community they lived. It is this last group, who it is thought surrendered their land to their lord, only to have it returned to them if they laboured on the lord’s land. As part of this arrangement, they also received the lord’s protection. See AWB Simpson, A History of the Land Law, 2nd ed, Oxford University Press, Oxford, 1986, p 4. 39. AWB Simpson, A History of the Land Law, 2nd ed, Oxford University Press, Oxford, 1986, p 2. 40. P Butt, Land Law, Thomson Reuters, Sydney 2010, p 74. 41. F Maitland, Domesday Book and Beyond, Cambridge University Press, Cambridge, 1897. 42. GSW Barrow, Feudal Britain: The Completion of the Medieval Kingdoms 1066–1344, Edward Arnold Ltd, London, 1956, p 43. Before the Norman invasion, land in England was held as folkland, bookland, laenland (ie, leasehold) or allodial land. Only laenland appears to have involved holding ‘of ’ the landlord in return

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Irrespective of the degree of pre-conquest feudalism in England, it was certainly true that after the Norman invasion, William, Duke of Normandy, needed a large army of specially trained knights and a system of castles, of a type unfamiliar in England, in order to secure and maintain his position.43 As it happened, these needs were satisfied by the brand of feudal system that was instituted in England after 1066. 3.11  Although land was not granted specifically for the purpose of entrenching feudalism, many of the landed estates that had previously belonged to (English) King Harold and his followers were redistributed among William’s loyal followers, who had fought at the Battle of Hastings.44 These loyal followers became tenants in chief (or tenants in capite/immediate tenants) of King William and in return for their estates in land they had to provide services. In 1086, there were approximately one thousand five hundred tenants in chief of the King.45 The Domesday Book of 1086, which recorded land holdings in England, revealed that about one-half of the surveyed land of England was held by the King’s greater followers.46 It should, however, be noted that the post-Conquest system of land tenure did not involve ‘a wholesale eviction’ of all people, who previously lived on the land.47 A wholesale eviction would have had the effect of dislodging those at the bottom of the social hierarchy, who tilled the soil and grew the crops. For King William, that would have been an undesired outcome because ‘the whole paraphernalia of knights and castles’48 was dependent on those who worked the land. Feudalism, it has been said, was ‘a system of parasitism’ and ‘parasites cannot survive the destruction of their hosts’.49 Further, the redistribution of the estates did not involve the out-and-out transfer of land to loyal Norman followers.50 Instead, the King retained ownership of the land and his for performing services. None of the other methods of landholding involved either (a) holding ‘of ’ the king or (b) by way of the intercession of a lord as part of a tenurial system. 43. Barrow, Feudal Britain:The Completion of the Medieval Kingdoms 1066–1344, note 26 above, pp 42–43. 44. For an interesting discussion of Crown grants, see  K McNeil, Common Law Aboriginal Title, Oxford University Press, 1989, pp 84–5. McNeil explains that many of the titles did not, in practice, originate in a Crown grant. He suggests that the survival of the Anglo-Saxon system of strip-holding, together with the fact that the Domesday survey’s purpose was to determine who held what lands of whom (an inquiry it probably would have been unnecessary to make if everyone had simply held of a Crown grant anyhow), demonstrates that it was untrue to say that all land originated in a Crown grant. See also W Holdsworth, A History of English Law, 1st–7th eds, Methuen, Sweet and Maxwell, London. 45. AWB Simpson, A History of the Land Law, 2nd ed, Oxford University Press, Oxford, 1986, p 4. 46. R Lennard, Rural England 1086–1135, Clarendon Press, Oxford, 1959, pp 25–6; cited in P Butt, Land Law, 5th ed, Lawbook Co, Sydney, 2006, p 3. 47. AWB Simpson, A History of the Land Law, 2nd ed, Oxford University Press, Oxford, 1986, p 4. 48. AWB Simpson, A History of the Land Law, 2nd ed, Oxford University Press, Oxford, 1986, p 4. 49. AWB Simpson, A History of the Land Law, 2nd ed, Oxford University Press, Oxford, 1986, p 4.The parasites were the King and his lords, who lived off the labour of those who tilled the soil. 50. There is reason to believe that William did not take all land for himself (before he went on to grant land to his subjects). It is thought that some land remained outside the King’s hands. Indeed, it has been suggested that for some time there existed a dual system of land titles. On one hand, there was the land held by the Anglo-Saxons who had not resisted William and were, therefore, permitted to retain their pre-existing interests. Co-existing with this land was the land that had been confiscated by William and redistributed among his followers. It

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subjects held their estates by virtue of feoffment with livery of seisin.51 Therefore, from this point on, two central principles of English land law were established: 1. the doctrine of tenure, which addressed the question: ‘Upon what terms is this land held?’; and 2. the doctrine of estates, which addressed the question:‘For how long is this land held?’52

Feudalism and free tenures 3.12  Under the feudal compact the King retained absolute ownership of land in England.53 He granted something lesser, an estate, to his subject, who became a tenant.54 What was alienated or inherited was, therefore, an estate in land rather than the land itself.55 The grant of the estate came with attached duties. Indeed, as time progressed an intricate and complex system of dues and obligations developed that bound the subject and the King. The essence of the feudal nature of land law may be seen to lie in these obligations. Without the obligations of services and incidents, the land-holder would have held completely free. This would have amounted to absolute ownership or allodial title, but such a form of ownership did not sit comfortably with feudal conceptions of mutual obligation and was, therefore, virtually unknown in England after the Norman Conquest.56 would seem that this dual system operated for some time but, by 1788, the English doctrine of tenure had chosen to disregard the duality and instead operated on the basis that all land had vested in the Crown. The Crown then proceeded to grant the land to subjects. See Barrow, Feudal Britain: The Completion of the Medieval Kingdoms 1066–1344, note 27 above, p 43. Barrow’s view would seem to conflict with Blackstone’s: Blackstone, Commentaries on the Laws of England, note 9 above, pp 50–51. Blackstone said that:  … the King is the universal lord and original proprietor of all the lands in his kingdom; and that no man doth or can possess any part of it, but what has mediately or immediately, been derived ‘as a gift from him, to be held upon feodal services’.  At any rate, it is clear that the ‘modern’ definition of tenure, which relies on a Crown grant, is a fiction. According to Gummow J in Wik Peoples v Queensland (1996) 187 CLR 1 at 172; 141 ALR 129 at 223, this modern definition of tenure seemed to provide justification of imperial expansion. These views are also affirmed in Holdsworth, A History of English Law, note 28 above.

51. This was a process which invested a person with land by means of public delivery. It involved a ceremony called ‘livery of seisin’. See 3.73. 52. C Harpum, S Bridge and M Dixon, Megarry and Wade:The Law of Real Property, 8th ed, Thomson Reuters, London, 2012, p 24. 53. The gendered term ‘King’ is used here because history records the monarch at the relevant time as being a man. The term ‘Crown’ is perhaps more appropriate. 54. The doctrine of estates is discussed later in this chapter commencing at 3.39. 55. Later English law did accommodate an exception to the rule that no subject could acquire property unless it had previously been held of the Crown and alienated by the Crown. The Crown Suits Act 1769 (Imp) (the Nullum Tempus Act) permitted a subject to bar the Crown from recovering possession of land that the Crown had owned but never alienated, provided that the subject had enjoyed possession adversely to the Crown for a period of 60 years.This meant that the Crown could now be disseised of land and the adverse possessor’s seisin could result in him or her holding a fee simple estate in land which had not previously been the subject of a Crown grant. 56. Allodialism is the direct ownership of land without holding through the Crown or one of the Crown’s lords. Having said that allodial title is not part of the common law approach to land holding, there are actually some small pockets of allodially held land still in existence today. See 3.31.

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Indeed, the overwhelming view was that only the Crown had an absolute title, and this was because the Crown owed no obligations to an overlord.

Services 3.13  The different types of tenures attaching to grants of land, could be differentiated according to the different types of services that accompanied them. Indeed, the variety of services imposed by the King was vast and remarkably unconstrained. He used the imposition of services attaching to a grant of land to ensure that the land yielded whatever goods or labour he required.57 Examples of services attaching to land, therefore, included the provision of foot soldiers or armed horsemen, the provision of agricultural labour, the saying of masses, the organising of public hangings, the holding of the King’s head while he was seasick crossing from Dover to Whitsond58 and even the provision of straw for the royal privy.59 Other more frivolous tenures were for designed for entertainment or to cause embarrassment. The tenure held by Roland de Sarcerre (in Suffolk) was one such tenure. Each Christmas Day he was obliged to make ‘a leap, a puff and a fart’ in the presence of the King.60 The most traditional service was ‘knight service’. It required the tenant to serve in the King’s army and also provide a specific number of knights. According to Plucknett, tenure by knight service involved the provision of horsemen to the King for 40 days each year.61 Meanwhile, services of a personal nature, which the tenant had to perform in return for holding land of the lord, fell under the head of ‘grand serjeanty’. Services of a religious nature gave rise to ‘frankalmoign tenure’ while ‘socage tenure’ was a residuary category for all ‘free’ tenures that did not fall into the other designated categories.62 The provision of services had both social and legal significance.63

Incidents 3.14  In addition to services, there were some other incidental obligations (incidents) that attached to the free tenures. Incidents were ‘spasmodic liabilities’64 and were more useful to the lords than services because they were less susceptible to devaluation. Examples

57. AWB Simpson, A History of the Land Law, 2nd ed, Oxford University Press, Oxford, 1986, p 6. 58. For this and further interesting examples of feudal incidents, see R Megarry, Miscellany-at-Law: A Diversion for Lawyers and Others, Stevens and Sons Ltd, London, 1955, p 155. See also AWB Simpson, A History of the Land Law, 2nd ed, Clarendon Press, Oxford, 1986. 59. AWB Simpson, A History of the Land Law, 2nd ed, Oxford University Press, Oxford, 1986, p 6. A privy is a toilet. 60. R Megarry, Miscellany-at-Law: A Diversion for Lawyers and Others, Stevens and Sons Ltd, London, 1955, p 155. 61. See Plucknett, Concise History of the Common Law, note 16 above, pp 531–3. 62. The services associated with socage tenure included ploughing the King’s or lord’s land on an allocated number of days per year or raising a flag annually. 63. Chattels or personalty were not subject to such restrictions because they were held allodially, or absolutely. 64. AWB Simpson, A History of the Land Law, 2nd ed, Oxford University Press, Oxford, 1986, p 7.

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of feudal incidents include homage,65 fealty,66 suit of court,67 aids for the knighting of the lord’s eldest son and the marriage of his eldest daughter,68 primer seisin,69 wardship and marriages,70 and escheat.71 3.15  The incidents of fealty and homage were particularly important in symbolising the whole feudal compact.72 The tenant swore an oath to serve his lord in ‘life and limb and earthly honour’.73 He then placed his hands between the lord’s and undertook to become the lord’s man, swearing that he (the tenant) would devote himself to the lord’s service and remain a subject of the lord in many aspects of his daily existence.74 Interestingly, this ceremony took place, not in a general sense, but in regard to a particular piece of land. Once the services and incidents had been delineated, they were fixed and had to be complied with by the tenant. In return, the tenure of the estate usually became hereditary. As noted above, but it is worth re-iterating, the quid pro quo of the feudal arrangement was that the tenant received the lord’s protection both physically and legally, as well as the benefits of ‘ownership’, while the King received the services he needed, at the expense of parting with direct control of the land. Usually, the King–tenant in chief relationship did not end there. Most commonly, the tenant went on to replicate the process by which he or she had acquired an interest in land; that is, he or she created a tenant of his or her own, who, in turn, created a tenant of his or her own.

65. The solemn ceremony by which the tenant became bound to the lord.The ceremony involved the tenant placing his hands between the lord’s and swearing his (not usually her) allegiance. 66. The oath taken by the tenant in homage. It effectively amounted to an oath of fidelity in which the tenant swore to perform feudal obligations. 67. The obligation of the tenant to attend and participate in cases heard by the lord in his court. 68. The rendering of financial assistance to the lord on occasions such as those delineated in this chapter. 69. The right of the King on the death of a tenant holding directly of the King to take possession of the land until homage was performed and relief rendered. Relief was the lord’s right to money payable by the tenant when the heir succeeded. This generally amounted to one year’s value of the land. In the case of primer seisin, the lord in question was the King himself. 70. The process by which a male heir (under 21  years of age) and female heir (under 14  years of age, if married, and 16 years, if unmarried) became wards of the lord of whom the land was held. This right permitted the lord to hold and use the land for his own purposes until the wardship came to an end on attainment of the ages specified above. Further, the lord also had control over when and whom the ward could marry. If the ward refused to marry the person designated as ‘suitable’, the lord could levy a payment amounting to the value of the marriage. If the ward married without the permission of the lord, the ward had to pay double the amount of the value of the marriage. 71. The process by which the land reverted to the intermediate lord or the Crown when a tenancy came to an end. Property usually escheated because there was no heir to continue the tenancy or because the tenant committed a crime and was sentenced to death.These explanations are largely taken from Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 52 above, pp 31–32. 72. See Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 52 above, p 25. 73. Barrow, Feudal Britain:The Completion of the Medieval Kingdoms 1066–1344, note 50 above, p 43. 74. Historically, land was predominantly held by men and accounts of feudalism reflect this. Presumably, however, if land were held by women, the tenant would have sworn to become the lady’s man, devoting himself to the lady’s service.

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This replication process, known as ‘subinfeudation’, continued until eventually a large, laddered tenurial pyramid represented the pattern of land holding in England, as illustrated in Figure 3.1.75 Figure 3.1:  Tenurial pyramid Feudalism

The Crown

Tenants in chief Held directly of the King Immediate Lords

Mesne (mediate) lords

Tenants in demesne

Unfree tenures, manorial law and villeinage 3.16  Alongside the system of free tenures was another system of social organisation that evolved to give the lord of the manor significant authority within the village structure. That system involved unfree tenure; a form of tenure held by villein tenants.76 In order to better understand unfree tenure, it is helpful to briefly consider village organisation. All the land in a village was combined to operate as one farm, divided into three fields. Use of the fields was rotated with one field being left fallow each season to regenerate. Each field was, in turn, divided into many small strips, owned by various members of the village community. The lord owned the most land, including either a home farm or a conglomeration of strips across the three fields.Villeins held, say 30 small strips of land (of about an acre each) that were scattered across the different fields. As the strips were generally not contiguous, they could not be amalgamated into larger plots. The crops grown on each strip of land belonged to whomsoever owned that strip of land. Further, some workers, such as cottars did not hold a tenement at all. They tilled the soil and were considered to be lower on the social scale than villeins. When disputes arose, the villein could not sue in the royal courts, for the protection of his/her interest in land. This was because the villein held by way of an unfree tenure 75. For detailed information on tenants in chief, see  Barrow, Feudal Britain: The Completion of the Medieval Kingdoms 1066–1344, note 50 above, p 43. 76. Villeins were villagers who usually owned strips of land in one or more of the village’s three fields. Cottars were the more lowly workers, who actually tilled the soil. It is interesting to note that the word ‘villain’ is a variant of the word ‘ villein’, from the Old French, ‘vilein’.

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3.16

which did not enjoy seisin.77 Instead, the lord of the manor heard the disputes of the villein (and of those people, who held no tenement at all). Such disputes were heard in baronial (manorial or lord’s) courts, courts that had a very localised flavour. Each lord of the manor (and each village) could potentially have different rules and customs that required upholding. One of the reasons for the lord’s power lay in the nature of the villagers’ obligations to him. As we have learned above, obligations such as services were usual under free tenures in post-conquest (feudal) England, but what was different about the villein’s obligations under unfree tenure was their ambit.78 Whereas the ambit of the services that a ‘free’ tenant was required to render was known with certainty, the ambit of the services required of an ‘unfree’ tenant such as a villein, was variable and uncertain. This distinguished the one from the other. Although in practice, one common feature among unfree tenures was the obligation to labour on the lord’s demesne,79 the extent of the labour required could vary between villages and the different lords of the manor. Further, an unfree tenant could not transfer his or her interest without the consent of the lord,80 with some lords being more accommodating than others. The villein could not even move to a new village without first gaining the permission of the lord. Compliance was ensured through the imposition of heavy taxes and fines. In these circumstances, the lord of the manor became a type a quasi king. He was powerful, effectively developing his own fiefdom, regulating the lives of those who lived in the village and wielding an authority that, at  least as far as villeins were concerned, basically went unchallenged, even by the King himself. Yet over time all the services owed by the villein were commuted to monetary obligations and ultimately these services were found to attach not to the person but rather to the land. 77. ‘Seisin’ was originally a term used to denote possession alone, but it later came to denote possession of a freehold estate. According to K Gray and S Gray, Elements of Land Law, 5th ed, Oxford University Press, Oxford, 2008, p 151:  Seisin expressed an organic element in the relationship between tenant, land and lord, and came to provide presumptive evidence or entitlement within the medieval framework of rights in land. Moreover from the 15th century onwards, seisin was the technical term used to ‘denote the completion of that investiture, by which the tenant was admitted into the tenure; and without which, no freehold could be constituted or pass’ (Taylor d Atkyns v Horde (1757) 1 Burr 60 at 107, 97 ER 190 at 216 per Lord Mansfield).

Note that the judgments of Cockburn CJ and Mellor J in Asher v Whitlock (1865) LR1QB 1 indirectly raise the issue of whether retaining the difference between seisin and possession, in the context of an action to recover land, is necessary. 78. Each lord of the manor could impose different services and rules in relation to the running of the village. Hence, variation was rife. 79. The tenant who had seisin was the tenant in demesne. 80. Harpum, Bridge and Dixon, Megarry and Wade: The Law of Real Property, note 52 above, p 26, comment that ‘At first, the villein tenant was literally a tenant “at will”’. A tenant at will’s interest is not assignable. The only way a villein could transfer his or her interest was to surrender that interest to the lord on trust and to admit to the alienee. The alienee was admitted at a session of the manorial court and the alienee’s name was copied onto the court rolls. Hence, this provides another explanation of why villeinage became known as ‘copyhold tenure’.

97

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Hence, the position was that the villein held land ‘of ’ the lord of the manor, by virtue of customary services; services that eventually evolved into monetary obligations. This type of tenure was known as ‘villeinage’, but it remained distinct from the feudal free tenures. Later, villeinage became known as copyhold tenure. The etymology of this term lies in the fact that, although transfers of the villein’s land were (when permitted by the lord to take place) recorded in court rolls, the rolls proved difficult to access. Therefore, copies of the rolls’ entries were made and used by those wishing to establish and prove title to land. Hence, it was known as copyhold tenure. Notably, the copyhold tenant could not sue or be sued in the common law courts in respect of his or her holding.This left only the manorial (baronial or lord’s) courts as an avenue of redress. Copyhold tenure was finally abolished by the Law of Property Act  1922 (UK) and, although never imported into Australia, is helpful in gaining an understanding of the doctrine of tenure more generally. In this section, it is also helpful to reflect on the intersection between law, and economic and social change. In that regard, the form of farming discussed above was not an efficient way to farm. Consequently, attempts to consolidate land and make it more productive had been undertaken since medieval times, but the most concerted effort occurred between 1760 and 1830 when the English Parliament passed the Inclosure Acts.81 These Acts consisted of a series of laws that led to enclosure of ‘the commons’ (and effectively the loss of common land) along with the redistribution of plots and the requirement for farmers to fence their land.Theoretically, the poor were compensated for loss of their rights to use common land as well as their loss of ‘gleaning rights’, as the right to scavenge food left on the land by others was known. However, this compensation (where provided) was commonly inadequate and large numbers of village poor were left indigent and miserable. Although enclosure enhanced farming efficiencies and permitted the introduction of new agricultural technologies, it arguably exacerbated the gap between rich and poor. Larger areas of land were held by fewer people, who rented them out for high prices. In response to worsening circumstances such as these, many impoverished villagers left the rural areas, migrating to the cities in search of work in the burgeoning factories that industrialisation facilitated. Poets such as Goldsmith wrote of the effect of the enclosure of land and indirectly criticised its impact on poor farmers, their workers and village life.82 Many after him have written about (a) the connection between enclosure and crime, and (b) the consequent need to accommodate the growing number of convicted criminals — a need that was addressed, at least in part, by the establishment in 1788 of a penal colony in New South Wales.83 81. See, for example, the Inclosure Act 1773 (UK). In common usage, the term is ‘enclosure’. 82. For the effects of enclosure on the poor, see also Oliver Goldsmith’s poem ‘The Deserted Village’ (1770) and George Crabbe’s poem ‘The Village’ (1783). 83. Later enclosure of the fields forced the rural poor to migrate to industrialised cities to seek work. As those cities became more heavily populated and the availability of work became scarce, crime rates rose. In turn, authorities sought a new place to incarcerate the rising criminal class and, ultimately, they settled on Australia as the site of an antipodean prison.

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3.17

Historical development of the free tenures 3.17  The English Statute of Quia Emptores, passed in 1290, was instrumental in simplifying the tenurial system. For example, it prevented further subinfeudation of fee simple estates.84 From 1290 onwards, instead of creating further rungs on the tenurial ladder to accommodate newcomers, a system of substitution prevailed, and a new tenant wishing to hold land would step directly into the shoes of a previous tenant.85 Fewer people were involved with the same piece of land. This, together with the incident of escheat (which provided for the taking of land by the immediate lord when a tenant died without an heir and in other special circumstances),86 meant that the tenurial pyramid contracted in size remarkably because there were fewer rungs on it.87 Dealings with the land were also freed up as a result of the statute because the statute allowed the tenant to alienate land without the permission of the lord. Over time, many (and ultimately all) feudal incidents associated with socage tenure were commuted to monetary equivalents — but, as the value of money was whittled away by inflation, mesne (or mediate) lords and overlords were less inclined to expend resources on the collection of these moneys.88 As the role of mesne lords diminished and mediate holdings dropped out of the feudal arrangement, socage tenants eventually came to hold directly ‘of ’ the King.89 Further, some of the more onerous incidents of socage tenure that had survived, such as aids,90 were removed. In fact, the only (valuable) incidents of socage

84. The statute did not apply to life estates or fees tail, nor did it bind the Crown. Although it is widely thought that subinfeudation was never part of Australian law, Butt, Land Law, note 40 above, p 84, observes that a variant of subinfeudation may exist in relation to some land. 85. The following example was taken from an earlier version of Halsbury’s Laws of Australia, loose-leaf, LexisNexis, Australia, 28.1, ch 2, [10]:   If Albert held the land from Lord Havelock, and Albert alienated all or part of the land to Brian, Brian stood in Albert’s shoes. Brian now held directly from Lord Havelock; no new subtenancy between Albert and Brian could be created.

See also Halsbury’s Laws of Australia, loose-leaf, LexisNexis, Australia, 355 — Real Property, I Introduction — Real Property, (1) Historical Foundation of Real Property in Australia, (E) Doctrine of Tenure — Real Property, [355-70]. 86. For example, propter delictum tenentis applied where the tenant was convicted of a crime and sentenced to death. See T Cyprian Williams, ‘The Fundamental Principles of the Present Law of Ownership of Land’ (1931) 75 Solicitors’ Journal 843 at 844–6 for further examples. 87. Further simplification of tenures occurred when knight service was commuted to a monetary equivalent known as ‘scutage’; that is, shield money. 88. AD Hargreaves and BA Helmore, Introduction to the Principles of Land Law, Law Book Co, Sydney, 1963, p 35. Inflation was rife in the 16th and 17th centuries. 89. Movement in this direction was assisted by the rule that, where there is no evidence to the contrary, a tenant will be deemed to hold land directly of the King. See Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 52 above, pp 29–30; Re Lowe’s Will Trusts [1973] 1 WLR 882. 90. Aids was the tenant’s duty to provide the lord with financial support if the lord were in need. After the Magna Carta of 1215, the circumstances of need were limited to (a) the payment of a ransom if the King were captured; (b) the knighting of the King’s eldest son; and (c) the marriage of the King’s eldest daughter.

99

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tenure that remained were escheat and forfeiture.91 Yet, even escheat lost its force once it became possible to devise property under a will.92 3.18  Tenure by knight service (which as noted above, originally required the provision of knights to the King), had begun to be commuted to monetary payments, known as scutage, as early as the 12th century. However, the conversion process was slow. Eventually, the Tenures Abolition Act 1660 intervened,93 having the effect of converting the tenures of knight service and serjeanty to socage tenure.94 Legislation, therefore, had the effect of abolishing most — but not all — feudal incidents. Weakened by these changes, the real significance of tenurial incidents declined. 3.19  Despite this, the practical importance of the doctrine of tenure has been the subject of much discussion and, at times, confusion. For example, the eminent English property lawyer and scholar Joshua Williams said: … the first thing … the student has to do is to get rid of the idea of absolute ownership. Such an idea is quite unknown to English law. No man is in law the absolute owner of lands. He can only hold an estate in them.95

It is claimed that Professor Maitland, when lecturing at Lincoln’s Inn, would quote Williams’ words, but continue, ‘And the next thing a student must do is painfully re-acquire it’.96 According to Cyprian Williams: … when the student has assimilated the whole history of the law of real property from the time of the Norman conquest down to the year of 1845 and subsequently to the year of 1925, he must arrive at the conclusion that a tenant in fee simple of land enjoys all the advantages of absolute ownership, except the form. For what is ownership and what is absolute ownership, which a tenant in fee simple enjoys: and in what way does the form of ownership, which he undoubtedly has, differ from absolute ownership?97

If the reasoning of Professor Maitland and Cyprian Williams is correct, it may explain, in part, why a failure to preserve the distinction between tenurial (on one hand) and absolute, or allodial, land holding (on the other) does not always result in consternation. For example, it may explain why (on one analysis) the Wills, Probate and Administration 91. Forfeiture was a right of the Crown dependent upon the royal prerogative (compare tenure) to seize the lands of a person who had committed high treason. 92. The Statute of Wills 1540 permitted testamentary disposition. 93. 12 Car 2 c 24. 94. Frankalmoign and copyhold were not converted to socage tenure. The honorary services associated with grand serjeanty were specifically retained, as were the services incidental to socage (eg, those of petty serjeanty). See Hargreaves and Helmore, Introduction to the Principles of Land Law, note 88 above, p 36. In England today, some land is still held by virtue of serjeanty, for example, the Dukes of Marlborough and Wellington hold the land that was formerly granted to their ancestors by ‘the service of bringing a small flag to Windsor on the anniversaries of Blenheim and Waterloo respectively’. See CF Colbert and NAM Mackay, History of Scots and English Land Law, Geographical Publications Ltd, Hertfordshire, 1977. 95. J Williams, Principles of the Law of Real Property, 1st ed, Sweet & Maxwell, London, 1880. 96. T Cyprian Williams, ‘The Fundamental Principles of the Present Law of Ownership of Land’ (1931) 75 Solicitors’ Journal 843 at 843. 97. Williams, ‘The Fundamental Principles of the Present Law’, note 86 above, p 843.

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3.19

Act  1898 (NSW) blurred the distinction, seemingly without dire consequence.98 To explain, the Wills, Probate and Administration Act 1898 permitted real property passing as bona vacantia,99 by virtue of s 61B(7) of that Act, to be treated as personalty would have been treated; that is, allodially, rather than tenurially. Under the bona vacantia provisions in the Act, real property passed directly to the Crown by virtue of the Crown succeeding to the rights vested in the deceased. By comparison, under the doctrine of tenure and in the context of escheat, the Crown acquired the deceased’s interest in land by virtue of title paramount. The mesne lord or Crown did not succeed to the deceased’s interest. Once the tenant ‘dropped out of the picture’, through death, the mesne lord or the Crown took back what had always been his or hers, but which, during the tenant’s life, had been subject to the tenant’s intervening interest.100 Since the Succession Act 2006 (NSW) came into force on 1 March 2008, s 136 of that Act has dealt with bona vacantia. Section 136 simply states that ‘[I]f an intestate dies leaving no person who is entitled to the intestate estate, the State is entitled to the whole of the intestate estate’. Figure 3.2 shows the different types of tenure in the English tenurial system. Of these, socage tenure was the only kind imported into New South Wales. Figure 3.2:  Types of tenure Free tenure

Tenure in socage Petty serjeanty Socage

Tenure in chivalry Grand serjeanty Knight’s service

Spiritual tenure Frankalmoign Divine service

Unfree tenure Villeinage (later called ‘copyhold’ tenure)

Miscellaneous tenures

Home ancestral

Ancient demesne

98. With the introduction of the Succession Act 2006 (NSW), the Wills, Probate and Administration Act was renamed the Probate and Administration Act 1898 (NSW). The Succession Act covers both testamentary dispositions and intestacy. Meanwhile, the renamed Probate and Administration Act has a more limited focus and, as the name suggests, is concerned with the mechanisms that facilitate or enable distribution of the estate (ie, probate and administration). For wills made prior to the commencement of the Succession Act, see ‘Transitional Provisions’ in Sch 1 Pt 2 of that Act. 99. Bona vacantia is ownerless property. For a discussion of the general principles of bona vacantia, see N Ing, Bona Vacantia, Butterworths, London, 1971. 100. See Re Middle Harbour Investments Ltd [1977] 2 NSWLR 652; Sandhurst Trustees Ltd v 72 Seventh Street Nominees Pty Ltd (in liq) (1998) 45 NSWLR 556; National Australia Bank Ltd v New South Wales (2009) 260 ALR 115.

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Local Developments and the Doctrine of Tenure New South Wales and tenures — background 3.20  As noted, in New  South  Wales the only type of imported English tenure was socage tenure, a tenure that evolved into a tenure free of incidents. Socage tenure required the payment of money by the grantee, rather than the performance of services. It is, therefore, not surprising that in New South Wales the notion of property interests being unfettered by obligations such as services and incidents, gained acceptance. Such a form of tenure has served to encourage relatively easy alienation of interests in land and, in many ways, seems to have brought notions of real property in New South Wales closer to notions of personalty, which notably is not held ‘of ’ the Crown. The complexities of the English tenurial system, having never been imported into New South Wales, have often allowed property in New South Wales to be perceived, in practice, as more allodial than traditionally tenurial. Indeed, Fry observed the way in which Australian conditions varied from those in England when he said: Tenurial incidents in medieval England were, however, peculiarly appropriate to the feudal period, and those in modern Australia are of a different nature.101

Further, while in Wik Peoples v Queensland 102 Brennan CJ (with whom Dawson and McHugh JJ concurred) indicated a strong willingness to uphold expressly the doctrine of tenure in the Australian context, he spoke of it in terms different from its English counterpart, when he said: By the interlocking doctrines of tenure and estates, the land law provides for the orderly enjoyment in succession of any parcel of land. The doctrine of tenure creates a single devolving chain of title and the doctrine of estates provided for the enjoyment of land during successive periods.103

Brennan CJ’s characterisation of a local version of the doctrine of tenure is without reference to the presence of incidents and services; incidents and services being the essence of tenure as traditionally defined. Indeed, when viewed in these terms, there is, perhaps surprisingly, some similarity between Brennan CJ’s approach and that of Fry. With this in mind, it is useful to examine some of the distinctively Australian elements of property law, in order to situate the development of a domestically honed doctrine of tenure, in a broader and evolving context.

101. P Fry, ‘Land Tenures in Australian Law’ [1946–47] Res Judicatae 158 at  169, quoted by Kirby J in Wik Peoples v Queensland (1996) 187 CLR 1 at 243; 141 ALR 129 at 279. 102. Wik Peoples v Queensland (1996) 187 CLR 1; 141 ALR 129. 103. Wik Peoples v Queensland (1996) 187 CLR 1 at 90; 141 ALR 129 at 156.

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3.22

Quit rents 3.21  Property law in New South Wales developed as a subset of the law that generally regulated and ordered the colony. Sometimes it deliberately fashioned itself in response to the distinctive Australian conditions, while at other times it inadvertently moved in a divergent path from its English counterpart. For example, although in New South Wales quit rents were modelled on the English practice of commuting the agricultural service usually associated with socage tenure to money payments (payments that, in turn, permitted the tenants to go ‘quit’ or free from their services), they (quit rents) developed a decidedly local flavour in the colonial conditions. Their substantive features and their mode of functioning reveal dramatic divergences from the system in place in England. For instance, by 1809 it was the policy of the fledgling colonial administration to grant land to emancipated convicts (in blocks of 30 acres, if single, and 50 acres, if married) free of quit rents for 10 years. Free settlers were granted 100-acre blocks on similar terms.104 Generally, these grants contained a prohibition on alienation for a fixed term, usually seven years, as well as the obligation to clear and cultivate a set proportion of the land. A period of considerable uncertainty followed in the 1820s and 1830s, due in large measure to attempts to put the land on a more commercial footing. So, in 1825, a scheme was introduced whereby land could be bought outright at auction, though it would still be subject to a nominal quit rent. However, land passed in could be granted without purchase. After a grace period of seven years, the land was subject to a quit rent of 5% of the market value, redeemable at  20  years. No further obligation to pay quit rents of any form arose once 20 repayments had been duly made. Clearly, nothing like this arrangement was possible under the English system of tenure. In this instance, quit rents were not in any meaningful sense forms of feudal incidents but, rather, a purchase by instalment.105 In 1826, the procedure was finally formalised to allow immigrants to buy all land in this fashion, representing a severe deviation from the English approach.106

Pastoral leases 3.22  In discussing the sui generis nature of a pastoral lease, the decision in Wik Peoples v Queensland107 highlighted how early statutes in Australia were ‘designed to provide for conditions unknown in England and to meet local wants in a fashion unprovided for in

104. Instructions to Governor Macquarie, Historical Records of Australia, (hereafter HRA), Pt 1,Vol II, p 193. The instructions to Sir Thomas Brisbane were in similar terms: see HRA, Pt 1,Vol X, p 599. 105. The best land was valued at 10 shillings an acre, the worst at five shillings: Lord Bathurst to Brisbane, 30 May 1823, HRA, note 77 above, Pt 1,Vol XI, p 87. 106. See HRA, note 77 above, Pt 1, Vol XI, p 87. See also Stanley to Governor Bourke, 28 September 1833, HRA, Pt 1, Vol XVII, p 219; Governor Bourke to Rice, 8 February 1835, HRA, Pt 1, Vol XVII, p 650; Government Gazette, 9 October 1846; Grey to Fitzroy, 30 June 1847, HRA,Vol XXV, p 643. 107. Wik Peoples v Queensland (1996) 187 CLR 1; 141 ALR 129.

103

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England’.108 The statutory pastoral lease represented a modification to one of the types of interests in property recognised by the doctrines of tenure and estates.109 3.23  In order to understand the concept of the pastoral lease and its relationship to tenures more fully, it is worth considering the historical development of the statutory pastoral lease. Much of the need for statutory regulation of interests in land in New South Wales arose because of people’s propensity to leave the limits of location (ie, the environs of Sydney) and to occupy large tracts of land where stock could be depastured.110 In the course of doing this, the squatters (as they were called) occupied land to which they had no documentary title. The governors wished to regulate and control the squatters’ activities, and were disinclined to grant the squatters fee simple estates in land and thus highly reward the squatters’ uncontrolled straying from the circumjacence of Sydney.111 On the other hand, the squatters themselves were keen to acquire some kind of security with regard to the land, particularly as they usually incurred expense in fencing it, digging dams, clearing paddocks and building homesteads. 3.24  Such a frontier phenomenon was unknown in England, and hence English land law did not need to develop mechanisms for regulating such conditions. Clearly, New South Wales did,112 and hence it developed a system of ‘occupation licences’ under the Crown Lands Occupation Act 1839 (NSW). Under this Act, it was illegal to occupy Crown land beyond the limits of location without a valid lease or licence.113 The Sale of Waste Lands Act 1842 (Imp) took control of Crown land a little further by bringing management and disposal of such land under statutory control.114 Thus, according to Fry, ‘the year 1846 saw the first step taken along a road which led to the subsequent invention of a multitude of Australian tenures of new types’.115 In the following year, an Order in Council was issued that gave the Governor of New South Wales the capacity to grant leases in unsettled lands for terms not exceeding 14 years, for pastoral purposes.116 This encouraged land to be taken up beyond the 19 counties around Sydney; hence, land

108. Wik Peoples v Queensland (1996) 187 CLR 1 at 174; 141 ALR 129 at 224 per Gummow J. 109. The pastoral lease also represents a modification of the doctrine of estates, in that it deals with a modification to an interest in land; an interest which can be explained by virtue of a categorisation based on temporal fragmentation. It is, nevertheless, discussed at this point because of the references by both Fry (see note 74 above) and Gummow J (in Wik Peoples v Queensland (1996) 187 CLR 1 at 174; 141 ALR 129 at 224) to the development of new tenures. 110. Wik Peoples v Queensland (1996) 187 CLR 1 at 109; 141 ALR 129 at 171 per Toohey J. 111. The early governors could make grants by virtue of the powers under their commissions. See Randwick Municipal Corporation v Rutledge (1959) 102 CLR 54 at 71; 5 LGRA 127. 112. It should be noted that the law of New  South  Wales became the law of Queensland (until repealed) when Queensland became a separate colony in 1859. Queensland also had the facility to cope with the movement of squatters. 113. Wik Peoples v Queensland (1996) 187 CLR 1 at 109; 141 ALR 129 at 171 per Toohey J. 114. Wik Peoples v Queensland (1996) 187 CLR 1 at 109; 141 ALR 129 at 171 per Toohey J. 115. P Fry, ‘Land Tenures in Australian Law’ [1946–47] Res Judicatae 158 at 160, quoted by Toohey J in Wik Peoples v Queensland (1996) 187 CLR 1 at 109; 141 ALR 129 at 171. 116. Wik Peoples v Queensland (1996) 187 CLR 1 at 109; 141 ALR 129 at 171–2.

104



Fundamental Principles — Tenure and Estates

3.26

holding in New South Wales, like that in other parts of the country, developed into ‘a patchwork quilt of freeholdings, Crown lease-holdings and Crown reserves’.117 3.25  By 1855, the individual nature of the development of New  South  Wales land law was left up to the New South Wales legislature, rather than English authorities, by virtue of the New South Wales Constitution Act 1855 (Imp). Under this statute, England surrendered control over Crown lands. Thereafter, it was the colonial legislature that was responsible for passing legislation which met the needs of the developing colony. ‘New forms of tenure’ continued to develop and, according to Gummow J in Wik: … legislative activity illustrated the general propositions that statute may create interests in property which are unknown to the common law.118

Gummow J continued: To these new forms of tenure the terms “lease” and “licence” applied in a new generic sense.119

Clearly, these new forms of tenure were not merely clones of established and known common law concepts. They were unique statutory responses fashioned by peculiar circumstances. Hence, it is not surprising that any historical account of Australian — and, indeed, New South Wales — land law would need to reflect the contributions of both feudal doctrines and these responses to special Australian conditions. Millard and Millard summarised the position in writing about the ‘new forms of tenure’120 that were in operation in New South Wales by 1905 and which were created by legislative activity, when they said: The whole of the numerous and elaborate provisions of the Acts for the alienation and occupation of Crown lands are examples of the legislation which has been necessary to meet the peculiar conditions and wants of the colony. Nothing corresponding to the body of laws thereby created is found in English law, there being nothing in England analogous to the vast area of unoccupied lands in this colony, of which the Crown is the nominal, and the public the real owner, the settlement of which is necessary to the welfare and progress of the country.121

3.26  The majority judgments in the Wik decision served to highlight just how far away from traditional English law Australia had positioned itself, in regard to the doctrine of tenure.122 In that case, Toohey J offered a brief account of the initial source of Crown 117. P Fry, ‘Land Tenures in Australian Law’ [1946–47] Res Judicatae 158 at  160–1, quoted in Wik Peoples v Queensland (1996) 187 CLR 1 at 110; 141 ALR 129 at 172. 118. Stewart v Williams (1914) 18 CLR 381 at 390, quoted in Wik Peoples v Queensland (1996) 187 CLR 1 at 174; 141 ALR 129 at 224. 119. Wik Peoples v Queensland (1996) 187 CLR 1 at 174; 141 ALR 129 at 224. 120. This phrase is used by Griffith CJ: see Stewart v Williams (1914) 18 CLR 381 at 390. Griffith CJ also used the term ‘fancy tenures’ (at 390). 121. AC Millard and GW Millard, The Law of Real Property in New South Wales, 3rd ed, Law Book Co, Sydney, 1923, p 5. 122. Wik Peoples v Queensland (1996) 187 CLR 1; 141 ALR 129. See L Godden, ‘Wik, Feudalism, Capitalism and the State: A Revision of Land Law in Australia’ (1997) 5 Australian Property Law Journal 2.

105

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grants. He said that the source lay in the Crown’s prerogative power to dispose of such lands,123 and he explained how early governors’ commissions contained a power to dispose of Crown lands. Eventually, however, this prerogative power was replaced by statutes;124 one consequence of which was that revenues from the sale of land could not be siphoned off by the Crown, but instead could be directed to colonial needs. The New South Wales Constitution Act was instrumental in these changes. It was not a parochial or domestic statute, but a United Kingdom statute that had paramount force. Hence, its interference with Crown prerogative was in no way problematic. After it was passed, any grants of Crown land had to be made pursuant to statute. New forms of tenure were, therefore, created by operation of statute. Indeed, in Queensland approximately 70 different kinds of Crown leaseholds and Crown perpetual leasehold tenures were created.125 The question then became whether a grant of Crown land made under statute would mirror grants made at  common law in regard to the doctrine of tenure. The majority seemed to steer away from accepting this approach, with Toohey J relying on the words of Mason J in R v Toohey; Ex parte Meneling Station Pty Ltd.126 There Mason J said: The grazing licence is the creature of statute forming part of a special statutory regime governing Crown land. It has been characterised in the light of the relevant statutory provisions without attaching too much significance to similarities which it may have with the creation of particular interests by the common law owner of land.127

Toohey J found that the rights created by statute should be understood, by reference to their place in the wider statutory scheme and not by the simple application of feudal notions of tenure. An appreciation that the law has the capacity to change to accommodate different circumstances — and, in particular, that it changed historically to accommodate the very different situation in Australia to that in England — was considered relevant.128 By reliance on Fry’s work, Toohey J, along with the rest of the majority, concluded that feudal notions were inappropriate to Australian land tenures. Indeed, Kirby J added that: … it is a mistake to import into the peculiar Australian statutory creation, the pastoral lease, all of the features of leases in English leasehold tenures dating back to medieval times … it is much more appropriate to give content to the statutory pastoral lease by reference to the statute, unencumbered [by feudal doctrine]. Doing so represents a more orthodox approach to the construction of an Australian statute, made for peculiarly, and in some ways unique, local and land conditions.129

123. Wik Peoples v Queensland (1996) 187 CLR 1 at 108; 141 ALR 129 at 170 per Toohey J. 124. For an account of this, see P McDermott, ‘Wik and Doctrine of Tenures: A Synopsis’ in G Hiley (ed), The Wik Case, Butterworths, Sydney, 1997, p 35. 125. Wik Peoples v Queensland (1996) 187 CLR 1 at 112; 141 ALR 129 at 173 per Toohey J. 126. R v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327; 44 ALR 63. 127. R v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327 at 344; 44 ALR 63 at 76. 128. Wik Peoples v Queensland (1996) 187 CLR 1 at 112; 141 ALR 129 at 173–4. 129. Wik Peoples v Queensland (1996) 187 CLR 1 at 243–4; 141 ALR 129 at 279.

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3.30

Other statutory modifications 3.27  Lang’s Act130 is yet another example of the independent development of New South Wales property law. That Act dramatically altered the New South Wales law of inheritance on intestacy. Meanwhile, the Real Property Act 1862 (NSW) introduced into New South Wales a scheme of title by registration, and the Conveyancing Act 1919 (NSW) was responsible for extensively codifying much property law. All of these Acts, to some extent, put Australian law at variance with English law.131 3.28  Further, a number of English statutes that were incorporated into New South Wales law were not systematically updated with the English amendments that continued to be passed,132 nor was the spate of English legislation in the mid-1920s (including the Law of Property Act 1925 (UK), the Settled Land Act 1925 (UK), the Trustee Act 1925 (UK) and the Land Registration Act 1925 (UK)) ever replicated in Australia.133 However, had the British Parliament sought to have these statutes enforced in Australia, it could have done so until the late 1930s, under the doctrine of ‘paramount force’.134 ‘Paramount force’ meant that colonial legislation could be overridden and that the British Parliament could legislate for its dominions. Legal history reveals that this power was used infrequently, and hence there was ample opportunity for the nascent state to mould its law according to its own predisposition. 3.29  In regard to the common law (as opposed to statute), it was not until the Australia Act 1986 (UK) was passed that the Australian courts were released from the requirement to follow English authority.135 This Act also removed appeals to the Privy Council and effectively established the High Court of Australia as the highest court in the land. English decisions, like those of Canada, New Zealand and the United States, could be cited and relied on, but they were not authoritative.

Relevance of English Tenure to Australia Differences between English and Australian doctrines 3.30  Gummow J’s comment that ‘traditional concepts of English land law, although radically affected in their own country of origin by the Law of Property Act 1925 (UK) may still exert in this country a fascination beyond their utility in instruction for the task

130. Formally known as the Real Estate of Intestates Distribution Act 1862 (NSW) (26 Vic No 20).The effects of the Act are described in A Buck, ‘Torrens Title, Intestates and the Origins of Australian Property Law’ (1996) 6(2) Australian Property Law Journal 93. 131. For example, in New South Wales estates tail were abolished. See the discussion of entailed estates at 3.58. 132. Hargreaves and Helmore, Introduction to the Principles of Land Law, note 88 above, 1963, p 3. 133. Hargreaves and Helmore, Introduction to the Principles of Land Law, note 88 above, pp 3–4. See also Butt, Land Law, note 40 above, p 6. 134. When the Statute of  Westminster 1931 (UK) came into effect and the Statute of  Westminster Adoption Act 1942 (Cth) was passed, this was no longer possible. However, somewhat peculiarly, British Parliamentary supremacy still applied to state legislation. See also the Australia Act 1986 (UK). 135. This was followed up by the Australia Act 1986 (Cth).

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at  hand’136 forces us to consider the relevance or otherwise, in the Australian context, of tenure as defined by the English legal system. In this regard, the following issues are relevant, and can be observed from the foregoing discussion: • English-defined tenure automatically implies that land is held subject to services and incidents.137 • In Australia, no services ever attached to the socage tenure that was imported. Indeed, even quit rents were not substitutes for services. They were, as mentioned above, purchase moneys paid by instalment. • Lang’s Act, the development of the bona vacantia jurisdiction and the concurrent demise of escheat on intestacy, together with the Forfeiture Act 1870 (Imp), all accounted for the disappearance of the few incidents that had been imported in the first place.138 3.31  Further, the irrelevance of English tenure in the Australian context is suggested by the fact that the doctrine traditionally implies a spatial fragmentation of rights. It implies that the Crown, the tenant in chief, mesne lords, and tenants in demesne all have co-existing rights in a certain tract of land. Allodial land denotes quite the reverse because parties own it absolutely, totally and separately. Yet, as noted earlier, it is arguably allodial land, or something rather close to it, that has always existed in Australia, despite the words of Brennan J (as he was then) that it is ‘far too late in the day to contemplate an allodial or other system of land ownership’139 in this country. Tenure as redefined in Mabo v Queensland (No 2) (Mabo (No 2)) emphasises this; it describes the Crown’s right to property and its capacity to create title, but no more.140 3.32  By contrast, reliance on English tenure would have many more dramatic consequences in Australia than in England, partly because of the manner in which English tenure would interact with native title. Such a proposition is all the more interesting given that, according to Professor Jenks, writing in 1895: … the theory [of tenure] had almost died a natural death when it sprang to life again in the most unexpected manner with the acquisition of the great English colonies. For if, as was 136. Wik Peoples v Queensland (1996) 187 CLR 1 at 177; 141 ALR 129 at 226. 137. Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 52 above, p 24. 138. As quit rents were not an incident in the English sense, the only incident of note in Australia was escheat. Escheat for a felony was abolished by the Criminal Law Amendment Act  1883 (NSW). Escheat on intestacy or for lack of devisees was abolished by the Administration of Estates Act 1954 (NSW). Even escheat pertaining to bankruptcy was replaced by a statutory power to disclaim: see  the Bankruptcy Act  1966 (Cth). See  also Sandhurst Trustees Ltd v  72 Seventh Street Nominees Pty Ltd (in liq) (1998) 45 NSWLR 556. Sandhurst held that, where a landowner’s trustee in bankruptcy or liquidator disclaims land under the statutory power, the land escheats to the Crown. The High Court in National Australia Bank Ltd v New South Wales [2009] 260 ALR 115 cited Sandhurst but did not apply it. In obiter, the court held that title would not escheat absolutely to the Crown where the court was able to vest the title in someone else (in that case, National Australia Bank). 139. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 47; 107 ALR 1 at 33. 140. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1. This case is discussed in detail in Chapter 4. See  also B 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.

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the case, no subject could show a recognised title to any of the countless acres of America and Australia, at a time when those countries were first opened up by white men, it followed that, according to this relic of feudal theory, those acres belonged to the Crown. It may seem almost incredible that a question of such magnitude should be settled by the revival of a purely technical and antiquarian fiction.141

Tenure, allodialism and native title 3.33  Given the above position, it is useful to explore the relationship between tenure, allodialism and native title. Despite the fact that Australian land law did not simply transpose and import English land law to foreign shores, it has been argued that here in Australia ‘the ghost of feudalism hovered over the scene’.142 Indeed, in 1847, Stephen CJ stressed that when a grant of land is made it has to be assumed that the Crown holds the title to the land, and that title is then the source for the creation of lesser estates.143 Later, in 1992, Brennan J stated in Mabo (No 2) that ‘the doctrine of tenure applies to every Crown grant of an interest in land’.144 3.34  Clearly, one of the most significant vestiges of the feudal doctrine of tenure is its fundamental tenet and oft-asserted proposition that land cannot be owned allodially, but only ‘of the Crown’ or tenurially.145 In fact, although the colonial and state legislatures created such tenures as they saw fit, some of which were typically locally flavoured and described by ever-expanding legal terminology,146 they were created in an environment ‘where the local common law recognised no allodial species of estate which was held independently of any grant by the Executive Government or of any grant pursuant to statute’.147 However, as Gummow J pointed out, the assumption that the common law could not recognise allodial title proved to be incorrect in the light of Mabo (No 2).148 3.35 The Mabo (No 2) decision demonstrated that native title, which is a title based on an ongoing Indigenous connection to land, was not dependent on the pre-existence of a tenurial system of land holding.149 Indeed, as the Indigenous connection with land pre-dated both ‘settlement’ (or occupation) and the claim of sovereignty by the Crown of

141. E Jenks, The History of the Australasian Colonies, Cambridge University Press, Cambridge, 1895, p 59, quoted in Wik Peoples v Queensland (1996) 187 CLR 1 at 187; 141 ALR 129 at 234 per Gummow J. 142. Hargreaves and Helmore, Introduction to the Principles of Land Law, note 88 above, p 18. See J Devereaux and S Dorsett, ‘Towards a Reconsideration of the Doctrines of Estates and Tenures’ (1996) 4 Australian Property Law Journal 1. 143. Attorney-General v Brown (1847) 1 Legge 312; 2 SCR (NSW) 30. 144. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 48; 107 ALR 1 at 34. 145. This issue is explored in Edgeworth, ‘Tenure, Allodialism and Indigenous Rights at Common Law’, note 140 above. 146. For example, in Hegarty v Ellis (1908) 6 CLR 264, Higgins J used the term ‘quasi-Crown lands’ to identify those areas where there had been conferred a tenure short of a fee simple. See Wik Peoples v Queensland (1996) 187 CLR 1 at 174; 141 ALR 129 at 224. 147. Wik Peoples v Queensland (1996) 187 CLR 1 at 175; 141 ALR 129 at 225. 148. Wik Peoples v Queensland (1996) 187 CLR 1 at 175; 141 ALR 129 at 225. 149. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 48; 107 ALR 1 at 34.

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England, native title may be said to exist outside the doctrine of tenure, although, as noted above, it is a title recognised by the common law.150 3.36  Brennan J’s judgment in Mabo (No 2) confirmed the view that Australian freehold titles generally operate by way of Crown grants of estates; but in order to square this proposition with the concept of native title,151 which is not dependent on the existence of tenure, he was forced to revisit the long-held view — outlined in Attorney-General v  Brown152 and relied on until and including Milirrpum v  Nabalco153 — that absolute beneficial ownership was a concomitant of sovereignty. In doing so, he found that radical title, not absolute beneficial ownership, was a concomitant of sovereignty.154 This revisionist approach permitted the recognition of a dual system of land holding in Australia: the common law tenurial system and allodially held native title. Yet, perhaps surprisingly, the co-existence of two land-holding systems was not a new concept, even in the English context. The continuing Anglo-Saxon holdings after the Norman Conquest155 and the allodial land holdings on the Shetland and Orkney Islands,156 as well as the Nullum Tempus Act,157 demonstrate that English law had some familiarity with the concept of dual systems of land holding. Further, as we have noted above, if land were acquired by conquest, as was the case for certain American First Nations people, the law of the conquered remained intact until such time as the conquerors decided to replace it with their own laws. Indeed, Holt CJ in Blankard v Galdy158 noted that ‘in the case of an infidel country, their laws by conquest do not entirely cease, but only such as are against the law of God’. The doctrine of continuity presumed that pre-existing rights would endure. Hence, prior to the conquered’s interests in land being extinguished by the conqueror (which in the case of England was the Crown), two types of land holdings (that of the conquered and that of the conqueror) co-existed. A dual system of law operated. 3.37  Instead of trying to fit recognition of an allodial title (such as native title) around the doctrine of tenure, it is possible that another, simpler approach could have been taken in the Australian context. It may have been possible, for example, to overturn the doctrine 150. For a discussion of native title’s relationship to the common law, see S Dorsett, ‘Since Time Immemorial: A Story of Common Law Jurisdiction, Native Title and the Case of Tanistry’ (2002) 26 Melbourne University Law Review 32. See also S Hepburn, ‘Feudal Tenure and Native Title: Revising an Enduring Fiction’ (2005) 27 Sydney Law Review 49. 151. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 16; 107 ALR 1 at 8. See Chapter 4 for a discussion of what constitutes native title. 152. Attorney-General v Brown (1847) 1 Legge 312. 153. Milirrpum v Nabalco (1971) 17 FLR 1. Sovereignty is the overarching right to make laws for a country. 154. Radical title is ultimate or final title. 155. See K McNeil, Common Law Aboriginal Title, Oxford University Press, Oxford, 1989, p 85; Barrow, Feudal Britain: The Completion of the Medieval Kingdoms 1066–1344, note 50 above, p 43. See also Lennard, Rural England 1086–1135, note 46 above. 156. Some lands in the Shetland and Orkney Islands continued to be held after the Norman Conquest. These are noted by Brennan J in Mabo v Queensland (No 2) (1992) 175 CLR 1 at 46; 107 ALR 1 at 32 where he cites, among other things, Bell, Lectures on Conveyancing, Edinburgh, 1867,Vol 1, pp 531–2. 157. Crown Suits Act 1769 (Imp). 158. Blankard v Galdy (1693) 2 Salk 411 at 412; 91 ER 356 at 357.

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of tenure altogether; a course effectively followed in several of the states of the United States of America159 where it appears to have been achieved relatively seamlessly. In Australia, however, the High  Court in Mabo (No 2)160 chose to review existing authority and found that the doctrine of tenure was part of the skeleton of Australian common law. The court held that to ignore or deny the doctrine would risk damaging the fabric of the Australian legal system. The result was that the doctrine of tenure was thrust into the limelight in 1992 and has since enjoyed more attention than it had known for some time. But while there has been acceptance on one level that the feudal doctrine forms part of the skeleton of Australian law, there is at the same time, as we have observed, evidence that it was only ever a modified version of the doctrine of tenure that found its way into New South Wales property law in the first place. 3.38  In summary, ambivalence about the role of the doctrine of tenure — and, in particular, its intersection with allodial title — still remains.While Brown forcefully argued that the law respecting property was governed by feudal principles, we can observe varying degrees of retreat from that position.161 Indeed, the uncertainty surrounding the application of the feudal doctrine of tenure seems to be made plain by s 13J of the Real Property Act 1900 (NSW), which equates the state’s holding with that of a subject; that is, a fee simple.This seems to suggest that the Australian understanding of the feudal doctrine of tenure is clearly at variance with the English understanding of the doctrine.162 In this context, it was not surprising to see Deane and Gaudron JJ comment in Mabo (No 2), in words redolent of Professor Maitland and Cyprian Williams, that ‘the primary estate of a subject, the estate in fee simple, became for all practical purposes, equivalent to full ownership of the land itself ’.163 In order to explore these ideas further, it is necessary to examine the doctrine of estates more carefully.

Doctrine of Estates Definition of an ‘estate’ 3.39  So far, we have discussed how the common law, as exercised pursuant to local conditions, and with reference to native title jurisprudence, has moulded and shaped the doctrine of tenure since its arrival on Australian shores. In particular, we have observed 159. Hepburn, ‘Disinterested Truth: Legitimation of the Doctrine of Tenure Post-Mabo’, note 17 above. 160. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1. 161. Attorney-General v  Brown (1847) 1 Legge 312; 2 SCR (NSW) 30. For example, Butt claims that ‘[i]n Australia, the concept of one person holding of another under the hierarchical landholding structures developed in medieval times, was unknown’: P Butt, Land Law, note 40 above, p 83. Similarly, AR Buck says that ‘[b]y 1863 … feudal principles were eschewed from the land and from the idea of property in New South Wales’: ‘The Ghost of Feudalism: Law and the Idea of Property in NSW, 1788–1863’, Master of Arts (Economics) Thesis, University of Newcastle, February 1994. 162. For further consideration of these issues in the New Zealand context, see the New Zealand Law Reform Commission preliminary paper, Tenure and Estates in Land, No 20, June 1992. 163. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 80; 107 ALR 1 at 59.

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how, under the feudal system of land holding and the doctrine of tenure, a subject did not ‘own’ land. Only the Crown ‘owned’ land. The tenants to whom the land was granted held something else, but clearly not the land itself. The law described the ‘thing’164 that the tenant held as an ‘estate’.165  This ‘thing’ is the bundle of rights that a tenant is able to exercise at successive times in respect of land.166 It has been described as ‘an abstract entity’ that is ‘interpose[d] … between the tenant and the land’.167 Further, the term ‘estate’ has been said to indicate ‘an interest in land of some particular duration’.168 Walsingham’s case of 1537 provides the classic formulation, stating that ‘[A]n estate in the land is a time, or land for a time’.169 Estates represent one of the categories that the numerus clausus (closed class) doctrine identifies. According to that doctrine there is a limited range of recognisable rights over land and for rights to be recognised, they must fall into one of three categories. The categories are: (a) estates; (b) lesser interests including easements and profits à prendre; and (c) security interests, such as mortgages. An estate also refers to the right to have possession of the land and to exclude others from it. It is the most ‘ample’170 bundle of rights that a person holds over his/her own land, while lesser interests only amount to rights over the land of someone else.171 In ‘common parlance’, holding an estate was often referred to as ‘ownership’,172 but this notion was not technically compatible with the common law’s understanding of an estate173 because at common law only the Crown ‘owns’ land. Another way of understanding the doctrine of estates is to see it as involving a temporal fragmentation of rights (while the doctrine of tenure implies a spatial fragmentation of rights). 3.40  The two types of estates that exist in New South Wales (and indeed, Australia) are (i) the freehold estate, and (ii) estates of less than freehold. The leasehold estate is an estate of less than freehold.174 The term ‘freehold’ has its origins in the feudal experience and 164. For a brief introduction to estates, see B Edgeworth, C Rossiter, P O’Connor and A Godwin, Sackville and Neave Australian Property Law, 10th ed, LexisNexis Butterworths, Sydney, 2016, p 168. 165. See Stokes v Costain Property Investments Ltd [1983] 1 WLR 907 at 909 for comment on the nature of what a tenant ‘owns’. 166. See K Gray, ‘Property in Thin Air’ (1991) 50 Cambridge Law Journal 252. 167. FH Lawson, The Rational Strength of English Law, Stevens and Sons Ltd, London, 1951, p 87, quoted in AP Moore, S Grattan and L Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, 6th ed, Thomson Reuters/Lawbook Co, Sydney, 2016, p 57. 168. Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 52 above, p 37. 169. AWB Simpson, A History of the Land Law, 2nd ed, Oxford University Press, Oxford, 1986, p 86 citing 2 Plowden 547 at 555. 170. B Edgeworth, Butt’s Land Law, Thomson Reuters, Sydney, 2017, p 106. 171. Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 52 above, p 119. 172. B Edgeworth, Butt’s Land Law, Thomson Reuters, Sydney, 2017, p 106. Note the common law conceived of the Crown alone as ‘owning’ land. 173. Note that B Edgeworth, Butt’s Land Law, Thomson Reuters, Sydney, 2017, p 135 concludes that freehold estates are no longer held ‘of the Crown’ because of ‘statutory and doctrinal revisions’. He claims that they are now held ‘absolutely’. 174. B Edgeworth, Butt’s Land Law, Thomson Reuters, Sydney, 2017, p 134, suggests that, although the term ‘estate’ has been applied to leaseholds since the time of Littleton, this terminology is not strictly speaking correct because at common law a leasehold cannot be divided up into life estates or entailed estates.

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refers to estates of an uncertain duration; whereas the term ‘leasehold’ refers to estates of certain duration. By historical development, possession of the freehold estate gave rise to seisin and, as a consequence of this distinction, actions for the recovery of land, as opposed to claims for damages, were only available to the freeholder. 3.41  As noted, estates of freehold could be created for different but indefinite durations. For example, an estate could be limited to the life of a person, or could extend for as long as that person had heirs. Hence, A could be granted an interest for A’s life and, subsequently, B could be granted an interest for B’s life, then C could be granted an interest in remainder for as long as he or she had heirs.175 This capacity to divide up interests in land on the basis of time (creating successive interests) is what lies at the heart of the doctrine of estates and contributes to the doctrine’s high degree of in-built flexibility; a quality regarded as one of its great virtues. Figure 3.3 details the different categories and subcategories of estates. Figure 3.3:  Types of estates Estates Fixed term of years Periodic tenancy Freehold

Leasehold Tenancy at will Absolute

Fee simple

Tenancy at sufferance

Determinable Conditional

Fee tail

Absolute

Female

Determinable

Male

Conditional

Special

Absolute Ordinary

By express grant

Determinable Pur autre vie Conditional

Life estate

Dower

By operation of law

Curtesy

175. A remainder is a future interest in that it vests in possession at some time in the future. It does, however, vest in interest immediately.

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Freehold estates 3.42  There are three freehold estates: 1. the fee simple; 2. the fee tail; and 3. the life estate.

Fee simple estate 3.43  The fee simple estate is the largest estate in land, in that it lasts the longest. Historically the word ‘fee’ denoted that the estate was heritable (ie, it could be inherited) while the word ‘simple’ denoted that the estate could be taken generally by heirs and was not restricted or limited to a particular line of heirs, as was the case with an entailed fee. An heir inherited automatically on the death of the fee simple holder but the identity of the heir and, therefore, who would actually inherit, was not always a simple matter. It was determined according to a detailed formula of descent which favoured the male rather than female issue of the deceased.176 By the 13th century, and with the passing of the Statute of Quia Emptores 1290, there was another method by which property could pass from one person to another. A new method arose when the law permitted the fee simple holder to alienate (pass) his or her estate inter vivos (ie, during the holder’s own lifetime). One did not have to wait for death for the estate to pass. Originally the fee simple estate only lasted as long as the original grantee was alive or while that original grantee had heirs.177 This remained the case even when the estate had been alienated inter vivos pursuant to the Statute of Quia Emptores. Therefore, it was possible for the estate to evaporate in the hands of the alienee when there were no more heirs of the original fee simple holder. This situation was altered by the 14th century, when the estate in fee simple was permitted to continue as long as the new fee simple holder had heirs. However, it was not until 1540 and the passing of the Statute of Wills that the fee simple holder could avoid having the estate that he or she held at death automatically pass, on death, to his or her

176. See RE Megarry and HWR Wade, The Law of Real Property, 5th ed, pp 540–42; cited in Harpum, Bridge and Dixon, Megarry and Wade: The Law of Real Property note 52 above, p 38, for the 10 rules that were used to determine an heir; Simpson, A History of the Land Law, note 35 above, pp 57–63; B Edgeworth, Butt’s Land Law, Thomson Reuter, Sydney, 2017, p 109. See  also Clay v  Karlson (1998) 19 WAR 287. Primogeniture, as per note 269 below, was the principle that the eldest male child took to the exclusion of younger sons and all daughters of any age. 177. See Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 32 above, p 39.

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heir. When the Statute of Wills 1540 came into operation, it permitted the holder of a fee simple estate to make a testamentary disposition in favour of someone other than an heir. Prior to 1540, however, the creativity of lawyers had to be relied on to achieve a similar effect. In that regard, the development of the ‘use’178 (the trust’s precursor) assisted because it allowed the freeholder to achieve a quasi form of testamentary disposition. Today, the longevity of the fee simple estate is not determined by the availability of heirs. It continues irrespective of heirs. Further, the holder of the fee simple estate can pass his or her estate inter vivos or can pass it by virtue of testamentary disposition. If the holder of the fee simple dies without a will (ie, intestate), his or her interest will be distributed according to the law of intestacy pursuant to Ch 4 (and particularly Pts 4.2, 4.3 and 4.4) of the Succession Act  2006 (NSW).179 Where ‘an intestate dies leaving no person who is entitled to the intestate estate, the State is entitled to the whole of the intestate estate’ pursuant to s 136 of the Succession Act, although the state may, under s 137 of the Act, waive its rights in favour of a dependent or another person who has a just or moral claim, for example. Over time, we have come to see the fee simple estate as the largest known estate and the closest thing to absolute ownership that the doctrine of tenure admits. It is regarded as ‘the most comprehensive estate in land which the law recognises’.180 The fee simple estate can either be absolute, determinable or conditional.181

Determinable and conditional fees 3.44  A fee simple estate may be limited or modified by a determining event or a condition subsequent. If modified by a determining event, the fee is known as a determinable fee or a determinable interest. If modified by a condition subsequent, the fee is known as a fee defeasible by condition subsequent, a conditional fee or a conditional interest.

Determinable fee 3.45  A determinable fee is limited by a happening that may or may not occur. This uncertainty is unavoidable because a fee simple is, by definition, an estate of indefinite duration. To end the fee definitely at a certain point would cause the interest to become one of a fixed duration. The determining or limiting event marks out the boundary of the determinable fee as shown in Figure 3.4.182

178. The use is discussed in Chapter 6. 179. See explanation at note 96, above. 180. Amodu Tijani v Secretary, Southern Nigeria [1921] 2 AC 399 at 403 (Privy Council). 181. Determinable and conditional interests are discussed below at 3.44–3.57. 182. ‘The limitation marks the bounds or compass of the estate, and the time of its continuance’: Zapletal v Wright [1957] Tas SR 211 at 218, quoting Preston on Estates,Vol 1, p 49. See Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 52 above, p 64.

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ma

ry

inte

re

Det e r m i n a b le Limitation

and

te

en

de

meshed

.

ri

st

P

Figure 3.4:  Boundary of a determinable fee

rm

in

ing

eve

nt

The determining event is enmeshed in the primary interest and marks out the boundary of the interest. It is not grafted onto the primary interest but rather is intrinsically part of it. It cannot be detached from the gift without causing the whole gift to fail.

3.46  If the determining event does occur, the fee reverts to the grantor. Hence, in a grant in the form of ‘To A in fee simple until she ceases to reside in Australia’, the fee will automatically revert to the grantor if A does, in fact, cease to reside in Australia. The right of reverter arises immediately and requires no further action. After the grant has been made, but before the determining event occurs, the grantor is said to have a ‘possibility of reverter’.183 It should be noted that this is different from a grantor’s reversion, because a reversion is held when the grantor has passed or created an interest less than a fee simple. For example, ‘To A for life’ gives the grantor a reversion. If the determining event becomes impossible to satisfy, then the determinable fee will blossom into an absolute fee. 3.47  In the past, a fee simple could not be created after a determinable fee. For example, it was not possible to make a grant such as, ‘To A and his heirs until A buys a motorbike, and then to B and his heirs’. In this case, B was unable to take an interest even when A had bought a motorbike. Nowadays, s 50(1) of the Conveyancing Act permits the possibility of reverter to be considered an alienable right inter vivos. If the ability to alienate, previously 183. A possibility of reverter may be statute-barred under the Limitation Act  1969 (NSW) if, after the fee simple has determined (or put another way after it has terminated on the occurrence or non-occurrence of an event), an adverse possessor takes possession of the land for 12 years or more. See Fraser v Canterbury Diocesan Board of Finance [2001] Ch  669. Cram Foundation v  Corbett Jones (2006) NSWSC 495 at  [31] treated the possibility of reverter on termination of a determinable fee as not being subject to the rule against perpetuities, although the court acknowledged contrary views.

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found in s 5 of the Wills, Probate and Administration Act, has been imported into s 4(1) of the Succession Act, the possibility of reverter will also remain alienable by virtue of a disposition in a will. If a determinable life estate has been created, it is possible to follow this gift with another that would come into effect should the determining event occur; for example, ‘To A for life or until she gets a tattoo, and then to B and his heirs’. Meanwhile, when a determining event is found to be void, the whole grant will fail, because the determining event cannot be severed from the grant, it being inherently part of the estate itself. 3.48  Certain words are regarded as being indicative, but not definitive, of a determinable interest. These are: • • • • •

while; during; until; so long as; and for as long as.184

Fee simple defeasible by condition subsequent 3.49  An interest limited by a condition subsequent is sometimes called a ‘defeasible’ fee or a ‘modified’ fee. These terms refer to an estate in fee that is subject to a condition subsequent. A condition subsequent, rather than defining the parameters of the interest, is regarded as a specified event that cuts short an already otherwise defined interest. The condition subsequent is not ingrained in the boundary of the interest. It is merely an extra limitation that, if satisfied, will limit the already defined estate. 3.50  Cheshire and Burn state that: … if 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 condition.185

3.51  If the condition subsequent should occur, the grantor has a right of re-entry,186 but the grantor can decide himself or herself whether he or she wishes to exercise this right. It could be the case that, although the condition subsequent has been fulfilled and the grantee’s interest could be brought to an end, the grantor decides not to exercise his or her right of re-entry. If the grantor does exercise the right of re-entry he or she must either physically retake possession or rely on a court order to regain possession.

184. Harpum, Bridge and Dixon, Megarry and Wade,The Law of Real Property, note 52 above, p 65. 185. EH Burn, Cheshire and Burn’s Modern Law of Real Property, 15th ed, Butterworths, London, 1988, p 341. 186. If the grantor is dead, this right passes to his or her successors.

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Property Law in New South Wales Figure 3.5:  Fee simple defeasible by a condition subsequent Condition

P r ima r y Inte re s t

Su

b s e q u e nt

A condition subsequent is grafted onto an already fully formed interest. The condition subsequent is detachable, leaving the primary interest intact.

3.52  Certain words are regarded as being indicative, but not presumptive, of a conditional interest. These are: • on condition that; • provided that; and • but if.187 3.53  Should the condition subsequent fail because it is found to be void, it can be severed leaving the rest of the grant intact. It is not possible to create a fee simple after a conditional fee, because the fee has already been passed to the grantee. The fact that the condition subsequent, if satisfied, will cut short the interest does not alter the fact that the whole fee has already been granted and cannot be granted again. Nowadays, however, the grantor’s right of re-entry can be alienated according to statutory provisions.188 Historically it was not possible to create a remainder after a conditional life estate. Hence, it would not have been valid to make a grant in the following terms: ‘To A for life but, if he gets divorced, to B and her heirs.’This would have been construed as a remainder cutting short the life estate. Such a grant then would have offended one or more of the remainder rules.189 Nowadays, a grant of this nature could be affected by putting it behind a trust, which would cause an equitable future interest in B to be created.

187. Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 52 above, p 65. 188. By deed: Conveyancing Act 1919 (NSW) s 50(1). 189. See 3.107.

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Void limitations and conditions 3.54  The classification of the divesting event results in different consequences where that divesting event is found to be void. If a void divesting event is classified as a determinable limitation, the whole grant will fail; but if it is classified as a condition subsequent, the offending condition subsequent may be severed, leaving the rest of the grant intact. Limitations have been found to be void for a number of reasons, including: denying the power to alienate; being against public policy (eg, for immorality or illegality); being directed against the course of action that is prescribed by law; and for uncertainty. 3.55  A condition cannot remove the power to alienate because the power to alienate is generally regarded as being enshrined in ownership, and to deny this power would be to deny a fundamental indicium of ownership.190 In Re Dugdale,191 the court affirmed the view that a general restraint on alienation was void. Hence, ‘To A and her heirs but, if she attempts to sell the property, then to B and his heirs’ would be void. The law is less clear where the limitation places only a partial restriction on alienation. 3.56 In Trustees of Church Property of the Diocese of Newcastle v Ebbeck,192 the High Court found that a clause which required a son and his wife to profess the Protestant faith in order to receive the benefit of a residuary estate, although not void for uncertainty, was void on the grounds of public policy. According to Dixon CJ, on the facts, the disposition created a tension between the wife’s (Roman Catholic) religious beliefs and a serious temporal interest of her husband. If the wife could not, or would not, desert her religious beliefs, the limitation provided an inducement to him to desert the marriage. 3.57 In Clayton v Ramsden,193 a grant in the following terms was found to be void for uncertainty: ‘I give my residuary estate to my daughter provided that if she at any time after my death marries a person who is not of Jewish parentage and of the Jewish faith her interest is to cease.’ The term ‘Jewish faith’ was held to be too nebulous. However, in Blathwayt v Baron Cawley194 a condition that referred to what should occur if the donee were to ‘become a Roman Catholic’ was upheld and was not found to be uncertain. It is the ‘certainty of concept’ and ‘not ease of application’ that is at the heart of invalidity for uncertainty.195 190. It is worth noting that native title as described in Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1 does not permit the alienation of the interest (except perhaps in regard to a surrender to the Crown). 191. Re Dugdale (1888) LR 20 Eq 186. The relevant clause said: ‘if my son commits any act by reason of which he would be deprived of the personal beneficial enjoyment of the premises in his lifetime then the trust shall cease’. See also Re Macleay (1875) LR 20 Eq 186, where the court found a partial restraint on alienation valid; Re Rosher (1894) 26 Ch D 801, where the court found a partial restraint on alienation invalid; Saliba v Saliba [1976] Qd R 205 where, considering the circumstances, the court found a partial restraint void. 192. Trustees of Church Property of the Diocese of Newcastle v Ebbeck (1960) 104 CLR 394. 193. Clayton v  Ramsden [1943] AC 320. By comparison, a similar condition regarding the Jewish faith was found not to be void in Re Tuck’s Settlement Trusts [1978] Ch 49. 194. Blathwayt v Baron Cawley [1976] AC 397; [1975] 3 All ER 625. 195. Harpum, Bridge and Dixon, Megarry and Wade: The Law of Real Property, note 52 above, p 66. See also P Butt, ‘Testamentary Conditions in Restraint of Religion’ (1977) 8 Sydney Law Review 400.

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Meanwhile, in Ellaway v  Lawson196 the court found a condition stating that that the applicant would not receive a bequest until (a) she divorced her husband or (b) her husband died, was not a void condition. By applying Ramsay v Trustees Executors and Agency Co Ltd,197 the court concluded that the standards of ordinary and decent persons would prevent such conditions from providing an incentive for divorce.

Fee tail 3.58  The fee tail — or, as it is sometimes called, the ‘estate tail’ or ‘entail’ — is another estate of freehold and inheritance. It was, however, only heritable through a line of lineal heirs. Collateral heirs, such as brothers and sisters, were excluded. It was different from the fee simple in that the sequence of inheritance was defined and restricted (ie, it was not ‘simple’). One purpose of the estate tail was to keep the estate locked into a certain branch of a family.198 A fee tail was expressed in terms such as ‘To Mary and the heirs of her body’. When the line of lineal descendants who could take by virtue of the fee tail had run out, the interest reverted to the donor and his or her heirs. The line of lineal descendants could be further specified by gender if desired, causing only female issue or alternatively male issue to inherit.199 Determinable limitations or conditions subsequent could also be added to restrict grants of fee tail estates.200 Initially, the common law treated fees tail as though they were merely fee simple interests subject to a condition, that condition being that the heirs of the specified class existed. As soon as an heir of the specified class was born, the common law treated the condition as having been satisfied. It followed from this that the interest held was an unfettered fee simple which could be alienated. If the interest could be alienated by the donee or one of his or her heirs, the wishes of the donor could be defeated. Future heirs were deprived of their interest, and the interest did not revert to the donor and his or her heirs on a failure of heirs of the donee. The Statute of De Donis Conditionalibus 1285 rectified this so as to heed the wishes and intention of the donor.201 The statute provided that, in the circumstances outlined above, on the donee’s death, the land should pass to the donee’s issue, but if there were no issue or the line of issue ran out then the land should revert to the donor. Although the holder of the fee tail could still alienate it, that alienation was restricted by the fact that the interest created by the alienation only lasted as long as the alienor’s life. When the line of issue ran out, the interest in remainder202 (the fee tail 196. Ellaway v Lawson [2006] QSC 170. 197. Ramsay v Trustees Executors and Agency Co Ltd (1948) 77 CLR 321. 198. Butt, Land Law, 6th ed Lawbook Co, Sydney 2012, p 137, cites Plucknett and Simpson in support of the view that the fee tail had its origins in the maritagium or marriage settlement. He suggests that the fee tail was designed to benefit the daughter of the donor, her husband and their issue. For a literary example of the operation of an entailed estate, see Jane Austen, Pride and Prejudice, Collins, Sydney, 2010. 199. See 3.77–3.78. 200. See discussion of determinable and conditional interests later in this chapter at 3.44–3.57. 201. De Donis Conditionalibus was received law on ‘settlement’ in Australia. See Allison v Petty (1899) 9 QLJ 125 at 129. 202. Remainders are discussed later in this chapter at 3.99.

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being an interest less than a fee simple) reverted to the donor or, alternatively, passed in remainder to another person who might have been specified. In practice, the fee tail came to be an inalienable estate. Because of this, the tenant in fee found it a less than useful estate, but the large and powerful families, who wished to use the fee tail to tie up wealth in particular family branches, were loath to permit alteration to it. Once again lawyers developed creative responses to overcome the restrictions. In particular, they relied on fictitious procedures and used the common recovery and the fine to bar the rights of the specified line of descendants and anyone taking in reversion or remainder.203 The result was that the fee tail was converted into a fee simple. In Australia, the fee tail was rarely used, partly because our history was that of a traditional Indigenous community meeting with a penal colony. Established wealthy landed families did not form the upper echelon of society in Australia, so there was little need to employ aspects of the law, such as the fee tail, which preserved the rights of such a group. In New South Wales, the fee tail can no longer be created.204 The result of an attempt to create a fee tail is the creation of a fee simple. Further, s 19 of the Conveyancing Act 1919 (NSW) converted any pre-existing fees tail into fee simple estates, while De Donis Conditionalibus itself was repealed in New South Wales by the Imperial Acts Application Act 1969 (NSW).205

Life estate 3.59  The life estate is an estate of freehold, but it is not an estate of inheritance.The fact that the word ‘fee’ is absent from its name is an indication of this. The life estate ceases on the death of the grantee, and the reversion passes to the grantor or to the tenant in remainder. The life tenant is entitled to possession of the land during his or her lifetime. Possession may take the form of physical possession or possession of rents and profits through leases, licences or agistment. Life estates can either be ordinary or pur autre vie.206 The estates can be subdivided further into absolute, determinable or conditional.207 Life estates may also arise by dower and curtesy (at 3.62–3.63). 3.60  Ordinary life estate  There are two types of life estates that can be created by express grant (in a settlement or will): (i) the ordinary life estate; and (ii) the life estate ‘pur autre vie’. The former simply arises when a grant is made in the form ‘To A for life’. A receives a life estate; it terminates when A dies. This type of estate is sometimes used in wills where the 203. For an account of how these actions worked, see  Harpum, Bridge and Dixon, Megarry and Wade: The Law of Real Property, note 52 above, pp 72–74; Butt, Land Law, note 40 above, pp 140–2; MA Neave, CJ Rossiter and MA Stone, Sackville and Neave Property Law: Cases and Materials, 5th ed, Butterworths, Sydney, 1994, p  171. (Note that this is not discussed in later editions of Sackville and Neave Australian Property Law. See note 164 above.) 204. This is the same in Queensland,Victoria and Western Australia. 205. It was also repealed in Queensland and Victoria.The effect has been to give greater weight to the statutory provisions dealing with fees tail. 206. This term is explained at 3.61. 207. See Figure 3.3.

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testator does not wish to create an estate of inheritance. For example, where the testator has children from an earlier marriage, and wishes to provide for them in the long term, he or she may grant those children a fee simple estate in remainder, leaving a preceding life estate to his or her subsequent (ie, later) spouse. The life estate is also sometimes used in the context of retirement villages so as to provide security of tenure for residents. It may also exist in the context of a constructive trust. 3.61  Pur autre vie  The life estate pur autre vie arises when either: • the original grant measures the life estate against the life of another person rather than the grantee himself or herself; for example, ‘To A during the life of B’; or • when the present life tenant transfers the life estate. In old French, the words pur autre vie mean ‘through the life of another’. Hence, the life estate exists through the life of another, or is measured against the life of another. The ‘other’ person is not the present holder of the actual life estate. For example, if a grant is made ‘To A for life’ but A then transfers his or her interest to B, B holds an interest only for as long as A lives. At the expiration of A’s life, B’s interest determines (ends), although B might still be living. A is called the cestui que vie208 and B is called the life tenant pur autre vie. Originally, difficulties arose when the tenant pur autre vie (B in the above example) died before the cestui que vie (A in this case). This meant that the person whose life was measuring the life estate, A, was still alive, but the person in whose hands the estate had rested, B, was dead. However, because this was not an estate of inheritance technically the interest could not pass from the tenant pur autre vie, B, to his or her heirs. The way the law dealt with this problem was to treat the land as being without a tenant and, consequently, open to claim by the first person to obtain seisin of it by occupation alone. This approach was known as the doctrine of ‘general occupancy’ because anyone could claim the land. If, however, the grant of a life estate to B was phrased in terms of ‘To B and his heirs for the life of A’, on B’s death B’s heir could enter, but as a ‘special occupant’, rather than an heir.209 In both cases, the term used to describe the processes by which the new tenant took was the ‘doctrine of occupancy’. Since the Statute of Frauds 1677, the doctrine of general occupancy no longer exists. Section 5 of the Wills, Probate and Administration Act 1898 (NSW) provided that life estates pur autre vie were capable of being devised; however, this section was repealed by the Succession Act. Section  4 of the Succession Act  2006 permits ‘property to which the person is entitled at the time of the person’s death’ to be devised. This would appear to include a life estate pur autre vie. Presumably, life estates pur autre vie may also pass on intestacy pursuant to s  40 of the later re-named Probate and Administration Act  1898. Naturally, the life estate pur autre vie still determines when the person whose life is used as the measuring life dies. 208. Old French for ‘he who lives’. 209. The person was prevented from entering as an heir because the estate was not one of inheritance. On special occupancy, see Re Underwood Estate Acts and Account (No 2) (1888) 9 LR (NSW) (Eq) 105 at 111.

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3.62  Dower  This form of life estate was created by operation of law, rather than by express grant. It provided for a widow to receive one-third of her husband’s land for life. The husband had to have been seised of either a fee simple or a fee tail estate and had to have been in possession solely or as a tenant in common during the marriage in order for dower to apply. Finally, it must have been possible for heritable issue of the marriage to have been born. It did not matter that they had not actually been born. If land had been granted ‘To A and the heirs of his body begotten on X’,210 but A had married F and not X, F could not claim dower. Following the Dower Act 1837 (NSW), dower was defeasible by alienation. Further, equitable interests in possession were subject to dower (whereas prior to that Act no dower could be taken out of equitable interests).211 Dower was seen as a means by which women could be provided with security but, in a competition between this objective and the push for fewer restrictions on the free alienability of land, the latter won the day.212 Dower is now obsolete in New South Wales.213 3.63  Curtesy  Curtesy describes the life estate that a widower took, by the curtesy of England, on his wife’s death.214 Where the widow (on the basis of dower) was entitled to only one-third of her husband’s property, the widower (on the basis of curtesy) was entitled to the whole of his late wife’s property. In relation to curtesy, equity always followed the law and hence curtesy could be taken out of the widow’s equitable estates. One precondition to the widower taking such a life estate was that his wife must have been entitled to an estate of freehold either solely or by virtue of a tenancy in common, but not by way of joint tenancy.The wife must also have borne live issue who were capable of inheriting the land. Further, the land must not have been disposed of in a will or inter vivos. Since a wife could not alienate her property without her husband’s agreement and could not devise it without her husband’s consent, this requirement could often be satisfied with a little planning. Curtesy has been abolished in New  South  Wales, but some of the policy reasons behind dower and curtesy have been incorporated into modern day legislation, such as the Succession Act.215 That Act allows adjustment of the testator’s will to accommodate 210. See Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 52 above, p 50. 211. Historically equity did not follow the law in relation to dower. See Chaplin v Chaplin (1773) 3 P Wms 229, which involved a trust estate. 212. A Buck, ‘Women, Property and English Law in Colonial New South Wales’ in D Kirby (ed), Law and History in Australia, La Trobe University, Melbourne, 1987, Vol IV; ML Fellows, ‘Wills and Trusts: The Kingdom of the Fathers’ (1991) 10 Law and Inequality 137 at 146–50. Interestingly, there was no dower on copyhold tenures, but in many manors there was a custom for widows to have freebench, which was similar to dower. See Harpum, Bridge and Dixon, Megarry and Wade: The Law of Real Property, note 52 above, p 50. 213. Conveyancing Act 1919 (NSW) s 21. See also Probate and Administration Act 1898 (NSW) s 52. For a more detailed account of dower, see Butt, Land Law, note 40 above, pp 149–50. 214. See E Coke, Coke Upon Littleton, 19th ed, with notes by F Hargraves and C Butler, 1832 (Co Litt); cited in Harpum, Bridge and Dixon, Megarry and Wade: The Law of Real Property, note 52 above, p 78. Harpum, Bridge and Dixon observe (at p 29) that ‘Littleton’s Tenures was first printed in or about 1481; Sir Edward Coke’s commentary was first published in 1628)’. 215. Section 52 of the Probate and Administration Act denies a right of dower and curtesy, but Pt 3 of the Succession Act permits adjustments to wills on the basis of a range of circumstances.

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the interests of parties for whom, subject to particular requirements, the court believes it would have been appropriate for the testator to have made some provision. At common law, several rights attach to life tenancies. For example, a life tenant has the right to income from the property, such as when the property is leased or generates income from a farm.216 A legal life tenant is also entitled to possession, while an equitable life tenant is entitled to possession in more restricted circumstances.217 Where a life tenant dies, his or her personal representatives are entitled (with some restrictions) to exercise the right of emblement, a right that allows them to enter the land and reap the crops sewn by the life tenant before his/her death.218 In England, the life tenant also had various rights in relation to timber on the land but the position on that issue is less clear in Australia.

Doctrine of waste 3.64  The grant of a life estate is different from the grant of a fee simple estate in several ways, including because the grantor of the former retains a continuing interest in the land, which may or may not be disposed of in favour of a third party.219 While the grantee of a life estate will wish to use the land during his or her lifetime, exploiting it to gain profit or advantage, the grantor will have a different agenda.The grantor will wish either to have the land improved, or at least retained in its original condition, so that when it is returned to him or her (or passes in remainder to the person he or she has designated) it will not be devalued. Clearly, the interests of the grantor and grantee of the life estate are not necessarily compatible, and in order to resolve potential conflict the doctrine of waste was developed. Waste in this context means permanently altering the land.220 Initially, the doctrine of waste was applicable only to life estates that were acquired by virtue of dower or curtesy. If waste were committed by a tenant holding pursuant to an express grant, it was not actionable at common law. This was so because it was thought that the grantor of an estate expressly granted, having not availed himself or herself of the opportunity to impose a liability for waste, should bear the consequences.221 The common law position altered as a result of the Statute of Marlborough 1267, a statute received as part of the law of New South Wales and operating today in amended form as s 32 of the Imperial Acts Application Act. Marlbridge, as the statute was sometimes called, made life tenants and tenants for years liable for waste unless they had a special licence to commit waste. Where a life tenant had a special licence to commit waste, he or she was described as being ‘unimpeachable of waste’. A tenant in remainder who wishes to prevent waste continuing is able to bring an action before his or her own estate vests in possession. The remedies available include 216. Re Burns, 1918, 14 Tas LR 83. 217. See Powys v Blagrave (1854) 4 De G M & G 448; 43 ER 582. 218. See cases such as Graves v Weld (1833) 5 B & Ad 105; 110 ER 731. 219. The interest that the grantor retains is called the reversion, discussed at 3.98. 220. West Ham Central Charity Board v East London Waterworks Co [1900] 1 Ch 624 at 635.Waste means altering the nature of land so as either to improve or harm it. See Co Litt 53a, b, note 166 above. 221. Woodhouse v Walker (1880) 5 QBD 404 at 406.

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an injunction, damages and restitution. An injunction operates to prevent the tenant in possession from committing waste. Damages provide monetary recompense for the harm or loss caused by the waste, and restitution results in a return to the tenant in remainder of the profits gained from the waste. At common law, there are three types of waste: (i) permissive; (ii) voluntary; and (iii) ameliorating. There is also the waste that is recognised by a court exercising its equitable jurisdiction. 3.65  Permissive waste  Permissive waste occurs when the life tenant permits the property to decay.This is usually demonstrated by allowing the property to fall into a state of disrepair.222 A life tenant is not liable for permissive waste unless the instrument which created the life tenancy specifies that the liability to repair falls on the life tenant.223 Hence, if liability is not imposed by the instrument creating the estate, the property is allowed to fall into a state of disrepair without liability attaching;224 for example, ditches do not have to be cleaned out to prevent foundations rotting,225 and buildings do not have to be repaired.226 3.66  Voluntary waste  Voluntary waste occurs where there is a positive or deliberate act that results in harm to the property. The consequence of the act means that the tenant in remainder or the reversioner will receive an interest of less value than if the act had not occurred. Examples of voluntary waste include demolishing the internal walls of a house with the result that the character of the house is altered;227 or opening and working a mine that results in the life tenant acquiring more; and the tenant in remainder or the reversioner acquiring fewer benefits than intended.228 The life tenant will be liable for voluntary waste unless the instrument creating the life estate exempts him or her. This has been so since the commencement of the Statute of Marlborough in 1267.229 It should be noted, however, that even a life tenant who is unimpeachable for waste at common law may still be found liable for equitable waste. 3.67  Ameliorating waste  Ameliorating waste describes conduct by the life tenant that improves the land.230 By definition, such cases raise the issue of whether the conduct is 222. The issue of permissive waste is not relevant to leasehold tenancies because statute imposes a covenant that requires the tenant to maintain the property in good repair. See Chapter 11. 223. Powys v Blagrave (1854) 4 de GM & G 448; 43 ER 582. 224. Re Cartwright; Avis v Newman (1889) 41 Ch D 532 at 536; Sclanders v Cole (1918) 18 SR (NSW) 216 at 217. 225. Sticklehorne v Hatchman (1586) Owen 43. 226. Meux v Cobley [1892] 2 Ch 253. 227. Marsden v Edward Heyes Ltd [1927] 2 KB 1 at 8. 228. Saunders’ Case (1599) 5 Co Rep 12A; 77 ER 66; Spotswood v Hand (1874) 5 AJR 85. Note that if the mine were already working, then continuing to work it would not be classified as permissive waste because the grantor would have intended the life tenant to carry on enjoying the profits of the mine. See Dashwood v Magniac [1891] 3 Ch 306 at 306–61 per Lindley, Bowen and Kay LJJ. 229. See Imperial Acts Application Act 1969 (NSW) s 32. 230. Doherty v Allman (1878) 3 App Cas 709; Meux v Cobley [1892] 2 Ch 253; Hockley v Rendell (1909) 11 WALR 170.

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indeed properly described by the term ‘waste’.231 Naturally, it is unusual for the tenant in remainder or the reversioner to complain of improvement to the land. Hence, cases of ameliorating waste arise only rarely. Nevertheless, the court did find that ameliorating waste occurred when a disused corn store was converted into dwelling-houses232 and when a farm was converted into intensive market gardens.233 However, in these particular cases it was — and, indeed, generally would be — clearly inappropriate for the court to award damages when no loss had been suffered.234 It would also be inappropriate for the court to grant an injunction235 unless there was waste of a ‘substantially injurious nature’.236 One circumstance where it has been suggested that ameliorating waste might conceivably occur and an injunction might be appropriate is where an historical building is demolished to make way for a modern apartment block.237 If the apartment block were more valuable than the historic building then, presumably, the only way the court could find ameliorating waste would be if it were prepared to adjudge the historical building aesthetically superior. Such an exercise would clearly take the court out of its familiar legal terrain and into a sphere where its credentials may be said to be questionable and its skills undeveloped. 3.68  Equitable waste  Equitable waste describes the waste that a life tenant is allowed to commit at common law but which equity will restrain. Hence, although a person may, at  common law, be regarded as unimpeachable for waste that has been occasioned by obvious acts of destruction, if equity regards it as unconscionable to commit these acts, it will impose liability for them on the life tenant. Accordingly, a life tenant, who at common law had the right to strip lead, iron, glass and timber from a castle, was found in equity to be liable for waste.238 Further, a tenant who was not liable at common law for felling trees that had provided both shelter and aesthetic appeal was found to be liable in equity.239 Section  9 of the Conveyancing Act provides statutory recognition of the concept of equitable waste.That section also provides that a life tenant can be exempted from liability for waste where the instrument conferring the life estate unequivocally provides for this.

231. Jessel MR in Jones v Chappell (1875) LR 20 Eq 539 at 542 said that ‘in order to prove waste you must prove an injury to the inheritance’. 232. Doherty v Allman (1878) 3 App Cas 709. 233. Meux v Cobley [1892] 2 Ch 253. 234. Damages are a common law remedy which provide monetary recompense for harm suffered. Damages have made a foray into the equitable jurisdiction through the operation of what have become known as ‘Lord Cairns’ damages’. 235. An injunction is a remedy of the Court of Equity and either mandates or prevents certain acts. 236. Doherty v Allman (1878) 3 App Cas 709. 237. Butt, Land Law, note 40 above, p 156. 238. Vane v Lord Barnard (1716) 2 Vern 738; 23 ER 1082. 239. Gage v Bulkeley (Packington’s Case) (1744) 3 Atk 215; 26 ER 925; Marker v Marker (1851) 9 Hare 1 at 17; 68 ER 389 at 396; Turner v Jackson (1856) 1 VLT 127; Weld-Blundell v Wolseley [1903] 2 Ch 664.The exception to this rule lay where it was necessary to cut down trees to preserve the remaining trees. See  Baker v Sebright (1879) 13 Ch D 179.

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3.72

Words of limitation 3.69  Prior to the introduction of the Torrens system in New South Wales (see Chapter 8) the granting of estates was governed by old system law. Indeed, even after the introduction of the Torrens system, old system title (with its English heritage) continued to govern land that had not been converted to Torrens title.240 In order to appreciate which kind of old system title freehold estate had been passed by a grant inter vivos (or later via will) it was necessary to look to the particular form of words used. 3.70  At common law, the rules of conveyancing were very strict, and certain specific words had to be used in order to create the kind of freehold estate one intended. Different words were applicable for a fee simple, a fee tail and a life estate. The phrase ‘words of limitation’ refers to the words that defined the extent of the estate, while ‘words of purchase’ defined the person or persons on whom the estate was conferred. The consequences of a failure to use the correct words could be very severe. For example, the failure to use the correct words of limitation to create a fee simple would result in the grant being construed as a life estate, by default. 3.71  Historically, the courts treated grants inter vivos and dispositions under a will very differently. The courts were far stricter in regard to grants made inter vivos. In those circumstances, the words of limitation had to be correct and deviations were not tolerated, whereas, in wills, the courts were satisfied if the intention of the testator were clear. In New South Wales, since 1 July 1921, statutory provisions have made rigid compliance with formulaic verbal requirements unnecessary in deeds;241 however, in order to understand the way in which the amending provisions operate, it remains necessary to understand which words were historically required for the creation of different estates (ie, which words of limitation were needed.)242 3.72  At this point, it should be noted that the Torrens system has never required adherence to words of limitation in regard to registered interests. Under the Torrens system, title is created by registration and not by properly attested deeds, as is the case under old system title. Further, the Torrens system traditionally relied on the registration of a standardised memorandum of transfer to transfer property.The memorandum of transfer simply referred to ‘an estate in fee simple’ without any mention of words of limitation.243 Should a lesser interest, such as a life estate, have been the subject of the transfer, the memorandum of transfer is simply amended accordingly so as to reference that type of estate. Again, words of limitation are unnecessary.244

240. The conversion of old system land to Torrens was remarkably slow. In fact, a few small pockets of old system land still exist in New South Wales today. 241. Conveyancing Act 1919 (NSW) s 47(1). 242. For example, interpreting s 47 of the Conveyancing Act (discussed below at 3.75) requires an understanding of the material in 3.74. 243. See Chapter 8. 244. There is a divergence of views on whether before 1920, it was necessary to use words of limitation in relation to unregistered interests under the Torrens system. See P Butt, Land Law, 4th ed, Thomson Legal

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Fee simple and words of limitation 3.73  Disposition inter vivos  As noted above, during the Middle Ages, land was conveyed by ‘feoffment with livery of seisin’. This procedure involved: the passing of the estate; and a ceremony that handed over possession. The ceremony required both parties to be present either on or near the land. A clod of dirt, a twig or the branch of a tree was then handed to the transferee as a symbolic gesture that the interest had passed hands.245 These acts, together with a declaration of delivery, marked the receipt of seisin. The law, however, also needed a way to distinguish what kind of interest was conveyed. For example, it needed to distinguish between freehold estates, because some (like the fee simple and fee tail) were heritable and others (like the life estate) were not.The way of distinguishing between the estates was, as noted above, by use of the correct words of limitation. 3.74  In order to dispose of a fee simple estate inter vivos at common law, it was essential to use the precise terminology, which included the word ‘heirs’ after the grantee’s name.246 Even the slightest variation from this precise terminology would be fatal. For example, leaving off the ‘s’ and writing ‘To A and his heir’ (instead of ‘To A and his heirs’) was insufficient for the interest to be construed as a fee simple estate.247 In the phrase ‘To A and his heirs’, the words ‘and his heirs’ were called ‘words of limitation’, while the words ‘To A’ delineated the person who was to receive the interest, and were called ‘words of purchase’. Although it may seem counter-intuitive, the words ‘and his heirs’ did not actually give the heirs any interest in the land at all. These words simply set the boundaries of the type of estate that had been created, that is, a fee simple (as noted earlier, a fee simple being an estate that could descend to heirs). Indeed, at the time of the grant or conveyance it was technically impossible for A’s heirs to acquire an interest because an heir cannot be ascertained until such time as the ancestor (the father, uncle or whoever it may be) dies. 3.75  In New South Wales, since 1 July 1920 when the Conveyancing Act came into effect, these rigid requirements have not applied to dispositions inter vivos. Section 47(1) permits the words ‘fee’ or ‘fee simple’ to describe adequately a fee simple estate, and hence the words ‘and his [or her] heirs’ are no longer necessary. Section  47(2) also permits a description of an estate that omits words of limitation entirely to be construed as a fee simple estate, unless a contrary intention can be gleaned from the conveyance. Finally, s 19(1) has the effect of creating a fee simple estate from any attempt to create what would once have created a fee tail estate. and Regulatory Ltd, Sydney, 2001, p 108. Note that practice and procedure relating to registration has been revised and amended as part of the introduction of eConveyancing. See Chapter 8. 245. The ceremonial handing over of possession was called ‘livery of seisin’. 246. Simpson, A History of the Land Law, note 16 above, p 52. 247. Re Davison’s Settlement [1913] 2 Ch 498.

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3.76  Testamentary dispositions  From 1540 onwards, interests in land could be devised under a will, pursuant to the Statute of Wills 1540. Such dispositions never required the same rigid adherence to exact phraseology as did dispositions inter vivos. It has been suggested that this was because the Statute of Wills permitted a testator to devise land ‘at his free will and pleasure’,248 a phrase which the courts interpreted as requiring a less draconian approach. The will merely had to demonstrate an intention to pass a fee simple estate for a fee simple to be construed. Hence, expressions such as ‘To A in fee simple’ and ‘To A forever’ were regarded as sufficient. By comparison, a phrase such as ‘to A’ was prima facie insufficient to demonstrate that the testator intended creating an estate of freehold that could be freely inherited. In those circumstances, a life estate would be created. Before 1840 in New South Wales, the onus was on the devisee to prove that the testator intended to pass a fee simple estate. However, statutes operating in New  South  Wales since 1  January  1840 ultimately reversed this onus, so that a disposition that neglects to include appropriate words of limitation will now be construed as a fee simple estate unless a contrary intention is evidenced.249

Fee tail and words of limitation 3.77  Dispositions inter vivos  The word ‘heirs’ had to be used to create a fee tail because like the fee simple estate this estate was also one of inheritance. However, the fee tail estate included further words, which had the effect of restricting the line of inheritance to lineal descendants of the grantee.These further words were termed ‘words of procreation’. Hence, in a grant ‘To A and the heirs of his [or her] body’ the word ‘heirs’ indicated that a fee was being created, while the words ‘of his [or her] body’ indicated that the fee was restricted rather than simple. Some flexibility was permitted in regard to the words of procreation. ‘To A and the heirs of her body’, ‘To A and the heirs begotten by her’ and ‘To A and the heirs of his flesh’ were acceptable, but ‘To A and any children borne of A’ was unacceptable because the word ‘heirs’ was missing, and hence it was impossible to create a fee. Instead, a life estate was created by default. The fee tail estate could be restricted further still so that it passed to lineal descendants on the basis of gender.This was achieved by incorporating the words ‘male’ or ‘female’; for example, ‘To A and the heirs female of his body’. Other words could also be incorporated to ensure that the fee tail passed only to lineal descendants of a specified parentage; for

248. See Butt, Land Law, note 40 above, p 130. 249. In 1840, New South Wales adopted ss 28 and 34 of the English Wills Act 1837 (Imp). These were later embodied in s 24 of the Wills, Probate and Administration Act 1898 (NSW). In turn, s 24 of the Wills, Probate and Administration Act is now embodied in s 38(1) of the Succession Act, which deletes mention of the specific kind of estate and simply states:

 A disposition of real property to a person without words of limitation is to be construed as passing the whole estate or interest of the testator in that property to that person.

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example,‘To A and the heirs male of his flesh begotten to M’. Clearly, words of procreation were capable of severely restricting the scope of the fee tail estate created.250 In New  South  Wales, until 1920, when s  19(1) of the Conveyancing Act provided that fee tail estates could no longer be created, words of limitation had to be rigorously complied with. Further, s 19(2) of the same Act converted most entailed estates existing at 1 July 1920 into fee simple estates. Any entailed estates that were not caught by this section were ultimately caught by s 19A of the Conveyancing Act, which was inserted by an amendment passed after the Imperial Acts Application Act had been passed. The Imperial Acts Application Act repealed the Statute of De Donis Conditionalibus 1285 from 1 July 1971 onwards; the latter being the statute that had permitted the creation of entailed estates in the first place. 3.78  Testamentary dispositions Consistent with the law regarding the creation of fee simple estates and life estates, the courts did not rigidly enforce the words of limitation where testators sought to create fee tail estates in wills. Hence, expressions that would have been insufficient to pass a fee tail inter vivos were capable of passing a fee tail in a will. For example, ‘To A and his issue’ or ‘To A in fee tail’ were acceptable to pass a fee tail if contained in a testamentary disposition. Section 19 of the Conveyancing Act also applies to fee tail estates purportedly created by a will, as well as to grants and conveyances inter vivos. It deems that an interest that, prior to 1920, would have been a fee tail, is, after 1920, a fee simple estate.251

Life estate and words of limitation 3.79  Dispositions inter vivos  Before 1920, if a grantor made a grant using the words ‘To A for life’, a life estate was created. Further, before 1920, if the grantor attempted to create a fee simple but failed to use the proper words of limitation, a life estate was created by default. In New  South  Wales, since 1920, a life estate can only be created if clear words of intention to create a life estate are evidenced;252 for example, ‘To A for life’. Since 1920, a life estate is no longer the default estate. (As noted earlier, the fee simple now bears this role.) Naturally, if a life estate pur autre vie is being created as a result of a transfer it is not necessary to demonstrate clear words of intention, because a life estate is the only kind of estate that exists to be transferred. 3.80  Testamentary dispositions  In New South Wales, since 1840, a will without any words of limitation has been effective to pass a fee simple, unless the rest of the will displays 250. The fee tail estate was a helpful tool of social engineering. Refer to Chapter 1 and the discussion of how property may be used to shape society. 251. As theVictorian Law Reform Commission, Review of the Property Law Act 1958 — Final Report, Melbourne, 2010, p 80 [6.3]–[6.4] noted, not all states took quite the same approach (accessed 8 June 2022),. 252. Conveyancing Act 1919 (NSW) s 47(2).

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a contrary intention.253 If a party wishes to demonstrate a contrary intention, he or she bears the onus of proof. The burden of ‘proving’ a life estate under a will is easily removed by a clear intention to create a life estate being exhibited; for example, ‘To A for life’ or ‘To A for as long as he or she lives’.254

Equitable estates and words of limitation 3.81  The previous discussion of words of limitation in regard to fee simple estates pertained to common law requirements. Now we consider the position in regard to equitable interests. In order to appreciate this fully, we must understand something of the development of the Court of Chancery and the emergence of equitable interests. 3.82  Equitable interests were only possible because first the King and later the Court of Chancery gave recognition to them.255 Prior to 1875, the common law of England was administered by common law courts such as the King’s Bench and Common Pleas.256 These courts recognised and enforced rights known as ‘legal’ rights. Bringing actions in the common law courts was often difficult, expensive and time consuming, due largely to a complicated and rigid system of writs. So as to bypass the writ system and in the pursuit of justice, parties began to petition the King directly. Initially, the monarch and his council heard these cases, but in time the task was delegated to the Chancellor, who presided over the Court of Chancery. This court sought to temper the rigours of, and fill the gaps in, the common law. At least initially, the jurisdiction sought to provide a contextualised and individualised form of justice.257 Rights enforced in this court were known as ‘equitable’ rights. Hence, two parallel systems of justice developed: common law, on the one hand, and equity, on the other. 3.83  When the Judicature Act 1873 (UK) was passed, it had the effect of merging the administration of common law and equity. Although separate substantive bodies of law continue to exist in the form of common law and equity, today they are heard by a single court exercising jurisdiction over both.258 253. This was possible under s 24 of the Wills, Probate and Administration Act 1898. Under s 38(1) of the Succession Act 2006, a will without words of limitation is effective to pass the whole of the testator’s estate or interest unless there is a contrary intention. 254. Note that the rule in Shelley’s Case (emerging from Shelley’s Case (1851) 1 Co Rep 93b; 76 ER 206) was relevant to limitations made in New South Wales before 1920. The rule demonstrated the rigidity of the common law in regard to words of limitation. For details of how it operated, see 3.89. 255. See Chapter 6 for a fuller discussion of the development of equity. 256. Prior to the Judicature Acts, common law and equity were administered in separate courts. These two courts are examples of common law courts. See  JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, 5th ed, LexisNexis Butterworths, Australia, 2015, pp 36–44. 257. There is a view that the more the Court of Chancery developed, the more hidebound it became, so that ultimately it emerged as much bound by precedent as the common law. 258. Note that the English Judicature Acts were replicated in the New South Wales jurisdiction. For a discussion of this process, see  Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, note 256 above, pp 36–47.

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3.84  One of the finest developments of the Court of Equity is the trust. It is a device which allows A to hold a legal interest in property while B holds an equitable interest in the same property. The holder of the legal interest is known as the ‘trustee’ and the holder of the equitable interest is known as the ‘beneficiary’. The device permits property to be dealt with in a very flexible manner.259 3.85  Now that we appreciate a little of what is meant by the term ‘equitable interest’, we return to discuss the relationship between words of limitation and equitable interests. Historically, whether specific words of limitation were needed for equitable interests depended  on whether the trust behind which the equitable interest existed was executed or executory. In this context, an executed trust was one where nothing further needed to be done to create it, while an executory trust required some further instrument to be executed in order for the equitable interests to be defined.260 In regard to executed trusts, if the trust were drawn in technical language, requirements for the correct words of limitation were strictly enforced. Other sections of the instrument could not be relied upon to interpret the words contained in the limitation. 3.86  If, however, an executed trust was not drafted in technical language, but it was still possible to glean the nature of the intended interest from the instrument creating it, equity was likely to give effect to that intention, even if the correct words of limitation were absent.261 3.87  In regard to executory trusts, equity again displayed flexibility. It was prepared to look for evidence of the settlor’s intention concerning the kind of interest to be created, and it was prepared to uphold this intention despite the absence of the technically correct words of limitation.262 3.88  Since 1920, deeds that create either legal or equitable fee simple estates have not had to comply with the rigid requirements that dictated the use of specific words of limitation.263 However, it has been suggested that if the trust is not created under a deed,264 then the pre-1920 regime may still apply.265

The Rule in Shelley’s Case 3.89  For completeness of understanding, it is useful to refer briefly to the rule in Shelley’s case, which is a rule associated with the interpretation of words of limitation. The rule is 259. See Chapter 6 for further discussion. 260. See Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 52 above, p 439, fn 257. 261. Re Bostock’s Settlement; Norrish v Bostock [1921] 2 Ch 469 at 480–1; Sexton v Horton (1926) 38 CLR 240 at 247–8. 262. See Sackville-West v Viscount Holmesdale (1870) LR 4 HL 543; Sexton v Horton (1926) 38 CLR 240 at 250. The settlor is the party who creates the trust. 263. Section  47 of the Conveyancing Act means that, since 1  July  1920, both legal and equitable interests created in a deed do not have to comply with strict words of limitation. 264. For example, by way of a written declaration of trust but not in a deed. 265. Moore, Grattan and Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, note 167 above, p 57. See also Butt, Land Law, note 40 above, p 133.

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not applicable in New South Wales to limitations made after 1920, when it was abolished by s 17 of the Conveyancing Act 1919.266 Hence, today the rule’s main importance is to scholars of the legal history of land law. The rule took its name from a 1581 case where it was formulated267 and which demonstrated the rigidity of the common law in regard to words of limitation. The rule applied to dispositions by will and grants inter vivos. If for example, a grant or will gave: 1. ‘To A for life, remainder to his heirs’ or 2. ‘To A for life, remainder to the heirs of his body’ the court did not construe the grants as: a. A life estate followed by a fee simple; or b. A life estate followed by a fee tail Instead, the court construed them as: 1. A fee simple to A; and 2. A fee tail to A. Although the grantor’s or testator’s intention was clear, the words that purported to create an interest in the heirs were construed as words of limitation rather than words of purchase. The court treated the limitation as though the grantor or testator had written: 1. ‘To A and his heirs’; and 2. ‘To A and the heirs of his body’. The rule in Shelley’s case was a rule of law, not a rule of construction. Hence, it was compulsorily applied. It also applied either ‘mediately or immediately’. This meant that the rule was applied whether or not there was an intervening estate or interest between the estate of freehold and the remainder. For example, the remainder would be limited mediately where the grantor or testator wrote, ‘To A for life, remainder to B for life, remainder to the heirs of A’. In this case, A would have received a life estate in possession and B a life estate in remainder, while A took a fee simple in remainder.

266. For a brief discussion of the rule in Shelley’s case see Butt, Land Law, note 40 above, p131; Moore, Grattan and Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, note 167 above, pp 519–20. Note that R Megarry and H Wade, The Law of Real Property, 5th ed, Stevens & Sons, London, 1984, p 1161 (referencing HW Challis, The Law of Real Property, 3rd ed, 1911, p 154), provide a more detailed account of the rule in Shelley’s Case. They observe that a more detailed account still may be found in the 2nd edition of their book at p 60. See also D Smith, ‘Was there a Rule in Shelley’s Case?’ (2009) 30 Journal of Legal History 53. 267. Shelley’s case (1581) 1 Co Rep 88b; 76 ER 199. R Megarry and H Wade, The Law of Real Property, 5th ed, Stevens, London, 1984, p 116 state that an account of the case is given in HW Challis, The Law of Real Property, 3rd ed, 1911, p 154 and following.

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Estates of less than freehold — leasehold Historical development 3.90  Leaseholds are often referred to as estates of less than freehold but, historically, a leasehold was not recognised as an estate in land at all. Technically, it was classified as personalty rather than realty.268 Consequently, there were some circumstances where the lease was treated differently from other interests in land that were classified as realty. For example, on intestacy, realty was dealt with by the royal courts which employed feudal principles (such as primogeniture269) but personalty, by contrast, was dealt with by the manorial (baronial) courts, which, as we learned earlier in this chapter, operated at  a parochial level.  The manorial courts commonly relied on Roman law approaches. Hence, a leasehold on intestacy would be divided equally among the deceased’s next of kin but a fee simple estate would pass to the deceased’s heir. Ultimately, in New South Wales, most of these distinctions fell away, in large part because of the reforms contained in Lang’s Act.270 Categorisation of the lease as personalty also meant that if the lessee were evicted he or she had only contractual remedies against the lessor, for breach of contract.271 The evicted tenant could not recover possession by use of the possessory remedies, such as the assize of novel disseisin, because use of these remedies was dependent on the tenant having seisin. A leaseholder had possession but did not have seisin. (As noted above, for the purposes of this discussion seisin may be seen as possession of a freehold estate.) Bearing in mind the special position that land held in society, it is not surprising that an order for damages, rather than repossession of land, was seen by many leaseholders as an unsatisfactory remedy. 3.91  Developments in the law meant that, by the 15th century, the leaseholder could be protected from third parties, and not merely from the lessor with whom the leaseholder had contracted.272 This protection was provided through the action of ejectment. Although the leaseholder’s occupation came to be as effectively protected as that of the freeholder, it was too late to go back and reclassify a lease as a form of realty. Instead, leasehold interests continued to be categorised as personalty, albeit a type of personalty closely related to land.273 That is why, as perverse as it may seem, technically the hierarchy of estates dictates that a lease of 100 years’ duration remains inferior to a life estate. History 268. Personalty is not held by way of an estate. It is held absolutely. 269. Primogeniture caused the eldest son to take to the exclusion of his siblings. 270. Real Estate of Intestates Distribution Act 1862 (NSW). 271. For a discussion of this, see Harpum, Bridge and Dixon, Megarry and Wade: The Law of Real Property, note 52 above, p 40. Chambers points to the re-emergence of the contractual aspects of the lease, particularly by reference to the Residential Tenancies Act 1987 (NSW) and the importance that commercial tenancies have assumed: R Chambers, An Introduction to Property Law in Australia, 3rd ed, Sydney, Lawbook Co, Sydney, 2013, p 111. Note that the Residential Tenancies Act 1987 (NSW) has now been repealed and replaced by the Residential Tenancies Act 2010 (NSW). 272. The development of the remedy of trespass as relevant to leaseholders is complex. See Plucknett, A Concise History of the Common Law, note 16 above, pp 369–73. 273. Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 52 above, p 40. The authors (by reference to Littleton) also note that when leases became fully protected by the law of property they

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aside, in most circumstances today leases are, in practice, no longer seen as inferior to freehold estates. Legislative reforms have assisted the treatment of leaseholds.274 Yet, despite their genesis as personalty, leases have consistently been referred to as ‘estates’.275 This is somewhat anomalous, given that the doctrine of estates does not apply to personalty and, accordingly, at common law there is no facility for interests, such as life estates, to be carved out of leases.276 Hence, at common law, no remainders or reversions could exist in leases. Successive interests could only be created by virtue of subleases or with the assistance of equity, through a ‘use’ (which later developed into a trust).277

Key aspects 3.92  A lease necessarily involves a leaseholder, also known as a lessor (or sometimes by the gendered terms of landlord or landlady) and a lessee (also known as a tenant). A lease grants to the lessee the right of exclusive possession of land for a fixed duration. Leases contain mutual rights and obligations, called covenants.278 For example, the lessee has a right to possess the land during the term of the lease while the lessor has a right to regain possession on expiration of the lease. Other examples of covenants include the lessor’s covenant not to interfere with the lessee’s quiet enjoyment of the land. In return, the lessee will usually covenant to pay rent and keep the land in a state of good repair. Most leases contain both implied and express covenants.279 The interest that the lessor is left with after a smaller interest, such as a lease, has been carved out, is known as the ‘reversion’. Put another way, in the context of a lease, the reversion amounts to the lessor’s title minus the lessee’s interest. One of the key discriminators between leasehold and freehold title is duration. A leasehold is said to have a fixed duration based on blocks of time, whereas a freehold has an indefinite duration based on lives.280 In practical terms, this distinction is not always clearly evident. For example, some leases appear to have an indefinite duration, because they do not simply determine (end) on a fixed date. This point will become clearer as we examine the different kinds of leases. There are three main types of leases: 1. fixed-term tenancy; became estates but that it was too late for them to be reclassified. Note also that leaseholds are categorised as ‘chattels real’. 274. For example, Real Estate of Intestates Distribution Act 1862 (NSW) (Lang’s Act). 275. See Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 52 above, p 40. 276. In New South Wales, ss 68 and 69 of the Conveyancing and Law of Property Act 1898 (NSW) make an exception to the common law position and permit a life tenant to create a lease for a period of 10 years. 277. See Chapter 6. 278. See Chapter 11 for a fuller discussion of leases. 279. See Chapter 11. 280. Chambers makes this simple but nice point: Chambers, An Introduction to Property Law in Australia, note 271 above, p 111.

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2. periodic tenancy; and 3. tenancies at will and at sufferance.281

Fixed-term tenancy 3.93  A fixed-term tenancy or lease is one where the starting and ending points are known from the outset. In other words, those points fix the duration of the lease. The dates might be set by reference to the day, month and year, or by reference to other determinants — Christmas or university holidays, for example. Hence, a lease for three weeks, four years, or from Christmas Day until four days after Anzac Day would amount to a fixed-term lease. That the specific date is not specified at the outset does not matter if the date is ascertainable by reference to some other determinant. Further, a fixed-term lease does not require that time runs continuously. Hence, a series of blocks of time can still amount to a fixed-term lease. For example, a lease for the month of January over the next five years would be valid as a fixed-term lease.

Periodic tenancy 3.94  As the name suggests, a periodic tenancy is based on periods of time; for example, one week, one month or one year.This kind of lease is common in residential tenancies. For example, a tenant might first enter a fixed-term lease of one year from a set commencement date and thereafter move to a week-to-week, periodic tenancy.The periodic tenancy does not need to be formally renewed each week. That occurs automatically unless the lessor or lessee brings the tenancy to an end by a breach of covenant and/or the required notice. Although it is not necessarily obvious in advance when the periodic tenancy will end (because it may be renewed over and over again), it is still considered to be a lease of definite duration. This is because the tenant only has right to possession for the specified period. At the expiration of that period (eg, at  the end of the month), the lessor can reclaim possession and bring the lease to an end. Hence, the time when the lease can be brought to an end is known. If the period is not specified in the lease, it can be implied from what is usual in similar circumstances. Non-agricultural leases usually have their periods deduced from the payment periods applicable to the rent.282 For example, if rent has to be paid each week, the lease will be assumed to be a weekly periodic tenancy.283

Tenancies at will and at sufferance 3.95  A tenancy at will is created when it is understood that possession exists on the basis that either the lessor or lessee can bring the tenancy to an end at his or her will (or put another way, at any time).284 Although a tenancy at will may be created expressly, it is 281. The categories of leases outlined here are explored in more detail in Chapter 11. 282. Agricultural leases are often for one year so that crops can be harvested. 283. See Dockrill v Cavanagh (1944) 45 SR (NSW) 78. 284. Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR (NSW) 47.

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often implied by law. A tenancy at will commonly arises after a lease of another type (eg, a fixed-term lease) comes to an end and the tenant stays on (holds over) with the consent of the lessor. As noted, the general rule is that the tenancy is brought to an end when either party demonstrates that it is his or her will that the tenancy should end. Yet, somewhat contradictorily, in some circumstances it has been found that the tenancy will not determine until reasonable notice has been given.285 Although the lessee’s possession under a tenancy at will is consensual, and the lessee is able to enforce that possession against the rest of the world, he or she is unable to enforce it against the lessor. In that sense, the tenancy at will does not look like a lease at all; but on another view, the requirement of reasonable notice does perhaps make it look rather like a periodic tenancy with only a brief period. A tenancy at sufferance arises when a tenant ‘holds over’ without the lessor’s consent (or dissent). The only difference between a tenant at sufferance and a trespasser is that the tenant at sufferance’s original entry onto the premises was not wrongful. Leases are discussed more fully in Chapter 11.

Future interests 3.96  As we have seen, the doctrine of estates recognises that successive interests in land can exist. It, therefore, lays the groundwork for the recognition of future interests. By recognising that a grantor could grant an interest that was less than the one he or she held, the doctrine was compelled to recognise that something would be left over and retained by the grantor. If the grantor in so doing denied himself or herself a right to present possession (this being held by the holder of the lesser interest), it became possible to see interests in land as either present interests or future interests. 3.97  A present interest entitled the grantee to an immediate right to possession, use and enjoyment of the land. A future interest, on the other hand, delayed or postponed that right to possession to some time in the future. If the interest were a present interest, it was not subject to the technical and complicated rules to which a future interest was subject. Initially the common law recognised two types of future interests: 1. the reversion; and 2. the remainder. In both cases, the right to possession of the land arose in the future.

285. Grundel v Registrar-General (1990) 5 BPR 11,217 at 11,222, where a six-month notice period was needed for termination of a tenancy at will involving an elderly tenant who had been in occupation for 12 years.

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Reversion 3.98  As noted at  3.92, the reversion is what the grantor is left with after he or she has granted or carved out an estate less than the one he or she originally held.286 For example, if the grantor holds a fee simple estate but grants only a life estate to another, the grantor is left with the fee simple estate minus the life estate. That ‘residue’ has come to be known as the reversion. A reversion, although a present right in some ways, does not give a right to present possession.The right to present possession rests with the holder of the life estate, who has seisin. The reversion allows the grantor to take possession of the land some time in the future. In that sense, the reversion is a future interest. Thus, if G, the fee simple holder, grants ‘To A for life’, G has carved out a lesser interest for A in the form of a life estate.What is left in the hands of G, the grantor, is the reversion. There is no need for the grantor to grant the reversion specifically to himself or herself. It arises automatically by operation of law. A reversion is not the same as the grantor’s reverter that comes into play if the limitation in a determinable fee occurs. Neither is a reversion the same as the grantor’s right of re-entry, which arises when a condition contained in a conditional fee occurs. The reason for this is that the grantor has already passed the whole fee. He or she has not carved out an interest less than a fee that is passed to the grantee, while simultaneously holding a residue for himself or herself. The holder of a reversion has a present right to future enjoyment of the land and, in that sense, is said to have a future interest. (See Chapter 11 for reversions and leases.)

Remainder 3.99  A remainder is the interest in a grant that is to be taken by a grantee in the future, after the interest in possession has come to an end. For example, in a grant ‘To A for life, remainder to B and her heirs’, A has a present interest in possession, and B has an interest in remainder — in fact, a fee simple estate in remainder. Although B has a present right, his or her right to possession is in the future and, hence, the remainder is regarded as a future interest in that sense. He or she has no immediate right to possession. B must wait until A dies, some time in the future, before B can take possession and use and enjoy the land. If B is dead by the time A dies, B’s estate will be entitled to possession.287 There is no limit on the number of remainders in a grant. Hence, it is possible for G to grant ‘To A for life, to B for life, to C for life and to D and her heirs’.288

286. Most commonly, the grantor carves out the lesser interest from his or her fee simple estate. 287. For further practical examples of future interests, see P Tan, E Webb and D Wright, Butterworths Tutorial Series: Land Law, 3rd ed, LexisNexis Butterworths, Australia, 2002, pp 102–4. Note that Real Property Act 1900 (NSW) s 100(2) permits the Registrar to create and issue separate certificates of title for future interests (‘an estate in remainder’). Torrens Title and eConveyancing changes are discussed in Chapter 8. 288. In the case of contingent gifts, however, a grant must not offend the rule against perpetuities. See the Perpetuities Act 1984 (NSW). See also Chapter 10.

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Vested and contingent remainders 3.100  Remainders can either be vested or contingent.

Vested 3.101  An interest may be ‘vested in interest’ or ‘vested in possession’, or vested in both interest and possession. If vested in both interest and possession, it is classified as a present interest, because the grantee is able to use and enjoy the land immediately. If, however, the interest is vested in interest, but not possession, it is a future interest, the right to use and enjoy the land being postponed until the future. As we have seen above, reversions are vested in interest, but while the life-estate holder is alive they are not vested in possession. A remainder will not necessarily be vested in interest. It may be a vested remainder but alternatively it may be a contingent remainder. Contingent 3.102  A contingent interest gives no interest at all (neither in interest nor possession) until certain conditions precedent are satisfied. For example, if G grants ‘To A for life, then to B and her heirs’, the remainder to B is vested in interest but not possession until A dies. Nevertheless, B has nothing further to do but to wait until A dies (or, expressed legally, B only has to wait for the natural determination of the prior particular estate). If, however, G grants ‘To A for life, then to B and her heirs when she graduates in law’, A has an interest (a life estate) which is vested both in interest and possession, while B does not have any interest at all until she graduates in law. Until that point, B only has the prospect or possibility of an interest. When B graduates in law, then, if A is still alive, B will have an interest (a fee simple) that has vested in interest but not in possession.When A dies, if B has graduated in law, B will have a fee simple that is both vested in interest and in possession. At common law, B could not assign her possibility of an interest (ie, her expectancy). Nowadays, statutory provisions in New South Wales and other states do permit the assignment of such an expectancy.289 3.103  For a future interest to be regarded as vested rather than contingent, the tenant in remainder (B in the example above) must be clearly identifiable and there must be nothing else for him or her to do other than wait for the life-estate holder to die. 3.104  Even when an interest is vested, it is possible in some circumstances for it to be divested either partially or completely. For example, if G grants ‘To A for life, remainder to such of A’s issue as A shall appoint, and in default of an appointment among all A’s children in equal shares’, the remainders to the children in equal shares are vested, subject to being divested to the extent of any appointment made by A.290

289. Conveyancing Act 1919 (NSW) s 50(1). The Succession Act permits the assignment of an expectancy if it is characterised as property to which the testator is entitled under s 4. 290. This example is taken from Harpum, Bridge and Dixon, Megarry and Wade: The Law of Real Property, note 52 above, p 314. See also Cunningham v Moody (1748) 1 Ves Sen 174.

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3.105  As we will see in Chapter 10, there are occasions when the wording of the grant makes it difficult to tell whether the interest is vested or contingent.Where this is the case, the courts will favour finding the remainder vested if at all possible. 3.106  At common law, the legal contingent remainder rules dictated when a legal contingent remainder was valid. These rules could be easily offended and, hence, were not a very efficient way of ‘tying up’ interests in land and directing the behaviour of the grantee — which, of course, was their purpose.

Legal remainder rules 3.107  As we have noted, medieval landowners were keen to acquire land but were anxious that it not fall out of the family’s hands. Therefore, once land had been acquired grantors tried to impose restrictions on grantees. For example, grantees were commonly directed towards marrying certain people. Grantors relied heavily on legal contingent remainders to direct the course of conduct of grantees. However, when the contingent remainder offended the remainder rules, the remainder failed and the grantor’s objective went unfulfilled. When we speak of contingent remainders in this context, we are concerned with contingencies that precede the vesting of the estate in interest, not the vesting of the estate in possession. Technically, a contingent remainder is a mere possibility that an interest will be acquired some time in the future. The four legal contingent remainder rules were as follows: 1. A remainder after a fee simple estate was void. For example, the remainder ‘To A and his heirs and then to B and his heirs’ was void, because the fee simple had already been granted (to A) and the grantor could not give (to B) what the grantor did not have to give. 2. Any remainder that cut short the prior particular estate291 was void. For example, in the remainder ‘To A for life but, if A becomes a Catholic, then to B and her heirs’, B’s remainder was void and A still took a life estate. 3. Any remainder that, if it were to take effect, would leave a gap in seisin was void. For example, in the grant ‘To A for life, remainder to B and her heirs when she (B) has a baby’, there was a potential gap in seisin. B might not have had a baby by the time A died, so there was the possibility of a gap in seisin. Hence, the remainder to B was void and A took a life estate. 4. A remainder must be supported by a prior particular estate of freehold created by the same interest. For example, in the grant ‘A lease to A for 10 years, remainder to B and her heirs’, B’s remainder was void, because A’s interest was a leasehold and not a freehold estate. The basis of these rules was mainly to ensure that the person who held seisin could be established, because it was on the basis of seisin that feudal incidents were levied. 291. A particular estate amounts to only part (‘a particula’) of the fee simple, for example, the preceding life estate.

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Even if remainders avoided falling foul of the legal contingent remainder rules, remainders could be artificially destroyed. As a result, the grantor’s attempts to control behaviour (and along with it, land) were again thwarted.292 Alternative means for the protection of remainders were sought by landowners and once the ‘use’ was developed it became a favoured tool serving this end.293 Putting remainders behind a use had the effect of creating equitable interests that did not offend the legal contingent remainder rules.

Legal executory interests 3.108  A legal executory interest is another type of legal, future, contingent interest; but, unlike the legal remainders we have considered thus far, it could only be created after the passing of the Statute of Uses 1535. Similarly, legal executory interests created in a will were possible only after the passing of the Statute of Wills 1540. The development of equity generally — and, more specifically, the use — is discussed in Chapter 6. It is enough for present purposes to understand that the common law, with its doctrines of tenure and estates, was insufficient to cater for the changing needs and tolerances of society. For example, as we have noted, before the Statute of Wills, freeholders were frustrated by their inability to dispose of their estates on death, to whomsoever they chose. More generally, they also resented the feudal dues and incidents that were payable on the death of a freeholder (and at other times). Further, they were dissatisfied with the public and formal requirements incumbent on a party wishing to convey land.294 In response to these concerns, the Court of Chancery295 (later Equity) developed the ‘use’, which, as we have observed, was a precursor to the modern-day trust. Placing an interest behind a use resulted in one party (today known as the trustee) holding legal title to the land, while another party (nowadays known as the beneficiary) received an equitable title in the same land. Hence, if B were the freeholder, he or she would structure the conveyance in the following form: ‘To A and his heirs to the use of B and his heirs’. In this example, A is called the ‘feoffee to uses’ (later, the trustee) and B the ‘cestui que use’296 (later, the beneficiary). According to such a conveyance, A held the legal title to the fee simple estate and B held the equitable title to the same fee simple estate. If A refused to acknowledge that he or she held the interest to the use or benefit of B, B could not seek redress at common law, because B’s interest was not recognised at common law. B had to seek the assistance of the Court of Chancery. There, the Chancellor would have asked A if it did not bother his or her conscience not to recognise B’s interest. (If A

292. Moore, Grattan and Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, note 140 above, pp 520–21; Edgeworth, Rossiter, O’Connor and Godwin, Sackville and Neave Australian Property Law, note 164 above, pp 182–84; C Harpum, S Bridge and M Dixon, Megarry and Wade: The Law of Real Property, 7th ed, Thomson Reuters (Legal), London, 2008, p 370. 293. See discussion of equity at 3.82 and in Chapter 6. 294. Burn, Cheshire and Burn’s Modern Law of Real Property, note 185 above, p 38. 295. Originally, litigants petitioned the Chancellor directly. 296. This term comes from the French ‘cestui a que use le feoffment fuit fait’.

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found that it did not bother his or her conscience, imprisonment often provided the opportunity to rethink the matter.) 3.109  Putting a conveyance behind a use brought many advantages. For example, it had the effect of avoiding the feudal dues usually payable on the death of B, as in the above example. Assuming B conveyed his or her interest to two or more joint feoffees to use, then, as long as their number stayed above two, the interest in land would not have to pass by inheritance, on the death of a feoffee to uses. Instead, it would vest in the remaining feoffees by survivorship, and feudal taxes and burdens would not be payable. Further, if the cestui que use, B, conveyed himself or herself an interest for life behind a use and then granted an interest in remainder to C in fee simple, the effect was to avoid feudal incidents on B’s death and to pass the property to C as might a will. The legal remainder rules (which, we have observed, caused many legal remainders to fail) were not applicable to equitable future (ie, successive) interests. One significant reason allowing equitable future interests to escape the net of the remainder rules lay in the fact that the Court of Chancery was not concerned with the issue of seisin. Under the use, the feoffee to uses held seisin and as his or her estate was one recognised by the common law, the Court of Chancery felt able to operate outside the strictures of the common law remainder rules. 3.110  However, one effect of conveyancers employing the use was a loss of revenue for the King. Unhappy about this outcome, a response came from the King in the form of the Statute of Uses 1535. That statute converted what would have been an equitable interest arising under the use into a legal interest. It was said to ‘execute’ the use. Hence, the situation may be summarised thus: • Before 1535. A remainder that simply said ‘To A for life at 21 years’ was void, because A might not reach 21 years before the natural determination of the prior particular estate, and hence there would be a gap in seisin. If, however, the grant in remainder were placed behind a use and it said, ‘To B and her heirs, to the use of A for life at 21 years’ then, before 1535, A’s life estate in remainder would have been equitable and not subject to the remainder rules. A would have had an interest that sprang up when A reached 21 years, at which time the Court of Equity would have enforced that interest against B, the holder of the legal fee simple. • After 1535. The Statute of Uses converted A’s equitable life estate into a legal life estate. After 1535, B (in the example above) received no interest at all. Further, where A had not reached 21 years, the grantor held the legal estate (by way of resulting trust) until such time as A reached 21 years. In cases involving what would have been, prior to the Statute of Uses, a shifting interest, the situation was a little more complex. To explain, if the grant were in the form of  ‘To A and his heirs to the use of B and his heirs, but if C graduates in medicine then to the use of C and his heirs’, an issue arose in the post-Statute of Uses era, as to how the interest could shift from B to C. If the original use in favour of A had been executed and the legal title existed in B, not A, it was not possible for A to be seised to the use of C should C ultimately graduate 142



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in medicine. This difficulty was overcome by somewhat contentiously interpreting the above grant as having allowed A to retain a ‘scintilla’ of title, on which the statute could rely, so permitting the vesting of the fee simple estate in C when C graduated in medicine. 3.111  One of the key issues to be dealt with was whether this new kind of legal interest — created by virtue of the Statute of Uses and known as a ‘legal executory interest’297 — was subject to the legal remainder rules. Broadly speaking, the answer was in the negative. However, there were some exceptions, the most notable being the rule in Purefoy v Rogers,298 which stated that, where a gift contained in a grant to uses or a will was at all capable of complying with the legal remainder rules, then it was to be treated as a legal contingent remainder and not as a legal executory interest.299 The result was that the legal contingent remainder would fail if there were a gap in seisin; for example, even though the interest had been created behind a use, or was contained (after 1540) in a will.

Current position on remainder and executory interests 3.112  In New South Wales, the relevant statutory provisions applying to remainder and executory interests are ss 16(1) and 44(2) of the Conveyancing Act. The situation is also affected by the Imperial Acts Application Act (effective 1 January 1971). Section 16(1) Conveyancing Act states that: 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.

This section  clearly aims at  preventing a legal contingent remainder from failing for want of a prior particular estate. 3.113  Unclear drafting leaves the section open to two interpretations. First, the legal contingent remainder could be treated from the outset as though it is actually an equitable contingent remainder.The result would be to save the contingent remainder but it would, nevertheless, be subject to the rule against perpetuities, which may cause it ultimately to fail.300 Alternatively, the legal contingent remainder, if validly created, could be interpreted as existing until the prior particular estate determines. If, on the determination of the prior particular estate, the contingency has not been met, the legal contingent remainder is then treated as though it were an equitable contingent remainder. Again, this approach subjects the remainder to the rule against perpetuities, but doctrinally it is arguably ‘purer’ in that it keeps the remainder subject to the legal contingent remainder rules for as long as possible.301 297. Legal executory interests were comprised of springing and shifting uses and executory devises. 298. Purefoy v Rogers (1671) 2 Wms Saund 380; 85 ER 1181. 299. Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 52 above, p 1219. 300. See Chapter 10. 301. For a discussion of how these two different interpretations of the section  can yield different results, see  Butt, Land Law, note 40 above, pp 156–57. See  also P W Young, Annotated Conveyancing Act  1919

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3.114  Section 44(2) of the Conveyancing Act also modifies the earlier common law position in New South Wales. It states that: 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.

The aim of this section is obviously to bypass the need to put springing and shifting limitations behind a use in order to save them from the legal remainder rules.302 Hence, after s 44(2) was passed and before 1971, when the Statute of Uses was repealed, a conveyance in the form of: ‘To A and her heirs in fee simple, but if A buys a motor bike to B in fee simple’ would have been valid. However, s  44(2) of the Conveyancing Act is drafted as though it is still possible to make limitations under the Statute of Uses, which of course is no longer the case. Yet, if the repeal of that statute means that no limitation may now be made ‘by way of a use operating under the Statute of Uses’ (because without the Statute there is no such thing), it is arguable that the grant in favour of B, in the example above, would be void. Why? Because if the Statute of Uses is no longer valid, nor is s 44(2), and the limitation without the protection of s 44(2) would offend the legal remainder rule prohibiting a grant after a grant in fee simple. Such an interpretation of the operation of s 44(2) has the effect of thrusting the law in this area back into the pre-1535 position. 3.115  On the other hand, it could be argued that s 44(2) of the Conveyancing Act was drafted in accordance with the law that was valid in 1920 and that law included the Statute of Uses. Hence, the section is to be read as if the Statute of Uses were still valid. If this were done, the grant to B would not fail. Despite the obvious uncertainty surrounding the interrelationship of s 44(2) and the repeal of the Statute of Uses, the issue has never been litigated.303

Reform 3.116  A brief discussion of Zapletal v  Wright304 and Andrews v  Parker305 serves to demonstrate why the law of conditional and determinable interests is in need of reform. Although not a High Court case, Zapletal is worth considering because it serves to demonstrate the practical difficulties encountered in characterising an interest as determinable or conditional in circumstances when the limitation is void. In that case, the (NSW) and Real Property Act  1900 (NSW), 2010–2011 ed, LexisNexis Butterworths, Australia, 2011, pp 41–42. 302. For a discussion of springing and shifting uses see  R Megarry and H Wade, The Law of Real Property, 5th ed, Stevens, 1984, pp 1169, 1179–81. 303. Young, Annotated Conveyancing Act  1919 (NSW) and Real Property Act  1900 (NSW), note 262 above, p 81. Newcastle City Council v Kern Land Pty Ltd & Commonwealth Bank of Australia (1997) 42 NSWLR 273 and Bhana v Bhana [2002] NSWSC 117 discuss the operation of s 44(2) of the Conveyancing Act but the litigation does not turn on the section. 304. Zapletal v Wright [1957] Tas SR 211. 305. Andrews v Parker [1973] Qd R 93.

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(female) plaintiff and the (male) defendant lived together for 15 years. During that time, they had two children and bought land in joint names with the money that had been provided by the defendant.The man agreed to put title in their joint names, but subject to the limitation that, if the plaintiff (woman) left him, her interest would terminate. During the time they lived together, the plaintiff contributed extensively to household expenses. Ultimately, the plaintiff left the defendant. She then claimed the property should be sold and that she was entitled to half of the proceeds available. If the limitation were found to be void for immorality because it encouraged the plaintiff to continue living in a de facto rather than a de jure marriage, the characterisation of the fee as either determinable or defeasible/conditional assumed great significance.To explain, if the interest were determinable, the whole grant would fail and the plaintiff would receive nothing; but if it were conditional, the offending limitation could be severed and the plaintiff would retain her share in the property. The court found the interest to be a conditional one, stating: … the form of the gift was an undivided moiety in fee; it was not in terms limited to an estate defined by reference to any prior event … The form of the condition is such that it did not denote the extent of the estate but only the event in which the larger estate conferred may have been cut short.306

3.117  Parker raised similar issues, concerning the characterisation of an interest, in the Queensland Supreme Court. There, the plaintiff (male) and defendant (female) lived together in a house owned by the plaintiff, who transferred title of the house to the defendant on her agreement that if she ever returned to her husband, she would re-transfer the property to the plaintiff. She did not leave the house to return to her husband. Instead, the husband moved into the house as well, and the defendant then asked the plaintiff to move out. He did. Later, the plaintiff took proceedings to recover the property. He was met with the defendant’s claim that the limitation restricting her from returning to her husband was void for immorality. The court held that the gift was in the form of an interest defeasible by a condition subsequent, but that the condition subsequent was not designed to induce immorality because it did not induce the woman to live apart from her husband. She had already made that choice. Stable J noted that ‘[s]ocial judgements of today upon matters of “immorality” are as different from those of the last century as is the bikini from the bustle’. Without citing Zapletal, the court found that the plaintiff was entitled to a reconveyance of the property that he had transferred to the defendant because she was more blameworthy in the matter than he was. These cases serve to demonstrate how the consequences of the categorisation may be of great significance; however, in practical terms, the characterisation of an interest as either determinable or conditional seems to rest largely on semantics.307 (Does the grant use the 306. Zapletal v Wright [1957] Tas SR 211 at 217–18. 307. As noted, the consequences are different in cases where the limiting event occurs or is void. Further, the grantor’s possibility of reverter under a determinable interest probably is not subject to the rule against perpetuities. See Attorney-General v Pyle (1738) 1 Atk 435; 26 ER 278; The Cram Foundation v Corbett-Jones

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words ‘while’, ‘during’, ‘until’ or ‘for as long as’, or does it use ‘but if ’ or ‘provided that’?) Such an approach emphasises form rather than substance, which does not seem to reflect modern trends in judicial interpretation. 3.118  Following from this, it may well be the case that categorisation as either a determinable or conditional interest could result in discrimination, particularly when the limitations relate to marriage (including same-sex marriage) or religion, for example. It would appear that this area of the law is ripe for reform and, indeed, has been so for some time — at  least according to one judge, who as early as 1892 said that the distinction between conditional and determinable interests was ‘little short of disgraceful to our jurisprudence’.308 Cases such as Zapletal and Parker acknowledge that gifts can be used in terrorem. This may be repugnant morally, but not legally. Perhaps an alternative and better way of dealing with these issues may be within the framework of constructive trusts, where it is possible to adjust the interests of parties according to accepted equitable doctrines or extensions of those doctrines, rather than within the parameters of conditional and determinable interests. 3.119  Another area that is arguably in need of reform is the doctrine of tenure itself. In this chapter, we have highlighted how the Mabo v Queensland (No 2) (Mabo (No 2))309 decision afforded the doctrine a significance beyond that which it deserves. Since Mabo (No 2), there have been calls for the doctrine’s abolition in the Australian context.310 Hepburn has put a cogent argument for this, and has suggested replacing the doctrine with an allodial system of land holding for Australia.311 Interestingly, the Law Reform Commission of New Zealand came to the same conclusion for New Zealand in its 1992 report Tenure and Estates in Land.312 That jurisdiction went on to legislate accordingly.313 The doctrine of tenure has also been abolished in Scotland314 and Ireland.315 It is arguable that Australia should also abolish the doctrine. In that regard, it may be useful for Australian politicians and law reformers to consider the models in the jurisdictions above and also those in several states of the United States, where allodial systems of land holding have existed since the time of Thomas Jefferson, despite the fact that that country’s legal system [2006] NSWSC 495. Butt points out that, although a contrary decision is to be found in Hopper v Liverpool Corporation (1944) 88 Sol Jo 213 (Bennett VC), that decision is criticised in ‘Notes’ (1946) 62 LQR 222. For discussion of the issue, see A Lyall in ‘Human Rights and Conditional and Determinable Interests’ (1987) 22 Irish Jurist 250 at 259; cited in Butt, Land Law, note 40 above, p 203. 308. Re King’s Trusts (1892) 29 LR Ir 401 at 410 per Porter MR. 309. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1. 310. J Devereaux and S Dorsett, ‘Towards a Reconsideration of the Doctrine of Estates and Tenures’ (1996) 4 Australian Property Law Journal 30. 311. Hepburn, ‘Disinterested Truth: Legitimation of the Doctrine of Tenure Post-Mabo’, note 17 above. 312. New Zealand Law Commission, Preliminary Paper No 20, 1992, pp 30–31; 313. Property Law Act 2007 (NZ), s 57(1). 314. Abolition of Feudal Tenure etc (Scotland) Act  2000 (UK). See  also Scottish Law Commission, Report on Abolition of the Feudal System (SLC 168, 1999); KGC Reid, ‘Vassals No More: Feudalism and PostFeudalism in Scotland’ (2003) 3 European Review of Private Law 2. 315. Ireland Land and Conveyancing Reform Act 2009 (Ireland), s 9(2).

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was born (like Australia’s) out of an English legal heritage.316 It would seem that no lasting harm has been done where there is an absence of the doctrine of tenure. 3.120  In conclusion, this chapter examined some of the fundamental principles underpinning New  South  Wales property law. It outlined the common law principles relating to the reception of English law into Australia and, in particular, examined two key English property law imports: the doctrines of (i) tenure and (ii) estates. It concluded that New South Wales land law relies on a distinctly localised form of the doctrine of tenure that has always been free from services and incidents, which were key elements of English tenure. In order to understand the doctrine of estates more fully, this chapter examined the historical development of estates and interests and the rules pertaining to them.Accordingly, one purpose of the chapter was to enrich understandings of the operation of modern property law by familiarising readers with the relevant terminology and the development of key concepts and principles, as well as introducing them to areas in which law reform is needed. However, another (perhaps under-valued) purpose of the chapter was to provide a platform from which those readers interested in legal history may pursue further research and investigation.

316. See JC Gray, The Rule Against Perpetuities, 4th ed, Little, Brown & Co, Boston, 1942, pp 16–23; WR Vance, ‘The Quest for Tenure in the United States’ (1924) 33 Yale Law Journal 248.

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Chapter 4

Native Title Introduction 4.1  Rights in land in New South Wales are recognised through a number of different systems of land holding. For example, Chapter 7 deals with the recognition and operation of rights in land pursuant to old system title, while Chapter  8 discusses rights in land according to the Torrens title system. In this chapter, we turn to yet another system under which rights in relation to land may be recognised: that of native title. It is worth noting at  the outset that there is debate about whether native title simply represents another aspect of property law or whether it is conceptually more diverse than that.1 The issue of how native title is characterised will be discussed later in this chapter, where it is considered in some detail, particularly in the context of the Mabo v Queensland (No 2) (Mabo (No 2))2 decision and its aftermath. This chapter concentrates on the constitution, interpretation, recognition, characterisation, operation and extinguishment of native title rights. It also touches on legal mechanisms set up to allow native title owners to enjoy the benefits of that title, and issues around compensation. In order to appreciate these, however, it is necessary to trace briefly the evolution of native title, commencing with the Indigenous relationship to the land, moving on to ‘settlement’ of that land by Europeans, and to the mounting of the Milirrpum v Nabalco Pty Ltd3 (Gove Island Land Rights case or Gove case) and Mabo (No 2) cases. After this, we discuss a range of issues left unanswered by Mabo (No 2), some of which are dealt with in later case law or addressed in the statutory regimes that were introduced following the Mabo (No 2) and Wik Peoples v Queensland (Wik)4 decisions.

See J Webber, ‘Beyond Regret: Mabo’s Implications for Australian Constitutionalism’ in D Ivison, P Patton and W Sanders, Political Theory and the Rights of Indigenous Peoples, Cambridge University Press, Cambridge, 2000, p 61. 2. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1 (Mabo (No 2)). 3. Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 (Gove Island Land Rights case) (Gove case). 4. Wik Peoples v Queensland (1996) 187 CLR 1; 141 ALR 129. 1.

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A purely doctrinal approach is not possible in this chapter because culture, religion and history are central to the validity and understanding of native title.5 As will be seen below, the notion of continuity is embedded in the requirement for the establishment, maintenance and enforceability of native title.6

The Evolution of Native Title in Australia Relationship with the land 4.2  As noted in Chapter 3, Indigenous people lived in Australia for tens of thousands of years prior to European contact. Their society is culturally diverse and complex.7 Land plays a key role in social organisation as well as economic and cultural life. It is not only the source of food and shelter, but also holds a great spiritual significance.8 Hence, it is central to Indigenous being and, consequently, the land imposes weighty responsibilities on all who claim native title.9 Land is treated with reverence and care.10 Not surprisingly, much Indigenous law relates to conduct that ensures the preservation of the land in good condition for those who come later. Indeed, Blackburn J in Milirrpum v Nabalco11 found that the Yolngu people had a ‘more cogent feeling of obligation to the land than of ownership of it’. He continued: It is dangerous to attempt to express a matter so subtle and difficult by a mere aphorism, but it seems easier, on the evidence, to say that the clan belongs to the land than that the land belongs to the clan.

5.

6. 7.

8.

9. 10. 11.

The relevance of religion, for example, is shown in the decision of the Full Court of the Federal Court in Cheedy on behalf of the Yindjibarndi People v Western Australia [2011] FCAFC 100 that allowing mining over a particular area, which would cut off a source of ceremonial ochre, did not amount to a breach of s 116 of the Commonwealth of Australia Constitution (the Constitution), which prohibits Commonwealth interference with freedom of religion. See D Ritter’s opening paper presented to ‘Turning Back the Tide — The Use of History in the Native Title Process’, a conference sponsored by the Native Title Research Unit of the Australian Institute of Aboriginal and Torres Strait Islander Studies, 10–11 May 1999, Canberra. The term ‘Indigenous people’ is very broad and covers different groupings such as Yuin, Pitjantjatjara, Eora and Torres Strait Islanders. Not all bands or tribal groups, nor all members of a band or tribal group, would necessarily share exactly the same views; any generalisations about Indigenous people are flawed, at least to that extent. See  M Dodson, ‘Aborigines and the Criminal Justice System’ (1987) 28 Abor LB 4; B Butcher and D  Turnbull, A People’s History of Australia Since 1788, McPhee Gribble, Melbourne, 1988, Vol 1, p 19; CF Black, The Land is the Source of the Law: A Dialogic Encounter with Indigenous Jurisprudence, Routledge, London, 2011. See  also P Sutton, ‘The Robustness of Aboriginal Land Tenure Systems: Underlying and Proximate Customary Titles’ (1996) 67(1) Oceania 7. B Chatwin, The Songlines, Vintage, Sydney, 1988, picks up many of these themes. The novel is somewhat controversial in that it is written by an ‘outsider’, an Englishman, yet deals with Indigenous culture and the creation songs pertaining to the land. Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 at 268–73.

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Indigenous law also embraces some very subtle systems of inheritance, related to shifting kin definitions, which in turn establish overlapping degrees of responsibility for land.12 4.3  Some law is secret. Traditions, stories, songs of country and special knowledge are only passed on once members of the group demonstrate sufficient maturity to be entrusted with them. Some special knowledge is never shared with the whole group but is held solely by traditional elders. The obligation to protect and nurture the land is even more onerous for these people, but all users are seen as custodians. According to this paradigm, present users are part of a continuum, and one’s association with land is seen as cyclical rather than linear in nature. Protecting and caring for the land, or ‘growing up the land’ as it is sometimes called,13 involves making sure the land is passed on to the next generation in a state fit for physical and spiritual use.14 It has been said that: The fundamental truth about the Aboriginal’s relationship to the land is that whatever else it is, it is a religious relationship … There is an unquestioned scheme of things in which the spirit ancestors, the people of the clan, particular land and everything that exists on and in it, are organic parts of one indissoluble whole.15

As the interconnectedness between land, law, history and spirituality is central to Indigenous existence, any interference to one of these (such as land) reverberates throughout Indigenous society generally. The result is that the whole community is left somewhat exposed and vulnerable.16

‘Settlement’ and onwards 4.4  This strong connection with the land existed in Australia before European contact and continued until 1770, when Captain James Cook claimed Australia for Great Britain. From this point on, however, it became more difficult for Indigenous Australians to maintain their connection to the land.17 Of course, invasion of land itself is a common historical phenomenon. It usually involves force and subjugation. To that extent, the experience of Indigenous Australians is not unusual. However, their experience was peculiar in that the imperial government of Britain issued specific instructions concerning the taking 12. M Langton, ‘Grandmothers’ Law, Company Business and Succession in Changing Aboriginal Land Tenure Systems’ in Our Land is Our Life, G Yunupingu (ed), University of Queensland Press, St Lucia, 1997. 13. This is a term commonly used by Indigenous people. See P Toyne and D Vachon, Growing Up the Country: the Pitjantjatjara Struggle for Their Land, McPhee Gribble, Melbourne, 1984, pp 5–8. 14. Indigenous middens are evidence of an organised system of recording how the resources of the land and sea were used. By placing the shells and bones of seafood and animals eaten at ceremonial gatherings in layers, Aborigines ensured that those who next came to the site would know not to deplete resources by eating the same types of food as those that were last eaten. This explanation was given during a visit to the middens at Wallaga Lake on the far south coast of New South Wales by members of the Yuin nation: Personal communication, 16 January 1998. 15. Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 at 167. 16. Indigenous people today would argue that the same notions of interconnectedness and intermingling still underpin their cultural identity, beliefs and customs. 17. See Deane and Gaudron JJ’s discussion of ‘white expropriation’ of land in Mabo v Queensland (No 2) (1992) 175 CLR 1 at 105; 107 ALR 1 at 79. They state that land was ‘granted by the Crown or dedicated or reserved for inconsistent public purposes without regard to Aboriginal claims’.

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of possession of land, which referred to the gaining of Indigenous permission; that is, it referred to the European immigrants’ need to gain consent. For example, the Admiralty’s instructions to Captain Cook, issued in 1768, were in the following terms: You are also with the consent of the natives to take possession of convenient situations in the country in the name of the King of Great Britain, or if you find the country uninhabited take possession for His Majesty by setting up proper marks and inscriptions as first discoverers and possessors.18

These instructions leave open whether a simple courtesy was afforded to the Indigenous population or, alternatively, whether the instructions incorporated a legal acknowledgment that pre-existing Indigenous rights and interests would be interfered with by European contact.19 Ultimately, however, the consent aspect of these instructions was not followed. Cook simply claimed possession of New South Wales on 22 August 1770, without either seeking or obtaining Indigenous permission.20 Nettheim, citing Reynolds, suggests that the reason for disregard of the imperial government’s instructions lay in Sir Joseph Banks’ testimony to the House of Commons committee on transportation in 1785.21 There, Banks surmised that ‘natives’ lived only on the coastal fringes of New South Wales and, hence, New South Wales could be taken to be uninhabited. Such reasoning very comfortably fed into acceptance of the terra nullius doctrine and acquisition of the colony by settlement rather than conquest.22 The falsity of Banks’ surmise assisted in Indigenous people being led into a future of dispossession, disentitlement and deprivation. Redress of this situation underpins the reconciliation movement,23 and influenced the negotiation and consultative 18. JM Bennet and AC Castles, A Source Book of Australian Legal History, Law Book Co, Sydney, 1979, pp 253–54 (emphasis added). 19. For further information on the impact of Cook’s conduct and social memory, see C Healy, From Ruins of Colonialism, Cambridge University Press, Cambridge, 1997, particularly Ch 2. 20. H McRae, G Nettheim, L Beacroft and L McNamara, Indigenous Legal Issues: Commentary and Materials, 4th ed, Thomson Reuters/Lawbook Co, Sydney, 2009, p 18. Note that New  South  Wales comprised about half of the Australian continent in 1770: H Reynolds, ‘Racial Thought in Early Colonial Australia’ (1974) 20(1) Australian Journal of Politics and History 45. Flannery notes that the explorer Mitchell ‘was also virtually alone in his time in recognising and wishing to perpetuate a sense of prior Aboriginal ownership of Australia’: T Flannery, The Explorers, Text Publishing, Melbourne, 1998, p 13. 21. G Nettheim, ‘Native Title: Facts, Fallacies and the Future’, University Symposium Papers, University of New  South  Wales, Sydney, 1998, p 15. Nettheim cites H Reynolds, The Law of the Land, Penguin, Ringwood, 1992. 22. According to Blackstone, land could be acquired by virtue of settlement, conquest or cession: W Blackstone, Commentaries on the Laws of England, 9th ed,Vol 1,W Strahan and T Caddell, London, 1783. Depending on the method of acquisition, different consequences flowed. On one analysis, a new category was created after Mabo (No 2): the category of settled land with continuing native title. Such a category involves a rejection of Blackstone’s scheme. Terra nullius means ‘land of no-one’; in the Australian context, the doctrine is now recognised as a legal fiction. For recent comment on the concept in response to claims that it was illegitimately referred to in the Mabo decision, see K Williams, ‘Critique: A Historian Said Terra Nullius Was an Invention …’ (2006–2008) 10 Newcastle Law Review 37–48; U Secher, ‘The High Court and Recognition of Native Title: Distinguishing Between the Doctrines of Terra Nullius and “Desert and Uncultivated”’ (2007) 11 University of Western Sydney Law Review 1–39. 23. A policy initiated by the government of former Prime Minister Keating, when he gave his Redfern address. See the website of Reconciliation Australia: . One focus of current debate is whether there ought to be formal Constitutional recognition of the pre-existing rights of Indigenous

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processes that preceded the passing of the Native Title Act 1993 (Cth) and the Native Title Amendment Act 1998 (Cth).24 The effect of Banks’ conclusions could be seen more immediately when Governor Arthur Phillip took up his post. His instructions did not acknowledge any rights of the pre-existing inhabitants.25 Phillip was merely encouraged to establish ‘friendly relations’ with Indigenous peoples; but, contradictorily, it was also recognised that he might have to take steps to curb their ‘interference’. Significantly, he was authorised to grant land to people who would ‘improve’ it, yet there was no reference to his having to obtain the consent of the prior inhabitants before any grant was made.26 4.5  Hence, with the arrival of Captain Cook and Governor Phillip, a bleak history began. In Deane and Gaudron JJ’s words in Mabo (No 2): As political power in relation to domestic matters was transferred from the Imperial Government in England to the European Colonists on the other side of the world, the Aborigines were increasingly treated as trespassers to be driven, by force if necessary, from their traditional homelands.27

Deane and Gaudron JJ stated: … the oppression and, in some areas of the continent, the obliteration or near obliteration of the Aborigines were the inevitable consequences of their being dispossessed of their traditional lands.28

Accordingly, Deane and Gaudron JJ concluded: The acts and events by which that dispossession in legal theory was carried into practical effect constitute the darkest aspect of the history of this nation.29

Dawson J, although in dissent, appeared to conclude similarly on this issue, when he stated: ‘There may not be a great deal to be proud of in this history of events’.30 There were many incidents of Indigenous resistance to European invasion.31 These incidents attest to the facts, first, that ‘natives’ were present; and, second, that they were

24. 25. 26. 27. 28. 29. 30. 31.

Australians. See  Recognise, Why Recognition (accessed 1  April  2017), , for continuing arguments in favour of Constitutional recognition. A report presented in July 2021 recommends the embedding of an ‘Indigenous Voice’ in local and Parliamentary decision-making: see  (accessed February 2022). These statutes are discussed later in this chapter. See 4.63–4.81. McRae et al, Indigenous Legal Issues: Commentary and Materials, note 20 above, p 18. McRae et al, Indigenous Legal Issues: Commentary and Materials, note 20 above, p 18. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 105; 107 ALR 1 at 79. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 106; 107 ALR 1 at 80. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 109; 107 ALR 1 at 82. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 145; 107 ALR 1 at 111. See ‘Gipps to Glenelg, 19 December 1838’ in Historical Records of Australia, Series 1, Library Committee of the Commonwealth Parliament, Sydney, 1914–1925,Vol 19. See also H Goodall, Invasion to Embassy, Allen & Unwin, Sydney, 1996, p 27, for a discussion of resistance by the Dharuk and Gandangara landowners to the penetration of white farmers. For a more journalistic account of resistance, see B Elder, Blood on the Wattle, New Holland Publishers, Sydney, 2000.

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particularly attached to their land, having special entitlements to the use and occupation of defined tracts.32 4.6  Nevertheless, historical and legal records reveal judicial divergence on the issue of Indigenous legal rights. For example, on one hand, Burton J, a member of the New South Wales Supreme Court in 1836, rejected the idea that Indigenous people were governed by law, stating in his notes on R v Murrell,33 a criminal case, that: [Indigenous] practices are only such as are consistent with a state of the grossest darkness and irrational superstition and although in some cases being a show of justice — are founded entirely upon principles, particularly in their mode of vindication for personal wrongs, upon the wildest most indiscriminatory notions of revenge.34

Hence, without a recognisable system of law, it was open to him to conclude that Indigenous people had no recognisable rights to be protected. On the other hand, contrasting positions can be seen in Willis J’s judgment in R v Bonjon and the judgments of Dowling J and Forbes CJ in R v Ballard or Barrett.35 Forbes CJ thought that intra-Aboriginal crimes should be settled according to Aboriginal people’s own customs, thus acknowledging a kind of self-governance based on pre-existing Indigenous law and traditions. Dowling J went a little further by introducing the concept of consent, stating that: Until the Aboriginal natives of this Country shall consent, either actually or by implication, to the interposition of our laws in the administration of justice for acts committed by themselves upon themselves, I know of no reason human, or divine, which ought to justify us in interfering with their institutions even if such an interference were practicable.36

He continued, ‘The Englishman has no right wantonly to deprive the savage of any property he possesses or assumes a dominion over’ (emphasis added). Among other things, the views of Dowling J and Forbes CJ serve to demonstrate the significance accorded by some to Indigenous customs and traditions; customs and traditions that have been found to lie at the heart of native title. Importantly, Dowling J’s 32. McRae et al, Indigenous Legal Issues: Commentary and Materials, note 20 above. See also H Goodall, Invasion to Embassy, Allen & Unwin, Sydney, 1996, p 1, where, in discussing the significance of land to Indigenous people, Goodall points out that while the spiritual and religious dimensions are important, the role ‘land plays in social relations, political relations, and in the cultural construction and transmission of knowledge’ should not be overlooked. See  Goodall, p 23, for a discussion of the difference between Indigenous and European concepts of land. Note that outrage at  dispossession was expressed by many Indigenous people. On occasions the issue of dispossession also claimed the attention of white officials, such as the New South Wales Crown Land Commissioner in the Murrumbidgee area, C C L Bingham (Goodall, p 35). 33. R v Murrell and Bummaree [1836] NSWSupC 35. 34. Miscellaneous correspondence relating to Aborigines, in the possession of the Archives Office of New South Wales, 5/1161, pp 239–40; cited in B Kercher, Decisions of the Superior Courts of New South Wales, 1788–1899, Division of Law, Macquarie University at: . For the full decision, see R v Murrell and Bummaree [1836] NSWSupC 35, available on the AustLII database (). See also J Hookey, ‘Settlement and Sovereignty’ in P Hanks and B KeonCohen (eds), Aborigines and the Law: Essays in Memory of Elizabeth Eggleston, Allen & Unwin, Sydney, 1984. 35. See R v Ballard [1829] NSWSupC 26; R v Bonjon [1841] NSWSC 92. Dowling and Forbes JJ were the first two holders of the office of Chief Justice of New South Wales. 36. R v Ballard [1829] NSWSupC 26 at 107–8 (emphasis added).

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view also recognised that Indigenous people owned property, although according to him ‘the notions of property may be very imperfect in the native’.37 4.7  The courts also handed down other cases less sympathetic to Indigenous rights. Attorney-General v Brown38 is one of them. It dealt with the issue of whether Indigenous rights survived settlement. In that case, a coal miner sought to defend an action for trespass by rejecting the proposition of Crown ownership. The Full Court’s response was quite plain. It held that the lands of the colony: … are, and ever have been, from the time of its first settlement in 1788, in the Crown … as his or her property, they have been and may now be effectually granted to subjects of the Crown.39

The court also observed that recognition of any Indigenous rights in land would be inconsistent with the Crown holding title.40 4.8  Some years later, when reflecting on the issue of the recognition of pre-existing local law and its relationship to property, Deane and Gaudron JJ commented that ignorance may have been an excuse in the very early days, but: Increasingly, the fact that particular tribes or clans enjoyed traditional entitlements to the occupation and use of particular lands for ritual, economic and social purposes was understood. Increasingly, that fact was even acknowledged by government authorities and in formal dispatches.41

Further, James Stephen, head of the Imperial Colonial Office, noted: It is an important and unexpected fact that these Tribes had proprietary rights in the Soil — that is, in particular sections of it which were clearly defined or well understood before the occupation of their country.42

The 19th-century legal luminary Dr Lushington also appeared to recognise both the radical title held by the Crown and ‘the rights in relation to the territory of the Aboriginal occupants’.43 37. R v Ballard or Barrett, reported in Kercher, Decisions of the Superior Courts of New South Wales, 1788–1899, note 34 above. See also B Kercher, ‘The Recognition of Aboriginal Status and Laws in the Supreme Court of New South Wales under Forbes CJ, 1824–1836’ in A Buck, J McLaren and NE Wright (eds), Land and Freedom: Law, Property Rights and the British Diaspora, Ashgate, Aldershot, 2001, pp 83–102. 38. Attorney-General v Brown (1847) 1 Legge 312. 39. Attorney-General v Brown (1847) 1 Legge 312 at 316. 40. Attorney-General v Brown (1847) 1 Legge 312 at 324. See also A R Buck, ‘Attorney-General v Brown and the Development of Property Law in Australia’ (1994) 2 Australian Property Law Journal 128; A R Buck, The Making of Australian Property Law, The Federation Press, NSW, 2006; R Bartlett, Native Title in Australia, 4th ed, LexisNexis Butterworths, Australia, 2019, p 5. The authors acknowledge the assistance of the latter work in writing this chapter. 41. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 106–8; 107 ALR 1 at 80–2 per Deane and Gaudron JJ. 42. Quoted in Mabo v Queensland (No 2) 175 CLR 1 at 106–8; 107 ALR 1 at 80–2 per Deane and Gaudron JJ. 43. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 106–8; 107 ALR 1 at 80–2 per Deane and Gaudron JJ. Dr Stephen Lushington was a leader of the English Bar and a judge of the London consistory court. Subsequently, he was an eminent Admiralty judge and a member of the Judicial Committee of the Privy Council. For the concept of ‘radical title’, see 4.16 below.

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4.9  Yet, despite this, as mentioned above, a legal fiction flourished that was based on the view that the land belonged to no one. The fiction was embodied in the doctrine of terra nullius and the interaction of that doctrine with the doctrine of tenure.44 The doctrine of tenure permitted full legal and beneficial ownership of all lands to vest in the Crown, thereby serving to help dispossess Indigenous Australians.45 The logic went as follows. The land was either ‘desert uninhabited’ or inhabited by people so barbarous that there was no settled law. Hence, it was impossible to reconcile any customary rights ‘with the institutions or the legal ideas of civilised society’.46 As there was no sovereign Indigenous lawmaker in the colony, the British Crown became the sovereign lawmaker on acquisition of the colony. In short, the British Crown’s sovereignty filled a void. The Crown became owner because there was no other owner.47 Once the Crown held all land, then others, according to the doctrine of tenure, could only hold ‘of ’ the Crown; all land being held mediately and intermediately of the Crown. There is no place for allodial holdings under the doctrine of tenure. Hence, if the proposition that the land were terra nullius is rejected, then ‘the notion that sovereignty carried ownership in its wake must be rejected too’.48 When this rejection finally occurred, it left open a window for the recognition of Indigenous customs and traditions. They could be recognised outside the doctrine of tenure.49 Yet, long before the landmark case of Mabo (No 2) was decided, the struggle for the recognition of Indigenous rights in land had begun. In its legal dimension it was binary, involving both a common law approach that sought recognition of native traditions and customs, as well as a land rights approach that sought the transfer of claimed land through

44. Some doubt has recently been cast on the view that terra nullius as a doctrine was actually invoked by early courts considering these matters: see D Ritter, ‘The “Rejection of Terra Nullius” in Mabo: A Critical Analysis’ (1996) 18 Sydney Law Review 5; U Secher, ‘The Mabo Decision — Preserving the Distinction between “Settled” and “Conquered or Ceded” Territories’ (2005) 24 University of Queensland Law Journal 35. But something like this view lay behind the decisions, and calling it ‘terra nullius’ in an extended sense does not seem to cause any real misunderstanding. Secher, ‘The High Court and Recognition of Native Title: Distinguishing Between the Doctrines of Terra Nullius and “desert and uncultivated”’, note 22 above, p 6, suggests that the doctrine may be seen to have a ‘common law’ sense now as well as its traditional international law meaning. 45. This doctrine is explained in Chapter 3. 46. Re Southern Rhodesia [1919] AC 211 at 233. 47. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 45; 107 ALR 1 at 31 per Brennan J. 48. Mabo v  Queensland (No 2) (1992) 175 CLR 1 at  45; 107 ALR 1 at  31 per Brennan J. Murphy J in Coe v Commonwealth (1979) 53 ALJR 403 at 412 described the doctrine of terra nullius as a ‘convenient falsehood to justify the taking of Aboriginal land’ when he was discussing the doctrine as set out in Cooper v Stuart (1889) 14 App Cas 286. Cooper v Stuart enlarged the notion of a ‘settled colony’ to include those ‘practically unoccupied, without settled inhabitants or settled law’. 49. Indeed, Hepburn has argued that the logical implication of the doctrine of native title as spelled out in Mabo (No 2) is that the doctrine of tenure should be abolished: see S Hepburn, ‘Disinterested Truth: Legitimation of the Doctrine of Tenure Post-Mabo’ (2005) 29 Melbourne University Law Review 1; ‘Feudal Tenure and Native Title: Revising an Enduring Fiction’ (2005) 27 Sydney Law Review 49. But so far, the courts have not taken this step. For further discussion of these issues, see 3.33–3.38.

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specific land rights legislation.50 One of the key cases relevant to the first approach was Milirrpum v Nabalco, commonly known as the Gove case.51

The Gove case 4.10  In the 1960s there was a growing awareness of Indigenous identity and pride, in part fuelled by a worldwide Black Power movement.52 Indigenous people in Australia began to demonstrate resistance in various forms, some of which culminated in the Wave Hill strike. This involved the Gurindji people walking off a cattle station in the Northern Territory in response to poor pay and conditions, and ultimately retaking their tribal lands.53 Further, in the 1960s and 1970s, reserves where Indigenous people lived, and which had remained untouched by outsiders for many years because they were remote and inhospitable, became the subject of non-Indigenous interest with the advent of the mining boom. The result was that Indigenous people living on reserves faced unprecedented pressure to accommodate mining interests. In 1971, the Yolngu people from Yirrkala, on the Gove peninsula, unsuccessfully resisted this pressure in Milirrpum v Nabalco.54 In that case, Blackburn J found that Indigenous people did have a recognisable system of law, but that they did not have a proprietary interest (in land). He found that the usual indicia of property were not present: the right to use and enjoy, the right to alienate, and the right to exclude. He also held that, even if these indicia were present, some formal act by the Crown would have been needed to recognise the Indigenous relationship to the land before it could be protected.55 4.11  Milirrpum v Nabalco was not appealed. Instead, over the next decade or so the fight for rights in land became a statutory one. The Whitlam Government was elected in 1972, and there followed two reports on how Indigenous land rights could be best achieved.56 These reports formed the basis of a Whitlam Government Bill that was modified and eventually enacted by the Fraser Government as the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth). 50. This legislation is distinct from the native title legislation (the Native Title Act 1993 (Cth) and the Native Title Amendment Act 1998 (Cth)) that was spawned largely in response to Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1 and Wik Peoples v Queensland (1996) 187 CLR 1; 141 ALR 129. 51. Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141. 52. For example, the Black Panther movement in the United States of America. 53. For a more detailed account of this, see  J Gray, ‘The Mabo Case: A Radical Decision?’ (1997) 17(1) Canadian Journal of Native Studies 33 at  43. See  also Sir William Deane, Some Signposts from Dagaragu, inaugural Vincent Lingiari Memorial Lecture, AGPS, Canberra, 1996. 54. Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141. The land in question became part of Arnhem Land in the 1930s, but mining on it was nevertheless approved in following decades. For a review of the decision and its impact, see  N Graham and DA Pittavino ‘Bauxite and Boundaries: 50 Years Since “Milirrpum v Nabalco Pty Ltd” (1971) 17 FLR 141’ (2021) 29(3) Australian Property Law Journal 335–51. 55. This proposition was rejected in Mabo (No 2). 56. The Whitlam Government commissioned Woodward J to write the two reports, known as the Aboriginal and Land Rights Commission First Report (1973) and Second Report (1974).When still at the bar,Woodward J had been senior counsel for the Yirrkala people in Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141.

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The Act directly vested existing reserves in Aboriginal ownership,57 as well as providing a mechanism for claims to be lodged by Aboriginal groups. The latter process involves Aboriginal people convincing an Aboriginal Land Commissioner that they are the owners of the land in question under Aboriginal law. The commissioner then makes a recommendation to the relevant Commonwealth Minister about whether the land should pass to the Aboriginal people by the grant of a title under Australian law. While such a process does not recognise a title to land outside the common law, it does permit recognition of the significance of the Indigenous connection to the land, as well as recognition of custom and tradition.58 4.12  By contrast, direct vesting was not introduced by the Aboriginal Land Rights Act 1983 (NSW). That Act allows a claim to be made to land without requiring proof of anything other than that the land is claimable within the terms of the Act. It therefore moves away from proof of traditional ownership as a cornerstone. Unfortunately, this approach has set up some tension between traditional owners and other Indigenous people resident in the same area. The Aboriginal Land Rights Act has been the subject of criticism, some of which takes the form that the Act fails to provide the opportunity to make a claim on the grounds of historical or traditional connection.59 Running counter to that view is one that sees the mechanism for claims under the Act as simple, unique and providing a fairly good model for other jurisdictions, should they choose to follow it.60

Mabo (No 2) Background 4.13  The failure of the Yolngu people’s claim in Milirrpum v Nabalco and the passing of land rights legislation seemed to deter Indigenous Australians from seeking recognition of their rights through the common law. Yet, internationally, common law recognition through ‘native’ or ‘Aboriginal’ title, as it was sometimes called, was a known phenomenon. For example, in the United States, Johnson v  McIntosh61 had settled the question of competing claims between Aboriginal people and settlers based on native title at common

57. The word ‘Aboriginal’ rather than ‘Indigenous’ is preserved in this context because it is the language of the legislation. 58. Nettheim, ‘Native Title: Facts, Fallacies and the Future’, note 21 above, p 18. Nettheim claims that the court in Mabo (No 2) found the so-called jurisprudence of these claims very influential. See also comments to this effect by French CJ writing extra-judicially in ‘The Role of the High Court in the Recognition of Native Title’ in L Strelein (ed), Dialogue about Land Justice — Papers from the National Native Title Conference, Aboriginal Studies Press, ACT, 2010, pp 86–87. 59. M Wilkie, Aboriginal Land Rights in New South Wales, Alternative Publishing Co-Operative, Sydney, 1985. 60. To some, however, the legislation remains primarily a compensation-style Act rather than a land rights Act. It is worth noting that the Queensland legislation relies on a different approach, where the claim process provides a hierarchy of bases for entitlement to claimable land: first traditional affiliation, then historical association and, lastly, needs. 61. Johnson v McIntosh 8 Wheat 543 (1823). Although the Indians lost this case, the court clearly acknowledged that they were the rightful occupants of the land and that they had a valid legal claim to retain possession of it. However, the court found that their rights to complete sovereignty had been diminished and burdened.

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law, while Calder v Attorney-General of British Columbia62 in Canada and R v Symonds63 in New Zealand both relied on the continued existence of native title. Those seeking to test the native title doctrine in the Australian context were given hope by two cases in particular. They were Administration of Papua v Daera Guba64 and Coe v  Commonwealth.65 In the first case, Barwick CJ intimated that native title might exist, while, in the second, the whole court agreed that the issue of native title amounted to an ‘arguable question if properly raised’.66 In Northern Land Council v Commonwealth (No 2),67 native title was referred to as a ‘question of fundamental importance’. Further, in Gerhardy v  Brown,68 Deane J seemed to reveal dissatisfaction with the decision in Milirrpum when he stated that if Milirrpum were correct, Australia had not yet achieved the ‘retreat from injustice’ that had taken place in American jurisprudence at  the beginning of the 19th century. 4.14  In this climate, five Meriam plaintiffs initiated proceedings in the High  Court against the state of Queensland. Two dropped out, leaving Eddie Mabo, David Passi and James Rice to continue. These men sought a declaration that the Meriam people were entitled to their lands and the surrounding waters in the Murray Islands, on the basis that they held a traditional native title to them; or, in the alternative, that they held their land by virtue of possessory title or local custom.The plaintiffs also argued that any interference with or infringement of these rights constituted a breach of a fiduciary duty owed by the state of Queensland to the Meriam people. Such a breach would, they argued, cause compensation to flow. In February 1986, the matter was remitted to the Supreme Court of Queensland for hearing. The court was also to determine all matters of fact that the pleadings raised,69 but its task was interrupted when the status of the Queensland Coast Islands Declaratory Act  1985 (Qld) had to be clarified midstream. The defendant relied on this Act and, while its validity was tested, the case had to be adjourned. The effect of this Act was to declare retroactively that, on annexation, the islands off the Queensland coast (including the plaintiffs’ home island of Mer): … were vested in the Crown in the right of Queensland freed from all other rights, interests and claims of any kind whatsoever and became waste lands of the Crown in Queensland.70

The High  Court held that the Queensland Act contravened s  10 of the Racial Discrimination Act 1975 (Cth) because it ‘abrogated the immunity of the Meriam people Calder v Attorney-General of British Columbia (1973) 34 DLR (3rd) 145 at 218–19 (SC Canada). R v Symonds [1847] NZPCC 387 at 390. Administration of Papua and New Guinea v Daera Guba (1973) 130 CLR 353 at 397. Coe v Commonwealth (1979) 53 ALJR 403. Coe v Commonwealth (1979) 53 ALJR 403 at 408 per Gibbs J; at 411 per Jacobs J; at 412 per Murphy J. Northern Land Council v Commonwealth (No 2) (1987) 61 ALJR 616 at 620. Gerhardy v Brown (1985) 159 CLR 70 at 149. See Nettheim, ‘Native Title: Facts, Fallacies and the Future’, note 21 above, p 18. 69. This litigation led to the decision reported as Mabo v Queensland (No 1) (1988) 166 CLR 186; 83 ALR 14. 70. Queensland Coast Islands Declaratory Act 1985 (Qld) s 3. 62. 63. 64. 65. 66. 67. 68.

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from arbitrary deprivation of their legal rights in and over the Murray Islands’.71 The finding allowed the litigation to proceed to the next stage, where the question of whether native title existed was decided.72

The finding in Mabo (No 2) General 4.15  The High  Court in Mabo v  Queensland (No 2)73 held that the common law of Australia recognised a form of native title that was grounded in the laws and customs of Indigenous people. The court concluded that the ‘rights and interests in land possessed by the Indigenous inhabitants of the territory’ existed long before the relevant laws of England were brought to Australian shores and that they ‘survived the change in sovereignty’.74 As this was the first time an Australian appellate court recognised native title, enforcement through the courts of the rights associated with native title became available only from 1992.

Sovereignty 4.16  The Crown’s acquisition of sovereignty was, however, held not to be justiciable in a municipal court.75 Further, when the British Crown acquired sovereignty, native title was not automatically extinguished. Instead, sovereignty gave rise to radical or ultimate title, rather than absolute beneficial ownership. Therefore, it was only where native title was extinguished altogether that the Crown’s radical title blossomed into absolute beneficial ownership.This approach (best exemplified in the leading judgment of Brennan J) allowed the court to recognise native title rights while retaining the basic structure or ‘skeleton’ of the common law property system.76 Origin and nature of native title 4.17  According to the reasoning in Mabo (No 2), the origins and content of native title lie in the ‘traditional laws acknowledged by and the traditional customs observed by the Indigenous inhabitants of a territory’.77 The nature and incidents of native title are also 71. Mabo v Queensland (No 1) (1988) 166 CLR 186; 83 ALR 14 at 96. 72. Moynihan J of the Supreme Court of Queensland (to whom the matter had been remitted for a finding of fact) delivered his determination on 16 November 1990: Mabo v Queensland [1992] 1 Qd R 78.The law (as opposed to the facts of the matter) was decided by the High Court in the next stage of the litigation, reported as Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1. 73. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1 (Mabo (No 2)). 74. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 57; 107 ALR 1 at 41 per Brennan J. Similar expressions are to be found at CLR 81–2; ALR 60–1 per Deane and Gaudron JJ; at CLR 182–4; ALR 142–3 per Toohey J. 75. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 69; 107 ALR 1 at 51 per Brennan J. 76. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 29 per Brennan J, referring to ‘the skeleton of principle which gives the body of our law its shape and internal consistency’. S Young ‘Native Title As Displaced Mediator’ (2021) 44 UNSW Law Journal 1739, argues that the High Court ‘constructs native title and then retroactively posits that it pre-exists the acquisition of Crown sovereignty to make the Crown’s acquisition of sovereignty appear legally objective and unassailable’ (at 1745). 77. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 58; 107 ALR 1 at 42.

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determined by reference to the customs and laws of the Indigenous group, and their ascertainment is a ‘matter of fact’.78 While, on one hand, this is a respectful approach, on the other hand, it has placed a large burden on Indigenous people to prove by factual evidence what those customs and traditions involve. Clearly, where there is a clash of cultures (Indigenous versus non-Indigenous) this task becomes somewhat difficult, despite the practical efforts of some courts that have been willing to employ a variety of approaches aimed at bridging this gap.79 Ordinarily, native title will be a communal rather than an individual title, but that does not preclude Indigenous laws and customs creating entitlements in individuals.80 Later cases have explored this issue further, and demonstrated that different Indigenous groups are not precluded from coming onto the land and using it for hunting and ceremonies, for example, if that has been the traditional practice.81 Rights under native title generally belong to group members and membership is determined, according to Brennan J, by ‘biological descent’ along with ‘mutual recognition of a particular person’s membership by that person and by the elders or other persons enjoying traditional authority among those people’.82 Native title is also conceived of as an inalienable right, although it is possible to surrender it to the Crown.83 The lack of alienability raises an issue that is discussed in more detail later: how should native title be characterised? In Mabo (No 2) it was variously described 78. Mabo v  Queensland (No 2) (1992) 175 CLR 1 at  58; 107 ALR 1 at  42 per Brennan J. This view was supported in Wik Peoples v Queensland (1996) 187 CLR 1 at 169 per Gummow J. 79. In an effort to bridge the cultural gap, some courts have been willing to hold hearings in situ — in the bush or the desert, for example — rather than in the courtroom. In Members of the Yorta Yorta Aboriginal Community v Victoria [1998] FCA 1606 (Yorta Yorta Aboriginal Community v Victoria), Olney J began taking oral evidence at a temporary shelter at Rumbalara Community near Mooroopna,Victoria. He later took evidence at another 65 locations. 80. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 109–11; 107 ALR 1 at 83 per Deane and Gaudron JJ. 81. Ward v Western Australia (1998) 159 ALR 483 at 550–2. 82. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 70; 107 ALR 1 at 51 per Brennan J. Note that the issue of who is Indigenous and who is not is very contentious. While in the 1970s there was a movement away from the ‘bloodline definitions’ embodied in terms such as ‘half caste’ and ‘quadroon’, there has been a call by Michael Mansell, Indigenous lawyer and activist, as well as others, including members of the former Aboriginal and Torres Strait Islander Commission (ATSIC), to return to a biological descent test. They hope that a stricter test will lead Indigenous resources to be less taxed by an increasing number of people who identify as Indigenous. See  ‘Land is Not Enough — Mabo Ten Years On’ and ‘It’s Still Disputed Territory — Mabo: Land is Not Enough’, The Weekend Australian, Features, 1 June 2002, pp 19 and 24. Disputes over the appropriate criteria for identification of persons as Indigenous or not still cause controversy, as can be seen in litigation involving remarks by the commentator Andrew Bolt on the issue in the Federal Court: see Eatock v Bolt (2011) 197 FCR 261.The ‘tripartite test’ used by Brennan J in Mabo (No 2) was also adopted by the majority of the High Court in Love v Commonwealth of Australia; Thoms v Commonwealth of Australia [2020] HCA 3, (2020) 270 CLR 152, at 616 [81] (per Bell J), to determine whether or not someone was an Indigenous person and hence unable to be deported as an ‘alien’. 83. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 70; 107 ALR 1 at 51 per Brennan J; at CLR 110; ALR 83 per Deane and Gaudron JJ.The possibility that native title might be transferred from one traditional group to another was discussed, though held not to be applicable on the facts of that case, in Dale v Moses [2007] FCAFC 82 at [120]. See also D Yarrow, ‘The Inalienability of Native Title in Australia: A Conclusion in Search of a Rationale’ in S Brennan et al (eds), Native Title from Mabo to Akiba: A Vehicle for Change and

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as being ‘proprietary’,84 ‘personal’,85 ‘usufructuary’,86 ‘sui generis’,87 affording a ‘permissive occupancy’88 and perhaps ‘possessory’.89

Connection 4.18  According to Brennan J in Mabo (No 2): Where a clan or group has continued to acknowledge the laws and (so far as is practicable) observe the customs based on the traditions of that clan or group, whereby their traditional connection with the land has been substantially maintained, the traditional community title of that clan or group can be said to remain in existence.90

Yet this connection is not to be ‘frozen as at the moment of establishment of a Colony’.91 Indeed, Deane and Gaudron JJ stated that: Provided any changes do not diminish or extinguish the relationship between a particular tribe or other group and particular land, subsequent developments or variations do not extinguish the title in relation to that land.92

The type of connection that is required was another issue for consideration. Different views were expressed. Brennan J required only a ‘traditional connection’93 with the land, while Deane and Gaudron JJ referred to ‘occupation or use’.94 By comparison, Toohey J emphasised the need for a ‘physical presence’ on the land,95 but his approach did not preclude claimants living a nomadic existence from establishing the requisite connection. He stated that connection should be judged ‘in accordance with the way of life and habits, customs and usages’ of the claimants.96 Where there is a loss of connection with Indigenous traditions and customs, native title will be extinguished. Ceasing to acknowledge traditional law or failing to observe

84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96.

Empowerment?, The Federation Press, Sydney, 2015, pp 60–74, for the view that the doctrine needs more substantial justification than has so far been provided. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 61; 107 ALR 1 at 44 per Brennan J. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 61; 107 ALR 1 at 44 per Brennan J; at CLR 110; ALR 83 per Deane and Gaudron JJ. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 61; 107 ALR 1 at 44 per Brennan J. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 88–9; 107 ALR 1 at 66–7 per Deane and Gaudron JJ; at CLR 132–3; ALR 101–2 per Dawson J. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 132–3; 107 ALR 1 at 101–2 per Dawson J. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 214; 107 ALR 1 at 167 per Toohey J. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 59–60; 107 ALR 1 at 43. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 110; 107 ALR 1 at 83 per Deane and Gaudron JJ. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 110; 107 ALR 1 at 83. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 59; 107 ALR 1 at 43. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 110; 107 ALR 1 at 83. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 188; 107 ALR 1 at 147. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 188; 107 ALR 1 at 147. For a comprehensive discussion of the requirements for connection and ultimately proof of native title, see Bartlett, Native Title in Australia, note 40 above, Ch 7, discussing the position in light of the decision of the High Court in Members of the Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538 (Yorta Yorta Aboriginal Community v Victoria).

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customs would amount to a loss of connection, as would the death of the last member of the group or clan.97

Native title over waters 4.19  Mabo (No 2) asserted that native title exists over land. The implication seems clear that it also exists over water, permitting Indigenous people the right to fish in rivers, for example.98 However, the specific issue of whether native title extended to coastal seas and other offshore areas went unanswered by that decision.The issue is explored below at 4.34. Extinguishment 4.20  The concomitant of sovereignty, radical title, permits the Crown to extinguish native title where a clear and plain intention to extinguish is evident.99 The majority in Mabo (No 2), relying on the presumption set out in Adeyinka Oyekan v  Musendiku Adele,100 found that no intention to extinguish native title existed at  the point of the British acquisition of sovereignty.101 Native title was, however, extinguished on a more ad hoc basis by the Crown and the various legislatures. Acts of extinguishment can include: • the passing of legislation that manifests an intention to extinguish native title; • valid laws or executive acts creating rights in land in third parties that are inconsistent with the survival of native title; and • Crown acquisition of the absolute beneficial ownership of land. 4.21  Extinguishment by legislation  When legislation extinguishes native title, it is common for it to vest an interest in the Crown itself or a third party. At other times, the extinguishing legislation may cause executive acts to be inconsistent with the continuation of native title. Although acts of extinguishment must be unambiguous,102 the legislation need not single out the particular interests to be extinguished. If the general intention of the legislation exhibits a clear and plain intention to extinguish, that will be adequate.103 In some cases, however, the legislation or acts will be compatible with the continued existence of native title — albeit, at times, continued existence with limitations.To explain, some legislation will permit the co-existence of native title along with the carrying out of a statutory purpose. For example, legislation that sets aside land for a national park could 97. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 69; 107 ALR 1 at 51. 98. See Water Management Act 2000 (NSW) s 55, which recognises the right of native title holders in many circumstances to ‘take and use water in the exercise of native title rights’ without complying with licensing requirements. 99. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 64; 107 ALR 1 at 46 per Brennan J; at CLR 111; ALR 84 per Deane and Gaudron JJ; at CLR 196; ALR 153 per Toohey J. 100. Adeyinka Oyekan v Musendiku Adele [1957] 1 WLR 876 at 880. 101. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 57; 107 ALR 1 at 41 per Brennan J; at CLR 82; ALR 60 per Deane and Gaudron JJ; at CLR 184; ALR 144 per Toohey J. 102. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 64; 107 ALR 1 at 46 per Brennan J; at CLR 111; ALR 84 per Deane and Gaudron JJ. 103. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 196; 107 ALR 1 at 152–3 per Toohey J.

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accommodate the continued existence of native title,104 as could the creation of reserves or the appointment of ‘trustees’ to control a reserve where no grant of title was made.105 In such circumstances, there would be no intention to extinguish native title. In Lawson v Minister for Environment & Water (SA),106 the New South Wales Court of Appeal was dealing with the question as to whether an Act commencing in 1915, which provided that certain land ‘vested in South  Australia for an estate of fee-simple’, had extinguished native title. The land was subject to a later compulsory acquisition process in 1922, which provided compensation for land owners. The court concluded that, while on the face of the 1915 legislation an immediate estate in fee simple had been created (which would have extinguished native title at that point), the relevant legislative scheme was simply to allow vesting at some future point, and that the actual acquisition of the land did not take place until 1922 (which then allowed that the plaintiff here may have been entitled to compensation under the acquisition law.) In coming to this view, Bathurst CJ noted at [25] that the court would not lightly adopt a construction of legislation that ‘has the effect of depriving persons of vested property rights without compensation’. 4.22  Extinguishment by inconsistent grant  Another method of extinguishing native title is through legislation that authorises the granting of an inconsistent interest over the very same land.107 Where the grant causes the two interests to be in conflict, native title will be extinguished to the extent of the inconsistency.108 Resolution of whether or not the grant is inconsistent involves an analysis of the nature and incidents of native title and their fields of operation, compared with the competing rights under the later grant.109 According to Mabo (No 2), at  common law the granting of estates or interests less than freehold or leasehold, such as an authority to prospect for minerals,110 would not necessarily extinguish native title. 4.23  Extinguishment by appropriation  If the Crown acquires the absolute beneficial ownership of land as the result of a compulsory acquisition,111 or surrender,112 native title will be extinguished. Further, extinguishment will also occur if the Crown commences works on the relevant land totally preventing native title holders from exercising their rights. It is necessary to examine the terms under which the native title interest is acquired in order to gauge whether the requisite intention to extinguish exists. In the case of 104. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 70; 107 ALR 1 at 51 per Brennan J; see also CLR 111; ALR 84 per Deane and Gaudron JJ; CLR 196; ALR 153 per Toohey J. Note that the circumstances outlined above may be subject to the operation of s 211 of the Native Title Act 1993 (Cth). 105. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 65–6; 107 ALR 1 at 48 per Brennan J. 106. Lawson v Minister for Environment & Water (SA) [2021] NSWCA 6, (2021) 246 LGERA 421. 107. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 46; 107 ALR 1 at 32 per Brennan J. This was explored further in Wik Peoples v Queensland (1996) 187 CLR 1 at 85 per Brennan CJ; Western Australia v Ward (2000) 99 FCR 316; 170 ALR 159 at 180–1. 108. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 69; 107 ALR 1 at 51. 109. See 4.57–4.62. 110. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 69; 107 ALR 1 at 51. 111. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 70; 107 ALR 1 at 52. 112. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 70; 107 ALR 1 at 51–2.

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‘works’, the examination is of the nature of the works. Extinguishment would, therefore, seem to extend to the compulsory acquisition of land for use as a school, for example. Extinguishment by appropriation raises the issue of whether the mere statutory dedication of land for a specific purpose is enough of itself to extinguish native title. According to Brennan J it is not.113 The use of the land extinguishes native title. However, the question is one that has been debated in subsequent cases. In Western Australia v Ward,114 the majority of the High Court rejected the notion of ‘operational inconsistency’ and affirmed that the relevant issue is not how the land is actually used, but whether there has been a disposition of the relevant rights and interests in a way that is inconsistent with continued recognition of native title. In other words, questions of extinguishment of native title must be addressed by considering the ‘rights’ granted rather than considering evidence of how the land was actually used.115 At one stage, the decision of the Full Court of the Federal Court in De Rose v South Australia (No 2),116 was thought to establish that native title in a specific area had been extinguished only once specific improvements authorised by the terms of a lease had been erected. However, it seems clear since the later decision of the High Court in Western Australia v Brown117 that this view is wrong, and the view expressed previously in Ward is the correct one. Further, it is worth noting that negotiated settlements may also be executed. These may extinguish native title through surrender, but will not necessarily do so.118 Hence, while native title did survive the acquisition of sovereignty, its continued existence has been precarious. In fact, native title was highly precarious; more precarious than titles derived from the Crown, which cannot be extinguished by inconsistent grant. Fortunately, since 1975 this harshness has been tempered somewhat by the interaction of the Racial Discrimination Act 1975 (Cth) with native title.The difference this Act made is illustrated in Mabo v Queensland (No 1) (Mabo (No 1)) and Western Australia v Commonwealth, for example.119

113. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 68; 107 ALR 1 at 50. 114. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1. 115. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [215]–[216], [234]. 116. De Rose v South Australia (No 2) [2005] FCAFC 110 at [157]. See the comment by R Bartlett,‘Outstanding Matters of Proof and Extinguishment Left Over from Ward and Yorta Yorta: De Rose in the Full Federal Court’ (2005) 24 Australian Resources and Energy Law Journal 219. Special leave to appeal the decision to the High Court was refused: see Fuller v De Rose [2006] HCA Trans 49. 117. Western Australia v Brown (2014) 253 CLR 507. See further discussion below at 4.58. 118. The negotiated agreement made at  Crescent Head between the New  South  Wales Government and the Dunghutti people involved recognition of native title and payment for impairment of it, because a subdivision of the land had taken place. The payment was reportedly 150% of the freehold value of the land. The agreement did not result in extinguishment of native title. See B Horrigan and S Young (eds), Commercial Implications of Native Title, The Federation Press, Sydney, 1997, pp 19–20. See also the agreement between Boral and the Nyungah claimants of the Swan River and Swan Coastal Plains, signed on 16 January 2003. 119. Mabo v Queensland (No 1) (1988) 166 CLR 186; 83 ALR 14; Western Australia v Commonwealth (1995) 183 CLR 373.

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Fiduciary relationship? 4.24  Toohey J in Mabo (No 2) suggested that the Crown was in a fiduciary relationship with native title holders.120 He came to this conclusion on the basis that, first, native title could not be alienated to anyone outside the clan or group except to the Crown; and, second, the Crown was able to extinguish native title. According to Toohey J, the existence of a fiduciary relationship did not preclude the legislature from extinguishing native title but, if extinguishment were adverse to the native title holders’ interests or was brought about in a manner that ignored those interests, then a breach of the fiduciary obligation would result and damages would be payable.121 Brennan J in Mabo (No 2) concluded that, if Indigenous people surrendered native title to the Crown in expectation of the receipt of a Crown grant, a fiduciary obligation may arise.122 His reasoning focused on the expectation itself giving rise to a fiduciary obligation. Deane and Gaudron JJ’s approach was slightly different. They thought that native title could be protected by virtue of the imposition of a constructive trust under which the Crown was the trustee, and native title holders the beneficiaries.123 Notably, the relationship of trustee and beneficiary is one of those recognised as giving rise to a fiduciary obligation.

Compensation 4.25  By a narrow margin, the High Court in Mabo (No 2) did not support the payment of compensation for prior extinguishment of native title. Mason CJ and McHugh J stated that: … neither of us nor Brennan J agrees with the conclusion to be drawn from the judgments of Deane, Toohey and Gaudron JJ that, at least in the absence of a clear and unambiguous statutory provision to the contrary, extinguishment of native title by the Crown by inconsistent grant is wrongful and gives rise to a claim for compensatory damages.124

They also noted that Dawson J’s judgment supported the conclusion that compensation was not payable, because Dawson J characterised native title as a form of permissive occupancy at the will of the Crown.125 The Crown could simply withdraw its permission without facing the obligation to compensate. Compensation has since been provided for under legislation, as discussed at 4.33 below.

120. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 199–205; 107 ALR 1 at 156–60. 121. The Canadian jurisdiction (where a fiduciary duty is known to exist regarding Aboriginal rights) offers guidance on the payment of damages. See Guerin v R (1984) 13 DLR (4th) 321. 122. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 60; 107 ALR 1 at 43. 123. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 113; 107 ALR 1 at 85–6. 124. Mabo v Queensland ⁽No 2) (1992) 175 CLR 1 at 15; 107 ALR 1 at 7. 125. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 15; 107 ALR 1 at 7.

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Some key continuing issues in the ‘common law’ of native title General 4.26  As the court in Mabo (No 2) was not in complete agreement on a number of aspects of native title, several issues were left without clarification. Debate has continued, a significant volume of litigation has ensued, generating much case law, and significant legislation has been enacted. According to Kirby J, in Commonwealth v Yarmirr (known as the Croker Island case): It was to be expected that [the] … significant change in legal doctrine [initiated by Mabo (No 2)] would give rise to many doubts and uncertainties, especially during the early stages of clarification and elucidation … The process of elucidation of the law is continuing.126

An account of the relevant legislation is provided later in this chapter; meanwhile, some of the key issues and problems emerging in the decisions of later courts in what may be called the ‘common law’ of native title following from Mabo (No 2)127 follow.

Connection to the land 4.27  As mentioned above, the issue of connection to the land proved to be an interesting point of divergence between Brennan, Deane, Gaudron and Toohey JJ in Mabo (No 2). One aspect of that divergence arose in relation to the need for a physical connection to the land. Decisions such as Pareroultja v Tickner128 and Mason v Tritton129 have not tended to emphasise a physical presence requirement, while the High Court in Western Australia v Ward130 found it unnecessary to decide whether continuing use or physical connection were required. Notably, the Full Federal Court decision in Yorta Yorta Aboriginal Community v Victoria131 did not support a finding of native title as the result of simply carrying out activities on the land, unless the activities are connected or linked to the traditions and customs of the group. Kirby J, in Commonwealth v Yarmirr,132 also favoured an approach that downplayed the importance of physical occupation. He distanced himself from the primary judge and the majority of the Full Court in Yarmirr, believing that Mary Yarmirr’s references to ‘my country’ or ‘Mandilarri-Ildugij country’, and her culturally different explanations of

126. Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 at [242]. 127. See Mabo v Queensland (No 2) (1992) 175 CLR 1 at 70; 107 ALR 1 at 51–2. 128. Pareroultja v Tickner (1993) 42 FCR 32 at 39. 129. Mason v Tritton (1994) 34 NSWLR 572. 130. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [64]. 131. Members of the Yorta Yorta Aboriginal Community v  Victoria (2001) 110 FCR 244; 180 ALR 655 at [122]–[129]. 132. Commonwealth v  Yarmirr (2001) 208 CLR 1; 184 ALR 113 at  [304]. Note that Gleeson CJ, Gaudron, Gummow and Hayne JJ delivered a joint judgment. McHugh, Kirby and Callinan JJ were in dissent on some issues.

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how her people ‘owned’ the particular estate, were helpful in ascertaining the issues of possession and ownership. He stated: … such concepts appear far more relevant than physical possession of the area which, of its nature [it consisted of an area of sea] was not capable of being “occupied”, as nonIndigenous perspectives understand that term.133

Further, he saw Yarmirr’s comments, accepted by traditional law and custom, as an ‘integral part of the “socially constituted fact”’ that the High Court had upheld in Yanner v Eaton.134 In De Rose v South Australia (No 2),135 the Full Court of the Federal Court made it clear that an absence of physical presence on the land alone did not preclude the establishment of a relevant ‘connection’, especially where at least one major reason for irregular or limited physical use of the land was a justified fear of harm from non-Indigenous occupants.136 4.28  One of the reasons that the issue of continuing connection has become vexed is because it necessarily raises the question of how far present practices can deviate from past ones without loss of connection.137 Despite statements in Mabo (No 2)138 that suggest a repugnancy towards a ‘frozen rights’ approach,139 some later cases have shown less tolerance for change to, and adaptation of, Indigenous customs and traditions.At first instance, Olney J in the Yorta Yorta decision found, by relying on the amateur anthropological observations of a pastoralist, Edward Curr, from the 1840s, rather than later Indigenous accounts, that the claimants had lost their traditional connection with the land.140 He found a lack of evidence of ‘aspects of traditional lifestyle’141 and, in words echoing back to Brennan J in Mabo (No 2),142 that ‘the tide of history [had] indeed washed away any real acknowledgment of their traditional laws and any real observance of their traditional customs’.143 His views seemed to reflect the more conservative approach taken in some Canadian cases, such as 133. Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 at [304]. 134. Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 at [304]; Yanner v Eaton (1999) 201 CLR 351 at 372–3. 135. De Rose v South Australia (No 2) [2005] FCAFC 110 at [101]. 136. See also the decision of the Full Court of the Federal Court in Worimi (aka Gary Dates) v Worimi Local Aboriginal Land Council (2010) 181 FCR 320 at [87] confirming that ‘connection may be mainly spiritual rather than physical; it may have evolved over time to a less specific use of all or many parts of that land; it may not involve physical access to each and every part of the land’. 137. J Gray, ‘O Canada! Van Der Peet as Guidance on the Construction of Native Title Rights: The Gladstone Decision’ (1997) 2(1) Australian Indigenous Law Reporter 18; [1997] AUIndigLawRpr 10. 138. Brennan J in Mabo v Queensland (No 2) (1992) 175 CLR 1 at 61; 107 ALR 1 at 44 pointed out that ‘in time the laws and customs of any people will change’, but as long as the people remained an identifiable community ‘living under its laws and customs’ ‘the communal native title survives’. 139. The strongest manifestation of a ‘frozen rights’ approach requires an adherence to customs and traditions in the same state as before European contact. 140. YortaYorta Aboriginal Community v Victoria [1998] FCA 1606 at [109]–[121], [129]. See J Cockayne,‘Members of   Yorta Yorta Aboriginal Community v Victoria; Indigenous and Colonial Traditions in Native Title’ (2001) 25 MULR 786. 141. Yorta Yorta Aboriginal Community v Victoria [1998] FCA 1606 at [118]–[119]. 142. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 60; 107 ALR 1 at 43. 143. Yorta Yorta Aboriginal Community v Victoria [1998] FCA 1606 at [129].

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R v Van der Peet,144 R v NTC Smokehouse145 and R v Pamajewon.146 Those cases respectively found that the selling of 12 fresh salmon, the selling of processed fish, and high-stakes Bingo games were examples of activities that deviated too far from the original customs to be construed as modern manifestations of older traditions and customs.147 However, when it came to Hayes v Northern Territory, Olney J’s position seemed to have changed slightly. There he spoke of ‘some modification and adaptation of the old laws and customs’ as being acceptable.148 The acceptance of modification could also be seen in Yanner v Eaton,149 where Gummow J, in discussing whether the use of a motor-powered boat for fishing essentially altered a traditional activity, concluded that it was simply ‘an evolved, or altered, form of traditional behaviour’. While it was not a decision about the existence of native title, a similar result was reached in the decision of the Queensland Court of Appeal in Stevenson v Yasso.150 Mr Yasso was found to be not guilty of possessing a fishing net without a licence because his doing so was incidental to taking fish in accordance with ‘Aboriginal tradition’. The majority specifically held that the fact that he was using a modern net, which was not made of traditional fibres, did not stand in the way of him claiming that he was fishing under Aboriginal tradition.151 4.29  On appeal in the Full Federal Court, the majority in Yorta Yorta (Branson and Katz JJ) rejected the appellants’ argument that Olney J’s first instance decision had been prefaced on a frozen rights approach.152 The majority also said that if a frozen rights approach had been taken, it would have been wrong. Instead, they found that much hinged on what the word ‘traditional’ meant and how s 223 of the Native Title Act 1993 (Cth) operated.153 They emphasised that native title is able to survive changes to traditionally based practices, but it will be extinguished if those changes mean that practices cannot properly be ‘characterised as traditional’.154 Native title will also be extinguished where the practice ‘reflect[s] a breaking with the past rather than the maintenance of the ways of the past in changed circumstances’.155 Branson and Katz JJ also stated that the test for whether a custom or tradition retained its traditional character was objective rather than 144. R v Van der Peet (1996) 137 DLR (4th) 289; Van der Peet v R [1996] 2 SCR 507. 145. R v NTC Smokehouse Ltd [1996] 2 SCR 672; (1996) 137 DLR (4th) 528. 146. R v Pamajewon [1996] 2 SCR 821. 147. J Gray, ‘O Canada! Van der Peet as Guidance’, note 132 above. See also Hamlet of Baker Lake v Minister of Indian Affairs and Northern Development (1979) 107 DLR (3rd) 513 at 526–9. 148. Hayes v Northern Territory (1999) 97 FCR 32 at [30]. 149. Yanner v Eaton (1999) 201 CLR 351 at [68]. 150. Stevenson v  Yasso [2006] 2 Qd R 150; by a 2:1 majority, McMurdo P and Fryberg J (McPherson JA dissenting). The case involved a specific provision of s 14 of the Fisheries Act 1994 (Qld), but reference was made to native title cases in coming to the decision. 151. Stevenson v Yasso [2006] 2 Qd R 150 at [49]. 152. At first instance, per Olney J, Yorta Yorta Aboriginal Community v Victoria [1998] FCA 1606. On appeal to the Full Federal Court, Yorta Yorta Aboriginal Community v Victoria (2001) 110 FCR 244; 180 ALR 655. 153. The Act is discussed below at 4.63–4.74. 154. Yorta Yorta Aboriginal Community v Victoria (2001) 110 FCR 244; 180 ALR 655 at [122]. 155. Yorta Yorta Aboriginal Community v Victoria (2001) 110 FCR 244; 180 ALR 655 at [122].

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subjective.156 This view may be compared, and perhaps contrasted, with Kirby J’s view in the High Court decision of Yarmirr, in which he says that: It is the traditional connection arising from the acknowledgement of laws and customs by the Indigenous community, and not recognition or acceptance by others of the connection, which is the source of native title.157

4.30  Quite notable was Black CJ’s dissenting judgment in the Federal Court Full Court Yorta Yorta decision. He found that the decision at first instance, although not exactly based on a ‘frozen rights’ approach, was nevertheless too restrictive in its understanding of the term ‘traditional’. His approach has been said to mark a subtle shift in the interpretation of the term ‘traditional laws and customs’, because it moves away from seeing the traditional laws and customs contemplated by s 223 of the Native Title Act as ‘traditions in themselves’, towards seeing them ‘as laws and customs drawn from a particular Indigenous tradition, a particular Indigenous socio-legal order’.158 On the analysis offered by Black CJ, these ‘traditions’, it was argued, operated as ‘fundamentally dynamic, normative frameworks, reaching across generations’. They are not ‘freestanding practices’, but instead need to be conceptualised as ‘interrelated elements within these normative frameworks’.159 4.31  On appeal to the High Court in Yorta Yorta, Gleeson CJ, Gummow and Hayne JJ, forming part of the majority, continued the discussion relating to normative systems.160 They found that Indigenous customs were not freestanding, but instead were referenced to a normative framework. Even so, they did not allow the appeal. On the issue of normative systems, they stated: It is only if the rich complexity of Indigenous societies is denied that the reference to traditional laws and customs as a normative system jars the ear of the listener.161

156. Yorta Yorta Aboriginal Community v Victoria (2001) 110 FCR 244; 180 ALR 655 at [127]. 157. Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 at [307] (emphasis in original). Note that Kirby J was in dissent from the majority in regard to several aspects of the decision. 158. Cockayne, ‘Members of Yorta Yorta Aboriginal Community v Victoria; Indigenous and Colonial Traditions in Native Title’, note 140 above. 159. Cockayne makes this argument: Cockayne, ‘Members of Yorta Yorta Aboriginal Community v  Victoria; Indigenous and Colonial Traditions in Native Title’, note 140 above. See also A Reilly, ‘Land Rights — From Past to Present to Absent’ (2001) 26(3) Alternative Law Journal 143. 160. Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538. For discussion and critique, see J Gray, ‘The Lost Promise of Mabo: An Update on the Legal Struggle for Land Rights in Australia with Particular Reference to the Ward and YortaYorta decisions’ (2003) 23 Canadian Journal of Native Studies 305– 48; R Bartlett, ‘An Obsession with Traditional Laws and Customs Creates Difficulty Establishing Native Title Claims in the South: Yorta Yorta’ (2003) 31 Western Australian Law Review 35–46; R Bartlett, ‘Humpies not Houses, or The Denial of Native Title: A Comparative Assessment of Australia’s Museum Mentality’ (2003) 10 Australian Property Law Journal 83. Gray and Bartlett both refer to the devastating critique of the High Court decisions in Yorta Yorta and Ward by Noel Pearson: see N Pearson, ‘The High Court’s Abandonment of “The Time-Honoured Methodology of the Common Law” in its Interpretation of Native Title in Mirriuwung Gajerrong and Yorta Yorta’ (2003) 7 Newcastle Law Review 1. 161. Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538 at [40].

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The same judges also went on to discuss specifically the issue of how change affected ‘connection’. In particular, they asked critically important questions, such as:What is it that actually intersects with the common law? Is it a body of law and custom as it exists today but which, in some way, is connected with a body of law and custom that existed at sovereignty? How, if at all, is account to be taken of the inescapable fact that since, and as a result of, European settlement, Indigenous societies have seen great change?162 In attempting to answer these questions, Gleeson CJ, Gummow and Hayne JJ found that it is imperative to address them by bearing in mind ‘all the elements of the definition of native title’.163 Native title that represents communal, group or individual rights in relation to land or water, in accordance with s 223 of the Native Title Act, must be: • possessed under traditional laws acknowledged by traditional customs observed by the people concerned — put another way, the rights and interests ‘must find their source in traditional law and custom, not in the common law’;164 • such that ‘… by the traditional laws acknowledged and traditional customs observed by the relevant peoples, those peoples have “a connection with” the land or waters … the connection to be identified is one whose source is traditional law and custom, not the common law’;165 • ‘recognised’ by the common law of Australia.166 The last element for consideration necessarily raises the issue of timing. When is the relevant time to consider if the rights and interests are recognised by the common law of Australia? Is the law to be considered any aspect of the general law as it stood after the decision in Mabo (No 2), but before the enactment of the Native Title Act?167 Further, how does this element of the definition speak to the significance that is to be attached to the identification of what traditional law or custom may have said, ‘at the time sovereignty was first asserted, about the rights and interests of peoples in the land or waters’?168 4.32  Although the answers to these complex questions may take some time to tease out in relation to any given set of facts, it is clear that the High  Court has reaffirmed the importance of the position of customs and traditions at the time of the assertion of sovereignty.169 It has also re-emphasised the ‘forensic task’ of putting evidence of traditions

162. Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538 at [31]. 163. Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538 at [36]. 164. Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538 at [33]. 165. Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538 at [34]. 166. Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538 at [35]. 167. See Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538 at [33]. 168. See Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538 at [35] (emphasis in original). 169. Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538 at [79].

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and customs before the court as a means of establishing connection.170 Yet the court acknowledges that: It is not possible to offer any single bright line test for deciding what inferences may be drawn or when they may be drawn, any more than it is possible to offer such a test for deciding what changes or adaptations are significant.171

Although it is heartening that Gleeson CJ, Gummow and Hayne JJ state that some interruption of the enjoyment or exercise of native title rights and interests between the assertion of the Crown’s sovereignty and the present will ‘not necessarily be fatal to a native title claim’,172 it is disappointing that it remains so very difficult, in practical terms, to establish when the change or adaptation is of such a kind that the right or interest can no longer be considered a manifestation of the original tradition or custom.173 It is perhaps in response to these concerns that Graeme Neate, the then President of the National Native Title Tribunal, claimed in 2002 that many groups may turn to the use of mediated settlements rather than litigation.174 Since the High Court decision in Yorta Yorta, a number of decisions have hinged on the question of continuity of connection with the land.175 In Risk v  Northern Territory of Australia,176 Mansfield J found that the Larrakia people in the Darwin area had not observed traditional laws and customs since before European settlement of the area, and hence their claim for recognition of native title failed. Similarly, in Jango v Northern Territory of Australia177 Sackville J was unable to be satisfied that the applicants in a native title claim covering tourist areas near Uluru were part of a group of Western Desert people exercising traditional laws and customs sufficiently related to those exercised at  the acquisition of sovereignty. On the other hand, in Rubibi Community v  Western

170. Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538 at [80]. 171. Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538 at [82]. 172. Yorta Yorta Aboriginal Community v  Victoria (2002) 214 CLR 422; 194 ALR 538 at  [83] (emphasis in original). 173. S Young, The Trouble with Tradition: Native Title and Cultural Change, The Federation Press, Sydney, 2008, provides a detailed critique of what he calls the ‘over-particularity’ of the High Court’s view of tradition in Yorta Yorta. 174. ‘High Court DismissesYortaYorta Appeal’, National Native Title Tribunal media release, 12 December 2002, available at: (enter title of media release in search box to locate). 175. For a general overview of matters to be considered in establishing ‘connection’ with land, see V Hughston SC, ‘Native Title Connection: An Overview’ (2013) 118 Precedent 8–12. 176. Risk v Northern Territory of Australia [2006] FCA 404; see the conclusion expressed after a lengthy review of the evidence (at [834]). The trial decision was upheld on appeal in Risk v Northern Territory of Australia (2007) 240 ALR 74, and special leave to appeal was refused by the High Court: Risk v Northern Territory of Australia [2007] HCATrans 472. 177. Jango v Northern Territory of Australia (2006) 152 FCR 150, summarised in [499]–[507]. This case and the Risk decision, note 176 above, are discussed in R Webb and G Kennedy, ‘The Application of Yorta Yorta to Native Title Claims in the Northern Territory — The City and the Outback’ (2006) 25 Australian Resources and Energy Law Journal 201–13. The trial decision was upheld on appeal in Jango v  Northern Territory of Australia (2007) 159 FCR 531.

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Australia (No 7),178 Merkel J found that the local Indigenous community near Broome had established native title over areas of that town where there had not been extinguishment. In Sampi v Western Australia,179 the Full Court held that a relevant connection to land in the Dampier Peninsula had been made out.180 In Bennell v Western Australia,181 Wilcox J at first instance found that the Noongar people in south-western Western Australia constituted a community that was able to establish relevant continuity and, in a (politically, if not legally) controversial decision, ruled that native title might still exist over a large settled region that includes metropolitan Perth and a number of smaller towns. However, this decision was overturned on appeal in Bodney v Bennell,182 the Full Court holding that his Honour had not addressed the question whether there had been continuous acknowledgment and observance of the traditional laws and customs by the community from sovereignty until recent times.183 The Full Court indicated that continuity must be established ‘for each generation’.184 Following the Full Court decision in the Noongar claim, negotiations have been underway for a settlement of issues in the area outside the court system. A group called the South West Aboriginal Land and Sea Council (SWALSC) has been involved on behalf of native title holders.185 Part of the arrangements involved the enactment by the Western Australia Parliament of the Noongar (Koorah, Nitja, Boordahwan) (Past, Present, Future) Recognition Act 2016 (WA), which was assented to on 6 June 2016. However, the settlement also requires the registration under the Native Title Act 1993 (Cth) of a number of Indigenous Land Use Agreements (ILUAs) (see 4.67 for more detail about these agreements). In McGlade v Native Title Registrar,186 the Full Court of the Federal Court held 178. Rubibi Community v  Western Australia (No 7) [2006] FCA 459. The decision was upheld on appeal in Western Australia v Sebastian (2008) 173 FCR 1. 179. Sampi v Western Australia (2010) 266 ALR 537. 180. For comment, see M Burns, ‘Challenging the Assumptions of Positivism: An Analysis of the Concept of Society in Sampi on Behalf of the Bardi and Jawi People v Western Australia [2010] and Bodney v Bennell [2008]’ (2011) 4(7) Land, Rights, Laws: Issues of Native Title 1–15. 181. Bennell v Western Australia (2006) 153 FCR 120. His Honour was careful to point out that native title claims could not be made against freehold land in the region, and that people’s ‘back yards’ would not be affected (see the summary of the judgment accompanying the formal report, at p 10). 182. Bodney v Bennell (2008) 167 FCR 84. 183. For comment on the Full Court judgment, see S Young, ‘One Step Forward and One Step Back: The Noongar South-West Native Title Claim’ (2008) 23 Aust Prop Law Bull 14–17; L Strelein, ‘Continuity and Change’ in Compromised Jurisprudence: Native Title Cases Since Mabo, 2nd ed, AIATSIS, 2009, Ch 10; Burns, ‘Challenging the Assumptions of Positivism: An Analysis of the Concept of Society in Sampi on behalf of the Bardi and Jawi People v Western Australia [2010] and Bodney v Bennell [2008]’, note 180 above. 184. Bodney v Bennell (2008) 167 FCR 84 at [72]–[73]. For discussion of ‘connection’ issues arising in Canada, see the decision in Tsilhqot’in Nation v British Columbia 2014 SCC 44, holding that connection can be established over a large area used for hunting and fishing even if close settlement had only taken place in a smaller area. 185. For background, see M Mccagh, ‘Native Title in the Southwest: the Noongar Recognition Bill’ (2015) 8(18) Indigenous Law Bulletin 26–9; G Kelly and S Bradfield, ‘Negotiating a Noongar Native Title Settlement’ in Brennan et al (eds), Native Title from Mabo to Akiba: A Vehicle for Change and Empowerment?, note 83 above, pp 249–56. 186. McGlade v Native Title Registrar [2017] FCAFC 10.

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that not all the proposed ILUAs could be registered, as not all the relevant individuals who jointly comprised the relevant registered native title claimant or claimants had signed the ILUAs. Legislation was then introduced into the Federal Parliament to allow an ILUA to be registered even if not all members of a registered native title claimant (RNTC) have agreed to it.187 The ILUAs were registered in October 2018.188 In a subsequent decision, the Full Court rejected an application for judicial review of the approval of the ILUAs,189 and the settlement formally commenced on 25 February 2021.190 The decision in Bodney191 confirmed the view of many commentators that the ‘connection’ requirements for native title had become too strict and, in many cases, almost impossible to establish. The Australian Law Reform Commission (ALRC) was asked to consider this issue, among others, in its most recent review of the area. In its final report, the ALRC made a number of recommendations for change to the legislation to clarify issues around the connection requirements.192 It proposed, for example, in s 223 of the Native Title Act, specific recognition that laws and customs may adapt and evolve, and provision that it is not necessary for those laws or the community concerned to have been in continuous and uninterrupted existence since sovereignty for a connection to be established. The Native Title Legislation Amendment Act 2021 implemented some, but not all, of the ALRC recommendations; it did not amend s 223.193

Compensation 4.33  As noted above,194 the position emerging from Mabo (No 2) was that compensation for loss of native title was not payable at common law.195 Nevertheless, after the Racial Discrimination Act came into force, the rights of Indigenous people were to be treated ‘no less favourably’ than the rights of non-Indigenous people.196 Some of the implications that were thought to arise from this legislation were addressed in the Native Title Act.The Act authorises the compulsory acquisition of native title by states, and grants a consequent right to compensation in ‘just terms’ where that occurs.197 A right to compensation in just terms is also established by the Commonwealth Constitution, but only in so far as the loss of native title amounts to an ‘acquisition’.198 187. See the Native Title Amendment (Indigenous Land Use Agreements) Act 2017 (Cth). 188. See  for a timeline. 189. See McGlade v South West Aboriginal Land & Sea Aboriginal Corporation (No 2) [2019] FCAFC 238. 190. See note 187 above. 191. Bodney v Bennell (2008) 167 FCR 84. 192. See Australian Law Reform Commission, Connection to Country: Review of the Native Title Act 1993 (Cth), ALRC Report 126, Commonwealth of Australia, April 2015. 193. For an overview of the largely technical amendments made by this Act, see M O’Donnell and M Stone ‘Takeaways from the “Native Title Legislation Amendment Act  2021” (Cth).’ (2021) (1) Native Title Newsletter 5–6. 194. See above at 4.25. 195. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1. 196. Western Australia v Commonwealth (1995) 183 CLR 373 at 453. 197. Native Title Act 1993 (Cth) s 24MD. 198. Commonwealth Constitution s 51(xxxi).

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The impact of the native title legislation on the question of compensation is examined later in this chapter.199

Native title over waters 4.34  The argument for denying the existence of native title over coastal waters was as follows. Native title was claimable only over land that fell under the umbrella of the Crown’s sovereignty. When the Crown acquired sovereignty on ‘settlement’, that sovereignty extended only as far as the mean low-water mark and not beyond it. Hence, no native title could exist over areas that were not within the bounds of the area claimed by sovereignty.200 Coastal waters and offshore areas were beyond these bounds. The majority of the High  Court in Commonwealth v  Yarmirr found that it is not necessary for the Crown to have radical title (a concomitant of sovereignty) for native title to exist in an area.201 The majority dismissed appeals from both the Commonwealth and the claimants, thereby affirming the first instance and Full Federal Court decisions. Those decisions were that native title did exist over the sea, but that it did not give rise to a right of exclusive possession. Instead, native title in this case constituted a right to fish, hunt and gather for personal, non-commercial needs, as well as the right to access the sea and seabed in order to exercise rights to travel, visit and protect places of cultural and spiritual significance.202 In Lardil Peoples v Queensland203 and Gumana v Northern Territory,204 the decision in Yarmirr has been applied to find that, while native title may exist over areas of either riverbed or seabed below the high water mark, such title will not be exclusive. In Akiba on behalf of the Torres Strait Islanders of the Regional Seas Claim Group v State of Queensland (No 2),205 it was found at first instance by Finn J that the Torres Strait Islander communities in question had long exercised fishing rights and were entitled to continue to do so, subject, however, to general state regulation of commercial fishing.206 While this decision was initially 199. See 4.70. 200. The Australian Government did not assert sovereignty beyond this point until 1990, when it asserted sovereignty as far as the 12-nautical mile limit. 201. Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 at [49]. See comment by D J Cremean, ‘The Common Law of the Realm (Commonwealth of Australia v Yarmirr)’ (2002) 2 OUCLJ 257. 202. Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 at [87]. 203. Lardil Peoples v Queensland [2004] FCA 298. See comment by S Huber, ‘The Wellesley Island Decision: Offshore Native Title Post Yarmirr and Ward’ (2004) 23 University of Queensland Law Journal 242; J Behrendt, ‘Lardil Peoples v State of Queensland [2004] FCA 298’ (2004) 6 Indigenous Law Bulletin 14. 204. Gumana v Northern Territory (2005) 141 FCR 457. See comment by G Hiley, ‘Native Title for Blue Mud Bay and the Inter-tidal Zone’ (2005) 7 Native Title News 2. On appeal in Gumana v Northern Territory of Australia [2007] FCAFC 23, the Full Court upheld the finding that native title rights over the seabed did not give exclusive possession, while finding that a grant under specific Land Rights legislation of fee simple over certain parts of the ‘intertidal waters’ did give the right to exclude others from those areas. 205. Akiba on behalf of the Torres Strait Islanders of the Regional Seas Claim Group v State of Queensland (No 2) [2010] FCA 643. For comment, see S Hepburn, ‘Native Title Rights in the Territorial Sea and Beyond: Exclusivity and Commerce in the Akiba Decision’ (2011) 34 UNSW Law Journal 159–81. 206. The question of the extent of a native title claim over waters was also considered recently in the Canadian decision of Lax Kw’alaams Indian Band v Canada (Attorney General), 2011 SCC 56 (10 November 2011).

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overturned by the Full Court of the Federal Court,207 on appeal the High Court upheld the trial judge’s decision, affirming that the mere regulation of an activity that would otherwise form a part of a native title right, does not of itself extinguish that right.208 A similar decision was then reached by the High Court in Karpany v Dietman,209 the court holding that South  Australian legislation regulating fishing had not extinguished native title rights to fish, which could be used under s 211 of the Native Title Act 1993 (Cth) as a defence to a criminal charge of unlawfully taking fish.210 In providing for recognition of native title rights, Parliament was also concerned that the general access of the wider Australian community to beaches should be preserved. Under s  212(2) of the Native Title Act, Australian parliaments were given power to ‘confirm any existing public access to and enjoyment of ’ beaches and other categories of lands or waters that it specifies. In Western Australia v Manado,211 the High Court confirmed that this meant that, where a State had so provided, rights of members of the public to beach access were preserved and would amount to an ‘interest’ in relation to land or water within the meaning of the definition in s 253 of the Act, and would prevail over any competing native title rights.

Fiduciary relationship 4.35  There has been very little judicial consideration of the fiduciary issue in the postMabo (No 2) era. It was taken up by French J (as his Honour then was) in Re Wadi Wadi People’s Native Title Application,212 but in Coe v Commonwealth213 the issue was not decided, and in Thorpe v Commonwealth214 Kirby J also left the issue open. It has, however, been the subject of considerable academic discussion.215 One of the most attractive reasons for The Supreme Court of Canada held that an Indigenous custom of trading in the grease produced by one species of fish, did not entitle the Indigenous group to claim the right to control all commercial fishing within the area covered by the tribal claim. 207. Commonwealth v Akiba (2012) 204 FCR 260. 208. Akiba v Commonwealth (2013) 250 CLR 209. For comment see G Lauder and L Strelein, ‘Native Title and Commonwealth Fisheries: the Torres Strait sea claim’ (2013) 118 Precedent 13–19. 209. Karpany v  Dietman (2013) 252 CLR 507. See  L Butterly, ‘“For the reasons given in Akiba”: Karpany v Dietman [2013] HCA 47’ (2014) 8(10) Indigenous Law Bulletin 23–6. 210. For detailed comment on ‘interpretative choices’ available to courts in determining whether native title has been extinguished where activity is regulated, including discussion of Akiba and Karpany, see S Hepburn, ‘Statutory Interpretation and Native Title Extinguishment: Expanding Constructional Choices’ (2015) 38 UNSW Law Journal 587–617. 211. Western Australia v  Manado [2020] HCA 9, (2020) 270 CLR 81. For comment see  M Durand, ‘Public Access to Beaches: Western Australia v Manado’ (2020) 28 Australian Property Law Journal 174. 212. Re Wadi Wadi People’s Native Title Application (1995) 129 ALR 167 at 178–87. 213. Coe v Commonwealth (1993) 68 ALJR 110. 214. Thorpe v Commonwealth (1997) 71 ALJR 767 at 776. Argument for a broad fiduciary duty owed by the Commonwealth to Indigenous peoples was defeated in Kruger v Commonwealth (1997) 190 CLR 1. 215. C Hughes, ‘The Fiduciary Obligations of the Crown to Aborigines: Lessons from the United States and Canada’ (1993) 16(1) UNSWLJ 70; L Behrendt, ‘Bargaining on More than Good Will: Recognising a Fiduciary Obligation in Native Title’ in Land, Rights, Laws: Issues of Native Title,Vol 2, Australian Institute of Aboriginal and Torres Strait Islander Studies, Canberra, 1994; L Behrendt, ‘Responsibility in Governance:

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Indigenous people to mount a fiduciary argument in relation to native title concerns compensation. As claims for equitable compensation for breach of a fiduciary obligation are not statute-barred in New  South  Wales,216 the door to compensation for the pre1975 extinguishment of native title would be left open if the fiduciary argument were to succeed.217 Perhaps one of the reasons for judicial reticence in finding the existence of a fiduciary relationship between the Crown and Indigenous people, concerning native title, is a more general coyness about spelling out ‘how [a fiduciary relationship] arises, what are its indicia, what are the particular obligations arising from the relationship and what remedies follow upon failure to observe them’.218 The fiduciary relationship has been said to be ‘a concept in search of a principle’.219 At the moment this doctrine, as it is currently interpreted, seems of little assistance in achieving justice for native title holders.220

Is native title a proprietary interest? 4.36  Judicial divergence on the nature of native title  As noted earlier, there was judicial divergence in Mabo (No 2) on the question of the nature of native title.221 Although it is plain that the nature and incidents of native title are referable to Indigenous customs and traditions, there have been various attempts to equate native title with known common law rights, particularly proprietary rights.222 At other times, they have been equated with personal or usufructuary rights. This is not surprising, given that the task of recognition is made easier if the unknown is equated with the known.223 Yet there are difficulties in using all of these characterisations. Perhaps in recognition of these difficulties, Deane and Gaudron JJ in Mabo (No 2) observed that ‘the preferable approach … is to recognise the inappropriateness of forcing … native title to conform to traditional common law concepts’.224

Implied Rights, Fiduciary Obligations and Indigenous Peoples’ (2002) 61(2) Australian Journal of Public Administration 106; Bartlett, Native Title in Australia, note 40 above, Ch 29. 216. Limitation Act 1969 (NSW); Williams v Minister, Aboriginal Land Rights Act (1994) 35 NSWLR 497. 217. 1975 marks the commencement of the Racial Discrimination Act 1975 (Cth). 218. D Heydon and P Loughlin, Cases and Materials on Equity and Trusts, 6th ed, LexisNexis Butterworths, Australia, 2002, p 211. 219. Sir Anthony Mason, ‘Themes and Prospects’ in PD Finn (ed), Essays in Equity, Law Book Co, Sydney, 1985, p 246. 220. In the Canadian decision of Lax Kw’alaams Indian Band v Canada (Attorney-General) 2011 SCC 56, a claim for recognition of a fiduciary duty by the Crown was rejected on the basis that no treaty or promise made by the Crown existed that would create such a duty. 221. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1. See above 4.17. 222. S Motha, ‘Mabo, Encountering the Epistemic Limit of the Recognition of “Difference”’ (1998) 7(1) Griffith Law Review 79 at 83. 223. Section 223(1) of the Native Title Act recognises individual and group rights in relation to land or waters that are recognised by the common law. 224. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 89; 107 ALR 1 at 67.

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However, Mabo (No 2) also provided support for characterising at least some native title interests as proprietary, when Brennan J stated that: Whether or not land is owned by individual members of a community, a community which asserts and asserts effectively that none but its members has any right to occupy or use the land has an interest in the land that must be proprietary in nature; there is no other proprietor.225

That his Honour specifically referred to ‘a proprietary native title’ at another point is also a clear indication that he intended at least some incidents of native title to be characterised as proprietary. Further, it is worth noting that international cases such as United States v Alcea Band of Tillamooks 1226 and Delgamuukw v British Columbia227 indicate that Aboriginal rights may be regarded as proprietary in nature.228 Clearly, such a characterisation affords the right important status in any hierarchy of rights, because proprietary rights receive a higher level of protection than personal rights and, as such, are enforceable against the whole world.229 4.37  Support for a proprietary analysis of native title can also be seen in Toohey J’s position in Mabo (No 2).230 He suggested that, in regard to extinguishment, native title should be treated in the same way as a proprietary interest, when he required that any extinguishment by inconsistent grants or appropriation be evidenced by clear and plain legislative authority.231 Further, his finding that ‘the Meriam people may have acquired a possessory title on annexation’232 also supports a proprietary analysis of the rights of Indigenous people. It is also arguable that common law Aboriginal title, being a form of possessory title, would result in Indigenous people being seised of a fee simple estate.233 Yet Toohey J’s reasoning also offered some support for the proposition that traditions and customs mediated through native title may not resemble any common law rights at all, proprietary or otherwise, when he stated: … it would defeat the purpose of recognition and protection if only those existing rights and duties which were the same as, or which approximated to, those under English law could comprise traditional title; such a criterion is irrelevant to the purpose of protection.234

225. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 51; 107 ALR 1 at 36. 226. United States v Alcea Band of Tillamooks 329 US 40 (1946). 227. Delgamuukw v British Columbia [1998] 1 CNLR 14 at 113. 228. See the discussion in R Bartlett, Native Title in Australia, note 40 above, pp 330–32. 229. Contrast this with the general principle of contract law, which upholds privity of contract, so that a right is enforceable only against the parties to the contract. 230. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 187; 107 ALR 1 at 6. 231. Mabo v  Queensland (No 2) (1992) 175 CLR 1 at  196; 107 ALR 1 at  153. According to Toohey J, if extinguishment took place, compensation would flow. Wrongful extinguishment could not occur. However, in Wik Peoples v Queensland (1996) 187 CLR 1; 141 ALR 129, Toohey J concluded that native title could be extinguished without compensation if there is a clear and plain intention for that to occur. See the discussion in Bartlett, Native Title in Australia, note 40 above, pp 324–28. 232. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 213; 107 ALR 1 at 167. 233. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 206; 107 ALR 1 at 161. See also Chapter 3. 234. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 187; 107 ALR 1 at 146.

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4.38  That native title may have a different nature according to the different circumstances in which it arises is another interpretation available from Brennan J’s words in Mabo (No 2).235 There, he seemed to imply that native title is for some purposes proprietary, but is not necessarily so in all circumstances. In referring to the interests of the Meriam people, whose rights were being assessed, he stated that ‘as a community, they held a proprietary interest in the Islands’.236 Later, however, he suggested that there might be some flexibility regarding a more general interpretation of the nature of native title, when he said that native title may be: … protected by such legal or equitable remedies as are appropriate to the particular rights and interests established by the evidence; whether proprietary or personal or usufructuary in nature and whether possessed by a community, a group or individual.237

Pearson appeared to rely on Brennan J’s approach, at least partially, when he developed a distinction between the external and internal aspects of native title.238 According to Pearson, the external aspect refers to the relationship of the community as a whole to the non-Indigenous legal system (an aspect discussed in Mabo (No 2)),239 while the internal aspect relates to the rights of individuals and sub-groups within the overall community ownership. Some of the rights comprising the internal aspect may be proprietary in the English-based common law sense, and some may not; these are matters for Indigenous law. Pearson’s approach deals with the proprietary question summarily by simply characterising the external aspect as proprietary. This approach has its appeal, and it may well be the case that the High Court adopts this reasoning, but as yet the court does not appear to have reached this point. 4.39  The potential flexibility of the manner in which native title is characterised is evident in Brennan J’s discussion of remedies,240 where he seemed to suggest that legal and equitable remedies may support native title, whether that title is characterised as proprietary, personal or usufructuary. His approach permits appreciation of the fact that traditions and customs, when mediated through native title, may resemble a range of different common law rights. Of course, as noted above at 4.37, Indigenous customs and traditions sometimes may not resemble any common law rights at all. Where the latter is the case, an understanding of such difference may not yet be available. We will need to explore more creative means for giving expression to Indigenous customs and traditions if they are unfamiliar to the common law.241 The divergence of judicial opinion regarding characterisation was evident again when Toohey J suggested that native title’s nature was variable. He stated in the Wik Peoples 235. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 51; 107 ALR 1 at 36. 236. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 60; 107 ALR 1 at 43. 237. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 61; 107 ALR 1 at 44. 238. N Pearson, ‘Principles of Communal Native Title’ (2000) 5(3) Indigenous Law Bulletin 4. 239. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 60; 107 ALR 1 at 43. 240. See above at 4.38. 241. See  the discussion of the need to think creatively at  4.47. See  also Webber, ‘Beyond Regret: Mabo’s Implications for Australian Constitutionalism’, note 1 above, p 61.

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v  Queensland (Wik) decision that ‘at one end of the spectrum, native title rights may “approach the rights flowing from full ownership at common law”’.242 On the other hand, they may amount to an entitlement ‘to come onto land for ceremonial purposes, all other rights in the land belonging to another group’. Meanwhile, Gummow J stated in the same case that: The content of native title, its nature and incidents, will vary from one case to another. It may comprise what are classified as personal or communal usufructuary rights involving access to the area of land in question to hunt for or gather food, or to perform traditional ceremonies … At the opposite extreme, the degree of attachment to the land may be such as to approximate that which would flow from a legal or equitable estate therein.243

These extracts seem to point to the range of possibilities available in response to the question: what is the nature of native title? Yet the argument is open that decisions, such as the Wik decision, suggested that some resolution of the question has already been achieved, because in that case the majority agreed that an inconsistent grant could extinguish native title only if legislation manifested a clear and plain intention for extinguishment to result from the grant. In coming to that view, the majority dealt with native title as though it were proprietary in nature. The position was, however, clouded by Brennan CJ maintaining his earlier position and concluding that native title could be extinguished by Crown grant with or without legislative authority. Yet his Honour’s view on this issue, in both Mabo (No 2) and Wik, did not square with another of his conclusions that native title was a right to be ‘fully respected’. According to Bartlett, ‘“Full respect” suggests that native title, representing an exclusive relationship to land, is a proprietary interest’.244 4.40  More recently, in Commonwealth v  Yarmirr, the majority found the exercise of inquiring into the existence of native title should be conducted outside a proprietary framework. It stated that: Because native title has its origin in traditional laws and custom, and is neither an institution of the common law nor a form of common law tenure, it is necessary to curb the tendency (perhaps inevitable and natural) to conduct an inquiry about the existence of native title rights and interests in the language of the common law property lawyer.245

Perhaps the warning contained in these words should be extended to a discussion of the nature of native title once native title is established. In those circumstances, too, it may also be advisable to avoid the ‘language of the common law property lawyer’.

242. Wik Peoples v Queensland (1996) 187 CLR 1 at 126–7; 141 ALR 129 at 185. 243. Wik Peoples v Queensland (1996) 187 CLR 1 at 169; 141 ALR 129 at 220. 244. Bartlett, Native Title in Australia, note 40 above, p 325.This point was taken up in a slightly different fashion in Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [122], where the court rejected the ‘argument that native title can be treated differently from other forms of title because native title has different characteristics from those other forms of title and derives from a different source’. 245. Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 at [11].

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4.41  Indicia of property and their relationship to native title  One approach to this question is to revisit the question of what constitutes a proprietary interest.246 As noted in Chapter 1 and Chapter 3, the right to use and enjoy, the right to alienate, and the right to exclude are commonly seen as indicia of property.247 Clearly, no incidents of native title are capable of demonstrating strict compliance with all these indicia because, for example, native title cannot be alienated outside the group.248 On this analysis, one may be tempted to conclude that no native title rights could possibly be seen as proprietary in nature.Yet such a conclusion would be too simplistic in the light of post-Mabo (No 2) case law, both in Australia and Canada. It would also be inappropriate in light of the fact that, even in regard to the common law, there does not appear to be a requirement that all these indicia are present at any one time for an interest to be characterised as proprietary. For example, a non-assignable lease is treated as property, even though it cannot be transferred to another.249 4.42  Returning to the first indicium of a proprietary right (the right to use and enjoy), it is quite clear that incidents of native title may involve using and enjoying the land — to live, hunt, fish and gather, for example.250 They may also involve use for ceremonies. The Canadian Supreme Court in Calder v Attorney-General of British Columbia251 spoke of ‘a right to occupy the lands and to enjoy the fruits of the soil, the forest and of the rivers and streams’, while the Privy Council in St Catherine’s Milling and Lumber Co v R252 saw native title as extending to the fruits and produce of the land and to hunting and fishing. Both Ward v Western Australia253 and Hayes v Northern Territory254 at first instance determined that the content of native title included the right ‘to possess, occupy, use and enjoy’ the land, as well as the right to: control access; use and control the use of resources; maintain places that hold significance for the Indigenous community; and protect cultural knowledge.255 On appeal in the Ward case, the High Court stated that: [Where] native title rights and interests that are found to exist do not amount to a right, as against the whole world, to possession, occupation, use and enjoyment of land or waters, 246. See Chapter 1 for a more detailed discussion. 247. Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141. 248. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 59; 107 ALR 1 at 42 per Brennan J; at CLR 88, 110; ALR 66 and 83 per Deane and Gaudron JJ. See also, on this issue, the discussion by Yarrow, ‘The Inalienability of Native Title in Australia: A Conclusion in Search of a Rationale’, note 83 above. 249. It is acknowledged that, technically, a lease has historically been classified as personalty, but today it is treated as proprietary in nature. 250. This view is supported by R Bartlett, The Mabo Decision — Commentary and Full Text of the Decision in Mabo and Others v State of Queensland, Butterworths, Sydney, 1993, p xv. Further, cases such as Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 have spelled out the various ways in which native title rights may be used and enjoyed: see Yarmirr at [70]. 251. Calder v Attorney-General of British Columbia (1973) 34 DLR (3rd) 145 (SC Canada). 252. St Catherine’s Milling and Lumber Co v R (1888) 14 App Cas 46. 253. Ward v Western Australia (1998) 159 ALR 483 (Lee J), known as the Miriuwung Gajerrong determination. 254. Hayes v Northern Territory (1999) 97 FCR 32, known as the Arrernte determination. 255. See L Strelein, ‘Conceptualising Native Title’ (2001) 23(1) Sydney Law Review 95 at 99. See also Lee J’s Minute of Order in the Miriuwung Gajgerrong determination; Olney J’s Draft Minute of Proposed Determination of Native Title in the Arrernte determination.

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it will seldom be appropriate, or sufficient, to express the nature and extent of the relevant native title rights and interests by using those terms.256

Implicit in this statement is the view that at times, native title will be able to satisfy the ‘using and enjoying’ component. Further, in Commonwealth v Yarmirr,257 ‘using and enjoying’ was found to extend to the use of water for the purpose of passage from place to place and for the preservation of cultural and spiritual beliefs and practices. Most difficulties with ‘the right to use and enjoy’ tend to arise, not in relation to its existence, but rather because the right to use and enjoy native title may be inconsistent with the exercise of common law rights.258 4.43  The second indicium of a proprietary right (the right to alienate), deserves consideration. It raises more immediate problems concerning the characterisation of native title as proprietary. As observed earlier, the right to alienate has traditionally been seen as an important aspect of property. However, some common law interests have been classified as proprietary despite the fact that there have been restrictions imposed on their alienability. Examples include entailed estates (such as fee tail male, fee tail female and fee tail special) as well as property, the alienation of which is affected (even if only in a small way) by the rule against perpetuities.259 This would suggest that restrictions affecting alienability do not necessarily result in an interest being regarded as non-proprietary. Therefore, although native title’s alienability is very restricted (it can only be alienated within the group or surrendered to the Crown), it does not automatically follow that it should be denied proprietary status on this basis. By contrast, according to Deane and Gaudron JJ in Mabo (No 2), this very lack of alienability was one of the reasons to conclude that common law native title: … invites analogy with the kind of entitlement to use or occupy the land of another which confers no interest in the land and constitutes a ‘mere equity’.260

Even where these judges observed that ‘the rights under common law native title can … approach the rights flowing from full ownership’, they resisted a proprietary analysis and chose to see native title as sui generis.261 In the Canadian context, a lack of alienability has also led to an Aboriginal right being termed ‘personal’.262 However, the Supreme Court of

256. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [51]. 257. Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 at [87]. 258. The question of inconsistency is discussed later in this chapter in regard to Wik Peoples v Queensland (1996) 187 CLR 1; 141 ALR 129. See 4.73. 259. See Chapter 10. 260. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 89; 107 ALR 1 at 66. 261. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 89; 107 ALR 1 at 66–7. 262. Attorney-General (Quebec) v Attorney-General (Canada) [1921] 1 AC 401 at 408.

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Canada has sought to clarify the limited sense in which Aboriginal title should be seen as personal. Lamer CJ stated that: This Court has taken pains to clarify that Aboriginal title is only ‘personal’ [in the sense that it is inalienable] … and does not mean that Aboriginal title is a non-proprietary interest which amounts to no more than a license to use and occupy the land and cannot compete on an equal footing with other proprietary interests.263

In the Australian context, Brennan J, when considering whether native title was lost at the time the Crown acquired sovereignty, stated that: It would be wrong, in my opinion, to point to the alienability of land by that community and, by importing definitions of ‘property’ which require alienability under the municipal laws of our society, to deny that the Indigenous people owned their land.264

He went on to suggest that a failure to classify native title as proprietary could lead to curious results. For example, if native title were not proprietary, and if native title were extinguished by the Crown, he thought it seemed rather odd that the new interests which the Crown created in place of native title would, in fact, be proprietary.265 In other words, he was uncomfortable with a proprietary interest blossoming out of soil that had previously been able to yield only a lesser interest. 4.44  On the question of the third indicium of a proprietary right (the right to exclude), Indigenous people have long been able to demonstrate that, as traditional communities, they excluded others from hunting, fishing and gathering, for example.266 The fact that they often invited other traditional groups to pass over their land or partake of its fruits for ceremonies or festivities may not necessarily deny the exclusivity element. It may be argued by way of analogy that exclusive possession of land demonstrates a proprietary interest, at least in regard to the question of what will survive a change in sovereignty.267 The common law is quite familiar with the concept of possession that permits concurrent use by others; for example, by way of an easement. In Commonwealth v Yarmirr,268 the question of exclusive possession was revisited, with the finding at first instance that it was not possible for exclusive possession to co-exist with other, non-exclusive rights being overturned by the High Court. The issue of exclusive possession remained for some time a live one for McHugh J, because in Western Australia v Ward 269 he reasserted a position he took in Wik v Queensland,270 which was that:

263. Delgamuukw v British Columbia [1998] 1 CNLR 14 at 113. 264. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 51; 107 ALR 1 at 36. 265. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 51; 107 ALR 1 at 36 per Brennan J. 266. Palmer, ‘Aboriginal Land Ownership Among the Southern Pitjantjatjara of the Great Victorian Desert’ in McRae et al, Indigenous Legal Issues: Commentary and Materials, note 20 above, p 90. 267. Mabo v Queensland (No 2) (1992) 175 CLR 51; 107 ALR 1 at 36 per Brennan J. 268. Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 at [301]. 269. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1. 270. Wik Peoples v Queensland (1996) 187 CLR 1; 141 ALR 129.

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Possession that is not exclusive is a contradiction in terms, for the right of general control and exclusion is central to the concept of legal possession.271

It should be noted, however, that McHugh J was in dissent in Ward’s case. The issue of what amounts to ‘exclusive possession’ was discussed in the decision of the Full Court of the Federal Court in Fortescue Metals Group v Warrie on behalf of theYindjibarndi People.272 In that decision the court ruled that a native title group could make out a claim for exclusive possession if there was clear evidence of a customary law excluding those who were not members of the group from the relevant land without permission, even if in the circumstances of European occupation such exclusion could not be fully implemented in relation to non-Indigenous persons. 4.45  In conclusion, many incidents of native title would look as if they were able to satisfy reasonably easily two of the three conventional indicia of a proprietary right. In regard to the third, alienability, as noted above, there appears to be evidence to suggest that lack of satisfaction of this element will not necessarily preclude a finding of a proprietary interest. To recapitulate, even in the common law, a lack of alienability or restricted alienability has not precluded a proprietary characterisation.273 Yet it may ultimately be the case that considering the indicia of property, on one hand, and assessing whether native title interests meet them, on the other, is an inappropriate or flawed approach in itself. Gleeson CJ, Gaudron, Gummow and Hayne JJ imply that this may be the case when they state that: … the expression “possession, occupation, use and enjoyment … to the exclusion of all others” is a composite expression directed to describing a particular measure of control over access to land. To break the expression into its constituent elements is apt to mislead.274

They continue, warning that it would be wrong to invite attention to: … the common law content of the concept of possession and whatever notions of control over access might be thought to be attached to it, rather than to the relevant task, which is to identify how rights and interests possessed under traditional law and custom can properly find expression in common law terms.275

Difficulties with the proprietary approach 4.46  While it is possible to make an argument for the proposition that native title, at least in some circumstances, may be seen as proprietary in nature, there are several difficulties in 271. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [477]. 272. Fortescue Metals Group v Warrie on behalf of the Yindjibarndi People [2019] FCAFC 177, (2019) 273 FCR 350. For comment see G Anderson, Property Law: Concepts and Doctrine, LexisNexis, Australia, 2022 at 6.157– 6.159; V Hughston & T Jowett ‘Case note:“Fortescue Metals Group v Warrie on behalf of the Yindjibarndi People” [2019] FCAFC 177: Abuse of Process and Exclusive Possession’ (2020) Precedent (159) 50–52. 273. Another example of an interest that can be alienated in limited circumstances only (eg, pur autre vie), but still remains a property interest, is a life estate. See B Edgeworth, C Rossiter, P O’Connor and A Goodwin, Sackville and Neave Australian Property Law, 10th ed, LexisNexis Butterworths, Australia, 2016, p 171. 274. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [89]. 275. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [89].

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employing a proprietary framework as the sole means of characterising native title. Some of these difficulties may be termed cases of ‘square pegs and round holes’. Where native title does not easily fit the proprietary paradigm, it would seem inappropriate to force it to do so, irrespective of the benefits that might flow from such forcing.276 4.47 In Western Australia v Ward, Gleeson CJ, Gaudron, Gummow and Hayne JJ appeared concerned that native title should not be treated as a proprietary interest in the form of a fee simple estate if that were not the most appropriate way of dealing with it. They commented that: … it is a mistake to assume that what the NTA [the Native Title Act] refers to as “native title rights and interests” is necessarily a single set of rights relating to land that is analogous to a fee simple.277

It is possible to extrapolate from this statement that sometimes native title may equate with a single set of interests, such as a proprietary interest, but at other times that characterisation may be too limited.278 Indeed, the High  Court clearly warned against over-simplifying the relationship of Indigenous people to the land by commenting: It is wrong to see Aboriginal connection with the land as reflected only in concepts of control to access to it. … [To do so is] to reduce a very complex relationship to a single dimension. It is to impose common law concepts of property on peoples and systems which saw the relationship between community and the land very differently from the common lawyer.279

These words highlight the need to ‘step outside the square’. They recognise that native title is perhaps not best understood simply in terms of a common law proprietary analysis, many of the difficulties of which are outlined in the sections on the indicia of property and compensation, above. The High Court’s approach is far from new in this regard. 4.48  The move away from a simple proprietary analysis of native title has been under discussion for some time. It has been evident both in case law and in academic scholarship.280 For example, the simple equation of native title with a proprietary right has drawn criticism from academics such as Webber, who states: … Indigenous title is frequently discussed as though it were simply another kind of interest affecting land, slipped into the structure of Australian property law.281 The implications are thoroughly captured by determining the content of Indigenous law according to the rules of

276. One of these benefits is that compensation would flow on its loss. This issue is discussed later: see 4.50. 277. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [82]. 278. Bartlett seems to favour a proprietary analysis of native title: Bartlett, Native Title in Australia, note 40 above, Ch 17. Note also the view of Brennan J in Mabo v Queensland (No 2) (1992) 175 CLR 1 at 58–62; 107 ALR 1 at 42–5. 279. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [90]. 280. See Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113. 281. This is the approach adopted in Brennan J’s judgment in Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1, and implicitly followed by the great majority of subsequent commentators and judgments. See, especially, his discussion of the recognition and enforcement of native title by the ordinary courts at CLR 58–62; ALR 42–5 of that decision.

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Indigenous customary law, examining to what extent the title has been extinguished by prior acts of the non-Indigenous sovereign, and then enforcing the remaining interests.That view of Indigenous title is, however, altogether too limited, not just because a more ambitious interpretation should be preferred as a matter of policy, but because it misunderstands what the recognition of Indigenous title necessarily involves. Indeed, it mischaracterises the very nature of Indigenous title as a legal doctrine.282

Webber argues that native title has significance ‘beyond the bounds of land law’ and that Mabo (No 2) ‘initiates a process of mutual adjustment that will continue long into the future’.283 Further, Sweeney observed that ‘caution needs to be exercised to avoid classifying the incidents of Aboriginal title in terms of English property law concepts’.284 Caution against this characterisation is suggested because such an approach is said to lead to a process of ‘rights reductionism’ and ‘involves the delegitimation of Indigenous rights’.285 4.49  Bearing this in mind, it is perhaps useful to interpret Indigenous traditions and customs through the medium of native title, concluding that native title is sui generis; although many of its incidents are synonymous with common law rights, some of which are personal and usufructuary, while others are proprietary. At other times, native title bears little or no synonymy with common law rights.286 Hence, it may be possible to see native title extending beyond proprietary understandings, but at the same time having the scope to incorporate these understandings within its ambit, where applicable. In reflecting on the richness and uniqueness of native title, it has been said that: Native title involves concepts that are not traditionally the domain of the Australian courts, such as collective rights, legal pluralism, and issues of competing sovereignty. It is an area where judges cannot always draw on familiar ways of understanding the issues before them.287

Presumably though, it is evidence of a synonymy with property rights that has led some authors to link traditional customs and traditions to property in discussions which analyse the nature of native title.288 Yet, as observed, there may be risks in relying too heavily on a proprietary framework. If we are too determined to cast Indigenous traditions and customs in the proprietary mould, we may run the risk of losing sight of their real 282. Webber, ‘Beyond Regret: Mabo’s Implications for Australian Constitutionalism’, note 1 above, p 61. 283. Webber, ‘Beyond Regret: Mabo’s Implications for Australian Constitutionalism’, note 1 above, p 61. 284. D Sweeney, ‘Fishing, Hunting and Gathering Rights of Aboriginal Peoples in Australia’ (1993) 16(1) University of New South Wales Law Journal 97 at 104. 285. M Harris, Native Title in Australia — the Frustration of Indigenous Aspirations, paper presented to the Law and Society Conference, Central European University, Budapest, Hungary, 4–7 July 2001. 286. For a discussion of incommensurability, a concept related to the process of interpretation of Indigenous traditions and customs, see  P Fitzpatrick, ‘Passions Out of Place, Incommensurability and Resistance’ (1995) 1(1) Law and Critique 96. 287. Strelein, ‘Conceptualising Native Title’, note 255, at 97. 288. Bartlett, Native Title in Australia, note 40 above, Ch 17; R Bartlett, ‘The Proprietary Nature of Native Title’ (1993) 6 APLJ 1; K McNeil, Common Law Aboriginal Title, Oxford University Press, Oxford, 1989; D Rose, ‘The 10 Point Plan — Its Constitutional Validity’ (1998) 17 Australian Resources and Energy Law Journal 216 at 225; K Gray and S Gray, ‘The Idea of Property in Land’ in S Bright and J Dewar (eds), Land Law:Themes and Perspectives, Oxford University Press, Oxford, 1998.

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meaning, that is, of their essence. The process of equation may result in customs and traditions being converted into something that they are not, when the aim is simply for them to find reflection in the common law. Therefore, it would seem important that the ‘recognition space’ of native title should preserve — not destroy, diminish or dilute — the uniqueness of Indigenous customs and traditions.289 The majority of the High Court indicated that it recognised these potential problems when it commented in Western Australia v Ward that:290 The difficulty of expressing a relationship between a community or group of Aboriginal people and the land in terms of rights and interests is evident. Yet that is required by the [Native Title Act]. The spiritual or religious is translated into the legal. This requires the fragmentation of an integrated view of the ordering of affairs into rights and interests which are considered apart from the duties and obligations which go with them. The difficulties are not reduced by the inevitable tendency to think of rights and interests in relation to land only in terms familiar to the common lawyer.291

Through these words, the High  Court also appears to be acknowledging the ‘straitjacket’ that the Native Title Act has imposed on the interpretation of Indigenous rights. A discussion of that Act follows later (at 4.63–4.74). 4.50  Compensation and a proprietary analysis  Despite the difficulties of characterising native title as proprietary, and despite the importance of looking to more creative understandings of native title, there is still some pressure to characterise native title as proprietary for expedient reasons. The following two expediencies are relevant: 1. Proprietary rights are known, familiar and convenient. Common understandings therefore follow. 2. Proprietary interests rank very prominently in the hierarchy of rights. In regard to point 2, it is relevant that extinguishment of a proprietary right triggers constitutionally enshrined compensation. Indeed, s  51(xxxi) of the Commonwealth Constitution speaks of ‘the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws’. That this provision is to be interpreted liberally can be seen in Clunies-Ross v  Commonwealth.292 Case law also suggests that the term ‘property’ is to be interpreted free from ‘the artificial refinements of any particular legal system’.293 In fact, Dixon J pursued this point quite vigorously in Bank of New South Wales v Commonwealth, where he stated that: I take Minister of State for the Army v Dalziel to mean that s 51(xxxi) is not to be confined pedantically to the taking of title by the Commonwealth to some specific estate or interest in land recognized in law or in equity and to some specific form of property in 289. N Pearson, ‘Concept of Native Title at Common Law’, Land Rights Past Present and Future, Proceedings of the Conference on 20 Years of Land Rights, Northern and Central Land Councils, Canberra, 1991, p 118. 290. With the exception of Kirby J. 291. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [14]. 292. Clunies-Ross v Commonwealth (1984) 155 CLR 193 at 202; 55 ALR 609 at 612. 293. Minister of State for the Army v Dalziel (1944) 68 CLR 261 at 285.

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a chattel or chose in action similarly recognized, but that it extends to innominate and anomalous interests.294

Dixon J’s words, therefore, suggest that native title may fall under the definition of property relevant to s  51(xxxi) of the Commonwealth Constitution.295 It would also appear that native title’s lack of alienability outside the group would not prevent it from being characterised as proprietary for the purposes of s 51(xxxi).296 Indeed, as Brennan has noted, it seems likely, given the breadth of the word ‘property’ as interpreted by the jurisprudence on s 51(xxxi), that extinguishment of native title might be characterised as an ‘acquisition’ of property attracting the requirement of compensation on ‘just terms’.297 4.51  No doubt, where native title is extinguished, constitutionally enshrined compensation on ‘just terms’ would reduce injustice resulting from its loss. That desire to compensate in order to ‘do justice’ is observable in the Native Title Act, where much of the logic for the validation of post-1975 grants was that they constituted property and, therefore, discrimination arose where no compensation was payable. Clearly, construing native title as a proprietary interest for the purposes of compensation results in very satisfactory moral and political outcomes, but there still remains a problem with characterising a right as proprietary if it does not sufficiently resemble a proprietary interest. It would be doctrinally unsatisfactory to characterise all rights comprising native title as proprietary if they did not all amount to proprietary interests. Where native title rights, which are referable to Indigenous customs and traditions, reflect a synonymy with proprietary rights, the characterisation may be appropriate. But where native customs and traditions are not synonymous with proprietary interests under the common law, it would be legally problematic to mould those customs into the shape of proprietary interests merely in order for them to be recognised by the common law as native title rights and, consequently, for compensation to flow on their loss. Gleeson CJ, Gaudron, Gummow and Hayne JJ seemed to warn against this tendency in Commonwealth v Yarmirr.298 4.52  On one reading, merely characterising a right as proprietary so that desired political, social or moral outcomes are achieved could be said to taint the operation of the 294. Bank of New South Wales v Commonwealth (1948) 76 CLR 1 at 349. 295. For a more detailed analysis of this and other points concerning compensation, see Bartlett, Native Title in Australia, note 40 above, Ch 28. 296. See Georgiadis v Australia and Overseas Telecommunications Corp (1994) 179 CLR 297 at 314 and 319–20; 119 ALR 629 at 633–5 and 639; Bartlett, Native Title in Australia, note 40 above, p 329. 297. S Brennan, ‘Native Title and the “Acquisition of Property” under the Australian Constitution’ (2004) 28 Melbourne University Law Review 28. See also C Winnett, ‘ “Just Terms” or “Just Money”: Section 51(xxxi), Native Title and Non-Monetary Terms of Acquisition’ (2010) 33 UNSW Law Journal 776–807. It should be noted that this view is not affected by the decision in Wurridjal v The Commonwealth of Australia (2009) 237 CLR 309, dealing with the question as to whether leasehold interests had been compulsorily acquired under legislation implementing the 2007 ‘Northern Territory intervention’. The interests that were held by the majority to have been acquired under the legislation (and which another majority held had been compensated for on just terms) were explicitly said not to be ‘native title’ interests, but interests held under other specific land rights legislation. For comment on this decision, see MT Stubbs, ‘The Acquisition of Indigenous Property on Just Terms: Wurridjal v Commonwealth’ (2011) 33 Sydney Law Review 119. 298. Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 at [11].

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law and invest the judiciary with too much legislative influence. On this issue McHugh J, quoting Posner J, said that courts ‘have no authority to “provide a solvent” for every social, political or economic problem or wrong’.299 He went on to quote himself and Gaudron J in Breen v Williams, where they stated that, in ‘a democratic society, changes in the law that cannot logically or analogically be related to existing common law rules and principles are the province of the legislature’.300 On another, and perhaps more compelling, reading of the situation, it may be that it is important to avoid characterising native title as proprietary in circumstances where it bears little or no resemblance to a proprietary interest, because the distortion that is done to it in the process of reshaping and re-inventing may foreclose other, more imaginative understandings of the traditions and customs which underpin native title. Therefore, if at  times native title is more personal or usufructuary — or indeed, something else altogether — rather than proprietary, perhaps that should be respected, even if it means that the consequences are harsh, particularly regarding compensation.301 Where there is a failure to trigger compensation, another solution will need to be worked out if the political will is to redress the loss of Indigenous rights. Such a solution may involve a legislative response which offers redress for the loss of rights that do not fit the proprietary framework, or it may involve revisiting the question of extinguishment, for example.302 Ultimately, a movement away from an approach that says ‘if there are serious questions of Indigenous rights, they should be squarely addressed and exhaustively defined, so that political and economic life can proceed in full certainty of what those rights entail’ could be embraced. Such a repositioning may well embody a commitment to a process of ‘mutual adjustment’ that requires the redefinition of the relationship between Indigenous and non-Indigenous communities.303 4.53  Native title as sui generis  If native title is not necessarily best described by reference to common law rights such as proprietary rights, perhaps brief consideration needs to be given to whether the sui generis classification is more apt. Pearson has argued for the characterisation of native title as sui generis because: (1) it is inalienable; (2) it is a communal right which has an internal dimension regulated by Indigenous law and custom and; (3) … it is subject to extinguishment by the valid exercise of Legislative and Executive powers in circumstances where other titles to land are not.304

Despite the fact that the appearance of some of these characteristics in other contexts (eg, entailed estates) has not forced the relevant rights and interests to be reclassified as 299. Quoting Tucker v US Department of Commerce 958 F 2d 1411 at 1413 (7th Cir 1992) per Posner J. 300. Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 at [236] per McHugh J, quoting himself and Gaudron J in Breen v Williams (1996) 186 CLR 71 at 115. 301. Perhaps the respect should arise from a desire to preserve doctrinal purity. 302. If the instances where native title was extinguished were reduced, the need for compensation for its loss would be reduced. 303. Webber, ‘Beyond Regret: Mabo’s Implications for Australian Constitutionalism’, note 1 above, p 82. 304. Pearson, ‘Principles of Communal Native Title’, note 238 above.

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sui generis, that might not be an argument for precluding such a classification in this context. Perhaps it is the unique combination of these characteristics that may permit the right to be best seen as sui generis. That native title is effectively a means or space for recognition by the common law of Indigenous customs and traditions may be another good reason to characterise it as sui generis. Native title’s role of assisting Indigenous customs and traditions to find reflection in the common law is seemingly unique. Strelein has observed that a characterisation of native title as sui generis revealed ‘an explicit acknowledgement that native title should not be understood by reference to common law property rights’.305 Perhaps she is correct, but it is certainly arguable that native title may both be sui generis and, at times, embrace rights resembling proprietary and personal rights. Native title may also embrace rights that bear little or no similarity to proprietary or personal rights. Seen this way, the terms ‘sui generis’ and ‘proprietary’ are not necessarily mutually exclusive. 4.54  Native title as a ‘bundle of rights’  Finally, another possible classification is that native title is a ‘bundle of rights’. Most commonly, the bundle of rights template extends only to the inclusion of a range of different personal rights. However, it would appear that it is at least possible to conceive of the bundle being constituted by personal, usufructuary or proprietary rights. The bundle of rights approach to native title gained greater currency following the majority decision of Beaumont and von Doussa JJ in the Full Federal Court appeal in Western Australia v  Ward.306 There, those judges stated that, even where native title recognised an entitlement to exclusive possession, it remained a personal right rather than an interest in land.307 They claimed support for their position in the High  Court decision of Fejo v Northern Territory, where Kirby J referred to ‘the bundle of rights which we now call native title’.308 While the bundle of rights approach may have gained favour with the High Court in Ward, that court, a year before in Commonwealth v Yarmirr, seemed concerned to leave open the possibility that, once established, native title may have ‘some or all of the features which a common lawyer might recognise as a species of property’.309 Nevertheless, the majority also warned against simply identifying native title as property, when it commented: Neither the use of the word “title” nor the fact that the rights and interests include some rights and interests in relation to land should, however, be seen as necessarily requiring identification of the rights and interests as what the common law traditionally recognized as items of “real property”.310

305. Strelein, ‘Conceptualising Native Title’, note 255 above, p 98. 306. Western Australia v Ward (2000) 99 FCR 316; 170 ALR 159 at 178. 307. Western Australia v  Ward (2000) 99 FCR 316; 170 ALR 159 at  178. See  the discussion in Strelein, ‘Conceptualising Native Title’, note 255 above, p 102. 308. Fejo v Northern Territory (1998) 195 CLR 96 at 151. 309. Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 at [12]. 310. Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 at [12].

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The appeal to the High Court in Western Australia v Ward has confirmed that court’s attraction to the bundle of rights approach.311 The majority explained it by stating that the metaphor drew attention to the fact that, first, ‘there may be more than one [native title] interest’ and, second, there ‘may be several kinds of rights and interests in relation to land that exist under traditional law and custom’. Further, the court continued, ‘not all of those rights and interests may be capable of full or accurate expression as rights to control what others may do on or with the land’.312 However, as the focus of Ward’s case in the High Court was more on the extinguishment of native title, rather than its nature, the latter issue was not definitively addressed there. In its important decision on compensation principles, Northern Territory v Griffiths, the High Court majority brought these themes together by noting: Native title rights and interests are not the same as common law proprietary rights and interests but the common law’s conception of property as comprised of a ‘bundle of rights’ is translatable to native title.313

4.55  One argument against the bundle of rights approach is that it may place a greater onus on Indigenous people to prove their native title than would the alternatives. This is because it would seem easier to demonstrate that an Indigenous system of law, customs and traditions operated and continues to operate, albeit in a modernised way, than to establish the identity of each right making up the bundle, as well as having to establish the pedigree of each right in the bundle (by offering proof of continuity and its connection to traditions and customs).This calls for a high degree of specificity, particularly where the native title interest is something less than the right ‘to possess, occupy, use and enjoy’.314 Another criticism of the bundle of rights approach is that it treats native title as simply a composite of disparate rights, rather than being linked to a cohesive system of Indigenous law.315 In recent years, the ‘bundle of rights’ theory of property law has come under attack by theorists even outside the context of Indigenous rights.316 4.56  The future  Rather than seeing native title simply in terms of known common law rights and interests, it may be useful to conceive of it in a more creative fashion, seeing it as representing a point of interface between two different legal systems: the common law, on one hand, and Indigenous traditions and customs, on the other.317 Guidance on how 311. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [95]. 312. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [95]. Note that Kirby J was in the majority but he expressed his views in a separate judgment. 313. Northern Territory v Griffiths (2019) 269 CLR 1, at [68]. 314. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [95]. 315. Strelein, ‘Conceptualising Native Title’, note 255 above, p 103. 316. See the influential article by JE Penner, ‘The Bundle of Rights Picture of Property’ (1996) 43 UCLA Law Review 711;  TW Merrill and HE Smith, ‘What Happened to Property in Law and Economics?’ (2001) 111 Yale Law Journal 357; the detailed symposium on the issue in (2011) 8(3) Econ Journal Watch: Scholarly Comments on Academic Economics, available online at . 317. Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ referred to the existence of the intersection in Fejo v Northern Territory (1998) CLR 96 at 128, and in Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538 at [31], [39]–[42].

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we might approach this intersection was spelled out in Western Australia v Ward. There, the majority stated that the location of the intersection between these two legal systems should be determined as a result of careful attention being paid to the content of traditional law and custom and the way in which rights and interests existing ‘under that regime find reflection in the statutory and common law’.318 Perhaps, however, the most challenging and rewarding aspect of trying to develop more creative responses to native title issues relates to the process by which traditions and customs that, to date, seem foreign and unrecognisable may be interpreted. It is suggested that such an interpretation could possibly occur as a result of the process of ‘mutual adjustment’, referred to by Webber.319 It would also appear that Kirby J in Ward entered into the ongoing dialogue that nourishes and sustains the process of ‘mutual adjustment’ when he began to explore the way in which dreaming beings located at certain sites are narrated in song cycles, dance rituals and body designs. Stylistically, he approached the discussion through questions that he sought to answer himself. They included: ‘Would such a claim [to cultural knowledge] be one “in relation to” land or waters?’320 He concluded by stating: If this cultural knowledge, as exhibited in ceremony, performance, artistic creation and narrative, is inherently related to the land according to Aboriginal beliefs, it follows logically that the right to protect such knowledge is therefore related to the land for the purposes of the [Native Title Act].321

Further, he also engaged in a dialogue with other members of the bench who were unable to find that cultural knowledge amounted to a form of native title, since they feared that such a finding would acknowledge a right ‘akin to a new species of intellectual property’.322 He rejected their reasoning by commenting on the inadequacy of established intellectual property laws to deal with the kind of protection sought. Kirby J embraced the breadth that a classification of native title as sui generis may permit. Indeed, he stated that ‘there has been little need to elaborate the well-established principle that native title is sui generis and should not be restricted to rights with precise common law equivalents’.323 The prospect that the court might further explore this issue is encouraging. It opens our minds to the embracing of understandings different from those referenced to established, common law rights. Ultimately, it may be that such an approach will assist the development of a more successful interpretation and accommodation of native title. In this respect, it is interesting to note that, as noted below at  4.70, the main decision on compensation for extinguishment of native title, Northern Territory v Griffiths,324 has clearly recognised ‘loss of connection with land’ as a separate head of damages.

318. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [85]. 319. Webber, ‘Beyond Regret: Mabo’s Implications for Australian Constitutionalism’, note 1 above, p 61. 320. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [580]. 321. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [580]. 322. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [582]. 323. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [578]. 324. Northern Territory v Griffiths (2019) 269 CLR 1.

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Extinguishment 4.57  The case law following Mabo (No 2)325 has both clarified and blurred a number of issues in relation to extinguishment. Some of these are discussed below. One preliminary issue should be clarified. The Native Title Act does contain some provisions dealing with extinguishment of native title, which will be dealt with below. But it seems accepted that, even apart from the application of those provisions, native title may be extinguished under ‘common law’, based on the provisions about to be discussed.326 In Wik Peoples v  Queensland327 and Yanner v  Eaton,328 the approach was to weigh up the nature and incidents of native title against the operation of the relevant inconsistent grant (that grant being born either of the common law or statute). On this approach, the characterisation of the two competing interests is relevant, and questions such as these arise: • Does the interest of the grantee give rise to exclusive possession?329 • Is native title of such a nature that it reflects a general connection to the land?330 • Alternatively, can native title be treated as a ‘bundle’ of discrete rights permitting the extinguishment of some and not others?331 Yanner v  Eaton involved an Indigenous man catching and killing a crocodile with the assistance of a harpoon-style implement. The man ate some of the crocodile and refrigerated the rest, at  home, for later use. The question was whether any native title right the man may have had to take the crocodile was extinguished by the relevant fauna legislation, which vested ‘ownership’ in the Crown. In part, the case explored the question of the grantee’s right to exclusive possession and the need for legislation to require a clear and plain intention. The court read ‘ownership’ in this context as merely being a right to regulate; a sort of ‘radical title’, rather than beneficial ownership against those with native title. That is why the case found that legislation preserving a species of fauna may not necessarily extinguish native title but could reduce the sphere of operation of native title. Put another way, depending on how it is interpreted, legislation may sometimes only burden or regulate, and not necessarily extinguish, native title. (As noted above at  4.34, a similar approach has been taken to legislation regulating fishing in the more recent High Court decisions in Akiba v Commonwealth and Karpany v Dietman.332)

325. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1. 326. See Brown (on behalf of the Ngarla People) v State of Western Australia (No 2) [2010] FCA 498 at [66] per Bennett J: ‘There is no dispute that extinguishment can occur at  common law and that common law extinguishment is not contrary to the [Native Title Act]’. 327. Wik Peoples v Queensland (1996) 187 CLR 1; 141 ALR 129. 328. Yanner v Eaton (1999) 201 CLR 351; 166 ALR 258. 329. Wik Peoples v Queensland (1996) 187 CLR 1; 141 ALR 129. 330. Western Australia v Ward (2000) 99 FCR 316; 170 ALR 159. 331. Western Australia v Ward (2000) 99 FCR 316; 170 ALR 159 at 189. 332. Akiba v Commonwealth (2013) 250 CLR 209; Karpany v Dietman (2013) 252 CLR 507.

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4.58 In Wik Peoples v  Queensland, Fejo v  Northern Territory and Yanner v  Eaton,333 the decisions of the High Court were not given in appeals brought in respect of determinations by the Federal Court of applications under the Native Title Act. By contrast, in Western Australia v  Ward the determination provisions of the Native Title Act were ‘directly engaged’.334 Indeed, that Act lies at the heart of the extinguishment issue in Ward. The question of whether there could be partial extinguishment of native title rights and interests and what principles should be adopted in determining them had to be decided there, by reference to the Native Title Act, not by an examination of the general law. In Ward, the issue of extinguishment was considered in several different contexts involving inconsistent grants (through pastoral leases and leases under the Land Act 1933 (WA)), appropriation (under the Public Works Act  1902 (WA)) and the creation of reserves for public purposes, to name but a few. The case involved a large native title claim by the Miriuwung Gajerrong people to 8000 square kilometres of land, including part of the East Kimberley region in Western Australia and land in the Northern Territory. The claim extended to land that was part of the Ord River Irrigation Area, Lake Argyle, Lake Kununurra, the Glen Hill pastoral lease, land subject to mining tenements, part of the Argyle diamond mine, part of the Keep River and Mirima National Parks, some Aboriginal-owned land in the Northern Territory, grazing land, areas of vacant Crown land that had formerly been pastoral lease land, various reserves, three islands in the Cambridge Gulf and parts of the inter-tidal zone of the gulf.335 In considering the issue of extinguishment, the High  Court rejected Lee J’s finding at first instance that the ‘permanent adverse dominion’ test was the appropriate one to determine if extinguishment had taken place. That test, which had its genesis in the dissenting judgment of Lambert JA in the British Columbia Court of Appeal decision in Delgamuukw v British Columbia,336 emphasised the need for an ‘act authorized by legislation which demonstrates the exercise of permanent adverse dominion as contemplated by legislation’.337 Instead, the High Court favoured the test employed by Beaumont and Von Doussa JJ in the Full Federal Court,338 which is known as the ‘inconsistency of incidents’ test. That test requires a comparison between the legal nature and incidents of the statutory right which has been granted and the native title rights which are claimed.339

333. Wik Peoples v Queensland (1996) 187 CLR 1; 141 ALR 129; Fejo v Northern Territory (1998) 195 CLR 96; Yanner v Eaton (1999) 201 CLR 351; 166 ALR 258. 334. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [2]. For comment, see K Stoeckel, ‘Western Australia v Ward & Ors’ (2003) 25 Sydney Law Review 255. 335. For more information about the claim, see the National Native Title Tribunal website at  and search for Ward. 336. Delgamuukw v British Columbia (1993) 104 DLR (4th) 470 at 670–2. 337. Ward v Western Australia (1998) 159 ALR 483 at 508. 338. Western Australia v Ward (2000) 99 FCR 316; 170 ALR 159 at [71]. 339. See also comments in Western Australia v Ward (2000) 99 FCR 316; 170 ALR 159 at [81].

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Gleeson CJ and Gaudron, Gummow and Hayne JJ in the High  Court also rejected North J’s dissenting view in the Full Federal Court, in which he stated that there could be inconsistency between native title and statutory rights, but that the degree of inconsistency would determine whether or not native title was wholly extinguished.340 The High Court expressed its counterview plainly, stating that: Two rights are inconsistent or they are not. If they are inconsistent, there will be extinguishment to the extent of the inconsistency; if they are not, there will not be extinguishment.341

This approach seems to be a fairly clear affirmation that extinguishment will be complete and not partial in this context. Nevertheless, while some incidents of native title may be completely extinguished, it follows that if the ‘bundle of rights’ approach is employed as a means of characterising native title, there may be other rights in the bundle left unaffected by the extinguishment. Put another way, they will not be excised from the bundle. Such an approach requires the clear enunciation of the different incidents that constitute the bundle of rights known as native title. Examples of these incidents might include the right to burn country, the right to hunt or the right to gather traditional food on the land. Whereas the right to burn country may be inconsistent with rights under a pastoral lease, the rights to hunt and gather may not. It will be interesting to see how partial extinguishment in this context is played out.342 The firm view of the High Court that extinguishment is a matter of the relevant rights concerned, not the way that those rights are exercised, can be seen in its decision in Western Australia v Brown.343 At first instance in that litigation, Bennett J, in Brown (on behalf of the Ngarla People) v State of Western Australia (No 2),344 after an extensive review of previous authority, concluded that a mining lease had extinguished native title on those areas of the land concerned that had actually been developed, but had not extinguished native title rights on the undeveloped areas of the land. However, the High Court disagreed. They held that the question of extinguishment was one that had to be determined as of the moment the relevant rights were created, that the grant of mineral leases in this case had recognised the rights of third parties to also use the land, and, hence, that there had been no grant of ‘exclusive possession’. In these circumstances, native title, while it could not be exercised fully on any part of the land actually being used to extract minerals, was not completely extinguished, and could be exercised again once that task had been completed or abandoned.345 This decision meant that the earlier holding of the Full Federal Court in

340. Western Australia v Ward (2000) 99 FCR 316; 170 ALR 159 at [684] point (7). 341. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [82]. 342. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [194]. 343. Western Australia v Brown (2014) 253 CLR 507. 344. Brown (on behalf of the Ngarla People) v State of Western Australia (No 2) [2010] FCA 498. See the conclusion that native title had not been extinguished on ‘non-developed’ areas: at [208]. 345. Western Australia v Brown (2014) 253 CLR 507 at [64].

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De Rose v South Australia (No 2),346 in so far as it seemed to envisage extinguishment by ‘later use’, was incorrect and should not be followed in future.347 However, while the general approach of ‘inconsistent rights’ is now well accepted, there can still be differences of opinion as to the content of rights created, especially by grants of land in unusual circumstances. In Queensland v Congoo,348 the High Court had to consider the question of extinguishment where the Commonwealth had temporarily taken control of land in World War 2 as a training area, and subsequently abandoned it. There had been a statement made in Parliament that the government intended as little interference with ‘individual rights’ as possible. But the relevant regulations empowered the government to treat such land as if it had an ‘unencumbered interest in fee simple’. The High Court divided evenly, in a 3:3 decision, on the question whether native title had been extinguished. In consequence, the 2:1 decision of the Full Federal Court349 was affirmed,350 resulting in the decision that native title had not been extinguished.351 4.59  On the issue of extinguishment by appropriation to the Crown, one of the questions that emerged in the post-Mabo (No 2) era was whether, on compulsory acquisition, native title was extinguished over every square centimetre of land acquired. In that regard, Hayes v  Northern Territory352 held that extinguishment extended only to the land necessary or incidental to the use of the building or work. In Western Australia v  Ward,353 the issue of compulsory acquisition also arose. Some of the claims involved possible extinguishment by appropriation through application of s  109 of the Land Acts (1898, 1933) (WA), the Public Works Act  1902 (WA) and the Rights in Water and Irrigation Act 1914 (WA).Whether or not the act of resuming caused extinguishment was found to be dependent on the effect of resumption as set out in the individual pieces of legislation. The court held that resumption under s 18 of the Public Works Act or s 3 of the Rights in Water and Irrigation Act resulted in the Crown being vested with a fee simple estate. Therefore, native title was extinguished. 4.60  When land has been reserved, the issue regarding extinguishment is whether ‘rights have been created in others that are inconsistent with native title rights and interests’.354 The High Court decided that the inquiry concerning extinguishment is ‘about inconsistency of rights, not inconsistency of use’.355 In the particular case of the Miriuwung Gajerrong peoples, the court found that designation as a reserve for certain purposes under Western 346. De Rose v South Australia (No 2) (2005) 145 FCR 290. 347. Western Australia v Brown (2014) 253 CLR 507 at [37] and [60]–[62]. 348. Queensland v Congoo (2015) 256 CLR 239. 349. Congoo (on behalf of Bar-Barrum People) (No 4) v Queensland (2014) 218 FCR 358. 350. This is the effect of s 23 of the Judiciary Act 1903 (Cth) in an appeal from a superior court of record. 351. For comment on the decision, see M Stephenson, ‘The Doctrine of Extinguishment: And Then There was Congoo’ (2016) 6 Property Law Review 3–26; Z Bush, ‘Queensland v Congoo:The Confused Reemergence of a Rationale of Equality?’ (2015) 39 University of Western Australia Law Review 451–68. 352. Hayes v Northern Territory (1999) 97 FCR 32. 353. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1. 354. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [215]. 355. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [215].

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Australian legislation does not, in itself, create any right in the public that extinguishes native title interests.356 If land is reserved for a public purpose, that will result in extinguishment of any native title right that pertains to how the land can be used.The use will already have been designated as part of the reservation. However, other native title rights may well not be inconsistent with the designated public use and they may continue to be exercised by the Indigenous people who hold them. 4.61  In regard to the question of extinguishment by grant of a fee simple estate, Mabo (No  2) established that such a grant extinguishes native title. Later cases, such as Fejo v Northern Territory,357 have confirmed this finding. Indeed, even where a grant in fee simple has been made but the Indigenous owners continue their connection with the land, extinguishment will still take place.358 That is because the court has chosen to focus, not on the factual, continuing connection, but rather on the extensive nature of the interest granted. A fee simple estate is the closest thing to absolute ownership that the common law recognises. It permits the greatest range of activities on and dealings with the land known to the common law. Its potential to be utilised accordingly is what extinguishes native title. 4.62  Mabo (No 2) clarified that ordinary common law leases extinguished native title.359 The issue of whether a pastoral lease extinguished native title was decided in Wik Peoples v  Queensland.360 There, it was found that a pastoral lease did not necessarily extinguish native title. The particular claim of native title and the terms of the pastoral lease would need to be considered.361 Western Australia v Ward discussed whether a lease of a reserve under s 32 of the Land Act 1933 would extinguish native title.362 Although the features of the interest granted were not prescribed by the Act, the court was able to find that the rights granted were rights as a lessee and that they gave rise to exclusive possession. As such, they were totally inconsistent with the continued existence of native title.363 In Wilson v Anderson,364 the High Court held that a ‘perpetual lease’ granted under the Western Lands Act 1901 (NSW) extinguished native title. In Western Australia v Brown,365 however, as noted above at 4.58, a ‘mineral lease’ was held not to do so, especially because it explicitly recognised a right in third parties to use the land so long as that use did not interfere with mining operations. The High  Court stressed on a number of occasions

356. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [221]. 357. Fejo v Northern Territory (1998) 195 CLR 96. 358. Yanner v Eaton (1999) 201 CLR 351; 166 ALR 258 at 288; Fejo v Northern Territory (1998) 195 CLR 96 at 151 per Kirby J. 359. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 69–70; 107 ALR 1 at 51 per Brennan J; at CLR 110; ALR 83 per Deane and Gaudron JJ; at CLR 158; ALR 123 per Dawson J. 360. Wik Peoples v Queensland (1996) 187 CLR 1; 141 ALR 129. 361. For a detailed discussion of the Wik case, see 4.73–4.74. 362. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [366]. 363. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [368], [369]. 364. Wilson v Anderson (2002) 213 CLR 401; 190 ALR 313. 365. Western Australia v Brown (2014) 253 CLR 507.

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that the lease did not grant ‘the right to exclude any and everyone from that land for any reason or no reason at all’,366 which it would have needed to do, to extinguish native title.

Legislation Native Title Act 1993 (Cth) Introduction 4.63 After Mabo v  Queensland (No 2) (Mabo (No 2))367 was handed down in 1992, discussion took place as to whether individuals should have to litigate their claims as Eddie Mabo had done, or whether legislation should set up a process or scheme for dealing with claims.368 Ultimately, it was decided to set up a scheme, and the Commonwealth Government passed the Native Title Act 1993 (Cth) in order to facilitate this. The Act did not attempt to codify native title. Instead, it was designed to operate in conjunction with the common law. As well as providing a mechanism for dealing with claims, another purpose of the Native Title Act was to validate land titles that came into existence after the passing of the Racial Discrimination Act 1975 (Cth) and which were issued over native title land. There was an argument that the post-1975 titles might not be valid because, if their issuance had the effect of extinguishing native title and no compensation had been paid to Indigenous owners, that act of issuance was discriminatory and in breach of the Racial Discrimination Act. Native title holders had not been afforded the same procedural and compensation rights as ‘ordinary’ title holders.369 The Native Title Act was a compromise that failed to satisfy many of the competing interest groups. It offended those who thought the aim of such legislation should be land management, and it simultaneously offended those who thought the legislation’s aim should be the recognition of Indigenous human rights.370 As a result, the legislation, like the discussion leading up to it and the Mabo (No 2) decision itself, provoked different responses. Two years after its inception, the Native Title Act was described as a legislative attempt to deal with the ‘novel legal problems’ raised by the recognition of native title.371

366. Western Australia v Brown (2014) 253 CLR 507 at [45]; see also [52], [53], [55], [57] and [63]. 367. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1. 368. Following the decision, the Commonwealth Government announced that a consultative process would take place between the Commonwealth, the states and territories, Aboriginal and Torres Strait Islander organisations, and industry. The group would be chaired by the then Prime Minister and would work with an interdepartmental committee of officials. The committee came to be known as the IDC (InterDepartmental Committee). One of the options for discussion was a statutory framework. 369. Western Australia v Commonwealth (1995) 183 CLR 373 at 470 found that it was only post-1975 titles that were at risk. 370. N Pearson, ‘The Law Must Dig Deeper to Find Land Rights’, The Australian, 8 June 1993, p 11, explored these competing approaches. 371. North Ganalanja Aboriginal Corporation v Queensland (1996) 185 CLR 595 at 613.

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A detailed understanding of the operation of the Native Title Act is best gleaned elsewhere.372 However, key aspects of the Act are outlined below. 4.64  The Native Title Act’s Preamble noted the dispossession of Indigenous people and stated that the legislature intended the Act to constitute a ‘special measure’ within the meaning of the Racial Discrimination Act.373 This suggested a desire to redress some of the concerns about the perpetuation of injustice towards Indigenous people expressed by the High Court in Mabo (No 2). It is, therefore, ironic that the validation of grants made after the coming into effect of the Racial Discrimination Act ‘completed the legitimation of the dispossession of Aboriginal people up until 1 January 1994’.374 That is, the passing of the Native Title Act assisted and reinforced the dispossession that its Preamble suggested it was seeking to redress.

Validation of existing grants 4.65  The validation of all existing grants meant that ‘full force and effect’ was given to all Crown grants made before 1 January 1994 or legislation made prior to 1 July 1993 where there was invalidity caused by the existence of native title. Hence, in a competition between native title and ordinary title, ordinary title prevailed.375 Such was the extent of the validation of ordinary title, that the Racial Discrimination Act did little to protect Indigenous interests in land.376 Put simply, native title could still be extinguished after the passing of the Racial Discrimination Act. To redress the loss ‘and provide for those Aboriginal people who have been dispossessed and lost all kind of contact with the land that could begin to justify … [native] title status’, s 201 of the Native Title Act as enacted in 1993 made provision for a National Aboriginal and Torres Strait Islander land fund.377 It was designed to meet the social and economic needs of dispossessed Indigenous people by assisting in the acquisition of land and its management. The fund was later re-established under more specific legislation. Definition of ‘native title’ 4.66  The Native Title Act defines native title and native title rights in s 223 of the Act, which states: (1) The expression native title or native title rights and interests means the communal, group or individual rights and interests of Aboriginal peoples or Torres Strait Islanders in relation to land or waters, where: 372. Bartlett, Native Title in Australia, note 40 above, Ch 14; P Butt, Land Law, 6th ed, Lawbook Co, Sydney, 2010, pp 986–1028; B Edgeworth, Butt’s Land Law, 7th ed, Lawbook Co, Sydney, 2017, pp 1026–70; M Perry and S Lloyd, Australian Native Title Law, 2nd ed, Lawbook Co, Sydney, 2018. 373. Special measures are defined under s 8 of the Racial Discrimination Act in terms of Art 1, para 4 of the International Convention on the Elimination of All Forms of Racial Discrimination. 374. Bartlett, Native Title in Australia, note 40 above, p 42. 375. See Native Title Act 1993 (Cth) s 228, which defines ‘past act’ for the purposes of validation. 376. Native Title Act 1993 (Cth) s 7(2). 377. Commonwealth of Australia, Hansard, Senate, 16 December 1993, p 5455 (Senator Gareth Evans); quoted in Bartlett, Native Title in Australia, note 40 above, p 765.

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(a) the rights and interests are possessed under the traditional laws acknowledged, and the traditional customs observed, by the Aboriginal peoples or Torres Strait Islanders; and (b) the Aboriginal peoples or Torres Strait Islanders, by those laws and customs, have a connection with the land or waters; and (c) the rights and interests are recognised by the common law of Australia.

This definition reflects the High  Court’s definition of ‘native title’ in Mabo (No 2); a definition that was referable to Indigenous customs and traditions.378 Under this definition, native title has either been seen as exclusive or non-exclusive. Exclusive native title rights have been found to include: rights to live on land; rights to use and enjoy plant, animal, fish and bird life for customary and traditional purposes; and the right to maintain the land by stewarding it, protecting important sites, and holding spiritual, cultural and social activities on it.379 Non-exclusive rights permit similar kinds of activities, but their use and enjoyment are tempered by the rights of non-native title holders to exercise their rights as well. For example, in Commonwealth v  Yarmirr,380 Gleeson CJ, Gaudron, Gummow and Hayne JJ found that the Yuwurrumu members did not have an exclusive right to use and enjoy the seabed and the water above it, because ‘common law public rights to navigate and to fish’, as well as ‘the international right of innocent passage which is recognised by Australia’, could not be interfered with. A right to exclusive possession by native title holders could not have co-existed with these rights. Therefore, it was found that the relevant native title rights gave rise to ‘non-exclusive’ possession. Notably,  s 223 of the Native Title Act sets out a requirement that the rights and interests claimed as native title must be recognised by Australian common law. This may pose problems for those Indigenous rights that do not resemble common law rights, as has been discussed earlier in this chapter. While the reference to the common law may have been seen initially as a means to allow the courts to continue to develop the rules of common law concerning the recognition of native title in accordance with the process begun in Mabo (No 2), in fact s 223(1)(c) has received a very narrow interpretation by the High  Court. In Yorta Yorta Aboriginal Community v Victoria,381 the majority held that the effect of s 223(1)(c) is essentially to limit the type of recognition that may be extended to native title rights where those rights might be ‘antithetical to fundamental tenets of the common law’, and to direct attention

378. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 58; 107 ALR 1 at 42. 379. Saibai People v Queensland [1999] FCA 158; Mualgal People v Queensland [1999] FCA 157; Hayes v Northern Territory (1999) 97 FCR 32. 380. Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 at [94]. 381. Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538 at [76]–[77] per Gleeson CJ, Gummow and Hayne JJ.

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to the need to limit native title rights to those where there is continuity with laws and customs exercised prior to European settlement.382

Native title determinations 4.67  The Native Title Act also provides for mechanisms to determine native title. Accordingly, native title is determined either by the National Native Title Tribunal (which the Act established) or by the Federal Court. The tribunal’s role in this regard is restricted to determining native title in circumstances where the parties in question agree, or seek to come to agreement, by virtue of mediation. Where the parties cannot agree as to the existence of native title, the Act redirects them into the litigious process and the Federal Court is left to decide the matter. From the outset, the Commonwealth legislation was designed to have compatible state legislation exist alongside it. After a faltering start, this has been achieved. Now, all states and territories have passed legislation complementary to the Native Title Act.383 An important part of the legislation, however, provides for a non-litigious resolution of issues. Subdivisions B, C, D and E of Div 3 of Pt 2 of the Act provide for three different types of ILUA and for their effect.384 The ILUAs are designed to be a mechanism whereby native title parties and others can reach a binding agreement on resolution of issues without an adversarial battle in the courts.385 They have been popular; the latest information is that there are now 1405 registered ILUAs.386 In Northern Land Council v  Quall,387 the High  Court held that a native title representative body, with responsibility for certifying that reasonable steps have been taken to notify native title holders of the establishment of an ILUA, may if it chooses authorise its CEO to make that decision on its behalf. Proper negotiation of such agreements, of course, requires an understanding of the legal basis of native title and how it is dealt with under the Act.

382. McHugh J expressed some personal doubt that this was in fact what Parliament had intended, but felt bound by the court’s previous decisions to accept this limited view of s  223(1)(c): see  Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422; 194 ALR 538 at [133]–[134]. For a detailed critique, see Pearson, ‘The High Court’s Abandonment of “The Time-Honoured Methodology of the Common Law” in its Interpretation of Native Title in Mirriuwung Gajerrong and Yorta Yorta’, note 160 above. 383. This did not occur seamlessly. For example, the Western Australian Land (Titles and Traditional Usage) Act  1993 (WA), which purported to extinguish any surviving native title in that state and replace it with statutory rights for the traditional use of land, was found to be unconstitutional in Western Australia v Commonwealth (1995) 183 CLR 373. Eventually, the Titles Validation Act 1995 (WA) was enacted, which validated past dealings inconsistent with native title. 384. See also Pt 8A of the Native Title Act, which sets up the Register of ILUAs. 385. For an overview of ILUAs and their operation, see  Butt, Land Law, note 371 above, [25164]–[25168]; Edgeworth, Butt’s Land Law, n 372 above, [14.1200]–[14.1210]; K Mackie, E Histed and J Page, Australian Land Law in Context, Oxford University Press, Melbourne 2011, pp 119–20. 386. See  NNTT, Statistics: Current Applications (accessed 8  May  2022), . 387. Northern Land Council v Quall [2020] HCA 33, (2020) 94 ALJR 904.

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Past acts 4.68  The Native Title Act instituted a ‘past acts’ regime. This regime is relevant to more fully understanding the validation of native title and its interaction with other forms of title, as well as the issue of compensation. A ‘past act’ is defined in s 228 of the Act and, broadly, refers to legislative acts before 1 July 1993 or any other acts taking place before 1 January 1994, where such acts might have been invalid due to the existence of native title. (This invalidity is a result of a possible clash with the Racial Discrimination Act 1975, where native title land was treated detrimentally in comparison to land under mainstream title.) The Commonwealth legislation authorises states and territories to validate past acts.388 In so doing, the legislation also provides for the extinguishment of native title according to the category of past act that took place.389 Many, but not all, past acts extinguish native title; for example, category A past acts include grants of freehold title and grants of commercial, agricultural, pastoral or residential leases.390 Under the Native Title Act, these grants extinguish native title permanently, whereas category B ‘past acts’ extinguish native title only to the extent of the inconsistency.391 Category C acts (currently, only mining leases)392 and category D acts (which include any past acts not included in categories A, B and C, such as an easement, licence or permit) apply the ‘non-extinguishment principle’.393 This scheme does not validate every grant made in the past, nor every piece of legislation which may have had the effect of impairing or extinguishing native title.394 For example, native title may be extinguished by the valid operation of legislation apart from the Native Title Act. Hence, whether a particular statute has extinguished native title must be determined according to the common law as set out in Mabo (No 2)395 and other relevant cases. Whether a pastoral lease that was granted prior to the operation of the Act, and that was outside the ‘past act’ categories under the Act, was valid was, therefore, left after Wik for the courts to decide.396 In some specific cases the Act provides that past acts which would otherwise extinguish native title can be disregarded. For example, where land that would otherwise be held as native was previously the subject of a mining lease, that lease may be disregarded in some circumstances.397 Recent amendments inserting s 47C into the Act allow previous 388. Native Title Act 1993 (Cth) s 19ff. 389. Section 19 of the Native Title Act applies the provisions of ss 15–16 of the Act, dealing with Commonwealth Acts, to analogous state Acts. 390. Native Title Act 1993 (Cth) s 229. 391. Native Title Act 1993 (Cth) s 230. 392. Native Title Act 1993 (Cth) s 231. 393. Native Title Act 1993 (Cth) ss 15(1)(d), 232. For the ‘non-extinguishment’ principle, see s 238 of the Act. 394. For an overview of the validation provisions, see G J Neate (ed), NativeTitle Service, LexisNexis Butterworths, Australia, looseleaf, [1680.30]ff. 395. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1. 396. Wik Peoples v Queensland (1996) 187 CLR 1; 141 ALR 129. 397. See the High Court decision in Tjungarrayi v Western Australia; KN (deceased) and Others (Tjiwarl and Tjiwarl #2) v Western Australia [2019] HCA 12, (2019) 269 CLR 150, which considered one such example.

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extinguishment of native title in a National Park area to be disregarded in some circumstances. 4.69  The validation aspect of the Native Title Act was left largely intact by amendments made in 1998.398 The 1998 amendments also introduced the concepts of a ‘previous exclusive possession act’ and a ‘previous non-exclusive possession act’. The result is that now there is no doubt that both a freehold title and a residential lease extinguish native title as a result of being incorporated into the ‘previous exclusive possession act’ category. The common law is left to decide if non-exclusive pastoral leases extinguish or suppress native title.399

Compensation for past acts 4.70  Section 17 of the Native Title Act spells out two main grounds for the payment of compensation when native title is extinguished by virtue of a past act. They are where: 1. native title is extinguished by a category A or category B past act; or 2. native title has been affected by a category C past act (a mining lease) or a category D past act (any past act not included in categories A, B or C). In regard to the first ground, compensation is payable on the same basis as that spelled out in the Commonwealth Constitution; that is, on ‘just terms’.400 The compensation is for the ‘loss, diminution, impairment or other effect … on their native title rights’.401 In regard to the second ground, two regimes operate: 1. If compensation would have been available had the native title holder held ‘ordinary title’ rather than native title, the measure and extent of compensation available is determined by the compensation regime that would have applied to an ordinary title holder.402 This type of regime works by treating native title in the same way as ordinary title. In New South Wales, in these circumstances, the term ‘ordinary title’ can be equated with freehold title. It has been suggested that problems may occur with this approach when a native title holder suffers loss but there is no equivalent position for an ordinary title holder; for example, if the loss is spiritual. It is important to acknowledge what Pearson, an Indigenous leader and lawyer, called ‘a loss of culture’ rather than simply a ‘loss of real estate’.403 Denying this harm does not seem to do justice to Deane and

398. See the Native Title Amendment Act 1998 (Cth). 399. See  G Griffith, The Native Title Debate: Background and Current Issues, New  South  Wales Parliamentary Library Research Service, Briefing Paper No 15/98, p 12. 400. Native Title Act 1993 (Cth) s 18(1). 401. Native Title Act 1993 (Cth) s 51(1). 402. Native Title Act 1993 (Cth) ss 17(2), 20 and 51(3). See also the ‘similar compensable interest test’ in s 240 of the Act. 403. Pearson,‘The Law Must Dig Deeper to Find Land Rights’, note 370 above, p 11, explored these competing approaches.

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Gaudron JJ’s view that native title is a strong right.404 However, as noted below, the recent compensation decision in Griffiths405 does, to some extent, take these matters into account. 2. Where extinguishment would have been impossible had the native title holder been the holder of an ‘ordinary title’, compensation will be available on just terms.406

This situation was altered slightly by changes embodied in the Native Title Amendment Act, discussed later in this chapter.407

Where compensation is payable for past acts, it is payable only by the relevant government and not by any third parties.408 Under the Commonwealth regime, compensation is usually monetary, but a claimant may request payment in kind, in the form of land, goods or services.409 Experience has demonstrated that because compensation is payable only after the existence of native title has been determined, the wait for compensation could be very long. Only a few cases so far have considered the compensation regime under the Native Title Act in any detail. One was the decision of Sackville J in Jango v Northern Territory of Australia.410 An argument was put in that case that, if native title were held to have existed, then it was not completely extinguished until some time after a number of significant improvements had been made on the land, including the building of an airport. His Honour, after a detailed consideration of the legislative history of the ‘extraordinarily complex’ compensation provisions in the Native Title Act,411 concluded that extinguishment of native title by the construction of public works took place when the construction of the works commenced, and hence that no compensation would be payable to native title holders based on the value of the public works themselves.412 The issue of compensation was then considered in De Rose v South Australia,413 where compensation was ordered in a consent order; as a result, the case did not provide any guidance on how the amount in question had been calculated. 404. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 101; 107 ALR 1 at 76.  Arguments have been raised that the solatium aspect of compensation (by which, in some cases, a payment may be made for wounded feelings) may be relevant. 405. Northern Territory v Griffiths (2019) 269 CLR 1. 406. Native Title Act 1993 (Cth) ss 17(2)(a), 17(3), 20 and 51(1). 407. See 4.75–4.81. 408. This serves as a contrast to compensation in the context of future acts, where it is envisaged that compensation may be paid by third parties. 409. Native Title Act 1993 (Cth) s 51(6). See Butt, Land Law, note 371 above, p 1007, [2599]. 410. Jango v Northern Territory of Australia (2006) 152 FCR 150; upheld on appeal in Jango v Northern Territory of Australia (2007) 159 FCR 531 with no real discussion of the compensation issues. Compensation is discussed in a paper by T Jowett and K Williams, ‘Jango: Payment of Compensation for the Extinguishment of Native Title’, presented to the AIATSIS Conference, Darwin, 23 May 2006; and in T Nau, ‘Looking Abroad: Models of Just Compensation Under the Native Title Act’ (2009) 93 Reform 18. 411. Jango v Northern Territory of Australia (2006) 152 FCR 150 at [39]. 412. Jango v Northern Territory of Australia (2006) 152 FCR 150 at [774]. 413. De Rose v  South  Australia [2013] FCA 988. For comment, see  W Song, ‘What’s Next for Native Title Compensation: the De Rose decision and the assessment of native title rights and interests’ (2014) 8(10) Indigenous Law Bulletin 11–14.

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However, clearer guidance has now been provided on these issues in the decision of the High Court in Northern Territory v Griffiths (also known as the Timber Creek decision).414 At trial level, Mansfield J in Griffiths v Northern Territory of Australia (No 3)415 had ordered compensation of over $3.3 million for the effect on native title rights and interests of various land grants and other works, which had occurred after 1975.This was made up of: • an award for economic loss of about $500,000, which valued the relevant land at 80% of its ‘freehold value’ under the European title system (given that the rights involved were not all those of ‘exclusive possession’); • an order for non-economic loss, representing an overall amount for ‘loss of traditional attachment to land’ of $1.3 million; and • an award of simple interest of some $1.4 million, dating back to the original time that rights were extinguished some 30 years prior.416 On appeal, the Full Court of the Federal Court generally upheld the approach followed by Mansfield J, but reduced the ‘economic loss’ component to 65% of the freehold value of the land.417 In the High Court, this component was further reduced to 50%.418 The High Court ruled that the economic loss aspect of compensation needed to be sharply discounted from the full freehold value, taking into account the significant differences between the native title as found in this case and the rights that would have been enjoyed by the owner of the land if held under ‘ordinary’ title: the Claim Group’s native title rights and interests were essentially usufructuary, ceremonial and non-exclusive, without power to prevent other persons entering or using the land or to confer permission on other persons to enter and use the land, without right to grant co-existing rights and interests in the land, and without right to exploit the land for commercial purposes.419

They seemed to suggest that an even larger discount may have been possible, but they concluded that, as no party argued for a discount below 50%, that this was the appropriate figure.420 While discounting the economic loss component, the High Court upheld the other aspects of the trial judge’s decision. An award of $1.3 million for ‘cultural loss’, made after careful consideration of relevant issues by the judge, was said to one that could ‘be

414. Northern Territory v Griffiths (2019) 269 CLR 1. 415. Griffiths v Northern Territory of Australia (No 3) [2016] FCA 900. 416. For commentary, see  F Martin, ‘Native Title Compensation Awarded to Timber Creek Claimants in First Judgement of its Kind’ (Dec 2016) Native Title Newsletter 16–18; F Martin, ‘Compensation for Extinguishment of Native Title: Griffiths v Northern Territory Represents a Major Step Forward for Native Title Holders’ (2016) 8/27 Indigenous Law Bulletin 8–11. 417. See Northern Territory of Australia v Griffiths [2017] FCAFC 106. 418. Northern Territory v Griffiths (2019) 269 CLR 1. 419. Northern Territory v Griffiths (2019) 269 CLR 1, at [106]. 420. Northern Territory v Griffiths (2019) 269 CLR 1, at [107].

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accepted by the Australian community as appropriate, fair or just’, and the amount was ‘not shown to be inconsistent with acceptable community standards’.421

Future acts 4.71  The Native Title Act, as well as dealing with the consequences of the previous extinguishment of native title, makes detailed provision for the future (ie, for actions done after the commencement of the legislation).422 The Preamble to the Act deals with this element of the legislation when setting out the principle that: In future, acts that affect native title should only be able to be validly done if, typically, they can also be done to freehold land and if, whenever appropriate, every reasonable effort has been made to secure the agreement of the native title holders through a special right to negotiate.

The regime governing ‘future acts’ was then later changed with the passage of the Native Title Amendment Act 1998 (Cth).423 The previous regime will not be discussed here.424 The current rules are set out in Pt 2 Div 3 of the Native Title Act. They are very complex, and it is not possible to explore them in detail here.425 Broadly speaking, the logical starting point (as signalled by the words of the Preamble noted above) is that, under s 24OA of the Native Title Act,426 unless otherwise provided, a ‘future act’ is invalid ‘to the extent that it affects native title’. The Act is intended to be the only means by which native title in the future may be impaired or extinguished. Within earlier provisions of Pt 2 Div 3, however, there are a number of specific situations that amount to exceptions to the general rule under s 24OA. They are set out in Subdivs E–N of Pt 2 Div 3, and include, for example, acts done pursuant to ‘Indigenous land use agreements’ (ILUA’s), acts done to manage water supplies, and certain acts done to provide facilities for services to the general public.427 The Native Title Act requires a sequential approach to be followed to the various categories of future acts, which are listed in order in s 24AA(4). With the exception of future acts dealt with by an ILUA, if a future act falls

421. Northern Territory v Griffiths (2019) 269 CLR 1, at [237]. For a critique of the Griffiths decision from a radical ‘decolonisation’ perspective, see S Young ‘Native Title As Displaced Mediator’ (2021) 44/4 UNSW Law Journal 1739. See for more straightforwardly legal commentary, B Edgeworth, ‘Valuable, Invaluable or Unvaluable? The High Court on Native Title Compensation’ (2019) 93(6) Australian Law Journal 442; T Dews, ‘“Mabo” and the Valuation Vibe: Substantive Equality in the Timber Creek Compensation Case’ (2021) 43(3) Sydney Law Review, 391. 422. Confusingly, of course, many of these ‘future’ acts are now in the past from the perspective of those who are dealing with the Act after the relevant provisions have commenced. 423. Discussed in more detail below at 4.75ff. 424. For a summary, see Perry and Lloyd, Australian Native Title Law, note 364 above, pp 34-35. 425. For more information see Perry and Lloyd, Australian Native Title Law, note 364 above, from p 243; Butt, Land Law, note 371 above, pp 1014–26; Edgeworth, Butt’s Land Law, n 372 above, pp 1056-1068. 426. Note that this is s 24 ‘OA’, where O is the letter ‘O’, not the number ‘0’. It is to be found in Subdiv ‘O’ of Div 3 of Pt 2. 427. For a more detailed summary see Perry and Lloyd, Australian Native Title Law, note 364 above, p 34; and pp 258–62, Table 2.1, which contains a full list of the Subdivisions and their effects.

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within one of the earlier provisions of s 24AA(4)(a)–(k), then it cannot be dealt with under one of the later provisions.428 In some of these cases the ‘non-extinguishment principle’ in s 238 of the Native Title Act applies, so that native title will only be suspended, rather than completely extinguished, and hence may revive after the relevant ‘future act’ has ceased to operate.429 In other cases the ‘future act’ will completely extinguish native title.430

Right to negotiate 4.72  Certain types of future act are said to be subject to a specific ‘right to negotiate’ dealt with in Subdiv P of Pt 2 Div  3 of the Native Title Act. The right to negotiate procedures must be followed for the relevant ‘future act’ to be valid. Future acts subject to the right to negotiate are defined in s 26, and mostly include mining rights and the compulsory acquisition of land by a government.431 Where state law makes its own provision for negotiation procedures, and that law is determined by the relevant Commonwealth Minister to contain adequate safeguards, then compliance with the state procedures will be deemed to be sufficient compliance with the Act.432 The Wik decision and its sequel 4.73  As noted, neither the Mabo (No 2) decision nor the Native Title Act explicitly spelled out whether pastoral leases extinguished native title.433 Certainly, Brennan J in Mabo (No 2) seemed to imply that pastoral leases, like all Crown leases, extinguished native title,434 while the Preamble to the Act, as well as the past acts regime contained within it, also seemed to imply the same. However, when the issue was put to the test, the High  Court found in Wik Peoples v  Queensland (Wik) that a pastoral lease did not ‘necessarily extinguish all incidents of Aboriginal title’.435 The majority noted that a ‘clear and plain intention’ was needed to extinguish native title.436 According to the majority 428. See Native Title Act 1993 (Cth) s 24AB. 429. For example, future acts under Subdiv E, dealing with ILUAs (see  s  24EB(3)), and future acts under s 24GB dealing with primary production activities (see s 24GB(6)). 430. For example, where public works are erected under Native Title Act 1993 (Cth) s 24JB(2). 431. For a decision holding that the construction of an area for deposit of silt removed from a channel where minerals were being transported did not itself amount to a ‘mining’ operation and so did not engage the ‘right to negotiate’, see Harvey v Minister for Primary Industry and Resources [2022] FCAFC 66 (29 April 2022). 432. See Native Title Act 1993 (Cth) ss 43, 43A. 433. A counter-view claims that, after the introduction of the Native Title Act, there were many contested opinions, and the cases Re Waanyi People’s Native Title Application (1994) 129 ALR 100 (brought in the National Native Title Tribunal) and Wik Peoples v Queensland (1996) 63 FCR 450; 134 ALR 637 (in the Federal Court) contested the issue of exclusivity and pastoral leases. Hence, the Wik outcome, while contested, was not unexpected, and all parties should have been on notice of this possibility. 434. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 69; 107 ALR 1 at 51. 435. Wik Peoples v Queensland (1996) 187 CLR 1 at 2 (headnote). This was a 4:3 split decision. 436. Wik Peoples v Queensland (1996) 187 CLR 1 at 155, 166; 141 ALR 129 at 208, 218 per Gaudron J; at CLR 123–4, 130; ALR 182–3, 188 per Toohey J; at CLR 168–9, 185–6; ALR 220, 233 per Gummow J; at CLR 243, 241 and 249; ALR 279, 283 and 284 per Kirby J.

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of Toohey, Gaudron, Gummow and Kirby JJ, that intention is only evident where the inconsistency between native title and the rights of the grantee is so great as to prevent native title and the rights of the grantee from co-existing.437 The majority found that pastoral leases were unlike common law leases in that they did not automatically confer a right to exclusive possession. The pastoral lease was sui generis in nature, giving rise to a new form of tenure.438 It was a statutory response to the peculiar historical, domestic conditions of Australia. In coming to its conclusion, the court took account of the imperial dispatches on the matter, which suggested that it was unlikely that the legislature intended to exclude Aboriginal people altogether. The majority also based its decision on the fact that a grant of this nature was for a pastoral purpose only, and that the lease could be affected by exceptions relating to minerals, timber and other materials, as well as access by, and the depasturing of, stock upon a stock route. Further, the remoteness and size of the vast land tracts which were the subject of the leases also suggested to the majority that the land was not intended to be for the exclusive possession of the grantee of the lease.439 4.74  Ultimately, the Wik decision affirmed the paramountcy of a pastoral lease over native title where there was a clash, but, by finding that a pastoral lease per se was not necessarily inconsistent with native title, the court left open the possibility of co-existence.440 This led to calls by the Pastoralists and Graziers Association and others for legislation to delineate in what circumstances native title would be extinguished by the grant of a pastoral lease.The call for certainty became loud and — together with other long-brewing concerns, many evident since the inception of the Native Title Act — was taken up by the Liberal–National Coalition Government elected in March 1996.The Wik decision, which was handed down on 23 December 1996, provided a timely opportunity for legislative intervention, but it is clear that the government’s planned overhaul of native title was in train before the Wik case was decided.441 The ‘10 Point Plan’ set out the government’s proposed changes. It sought the diminution of native title rights then existing in relation 437. Wik Peoples v Queensland (1996) 187 CLR 1 at 125–7; 141 ALR 129 at 184–5 per Toohey J; at CLR 185–6; ALR 233 per Gummow J; at CLR 249; ALR 284 per Kirby J. 438. Wik Peoples v Queensland (1996) 187 CLR 1 at 110; 141 ALR 129 at 172 per Toohey J; at CLR 149; ALR 204 per Gaudron J; at CLR 173–4; ALR 224 per Gummow J; at CLR 226; ALR 266 per Kirby J. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [78] confirms the position taken in the Wik case by stating that ‘the question is whether rights are inconsistent with the alleged native title rights and interests’. 439. For a more detailed account, see Bartlett, Native Title in Australia, note 40 above, Ch 4; and especially p 52, for a summary of the holding in the case. 440. Wik Peoples v Queensland (1996) 187 CLR 1; 141 ALR 129. In Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [474], McHugh J offers a strong criticism of the majority judgment in the Wik case, as does G Del Villar, ‘Pastoral Leases and Native Title: A Critique of Ward and Wik’ (2004) 16 Bond Law Review 29. 441. G Nettheim, ‘The Search for Certainty and the Native Title Amendment Act 1998 (Cth)’ (1999) 22(2) University of New South Wales Law Journal 564 at 566. Nettheim discusses how concerns about the operation of the Native Title Act 1993 (Cth), from both sides of the political fence, had been aired before the Wik decision was handed down; however, the post-Wik era provided an ideal time for these to be dealt with legislatively.The government had also released an outline paper entitled ‘Towards a More Workable Native Title Act’ in May 1996, and followed up with an outline of proposed amendments to the Native Title Act in October 1996.

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to pastoral leases, and also sought to reduce native title rights in reserves, towns and cities, as well as over water. It placed restrictions on how and when native title claims could be made and what compensation could flow from the loss of native title. Consequently, it became very difficult to see how these proposals were at one with any notions of equality between native title and other forms of land holding commonly used in Australia, such as old system, Torrens, strata and community title.442 Like Mabo (No 2) several years before, the plan served to divide the community. Ultimately, it provided the basis for the Native Title Amendment Act 1998 (Cth), a piece of legislation that had a difficult passage through parliament, but which was eventually passed subject to many amendments, when the government struck a deal with an independent senator.443 The key features of the Act are set out below.444

Native Title Amendment Act 1998 (Cth) Intermediate period acts 4.75  A new concept of ‘intermediate period acts’ was created. The intermediate period referred to here is between 1 January 1994 and 23 December 1996 when the Wik decision was handed down. Part 2 Div 2A of the Native Title Act (ss 21–22H), inserted by the Native Title Amendment Act 1998 (Cth), permits grants made in this period over land that was formerly the subject of a freehold estate or a lease, including a pastoral lease, to be validated. Mining leases are not included in this category. The effect of the validation is to override native title in all cases. In most cases, it will also mean the extinguishment of native title.

Extinguishment 4.76  At common law, a clear and plain intention, such as a grant of freehold,445 is needed to extinguish native title. Initially, the common law was not so clear on the issue of whether a short-term lease, for example, would have the same effect. It left open the possibility that a short-term lease would only suspend native title for the duration of the lease, after which native title could be revived. The Native Title Act, however, is categorical. Part 2 Div 2B of the Act (ss 23A–23JA) deems that a short-term lease automatically extinguishes native title. This is so because a short-term lease is seen as giving rise to a right of exclusive possession.446 Under the Act, native title will also be extinguished by a ‘scheduled interest’.447 The effect of this deeming procedure is to broaden and increase the range of areas where other title can triumph over native title. 442. Bartlett makes this point in Native Title in Australia, note 40 above, p 60. 443. Senator Harradine held the balance of power in the Senate.The Act came into effect on 30 September 1998. 444. For a more detailed analysis of the Native Title Amendment Act specifically, see Bartlett, Native Title in Australia, note 40 above, Ch 5. 445. Fejo v Northern Territory (1998) 195 CLR 96; 156 ALR 721. 446. Bartlett, Native Title in Australia, note 40 above, pp 60–61. 447. See s 249C of the Native Title Act for the definition of this term.

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4.77  At common law, native title is extinguished only in relation to reserved land by virtue of a clear and plain statutory authority. The Native Title Act, as originally enacted, treated a future act ‘done in good faith and in accordance with the reservation’ as a past act. The effect of this was to extinguish or diminish native title. Part 2 Div 3 Subdiv J of the Act (ss 24JA–24JB), inserted by the Native Title Amendment Act, does away with the requirement that the act be done ‘in good faith and in accordance with the reservation’, and instead demands only that the impact of the future act on native title is ‘no greater than the impact that any act that could have been done under’ the reservation would have been. By treating native title in this way, the Act is deviating quite strongly from the common law principle that had the extinguishment of past acts being confined to just that, acts in the past.448 The capacity for native title to be extinguished is also greatly affected by the operation of Pt 2 Div 3 Subdiv G of the Native Title Act (ss 24GA–24GE), which declares that if the grantee of a non-exclusive agricultural or pastoral lease expands his or her rights to engage in or carry on any primary production activity, or any associated or incidental activity, native title will be extinguished. One of the harshest aspects of these provisions is that extinguishment is to occur irrespective of the rights originally granted. Hence, if the original grant did not pertain to primary production, for example, but the present activity does involve primary production, native title will be extinguished. The only restrictive proviso is that the expansion or activity could have been authorised at any time before 31  March  1998. It should be noted that primary production in this context includes fishing, forestry, horticultural, pastoral and cultivation activities, and that expansion can even include tourism. 4.78  In circumstances where a non-claimant application is made, there is the very real possibility of extinguishment of native title.449 For example, any future act undertaken pursuant to a non-claimant application that has not been withdrawn by the applicant or dismissed by the National Native Title Tribunal450 will be valid and will have the effect of extinguishing — or at least overriding — a native title claim, unless the claimant of native title (ie, the relevant Indigenous group or individual) registers its claim within three months. The task of registration by claimants has also become onerous under the amendments. By contrast, the task of registration by non-claimants is not as onerous, there being no requirement that they demonstrate how native title has been extinguished. Further, future legislation concerning the management and regulation of water and ‘living aquatic resources’, as well as airspace and future grants of any lease, licence, permit or authority with respect to those resources, overrides native title pursuant to s  24HA 448. According to the common law, past acts were those that involved rights that were already in existence. 449. A non-claimant is usually a government or a mining or pastoral company that has an interest in knowing whether native title exists over certain land. There is a certain irony, however, in the fact that some recent non-claimant applications have been made by groups acting on behalf of Aboriginal people who need to establish a firmer title under state law by ruling out the existence of native title: see, for example, Hillig v NSW Native Title Services Ltd [2006] FCA 1184. 450. Or a state native title tribunal, or the Federal Court.

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of the Act. This section  suggests a wide range of non-Indigenous interests that take precedence over native title, again confirming that the operation of the Act has entrenched the inequality as between various forms of title. The Act, therefore, represents a whittling away of the status of native title — a title that the Native Title Act originally proclaimed to be, for the purpose of the future acts regime, equal in status to freehold.

Compensation 4.79  In an attempt to cut back the amount of compensation available for ‘past acts’, the Native Title Amendment Act 1998 (Cth) introduced s 51A into the Native Title Act. This section restricts the quantum of damages to the amount available had there been a compulsory acquisition of freehold land. There was previously a question as to whether such a formula would take account adequately of the loss of anything above a freehold equivalent, such as spiritual loss. Yet, as s 51A(2) makes s 51A subject to the ‘just terms’ standard contained in s 53 of the Act, the ‘just terms’ standard may still provide the scope to compensate over and above freehold value.451 Recently, the High Court decision in Griffiths suggests that the court now sees the ‘freehold cap’ in s 51A as relating only to the ‘economic loss’ component, and allows any award for ‘cultural loss’ to exceed that cap.452 The right to negotiate 4.80  In regard to mining tenements and the compulsory acquisition of land for grants to private individuals or parties, the Native Title Act created a right to negotiate. The legislation recognised the right of native title holders to negotiate and also created a duty for governments and the grantees of mining tenements and others to negotiate.453 The 1998 amendments cut back the right to negotiate very considerably. While they maintained the right to negotiate regarding mining interests and the compulsory acquisition of native title rights, as well as interests for the benefit of third parties, they denied the right to negotiate for compulsory acquisitions for privately built infrastructure454 and the creation or variation of certain mining rights, permitting some kind of low-impact or small-scale mining if the approval of the Commonwealth Minister were granted, for example.455 451. See J Litchfield, ‘Compensation for Loss or Impairment of Native Title Rights and Interests: An Analysis of Suggested Approaches’ (1999) 18(3) Australian Resources and Energy Law Journal 253 (Pt 1), (2000) 19(1) Australian Resources and Energy Law Journal 44 (Pt 2); J Sheehan, ‘Indigenous Property Rights: Towards a Valuation Methodology’ in Compensation for Native Title: Issues and Challenges, National Native Title Tribunal, 1999. 452. Northern Territory v Griffiths (2019) 269 CLR 1 at [54]: ‘ss 51 and 51A are to be read as providing that the compensation payable to the native title holders is to be measured by reference to, and capped at, the freehold value of the land together with compensation for cultural loss’ (per Kiefel CJ, Bell, Keane, Nettle and Gordon JJ, emphasis added); see also Edelman J at [332]–[333]. 453. Negotiation was also a duty in respect of the compulsory acquisition of land for the purpose of grants to third parties. 454. Native Title Act 1993 (Cth) s 26(1)(c)(iii). Section 24MD(6B) sets out the negotiation rights of native title holders. 455. Native Title Act 1993 (Cth) ss 26A–26C. Low-impact exploration, prospecting, fossicking, small-scale opal and gem mining in existing opal and gem mining areas, as well as alluvial mining for gold and tin, are included.

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Section 43A has also been incorporated into the Native Title Act by the amendments. It provides an alternative state and territory regime that operates over ‘alternative provision areas’. The right to negotiate is consequently lost where the Commonwealth Minister has given his or her approval to the scheme.The section applies to future acts over land which have been the subject of pastoral leases or many types of freehold.

Conclusion concerning the 1998 amendments 4.81  Reaction to the Native Title Amendment Act 1998 (Cth) was diverse. For example, many mining and pastoral interests were placated by the changes, but the amendments certainly did not gain universal approval. Human rights organisations and some political parties were outspoken in their dissatisfaction with the amendments.The amendments also spawned two controversial court cases whose object was to prove that the amendments gave rise to inequality and that inequality, in turn, amounted to genocide. Neither of these cases was successful.456 The Native Title Amendment Act contained other amendments relevant to land law, but space does not permit a discussion of these here. Into this category would fall issues concerning the six-year sunset clause and land use agreements.457

More recent legislative amendments 4.82  More recent amendments to the Native Title Act have mainly introduced refinements to the legislation rather than generating the political controversy of the 1998 changes.458 One controversial amendment, however, was the addition in 2010 of a new category of ‘future act’ under Subdiv JA of Pt 2 Div 3, allowing certain public housing projects to proceed as part of the ‘intervention’ process in the Northern Territory without necessarily taking account of underlying native title rights.459

456. Nulyarimma v  Thompson; Buzzacott v  Minister for the Environment (1999) 96 FCR 153; 165 ALR 621 (two cases, ‘different in nature and derivation’, were heard together) included argument that the Prime Minister, John Howard; Pauline Hanson, leader of the One Nation Party; and independent Senator, Brian Harradine, were responsible for Indigenous genocide through their support of the native title amendment. Buzzacott v Minister for the Environment argued that, in not declaring greater areas of Australia as worldheritage listed sites, the Minister for the Environment was responsible for Indigenous genocide. 457. See  Bartlett, Native Title in Australia, note 40 above, Ch  5, for a more comprehensive treatment. The process of making a claim now entails the adducing of evidence concerning the pre-contact relationship of Indigenous people to the land, as well as consideration of the history of post-contact development and disposition of the land. 458. For an overview of other legislative changes, see Mackie, Histed and Page, Australian Land Law in Context, note 377 above, pp 120–7. See also Bartlett, Native Title in Australia, note 40 above, Ch 10, where the author describes the theme of legislative amendments enacted between 2007 and 2019 as directed to ‘efficiency not equality’, attempting to make the current scheme more workable but not necessarily making it more equitable. 459. See Native Title Act 1993 (Cth) s 24JAA, introduced by the Native Title Amendment Act (No 1) 2010 (Cth) with effect from 16 December 2010. See comment on the views of various stakeholders in Mackie, Histed and Page, Australian Land Law in Context, note 377 above, pp 124–7.

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4.83  A package of amendments to the legislation was enacted in the Native Title Legislation Amendment Act 2021 (Cth).460 Most of the amendments were fairly technical. For example, the Act validated a number of agreements made under s  31 of the NTA that had been put in doubt by the Federal Court decision in McGlade,461 where it was held that ILUA’s required the signature of all members of a registered native title claimant group. Following previous legislative validation of the relevant ILUA’s in 2017,462 the 2021 amendments made it clear that s 31 agreements which might have been subject to similar problems were to be regarded as valid. However, an important amendment made by the 2021 legislation was the addition of new s  47C, which provides that any prior extinguishment of native title on land set aside as a national park may be disregarded where government approval can be obtained. This means that such land may be claimed as native title land if other requirements are satisfied.

Reform Definition of ‘native title’ 4.84  One of the very positive features of s 223 of the Native Title Act 1993 (Cth) is that it largely retains the common law definition of native title gleaned from Mabo v Queensland (No 2) (Mabo (No 2)).463 In turn, that common law definition was made referable to Indigenous customs and traditions.Yet, s 223 requires that the rights and interests claimed as native title must be recognised by the common law. At first blush, that requirement seems acceptable and suggests that native title may provide what Pearson has called a ‘recognition space’ for Indigenous customs and traditions in the common law world.464 Yet, if the Act does not create new forms of title,465 but demands that Indigenous customs ‘fit’ the common law model in order to be recognised, difficulties could arise. For example, it may mean that s 223 potentially acts as a filter, keeping out any customs or traditions that are too foreign or different. If that were the case, opportunities for interpreting aspects of native title that are different from the cultural and legal understandings non-Indigenous people bring to the matter may be denied.This would seem to be unfortunate and at odds with the messages being sent by the High Court to respect the sui generis nature of native title and to leave ‘the language of the common law property lawyer’ behind.466 This suggests an amendment to s 223 may be necessary, but any amendment would need to be preceded by extensive research and consultation.467 The recent ALRC Report468 represents 460. For an overview of the amendments see M O’Donnell and M Stone ‘Takeaways from the Native Title Legislation Amendment Act 2021 (Cth)’ (2021) (1) Native Title Newsletter 5–6. 461. McGlade v Native Title Registrar [2017] FCAFC 10, above, n 186. 462. See note 187 above. 463. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1. 464. Pearson, ‘Concept of Native Title at Common Law’, note 289 above, p 118. 465. Djaigween v Douglas (1994) 48 FCR 535 at 541. 466. Commonwealth v Yarmirr (2001) 208 CLR 1; 184 ALR 113 at [11]. 467. For comment on the need to allow a broader role for the common law in development of native title, see L Strelein, ‘A Captive of Statute’ (2009) 93 Reform 16. 468. Australian Law Reform Commission, ALRC Report 126, note 188 above.

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a good start to this process, which ought to be carefully considered by the government for enactment. 4.85  An important part of the concept of native title is the question of the ‘connection’ that a tribal group has to have with a pre-1788 community. In this respect, it is commendable that the Commonwealth Government’s Australian Institute of Aboriginal and Torres Strait Islander Studies has produced a report as to how issues of ‘connection’ should be dealt with when dealing with consent determinations of native title.469 The articulation of a clear policy would have the potential to avoid needless litigation and may have an impact on the way that the courts regard the issue.

Cultural knowledge 4.86  The issue of the recognition of cultural knowledge through native title rights has not yet been satisfactorily resolved, and the present position needs reform. Where artwork is located on rocks, or where ceremonies are performed on land, the ‘connection’ aspect of those practices to the land is fairly self-evident, but at other times cultural knowledge is not so physically related to the land.470 For example, it could concern restricting access to ‘representations, images or oral accounts relating to such land or waters’. An example would be restricting the ‘reproduction of a Dreaming story relating to a particular site, where the reproduction could be proved to contravene Aboriginal law’.471 In the latter circumstances, some members of the High  Court have shied away from finding the existence of native title rights, stating that they are unprepared to recognise ‘something approaching an incorporeal right akin to a new species of intellectual property’.472 They have commented that ‘The recognition of this [incorporeal] right would extend beyond denial or control of access to land held under native title’.473 It is suggested that the law needs to be reformed to take account of the ‘land-relatedness’ of the spiritual beliefs and cultural narratives of Indigenous people.474 Where song cycles, dances, body art and ceremony are wedded to the land, the law needs to acknowledge these as aspects of native title. As Kirby J, in dissent on this point, has stated: If this cultural knowledge, as exhibited in ceremony, performance, artistic creation and narrative, is inherently related to the land according to Aboriginal beliefs, it follows logically

469. See L Strelein, N Duff and T Bauman, Commonwealth Native Title Connection Policy: Final Report, Native Title Research Unit, AIATSIS, Canberra, 2014, (accessed 17 May 2022). 470. Western Australia v  Ward (2000) 99 FCR 316; 170 ALR 159 found that the common law could only recognise native title rights and interests that involve physical use of the land. On appeal to the High Court, artworks on rock, for example, were said, to some degree, to answer the connection with land requirement. See Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [59]. 471. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [579] per Kirby J. 472. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [59] per Gleeson CJ, Gaudron, Gummow and Hayne JJ. 473. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [59] per Gleeson CJ, Gaudron, Gummow and Hayne JJ. 474. This is the view of Kirby J in Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [580].

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that the right to protect such knowledge is therefore related to the land for the purposes of the NTA. Indeed, as stated in Yanner v Eaton: … an important aspect of the socially constituted fact of native title rights and interests that is recognised by the common law is the spiritual, cultural and social connection with the land.475

Perhaps the most appropriate manner to go about reforming this area of law is to take up Kirby J’s suggestion, which is to see these practices as human rights — human rights that are protected under international instruments.476 Another alternative could be to mount a constitutional argument that conceives of cultural knowledge as based on the spirituality of Indigenous people. Such spirituality, it could be argued, is protected by s 116 of the Commonwealth Constitution.477

Compensation 4.87  The previous edition of this book noted that a number of key questions relevant to compensation were then unresolved: • What should be compensated? • How should the quantum of that compensation be determined? • In what form should it be paid? Since then, the decision of the High Court in the Timber Creek case478 has provided some welcome clarity on these points. But there are still some issues which remain. For example, in deciding what should be compensated, we need to have some understanding of what has been lost. Once again, this involves inquiring into the nature of the interest extinguished or impaired. As the material in this chapter demonstrates, there is no unity of understanding regarding this concept. Further, where traditions and customs exist but are not recognised through native title, because they do not find reflection in the common law, compensation is precluded. Perhaps revisiting our understanding of how native title is to be interpreted and amending the relevant legislation so that new interpretations are available would be a good starting point in assisting with the development of a more equitable compensation scheme. To highlight the problem of simply treating Indigenous customs and traditions (mediated through native title) as something that they are not, we need only look as far as the issue of the ‘freehold cap’. The freehold cap means that the quantum of compensation payable 475. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [580]. 476. Such as the International Covenant on Civil and Political Rights, NewYork, 19 December 1966,ATS 1980, No 23; International Covenant on Economic, Social and Cultural Rights, New York, 19 December 1966, ATS 1976, No 5. See also K Howden, ‘Indigenous Traditional Knowledge and Native Title’ (2001) 24 UNSW Law Journal 60; Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [586] per Kirby J. 477. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [586]. The impact of s 116 was discussed in the decision in Cheedy on behalf of the Yindjibarndi People v Western Australia [2011] FCAFC 100, although a very narrow view of the provision was articulated by the court there. 478. Northern Territory v Griffiths (2019) 269 CLR 1, discussed in detail above at 4.70.

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is capped at the value of the same property had it been held by virtue of a freehold title. The Timber Creek decision clarified that the ‘freehold cap’ only applies to the ‘land value’ component of native title, and does not limit the amount that may be awarded for loss of connection with land.479 There has been strong support for a freehold cap to the quantum of compensation payable.480 The High Court decision now also clarifies that consideration of ‘any special or unique aspects of the links’ that native title holders may have with the land is a separate issue.481 It could be argued that s 51A (capping native title compensation at the level of a compulsory acquisition of freehold title), which was introduced into the Native Title Act as part of the 1998 amendment package, should be repealed. On the other hand, the over-riding entitlement to ‘just terms’ provided for in s 53, along with the High Court’s ruling that ‘cultural loss’ damages are not limited by the cap, may mean that the cap as interpreted does not constitute a serious barrier to proper compensation. The Timber Creek decision is critiqued by Dews for providing ‘formal’ but not ‘substantive’ equality, by failing to recognise even in the ‘economic loss’ component, the reality of what has been lost by native title holders.482 This is an issue that requires further consideration. An issue on which there was disagreement within the High Court in the Timber Creek case was the date at which ‘cultural loss’ should be calculated. This will have an impact on the overall award of monetary compensation, as if the date is regarded as the date when the relevant act of extinguishment took place, simple interest would be payable on the period to judgment. If the calculation only takes place when judgment is entered, no interest would be payable. The majority of the court held that the calculation should take place as at the time the court considers the matter. Edelman J dissented on this point, arguing that the cultural loss should be held to have taken place when the native title rights were extinguished.483 It would be helpful if the view taken by Edelman J were enacted by statutory amendment.

479. See above, 4.79. 480. See Western Australia v Thomas (1996) 133 FLR 124 at 195. 481. M Lavarch, ‘Compensation for Ancient Rights’ in L Strelein, Working with the Native Title Act, Native Title Research Unit, AIATSIS, Canberra, 1998, p 96. 482. Dews, ‘Mabo and the Valuation Vibe’, note 416 above, at 398–408. 483. See  Bartlett, Native Title in Australia, note 40 above, pp 748–49, who supports the dissenting view of Edelman J.

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Chapter 5

Possession and Adverse Possession Introduction 5.1  Possession is a key land law concept. Although its common law history is linked to the possessory actions of the medieval era, it remains both relevant and important today to land law and other legal subdisciplines. Possession, for example, lies at  the heart of torts such as trespass, conversion and detinue. Importantly for this chapter, the concept of possession also underpins the doctrine of adverse possession, known more informally as squatting. In this chapter, we explore both the concept of possession and the doctrine of adverse possession, the latter sometimes being seen as a controversial land law doctrine because under it land may be taken from the true owner without his or her consent and without compensation for the loss. Although a considerable period of time must elapse and additional requirements must be satisfied before the loss of land occurs, the doctrine is arguably even more controversial because the acts responsible for the loss start out as a trespass on land, which as discussed in Chapter 2, is a legal wrong.The doctrine of adverse possession operates in quite limited circumstances only but is, nevertheless, a significant, established and active land law doctrine.We begin our discussion of possession and adverse possession by revisiting the issue of who may hold land in Australia. 5.2  As outlined in Chapter 3, the common law recognises that land in Australia may be held by: • Indigenous Australians on the basis of a successful native title claim;1 • the Crown; or • private persons, who have received grants directly from the Crown, or who can trace title to a Crown grant.

1. Native title is communally held title recognised by the common law but not ‘of ’ the common law. See Chapter 4.

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Privately held land is held under either old system title or Torrens title.2 If land is held under old system title, the ‘true’ or ‘documentary’ owner is ascertained by reference to a chain of title with a good root of title ultimately traceable, at least in theory, to the original Crown grant. Where the land in question is held under Torrens title, as is the case for almost all land in New South Wales today, ownership is established by virtue of a recording in the Torrens Register.3 Possessory title (as adverse possession is sometimes known) is not simply a parallel alternative to either old system title or Torrens title, which are dealt with in Chapter 7 and Chapter 8, respectively. Indeed, in the correct circumstances,4 a party may claim possessory title over either old system or Torrens title land. Possessory title arises without documentation. While the common law determines the nature of the possession that is necessary for such title, statute is responsible for the extinctive process whereby the documentary owner’s title may be barred.5 Possessory title is, therefore, at odds with the documentary owner’s title and that is why possessory title is also known as adverse possession.6 The terms ‘adverse possession’, ‘possessory title’ and ‘squatting’ are used interchangeably throughout this chapter. Possessory title may be seen as an alternative to documentary title and, as such, bears some similarity to native title, which also arises independently of documentation. Both possessory title and native title are forms of title characteristic of pre-literate societies that rely on custom and oral tradition. At this point it is helpful to explore in more detail, the concept of possession itself; an undertaking that necessarily involves aspects of legal history.7 Following such a discussion, the chapter returns to consideration of adverse possession more specifically, offering a definition of the doctrine, exploring its rationale(s), and also outlining its key features including factual possession, the animus possidendi (intention to possess) and the statutory limitation period.

2.

Strata title and community title are two other popular forms of title used in New South Wales. Strata and community schemes operate only in relation to Torrens title land. See Chapter 9. 3. Traditionally, a certificate of title is generated from the Torrens Register. 4. The correct circumstances or what is needed to bring a successful adverse possession claim is discussed later in this chapter. See 5.73–5.134. 5. The limitation period is set by the Limitation Act 1969 (NSW). See s 27(2) of that Act. Other criteria also need to be satisfied. They are discussed in the course of this chapter. 6. It may be that as paper titles disappear from the Torrens system of land titling, the term, ‘documentary owner’ is more appropriately replaced by the term ‘the registered proprietor’ with the term, ‘documentary owner’ being reserved for adverse possession cases involving old system title land. Alternatively, although paper certificates of title are no longer being issued, in New South Wales, the Torrens Register will still exist and as it constitutes an electronic document that records land titles in New South Wales, it may be that we will cling to the term ‘documentary owner’ for Torrens title cases of adverse possession, too. These semantic issues are in an evolutionary phase. See Chapter 8, Torrens Title. 7. See AES Tay, ‘The Concept of Possession in the Common Law: Foundations for a New Approach’ (4) (1964) Melbourne Law Review 476 for a discussion of some the history.

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5.3  The significance of the concept of ‘possession’ was captured in stirring language by William Pitt the Elder (Lord Chatham) as recorded in Brougham’s Statesmen in the Time of George III in 1839, and quoted in Harrow London Borough Council v Qazi.8 Lord Chatham commented: The poorest man may in his cottage bid defiance to all the forces of the Crown. It may be frail — its roof may shake — the wind may blow through it — the storm may enter — the rain may enter — but the King of England cannot enter! — all his force dares not cross the threshold of the ruined tenement!9

5.4  As Lord Millett went on to observe in this case: Although not unrelated to his rights of property, the poor man’s defiance of the King was not based on his title. The common law protects possession as well as title. A person who is in actual possession of land is entitled to remain in peaceful enjoyment of the property without disturbance by anyone except a person with a better right to possession. It does not matter that he has no title. A squatter can maintain a claim of trespass. His want of title does not justify the authorities in searching his premises without a search warrant. He cannot be evicted save at the suit of someone with a better right to possession, and even then that person must rely on the strength of his own title and not the weakness of the squatter’s.10

5.5  In this case, Lord Millett was differentiating between rights that arise by virtue of being in possession of land and rights that arise by virtue of holding the documentary title to land. Accordingly, rights in land may be based on (a) possession or (b) ownership. However, sometimes a party may be in possession and simultaneously enjoy rights by way of his or her ownership.Where this occurs, the law of possession and the law of ownership will effectively merge.11 In other cases, however, a person may be in possession without also being the owner. His or her rights will be solely possessory in nature. Alternatively still, a person may own property but not be in possession of it, as is the case when an owner leases property to a tenant, who goes into possession.

Historical Development 5.6  In order to understand more fully why the law has been, and is still, willing to acknowledge (and at times favour) a title based on possession rather than documentation, it is helpful to examine the significance and historical development of the concept of possession more generally.12 It is also helpful to acknowledge the inter-relationship between the co-existing but often competing concepts of possession, ownership, property, 8. Harrow London Borough Council v Qazi [2004] 1 AC 983. 9. Henry Lord Brougham, Statesmen in the Time of George III (First Series), 2nd ed, Charles Knight & Co, London, 1839, pp 41–42. Quoted in Harrow London Borough Council v Qazi [2004] 1 AC 983 at [86]. 10. Harrow London Borough Council v Qazi [2004] 1 AC 983 at [87]. 11. W Holdsworth, An Historical Introduction to the Land Law,The Law Book Exchange Ltd, Clark, New Jersey, 2004, p 123. 12. For a discussion of the concepts of possession (and ownership) in the context of a theoretical framework, property law and literature, see ‘Terra Nullius, Cannibalism, and the Law of Appropriation in Robinson Crusoe’ in W Schmidgen, Eighteenth Century Fiction and the Law of Property, Ch 2, Cambridge University Press, Cambridge, 2002.

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estate and title13 It has been observed that ‘[t]he subtlety of these linkages reflects a deep historic ambivalence as to whether “property” in land is constituted by the empirical reality of behavioural fact or by the official recognition of abstract rights’.14 The situation is probably best explained as a case of shifting sands in that the pre-eminence of possession (behavioural fact) over ownership (recognition of abstract rights) and vice versa, is constantly being played out and positions are susceptible to change and readjustment over time. Some of the contestation and disputation as to dominance may be linked to the historic availability of proprietary and possessory actions. Harpum et al conclude that the ‘essentially possessory character of land is a product of historical evolution and in particular the old forms of action’. They go on to comment that ‘[f]or some time after the middle of the twelfth century there were (at least in name) both proprietary and possessory actions, the former asserting title and the latter asserting possessory rights’; yet despite the competition between the two concepts (proprietary and possessory), those authors also observe that ‘[e]ven the proprietary (“droitural”) actions had a strong possessory flavour’.15 5.7  More recently, it has been observed that, in England at least, there has been a move away from reliance on interests which are based on the fact of possession, in favour of a ‘more modern view of property’ that creates entitlements of ownership under a state-administered electronic land registration system.16 To date, Australian law has largely resisted this English trend (although Australian law does also rely on a state-administered land registration system in the form of Torrens title).17 Modern Australian law continues to uphold both the law of adverse possession (a principle that applies to estates and interests18 in land); and documentary title. In upholding the concept of adverse possession (and for that matter, also the doctrine of prescription)19 courts, it has been argued, are 13. K Gray and S Gray, Elements of Land Law, 5th ed, Oxford University Press, Oxford, 2009, p 150. 14. Gray and Gray, Elements of Land Law, note 13 above, p 150; K Gray and S Gray, ‘The Idea of Property in Land’ in S Bright and JK Dewar (eds), Land Law:Themes and Perspectives, Oxford University Press, Oxford, 1998, p 18. 15. C Harpum, S Bridge and M Dixon, Megarry and Wade:The Law of Real Property, 9th ed, Sweet & Maxwell, London, 2012, pp 87–8. The possessory actions and the development of the action of ejectment (based on possession) are discussed later in this chapter. 16. Gray and Gray, Elements of Land Law, note 13 above, pp 150 and 180. 17. Moore et al suggest that the adverse possession doctrine may not have a strong future when they conclude that ‘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’: A Moore, S Grattan and L Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, 6th ed, Thomson Reuters/ Lawbook Co, Australia, 2016, p 125. 18. Estates and interests in land were discussed in Chapter 3. 19. Note that the doctrine of prescription also impacts on the rights of the documentary owner.The doctrine recognises certain kinds of lesser interests in land, such as easements and profits à prendre acquired by long-user. These are known as prescriptive easements and prescriptive profits à prendre. In such cases, the use of the land is insufficient to constitute possession. Easements and profits a prendre are discussed in Chapter 12. An easement by prescription or long user in being based on use does not exist by way of documentation, but rather a party’s use of the land for at least 20 years. In Williams v State Transit Authority (NSW) (2004) 60 NSWLR 286, the court found against the holder of an alleged easement and in favour of the competing registered titleholder. It rejected the proposition that an easement by prescription could be founded on a lost Crown grant. The effect of this decision was to cut back severely the doctrine of

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5.9

simultaneously diminishing the proprietary rights of the documentary owner, especially his or her right to exclude others from the land.20 At this stage, it is difficult to predict how future Australian law will harmonise the principles of possession, ownership and title. For the present, however, adverse possession remains a significant property law concept, albeit one that its critics suggest, may help undermine a key element of the Torrens system — the stability of the Torrens Register.21

Concept of Possession 5.8  Although possession is a fundamental tenet of Anglo-Australian property law, it is not a term that has been neatly and succinctly judicially defined. Indeed, Earl Jowett stated, ‘In truth English law has never worked out a completely logical and exhaustive definition of possession’.22 Meanwhile, Toohey J in Mabo v  Queensland (No 2)23 described it as ‘a conclusion of law defining the nature and status of a particular relationship of control by a person over land’. Kevin Gray and Susan Gray put it similarly when they stated that ‘possession is simply a state of overall territorial control’.24 The High  Court in Western Australia v  Ward25 noted that the commonly used term ‘exclusive possession’ involved an element of redundancy, stating: … possession that is not exclusive is a contradiction in terms, for the right of general control and exclusion is central to the concept of legal possession. … It is a pity that the term “exclusive possession” was ever used …26

5.9  The term ‘possession’ is sometimes confused with the term ‘occupation’. Although often related in practice, they are not synonymous. Occupation describes a physical presence and accordingly it is a question of fact. Possession, on the other hand, goes beyond mere physical occupation and emphasises the control a person has over land (or a chattel).27 The relevant control is not accidental. It arises by virtue of application of a prescriptive easements, arguably demonstrating a curtailment of the doctrine of possession, in favour of ‘ownership’ at least in relation to Torrens title land. See B Edgeworth, ‘Adverse Possession, Prescription and their Reform in Australian Law’ (2007) 15 Australian Property Law Journal 1. F Burns, ‘Adverse Possession and the Title-by-Registration Systems in Australia and England’ (2012) 35(3) Melbourne University Law Review 773–820, argues for Australian reform of what Burns describes as ‘this “rough and ready” doctrine’: at 773. 20. Exclusion as an indicium of property was discussed in Chapter  1; On the diminution of exclusion see B Edgeworth, Butt’s Land Law, Thomson Reuter, Sydney, p 1097. 21. The Torrens Register is discussed in Chapter 8, while the scheme for possessory applications under Pt 6A of the Real Property Act  1900 is discussed at  5.148. That scheme attempts to harmonise the adverse possession of Torrens land with the sanctity of the Register. 22. United States of America & Republic Of France v DollfuS Mieg et Cie. S.A. & Bank of England [1952] AC 582, 605. 23. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 207; 107 ALR 1 at 162 (Mabo (No 2)). 24. Gray and Gray, Elements of Land Law, note 13 above, p 153. 25. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1. 26. Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [477] and [502] per McHugh J. 27. Holdsworth, An Historical Introduction to the Land Law, note 11 above, p 123, calls possession the ‘physical relation of control exercised by a person over a thing’. See also JA Pye (Oxford) Ltd v Graham [2003] 1 AC

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mental element (sometimes known as ‘animus’). Possession, therefore, involves a serious and deliberate attempt to bring the land or object under control, and that is why a friend who stays at one’s house overnight may be said to be in occupation but will not usually be in possession. Possession, then, is a conclusion of law, not fact. By parity of reasoning, a person may be in possession without actually occupying (ie, setting foot on) the relevant land. It has been observed: … [t]he fact that a lessee continues to pay the rent to the landlord is a fact which suggests that the lessee  has not parted with possession. The fact that an occupant other than the lessee holds the keys to the premises, ie exercises physical control over the premises, is an indication to the contrary.28

Property, possession, ownership, title and seisin 5.10  The distinction between (a) property; (b) possession; (c) ownership; (d) title; and (e) seisin is complex. For example, an estate in land (an estate, as explained in Chapter 3, refers to the duration of a landowner’s right) indicates a type of property right.29 An estate has also been found historically to be derivative of one’s possession of land30 but, as Gray and Gray explain, a person who is in possession of land is not (except in one highly technical sense) in possession of a proprietary right. Possession and property are distinct concepts.31 Those authors suggest that the difference between possession and property may be observed by recognising that: The animus which underlies “possession” of land is subjective to the occupier, whereas “property” in land is ultimately validated by some social or collective judgement about the legitimacy of the claim involved.32

419 at 445, where Lord Hope of Craighead suggests that mere physical occupancy will not at common law constitute possession; Moncrieff v Jamieson [2007] 1 WLR 2620 at [55], where per Lord Scott of Foscote also suggests that occupation is ‘fundamentally inferior to, exclusive possession’. 28. Ace Property Holdings Pty Ltd v Australian Postal Corp [2010] QCA 55 (19 March 2010) at [80] referring to Akici v LR Butlin [2005] EWCA Civ 1296; [2006] 1 WLR 201 at 209 [36]; Chaplin v Smith [1926] 1 KB 198. For further discussion of the concept of possession in the context of a lease, see Lam Kee Ying v Lam Shes Tong [1975] AC 247. For discussion of lower court decision in the Ace Property Holdings case, see S Jones, ‘Double Illusion: Parting with Possession or Occupation by Proxy’ (2010) 7 Australian Property Law Bulletin 102. 29. See Chapter 3 where reference is made to fee simple estates, life estates and fee tail estates, for example. 30. This point is made by Gray and Gray, Elements of Land Law, note 13 above, pp 165, 167. See also earlier edition Gray and Gray, Elements of Land Law, 4th ed, Oxford University Press, Oxford, 2005, p 200. Note that the court in Metropolitan Railway Co v Fowler [1892] 1 QB 165 at 175 stated that the origin of title was never ‘a set of words on a parchment’. It was rather the on-going possession of the land. See also Clos Farming Estates Pty Ltd v Easton (2001) 10 BPR 18,845 at [44], per Bryson J. 31. Gray and Gray, Elements of Land Law, note 13 above, pp 153–54. 32. Gray and Gray, Elements of Land Law, note 13 above, p 200; Minister of State for the Army v Dalziel (1944) 68 CLR 261 at 276 per Latham CJ, cited in Gray and Gray; AWB Simpson, A History of the Land Law, 2nd ed, Clarendon Press, Oxford, 1986, p 38. Note that property involves the relationship people have with each other about a ‘thing’ and therefore that relationship, being based on varying degrees of power, is capable of many calibrations.

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5.14

5.11  Perhaps another way of considering the issue is as flagged at 5.6 to inquire whether title to land arises from the physical or behavioural reality of actually going into possession and exercising the requisite level of control over land; or, alternatively, by way of a set of socially accepted conventions and relations that become recognised as law and which include the concept of ownership. The debate has been said to be about whether ‘the character of property [is] ultimately physical or cerebral.’33 5.12  Seen in this light, possession is a ‘behavioural reality’,34 while ownership is a concept that only has meaning if it is supported by law.35 Hence, Elizabeth will be said to be in possession of a bicycle if we see her riding it, but we would have to know more about how she came to be riding it to know whether she also owns it. She may have borrowed the bicycle (bailment). She may have hired it (lease) or may have stolen it (theft). Hence, ownership is determined by the conditions and acts leading to possession and depends on whether the law sanctions those conditions and acts as giving rise to ownership. Clearly, what will constitute ownership is dependent on what the law specifies at any given time. The law relating to ownership, therefore, is subject to change. That is why, at least to some extent, there was so much public outcry after the Mabo v Queensland (No 2) decision was handed down in 1992.36 As a result of that decision, many ‘owners’ of Torrens title land, for example, feared (wrongly) that the law granting them ‘ownership’ had changed, with the result that ownership vested in Indigenous claimants rather than in themselves. 5.13  The term ‘title’ is commonly used alongside the terms ‘possession’ and ‘ownership’. Title refers to the entitlement of a person to assert his or her estate in land against all the world. Title to an estate such as a fee simple or life estate, therefore, affords the titleholder the opportunity to exercise the range of rights associated with owning property. In relation to a fee simple or life estate, those rights include the right to: control; exploit, use or enjoy; and alienate. (As native title does not afford the titleholder the opportunity to assert the incidents of ownership per se, ‘title’ is arguably not the correct term to describe the common law’s recognition of the relationship between Indigenous Australians and land/ water.)37 5.14  Meanwhile, ownership in its ‘fullest sense’ has been said to ‘mean that the owner holds the land in tenure for an estate in fee absolute’.38 As explained in Chapter 3, tenure means the conditions and terms on, or ‘services’ by which, particular land is held; such as having to supply grain, holding the King’s head while he was seasick, or paying money.) As noted above, Lord Millett commented on a certain degree of independence between possession and title, when he observed that ‘possession’ may be upheld by a person who K Gray and S Gray, Elements of Land Law, 4th ed, Oxford University Press, Oxford, 2005, p 151. Gray and Gray, Elements of Land Law, note 13 above, p 166. That is, ‘ownership’ only has meaning if the law attaches rights to the owner. Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1; J Gray, ‘The Mabo Case: A Radical Decision?’ (1997) 17(1) Canadian Native Studies Journal at 33–74. 37. Native Title is discussed in Chapter 4. 38. Harpum, Bridge and Dixon, Megarry and Wade,The Law of Real Property, note 12 above, p 85. 33. 34. 35. 36.

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does not have (documentary) ‘title’.39 Further, the protection of possession in more recent times has been enshrined in Art 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (European Convention on Human Rights, or ECHR) (while protection of property is enshrined in the First Protocol to the ECHR, not by Art 8).40 5.15  Another related concept is that of ‘seisin’, which is referred to in Chapter 3 and discussed in more detail below.41 In its simplest form, seisin means ‘possession’ and in early law the terms ‘possession’ and ‘seisin’ were applicable to both chattels and realty, such that it was acceptable to use them interchangeably and speak of the seisin of chattels and the possession of freehold land.42 5.16  Over time, the term ‘seisin’ became reserved for realty only and, in particular, for freehold land.43 Seisin, therefore, came to mean possession of freehold title. Pollock and Maitland noted that a man was ‘in seisin’ of land when he was ‘enjoying it or in a position to enjoy it’.44 Seisin existed independently of ‘right’ and, hence, even a thief could have seisin.45 Seisin, therefore, reflected fact but the existence of seisin was presumptive evidence of entitlement (title) to land. From the 15th century onwards, seisin was necessary to pass freehold land and a conveyance of freehold (a feoffment) required livery of seisin.46 It has been noted that ‘[s]eisin was … the root of all titles’.47

39. Harrow London Borough Council v Qazi [2004] 1 AC 983 at [88]. 40. Note that the adverse possession issue in the case of JA Pye (Oxford) Ltd v  Graham [2003] 1 AC 419; [2002] UKHL 30, discussed later, eventually went to the European Court of Human Rights (ECtHR) for consideration under Art 1 of the ECHR as JA Pye (Oxford) Ltd v United Kingdom (2006) 43 EHRR 3; [2005] ECHR 921 (Application no 44302/02, Strasbourg, 15 November 2005) (ECtHR). As noted in Chapter  1, the Charter of Human Rights and Responsibilities Act  2006 (Vic) (the Victorian Charter) protects against the deprivation of ‘property’. 41. FW Maitland, ‘The Mystery of Seisin’ (1886) 2 Law Quarterly Review 481; ‘The Beatitude of Seisin’ (1888) 4 Law Quarterly Review 24 at 28. See 5.16 and 5.26 explaining seisin further. 42. Holdsworth, An Historical Introduction to the Land Law, note 11 above, p 121, notes that ‘the term seisin is derived from the same root as the Roman possessio and the German besitz’. 43. Holdsworth, An Historical Introduction to the Land Law, note 11 above, p 121, notes that from the 15th century on, when Littleton was writing on tenures the term seisin was appropriated to describe possession of freehold land. 44. F Pollock and FW Maitland, The History of English Law, 2nd ed, London, 1968; cited and referred to in Gray and Gray, Elements of Land Law, note 13 above, p 153. 45. See FW Maitland, ‘The Mystery of Seisin’ (1886) 2 Law Quarterly Review 481; ‘The Beatitude of Seisin’ (1888) 4 Law Quarterly Review 24 at 28; Asher v Whitlock (1865) LR1QB 1. 46. Note that livery of seisin was the ceremonial handing over of feudal possession. It involved the physical act of placing a clod of earth or twig from the transferor’s land into the hands of the transferee. (The act was imperative to admit the transferee into the tenure and was absolutely necessary to pass the freehold.) Although livery of seisin is no longer necessary to pass freehold, in  1975 the then Prime Minister of Australia, Gough Whitlam, poured sand from the Daguragu land into the hands of Vincent Lingiari, an Indigenous elder, in an act symbolising the handing back of ancestral land from non-Indigenous Australians to the Gurindji people. 47. Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 15 above, p 88.

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5.19

Against this background, it is perhaps not surprising that Salmond observed that ‘[i]n the whole range of legal theory … [there is] no conception more difficult than that of possession’.48

Possessory actions Development of the writ system 5.17  In English law, the roots of possessory title lie in circumstances, where proprietary and possessory actions for the recovery of land have historically existed alongside each other.49 ‘Real actions’, as they were known, were proprietary in nature and available only to freeholders. Pursuing them was a very time-consuming process. The drawbacks associated with real actions included: • the plaintiff needed to establish ownership by virtue of inheritance; • tenants in chief were the only class of people able to use the actions; and • adjudication was most commonly determined by ‘trial by battle’.50 5.18  The real actions available in the feudal or seigneurial (local) courts were usually commenced by way of verbal complaint. That system worked effectively enough in small local communities, but, to support the operation of the King’s national courts, a new system for commencing an action needed to be developed.51 The writ system served this purpose. It involved the sheriff acting as the local agent of the King, by informing the defendant that his or her presence was required in order for the matter to be heard in the King’s court. The instructions that the sheriff received were in the form of a writ; hence, the writ came to mark the commencement of an action.Writs had to be purchased and there was not one general writ for all complaints but, instead, a series of individual writs, which had their own procedures and remedies. As newer, more efficient writs were developed, litigants sought to bring their claims under those writs, but this was not always easy to do, because each writ required the facts of the plaintiff ’s case to comply exactly with the rigid requirements of the writ itself.52 Without complete compliance, the writ simply could not be used. 5.19  For example, the main writ used in regard to recovery of land was the praecipe in capite writ.53 This writ fell into the broad category of ‘writs of right’ and was used to commence litigation in the royal court. Initially, it could be used only by a tenant in 48. J Salmond, Jurisprudence (or The Theory of Law), London, 1902, p 288. 49. From at  least the reign of Henry II (1154–89). For an historical discussion of land law remedies, see Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 15 above, pp 87–89, 93. 50. See WJV Windeyer, Lectures on Legal History, 2nd ed, Law Book Co, Sydney, 1957, pp 44–46. See also R Bartlett, Trial by Fire and Water:The Medieval Judicial Ordeal, Oxford University Press, Oxford, 1986. 51. Henry II, who acceded to the throne in 1154, embraced wholeheartedly the notion of the King’s court. He made a number of changes to the rights, remedies and procedures of the legal system. These changes were made in an effort to divert power and influence away from the feudal lords and towards himself. 52. The writ was a blueprint from which deviation was not tolerated. 53. See W Holdsworth, A History of English Law, 4th ed, Methuen, Sweet & Maxwell, London, 1936, Vol 2. Praecipe means ‘order’ and was the word used after the introductory greeting.

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chief who had been disseised (lost seisin) of his or her land.54 It operated by requiring the disseised party to claim ownership of the land as his or her ‘right and inheritance’. Trial was by battle so, naturally, this form of resolution had its drawbacks for the faint-hearted. However, later the dispossessed could seek to have the dispute with the defendant resolved through either the traditional means of trial by battle or, alternatively, by a group of 12 local knights who were summoned by the sheriff to decide the matter.55 5.20  The alternative method (known as the Grand Assize), took place in the King’s court and represented an important aspect of the King’s attempts to establish the supremacy of the royal courts.56 The King’s determination to establish the supremacy of his courts rather than that of the seigneurial courts was also seen in his attempt to expand, beyond tenants in chief, the class of people eligible to use the praecipe in capite writ. The wider the net of people who could use the King’s courts, the more central to justice those courts would become. Although, initially, attempts at extension of the writ were thwarted,57 it became established that proceedings relating to land had to be commenced by the issuance of a royal writ. This, in turn, had the effect of sending a firm message to all subjects that justice began with the King even though the seigneurial courts retained their decision-making powers.

Assizes 5.21  Over time, the focus of the questions associated with actions relating to the recovery of land began to change and, in the process, the emphasis shifted from a concern about who was the owner, and therefore had a better right, to whether a person in possession had been dispossessed.58 5.22  This shift away from ownership was reflected in the introduction of the remedy known as the ‘possessory’ assize;59 a remedy that was notable in a doctrinal sense for the emphasis it placed on possession.60 The possessory assize was commenced in the King’s courts, but its use was not limited to tenants in chief. The key question was whether the defendant unjustly disseised61 the plaintiff. The answer to the question was decided by a group of witnesses and, without the need to establish ownership, the remedy could operate efficiently and provide results quickly. Accordingly, it assumed great popularity. 54. ‘Disseised’ means to have lost seisin. 55. The Grand Assize was a tool of the King designed to wrest power and influence away from the barons by offering new forms of actions and better remedies for old actions in the royal courts, thus influencing litigants to have their matters heard in the royal courts. The term ‘Grand Assize’ relates both to the procedure itself and the panel of 12 men. 56. Henry II also attempted to secure the supremacy of the royal courts by extending the writ of praecipe in capite to those other than tenants in chief and by introducing the possessory assizes. 57. Magna Carta 1215, ch 34, demonstrates how the earlier more rigid position was retained. 58. See  5.7, where it is noted that others have observed that this trend appears presently to be in retreat, in England, at least. 59. Assize means a sitting or session. The term comes from the Latin sedere, meaning ‘to sit’. 60. See P Butt, Land Law, 6th ed, Lawbook Co, Sydney, 2010, pp 90–93, for a discussion of the writ system and real actions. 61. At this time, the term ‘disseised’ meant ‘dispossessed’.

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5.26

5.23  The assize of mort d’ancestor is an example of the possessory assize.62 Pursuant to that action, the relevant question was whether the defendant had taken possession before the heir of the freeholder, who had died in possession of the land. The procedure necessary to answer this question did not require any inquiry of whether the ancestor was the owner. Instead, what was at issue was whether the defendant had dispossessed the plaintiff of a freehold estate unjustly and without judgment from a court.63

Better possession 5.24  From the above discussion, it can be seen that what lay at the core of the resolution of these disputes was which party had the better possession.As a result, both the importance of possession and the relativity of titles became embedded in land law. Initially, the concepts were woven into the law in the language of seisin.64 Where the plaintiff lost seisin, he or she gained a right of entry, which in turn permitted the plaintiff to recover possession if the plaintiff could demonstrate that he or she did, in fact, have a better right to seisin. Broadly speaking, a better right to seisin was established by earlier seisin.65 5.25  The attack on the seigneurial court’s jurisdiction in regard to dispossession of land (an attack which was assisted greatly by the possessory assizes) continued with the introduction of the writs of entry.66 These writs married aspects of the writs of right to the concept of possession, alleging that the tenant had a flawed title on which his or her entry was based.67

Seisin and remedies 5.26  Another important development in the history of possessory actions was the introduction of the writ de ejectione firmae or ejectment, which was really a personal action based on the writ of trespass. It was an action available for the recovery of possession, as opposed to the recovery of seisin. The possession/seisin concept mentioned earlier (at 5.16) may be elaborated on thus. Possession can be enjoyed by someone using the land and exercising control over it, as, 62. The assize of mort d’ancestor, the assize of novel disseisin, darrein presentment, and utrum comprise the four possessory assizes. They were commenced by way of writ. Possessory or petty assizes, as they were known, dealt with less significant issues than grand assizes. See Harpum, Bridge and Dixon, Megarry and Wade: The Law of Real Property, note 15 above, pp 94, 102; J Oxley-Oxland and RT Stein, Understanding Land Law, Law Book Co, Sydney, 1985, pp 24–35; SFC Milsom, Historical Foundations of the Common Law, 2nd ed, Oxford University Press, London, 1981, p 140; JH Baker, An Introduction to English Legal History, 4th ed, Oxford University Press, 2005, p 545. 63. In this context, ‘disseised’ meant ‘dispossessed’. Although the word ‘disseised’ had its origins in seisin, it was not until some time later that ‘seisin’ came to mean anything more than possession. 64. By the time the action of ejectment had been developed in the 16th and 17th centuries, ‘seisin’ no longer simply meant possession, but had come to mean something akin to the possession of a freeholder. 65. TFT Plucknett, A Concise History of the Common Law, 5th ed, Butterworths, London, 1956, pp 357–60. 66. Writs of entry date back to the reign of King Richard I (1189–1199) and King John (1199–1216). 67. Note that writs of right replaced the possessory assizes. These writs provided owners with a simpler and easier method of protecting their rights than had the real actions. See  Butt, Land Law, note 60 above, pp 92–93, for an insightful discussion of this point.

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for example, a leaseholder. Seisin, although originally synonymous with possession,68 came to represent a more complex concept than mere possession69 and eventually amounted to the possession of a freeholder.70 The distinction between seisin and possession, which emerged by the late 15th century,71 is grounded in the different incidents that attached to seisin on one hand, and possession, on the other. The incidents of seisin (and especially the conditions under which seisin could be recovered) were protected by the real actions, whereas the incidents of possession were protected by personal actions.72 Seisin could be acquired by: • taking possession of land by virtue of a Crown grant; • taking possession through inheritance from a person who was seised of the land at the time of his or her death; • disseising another; or • later by receiving a conveyance according to the requirements of livery of seisin.73 5.27  A leaseholder in possession did not have seisin and, if dispossessed of land, he or she was unable to access the real actions, the possessory assizes and the writs of entry. His 68. Trust Company Ltd v Chief Commissioner of State Revenue (2007) 13 BPR 25,019 at 25,027 (per Giles JA). Note that Holdsworth, An Historical Introduction to Land Law, note 11 above, p 121 states: ‘Seisin means possession. It is derived from the Roman “possessio” and the German “besitz”. The man who is seised is the man sitting on the land; when he was put in seisin, he was set there and made to sit there. During the mediaeval period the terms were used convertibly … but in the latter part of the Fifteenth century when Littleton was writing in his book on Tenures, the term seisin came to be appropriated to describe the possession of freehold estates in the land while the term possession was appropriated to chattels real and personal’. 69. Maitland claimed that seisin represented a fusion of concepts, a ‘primeval fusion between possession and ownership’: FW Maitland, ‘The Mystery of Seisin’ (1886) 8 Law Quarterly Review 481. See  also FW Maitland, ‘The Beatitude of Seisin’ (1888) 4 Law Quarterly Review 24 at 28. 70. A ‘freehold estate’ is the name given to one of the interests in land. Freehold tenure historically had an uncertain, though limited, duration. Under freehold tenure tenants were free, unlike under villeinage (also known as copyhold tenure) where tenants were unfree. See 3.40–3.42. Under the doctrine of estates there are freehold estates and estates less than freehold, such as leasehold estates. See Chapter 3 for a discussion of estates. 71. Certainly by the time Littleton was writing on tenures. See Holdsworth, An Historical Introduction to Land Law, note 11 above, p 121. 72. Holdsworth, An Historical Introduction to Land Law, note 11 above, p 121. 73. This area of the law was later echoed in s 79 (now repealed) of the Supreme Court Act 1970 (NSW), which stated:

Where if this Act had not been passed, any person might have brought an action of ejectment, the person may commence proceedings and claim judgment for possession of land and, subject to the rules, claim such other relief as the nature of the case requires. In turn, s 70 of the Supreme Court Act was replaced by s 20 of the Civil Procedure Act 2005 (NSW). On livery of seisin, see R Kipling, Puck of Pook’s Hill, London, 1906, p 12 (cited in Gray and Gray, Elements of Land Law, note 13 above, p 152, fn 2):





‘What’s taking seizin?’ said Dan, cautiously. ‘It’s an old custom the people had when they bought and sold land. They used to cut a clod and hand it over to the buyer, and you weren’t lawfully seized of your land — it didn’t really belong to you — till the other fellow had given you a piece of it — like this’. He held out the turves.

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or her interest was regarded as personalty (rather than realty) and, consequently, he or she could not recover possession.74 However, in the 15th century, the common law attempted to redress the unfairness suffered by dispossessed leaseholders through the development of the action of ejectment.75 As a result, a lessee (who had no seisin) became able to recover possession. 5.28  Freeholders also came to see  the benefits of this action and, eventually, by a complicated system of pleading involving the fictitious characters John Doe and Richard Roe, the action of ejectment, with its emphasis on possession, came to be the preserve of freeholders as well.76 (Although the pleadings were complicated, the action itself operated to provide a fairly simple means of recovering land.) Ejectment did not, however, develop into a complete replacement for the real actions before their abolition in 1833, because ejectment was dependent on a right of entry and some freeholders had only a right of action.77 Later still, the Common Law Procedure Act 1852 (UK) replaced the action of ejectment with the ‘action to recover possession of land’, which permitted a pleading in ordinary English. Nowadays, in New South Wales, actions for the possession of land may be brought by way of s 20 of the Civil Procedure Act 2005 (NSW) in conjunction with the Uniform Civil Procedure Rules 2005 (NSW).78 Despite statutory modifications, a form of right and remedy, which had possession at its core, became embedded in our legal system.

74. The best a dispossessed leaseholder could hope for was damages. 75. Until approximately 1475, eviction of a lessee did not give him or her a right to bring any kind of legal action to recover land. If a lessee were evicted, it was the lessor who could mount a real action for recovery, and that action was based on his or her own disseisin. The lessee would get the land back only if the lessor decided to hand over possession for the remaining portion of the unused lease. The only remedy available to the lessee was damages, a remedy that did not become possible until the 13th century. 76. The appropriation of ejectment by freeholders involved the dispossessed freeholder making an actual lease to a friend who would bring the action in his or her name. If successful, the friend would then hand over possession to the dispossessed freeholder. A later stage in the appropriation of the action involved the dispossessed freeholder alleging the existence of the fictitious lease to a fictitious character called John Doe, who suffered a fictitious eviction at the hands of another fictitious character, Richard Roe. Success in such an action would result in an order that the land be vacated by Roe or anyone else on it. Hence, the real defendant had to be given a chance to defend his or her possession of the land. Richard Roe would then attach a note to the writ explaining that he, Roe, did not intend to defend and the real defendant ought to do so in order to avoid eviction. Ultimately, the only issue for trial became whether or not the plaintiff ’s lessor had a right of entry against the defendant. Such a right of entry would be grounded in his or her earlier seisin, or that of an earlier ancestor. See Harpum, Bridge and Dixon, Megarry and Wade: The Law of Real Property, note 15 above, pp 96–98; B Edgeworth, C Rossiter, M Stone and P O’Connor, Sackville and Neave Property Law: Cases and Materials, 8th ed, LexisNexis Butterworths, Australia, 2008, p 141. (Note that later editions of Sackville and Neave do not discuss this historical material.) 77. F Pollock and FW Maitland, The History of English Law, 2nd ed, Cambridge University Press, Cambridge, 1898, Vol 2. Note that 3 and 4 Will IV c 27 (Real Property Limitation Act 1833 (UK)), which became effective on 31  December  1834, abolished the real actions. It was adopted and became effective in New South Wales in 1834. 78. Section 20 of the Civil Procedure Act now permits ‘a claim for judgment for possession of land’ to take 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.

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5.29  This was acknowledged by Toohey J many years later in Mabo v Queensland (No 2) (Mabo (No 2)), when he said: So long as it is enjoyed, possession gives rise to rights, including the right to defend possession or to sell or to devise the interest. A defendant in possession acquires seisin even if possession is tortiously acquired. That is, a person in possession has an estate in fee simple in the land; it is this interest on which a defendant in an action for ejectment could rely.The disseisee loses seisin and acquires a right of entry in its stead. A possessor acquires a fee simple estate because the fullest estate known to the law is presumed until a lesser estate is proved.79

Mabo (No 2) also arguably assisted in broadening what might amount to possession80 because since that case, entry onto land in order to perform an Indigenous ceremony, or to hunt or fish, may potentially be interpreted as amounting to possession. These acts go beyond what were traditionally thought to be evidence of possession.81 5.30  Seisin may still technically form the basis of old system title in Australia but it does not form the basis of Torrens title, where registration (pursuant to statute) lies behind the formation of title.82 Under old system title, vendors of land do not have to demonstrate that they are the absolute owners of land.83 Instead, purchasers take a title on the basis that there have been no challenges to the title which is offered by the vendor, within a reasonable period of time. In New South Wales, in most cases, that period of time is now set by statute at 30 years.84 Hence, both under old system title and Torrens title, the relativity of titles is important, rather than any notion of absolute title.

Ejectment and Possession 5.31  Having discussed the background to the action of ejectment above, it is helpful to return to that action in order to understand better the concept of possession. This is so even though the action of ejectment is no longer in use.

Need to establish ownership? 5.32  Historically, controversy has surrounded the basis on which an action of ejectment could be brought. Although the action was developed to assist the dispossessed leaseholder, 79. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 209; 107 ALR 1 at 163–4. 80. See Mabo v Queensland (No 2) (1992) 175 CLR 1 at 209; 107 ALR 1 at 16. 81. See B Pohle, ‘Possessory Title in the Context of Aboriginal Claimants’ (1998) 11 Queensland University of Technology Law Journal 200–6. See also the joint judgment in Western Australia v Ward (2002) 213 CLR 1; 191 ALR 1 at [48]–[52] and [89]–[94] for further elaboration. In Ward, the court warns against splitting up a portmanteau concept such as ‘possession’ into its component parts. Note that in some other jurisdictions, such as Greenland and the Galápagos Islands, whale fishery by way of striking did historically demonstrate possession. See, for example, Fennings v Lord Grenville (1808) 1 Taunt 245; 127 ER 825; Hogarth v Jackson (1827) Mood & M 58; ER 1080; cited in O Wendell Holmes, The Common Law (1881), pp 206–13. 82. Torrens title is discussed in Chapter 8. See Real Property Act 1900 (NSW). Note that it is possible to claim adverse possession of Torrens title land in limited circumstances in New South Wales. 83. Indeed, even under the Torrens system, title is not absolute. 84. See Conveyancing Act 1919 (NSW) s 53 (as amended). See Chapter 7. Note, however, that s 170 of the Crown Lands Act  1989 (NSW) effectively means that an adverse possession claim cannot be brought against the Crown.

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one influential view was that a plaintiff wishing to bring an action to recover land had to establish the probability that he or she was the owner.85 This view was favoured by Professor Holdsworth, and Doe d Carter v Barnard is authority for the proposition.86 In that case, Robert Carter’s son, John, entered into adverse possession of his father’s land in 1816.87 By 1836, John had statute-barred his father, and hence Robert had no title to pass to Barnard.When John died, his widow, Mary, took an action for recovery of the land against Barnard, who evicted her. Her action was lost because, to sue in ejectment, Mary had to prove that she had the best right to possession in all the world. As she was merely a widow, her right to possession (of what had been John’s land) was defeated by John’s (male) heir. Accordingly, this case is relied on by supporters of the jus tertii plea. See 5.47.

Need to establish a better right to possession? 5.33  An alternative, and more convincing, view suggests that the plaintiff in an action for ejectment need only establish that he or she had a right to immediate possession that was better than that of the defendant.88 Accordingly, this superior right to immediate possession could be established by demonstrating that at some earlier point the plaintiff, or someone through whom the plaintiff claimed, had been in possession, and that the rights which arose by virtue of previous possession had not been voluntarily surrendered on terms that would result in the plaintiff having lost his or her right to immediate possession. 5.34  Asher v Whitlock89 is authority for the latter view; that is, that to sue in ejectment a plaintiff does not have to establish ownership (through a documentary title) but rather need only establish a better right to possession than the defendant.The decision, therefore, reinforces the concept of the relativity of title. 5.35  The effect of Asher v Whitlock90 was to uphold the principle of hereditary squatters. As a result, Williamson, who was in possession adverse to the lord of the manor (the documentary titleholder), was able to pass his interest, via his will, first to his widow, Lucy, and later to his daughter, Mary Ann. Mary Ann, in turn, was able to pass her interest to her own heir, Mrs Asher.91 The dispute was between Lucy’s second husband, Whitlock, who 85. See  discussion in Edgeworth, Rossiter, Stone and Connor, Sackville and Neave Property Law: Cases and Materials, note 76 above, p 141. 86. Holdsworth, A History of English Law, note 53 above; Doe d Carter v Barnard (1849) 13 QB 945. See also Allen v Roughley (1955) 94 CLR 98 per Kitto and Taylor JJ. For a discussion of ejectment, see AWB Simpson, A History of the Land Law, 2nd ed, Oxford University Press, Oxford, 1986, pp 71–77. 87. ‘Adverse possession’ means that he took possession without the consent of the documentary titleholder. The concept is explained more fully at 5.50. 88. Asher v Whitlock (1865) LR1QB 1; Perry v Clissold [1907] AC 73; Allen v Roughley (1955) 94 CLR 98; Oxford Meat Co Pty Ltd v McDonald [1963] SR (NSW) 423 at 427; Spark v Whale Three Minute Car Wash (Cremorne Junction) Pty Ltd (1970) 92 WN (NSW) 1087; Newington v Windeyer (1985) 3 NSWLR 55; Mabo v Queensland (No 2) (1992) 175 CLR 1 at 209; 107 ALR 1 at 163 per Toohey J. 89. Asher v Whitlock (1865) LR1QB 1. 90. Asher v Whitlock (1865) LR1QB 1. 91. For a more modern application of hereditary squatting, see Beever v Spaceline Engineering Pty Ltd (1993) New South Wales Conveyancing Reporter ¶55-678 where a squatter devised his possessory title of land at Coledale, New South Wales, to his neighbour.

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had come into possession of the land after Williamson’s death, and Asher, both of whom sought possession of the land. The plaintiff, Asher, was successful. 5.36  The main ground for Cockburn CJ’s decision was that Williamson’s possession for any period would have been protected against all but someone who could prove a better right stemming from earlier possession or documentary title. According to Cockburn CJ, Williamson’s possession entitled him to bring an action in ejectment. As observed, the court also held that the rights generated by Williamson’s possession were transferable by will or inter vivos. Inherent in Cockburn CJ’s judgment is his view that, by 1865, possession had become equivalent to seisin. Mellor J’s view is almost the same as that of Cockburn CJ, except that he believed that in 1865 the plaintiff still needed to establish earlier unabandoned seisin (rather than possession) to bring an action in ejectment. Mellor J thought that earlier possession was prima facie evidence of earlier seisin. It is noteworthy that he did not say that earlier possession was prima facie evidence of ownership. 5.37  Despite the fact that Asher v Whitlock92 did not actually raise the jus tertii,93 the case is commonly referred to as support for the proposition that the jus tertii is not applicable to land. The reasoning behind this view is that, although the lord of the manor (the documentary titleholder) had the best title to the land in 1865 when the action was brought,94 (because he was not statute-barred until 1870) the court still found in favour of the plaintiff, Mrs Asher, and did not find against her although a third party (the lord of the manor) had the best title. 5.38  Allen v Roughley95 is another case on the issue of possession and ejectment although, technically, the court’s words on this issue remain obiter because the case was ultimately decided on the trust point.96 In this case, Plunketts’ land, as it was known, was granted by the Crown to Turner in 1823, but there was a break in the chain of title until another dealing, a mortgage between the Plunketts and Hyland, was recorded in 1877. In 1880, the land was jointly conveyed by the Plunketts and Hyland to Cusbert. Although Cusbert could not demonstrate that he had good title to the land because of the breaks in the chain, he nevertheless sought to pass his interest by way of testamentary disposition. In 1950, Roughley, a co-trustee under the will, sought a declaration that the land in question

92. Asher v Whitlock (1865) LR1QB 1. 93. See 5.47. 94. The lord of the manor retained best title until 1870 because he had 20 years from the date the adverse possessor took possession (ie, from 1850) to bring an action for recovery. 95. Allen v Roughley (1955) 94 CLR 98. 96. As Allen had accepted the office of trustee of Cusbert’s estate, he was bound by the usual duties of a trustee, and would have to deal with the land comprising the estate accordingly. Allen’s status as trustee meant that he could not take the normal stance of a defendant in possession of land from which a plaintiff sought to eject him. Naturally, if Allen were not a trustee, he could have relied simply on his existing possession at the time the action was brought and insisted that a plaintiff must affirmatively establish whatever the law requires to be proven to sue in ejectment. However, as the land in question was prima facie part of the estate for which he was trustee, he found himself in a position where he could defeat the ejectment action of the plaintiffs only by affirmatively proving that Plunkett’s land was not part of the estate over which he had become trustee in 1937.

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was part of the land held on trust under Cusbert’s estate. If it were, it should pass according to that will. 5.39  Cusbert’s will devised Plunketts’ land and the homestead block to the use of his son, William, for life, and then to his issue; but, in the words of the court, ‘William died a bachelor’, which the court interpreted as also meaning that he died childless.97 In this event, the will required that the land be sold and the proceeds divided among all the testator’s children. The original trustees appointed under the will died and two new ones were appointed. One was Allen (who was married to Cusbert’s daughter, a beneficiary under the will). The other was Roughley. 5.40  Allen had gone into possession of the land in 1898; that is, well prior to Cusbert’s death in 1942. William had also lived with Allen (and Allen’s wife, William’s sister) from about 1898  to  1900 on the homestead block. Indeed, William lived on and off at  the homestead for some years before he moved more permanently to a hut on Plunketts’ land, and finally back to the homestead in 1923. William died in 1942 and Allen stayed on in possession of Plunketts’ land, despite the fact that this was contrary to the will. 5.41  A dispute emerged between Allen and the beneficiaries in remainder under Cusbert’s will (who for ease of explanation may be regarded as William’s siblings). The matter was ultimately litigated as far as the High Court. Basically, the beneficiaries argued that they had a prior possessory interest emanating from the will and that interest defeated any later interest claimed by Allen. They claimed that, even if Allen were in adverse possession of the land, they were able to bring an action against him for recovery of possession because they had a period of 20 years from the date of William’s death in 1942, in which to do this and that period had not yet elapsed. Meanwhile, Allen argued that, as Cusbert’s interest had not arisen by virtue of either a documentary title or a period of adverse possession long enough in duration to statute-bar the true owner, it could not prevail against his own possessory interest.98 5.42  In the High Court, Allen’s own adverse possession claim was not pursued. Instead, Allen focused on the duration of Cusbert’s possession. He argued that, although Cusbert’s possession was sufficient for him to recover personally should a trespasser oust him, his possession was not sufficient to give him a possessory interest that could be passed on by will. Possession would be sufficient to achieve this only if the possession had been for longer than the relevant statutory limitation period. This argument was largely based on the Holdsworthian proposition that mere possession for less than the statutory period would not permit the possessor to bring ejectment, subject to two exceptions.99 The first exception was that the immediate victim of a trespassory ouster could bring an action against the immediate perpetrator still in possession; the second was that a party permitted 97. Allen v Roughley (1955) 94 CLR 98 at 106 per Dixon CJ. Note the law on extra-marital children meant that such children did not automatically inherit. Also note that a use was a precursor to a trust. See Chapter 6. 98. By the time the case went on appeal, Allen had died and his executors acted in his place. 99. Holdsworth, A History of English Law, note 53 above, Vol 2, pp 57–81; W Holdsworth, ‘Terminology and Title in Ejectment — A Reply’ (1940) 56 Law Quarterly Review 479.

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to take possession by another’s consent is estopped from denying that other’s title to recover the land, when the permission ceases.100 The court found that even if Cusbert had a mere possessory title (ie, neither a documentary title nor a title gained by a period of adverse possession that was sufficient to bar the true owner), he was able to pass his possessory title to his trustees. It was more equivocal on what was required to establish a possessory title. 5.43  The judgments differed on the issue of the significance of possession. For example, Dixon CJ, Taylor and Williams JJ all saw possession as being prima facie evidence of title, an approach that seemingly left it open to the defendant to demonstrate that best title lay in a third person (who was neither the plaintiff nor the defendant).101 Yet, Perry v Clissold had held that: It cannot be disputed that a person in possession of land in the assumed character of owner and exercising peaceably the ordinary rights of ownership has a perfectly good title against all the world but the rightful owner. And if the rightful owner does not come forward and assert his title by process of law within the limitation period prescribed by the provisions of the Statute of Limitations applicable to the case, his right is forever extinguished, and the possessory owner acquires an absolute title.102

Applying this logic, the court found in favour of the possessor despite the fact that a tertius existed. 5.44  By comparison, Fullagar J’s judgment in Allen v Roughley is based on the view that possession is prima facie evidence of seisin.103 With this in mind, he went on to reject the Holdsworthian view (and uphold the Hargreavian view)104 by finding that the plaintiff need only prove that he or she has a right to possession that is superior to that of the defendant in order to bring an action in ejectment. In Fullagar J’s view, it is not necessary for the plaintiff to establish that he or she has a title that is good against all the world. Hence, his judgment is consistent with the position taken by Mellor J in Asher v Whitlock.105 It follows, then, that the plaintiff could succeed in ejectment by establishing that he or she, or someone whose rights he or she acquired, enjoyed unabandoned possession of any duration prior to that of the defendant or the person through whom the defendant claims. 100. ‘Trespassory ouster’ involves a trespasser ousting the possessor of the land. 101. Allen v Roughley (1955) 94 CLR 98 at 108 per Dixon CJ; at 114 per Williams J; at 144 per Taylor J. The use of a defence based on better title resting in a third person is known as the jus tertii plea. 102. Perry v Clissold [1907] AC 73. Despite the waters having been muddied by the words of Dixon CJ, Taylor and Williams JJ in Allen v Roughley, it would seem that the position is probably that the jus tertii cannot be raised in relation to land. For further discussion of the jus tertii, see 5.47. 103. Per Fullagar J in Allen v Roughley (1955) 94 CLR 98 at 130, quoting Jordan CJ in NRMA Insurance Ltd v B & B Shipping and Maritime Salvage Co Pty Ltd (1947) 47 SR (NSW). 104. AD Hargreaves, ‘Terminology and Title in Ejectment’ (1940) 56 Law Quarterly Review 376. 105. Asher v Whitlock (1865) LR1QB 1. Mellor J used the word ‘seisin’ in its technically correct sense; that is, denoting the possession of a freeholder rather than a leaseholder, such as a tenant at will. Hence Mellor J’s point is simply that Williamson’s earlier possession might not have given him a title to sue in ejectment against a dispossessor if Williamson had entered in 1850 with the consent of the lord of the manor, and hence become a tenant at will, rather than someone who had seisin in the proper sense of the word.

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Such an approach permits an adherence to the concept of relativity of title and avoids leaning too heavily towards absolute title.106 It also sits comfortably with the proposition put forward in Perry v Clissold, and referred to at 5.43, that: … a person in possession of land in the assumed character of owner and exercising peaceably the ordinary rights of ownership has a perfectly good title against all the world but the rightful owner.107

5.45 Following Allen v  Roughley, cases such as Spark v  Whale Three Minute Car Wash (Cremorne Junction) Pty Ltd108 and Mulcahy v Curramore109 proceeded on the basis that the jus tertii plea was not a good defence. In so doing, they (wisely) ignored the possibility left open by some of the judgments in Allen v Roughley that the defence may still operate in similar sorts of cases.110 5.46  Although, as noted above, the action of ejectment was abolished in New South Wales by virtue of the Supreme Court Act, cases dealing with the action have been discussed in order to enhance understandings of the concept of possession.111

Jus Tertii 5.47 The jus tertii (referred to above) is a defence that permits the defendant to argue that although the plaintiff ’s right to possession may be better than that of the defendant, a better right still exists in a third party, the tertius. The existence of this better right will be fatal to the plaintiff ’s case.112 The defence may arise in relation to actions concerning the recovery of chattels or interference with their possession, but it did not apply to an action concerning the recovery of land in New South Wales in Perry v Clissold.113 In that case, Clissold was in possession of land for 10 years. When the land was compulsorily acquired by the Minister of Public Instruction in New South Wales, Clissold’s executors sought a writ of mandamus compelling a valuation of the land so that compensation could be calculated. Perry, the defendant and the Minister, argued that Clissold’s executors could 106. We are indebted to Denis Harley, sometime Senior Lecturer in the Faculty of Law, at the University of New South Wales, Sydney, Australia, for his discussion and analysis of this case. See also the discussion of, and questions about, Allen v Roughley in Edgeworth, Rossiter, Stone and O’Connor, Sackville and Neave: Property Law: Cases and Materials, note 76 above, p 154; Moore, Grattan and Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property, note 17 above, p 167. Note, too, that Kitto J thought that possession was prima facie evidence of a fee simple estate. Hence, had circumstances existed whereby a third party held better title than either the plaintiff or the defendant, Kitto J may well have seen that title as defeating the plaintiff ’s claim for possession. 107. Perry v Clissold [1907] AC 73 at 79. 108. Spark v Whale Three Minute Care Wash (Cremorne Junction) Pty Ltd (1970) 92 WN (NSW) 1087. 109. Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464. 110. See  Harpum, Bridge and Dixon, Megarry and Wade: The Law of Real Property, note 15 above, p 90, for examples of when the jus tertii defence may properly be applied. 111. See s 20 of the Real Property Act in conjunction with Uniform Civil Procedure Rules 2005 (NSW), including rr 6.8, 10.15, 14.5, 16.4 and 36.8 in relation to claims for possession of land. Note that in McPhail v Persons, Names Unknown [1973] Ch 447, Lord Denning MR acknowledged the remedy of self-help but discouraged its use in favour of court-ordered remedies. 112. Supporters of the jus tertii as it relates to land rely on Doe d Carter v Barnard (1849) 13 QB 945. 113. Perry v Clissold [1907] AC 73 at 80.

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not succeed because superior title to the land existed in a third party, the documentary titleholder. The court rejected this argument and held that possession is title. It found that it could not have been the intention of the compulsory acquisition legislation to shake titles. The fact that a documentary titleholder did exist (albeit an unknown one) and that the defendant had acquired ‘not merely the title of the person in possession as owner, but also the title, whatever it may have been of the rightful owner out of possession’ did not preclude the plaintiff from seeking compensation.114 5.48  Lord MacNaghten (in Perry’s case) went out of his way to distinguish Doe d Carter v Barnard,115 commenting that the conclusion in Carter’s case was: … hardly consistent with the views of such eminent authorities on real property law as Mr Preston and Mr Joshua Williams. It is opposed to the opinions of modern text writers of such weight as Professor Maitland and Holmes J of the Supreme Court of the United States.116

Adverse Possession At this point, we return more specifically to the doctrine of adverse possession and consider a range of key factors, including the doctrine’s definition, rationale, relationship to human rights, intersection with rights of the Crown, the statutory limitation period, the suspension of time, factual possession, the animus possidendi, consecutive periods of possession, and the doctrine’s interaction with Torrens title. We begin with the definition.

Definition 5.49 The possession-based title that we have observed above, operates on the basis that earlier possession is afforded priority over later possession.117 Such an approach helps reduce the likelihood of ‘free-for-alls’ or mêlées, whereby one party dispossesses another and is rewarded for that act by being privileged (ie, by having his or her rights prevail).The authorities that we have considered above also reveal how possession came to be treated as something that, of itself, was worthy of protection against all the world except for the true (documentary) owner.118 The doctrine of ‘adverse possession’ deals with the protection of possession even against the true (documentary) owner.119 114. Perry v Clissold [1907] AC 73 at 80. 115. Doe d Carter v Barnard (1849) 13 QB; 116 ER 1524. 116. Perry v Clissold [1907] AC 73 at 377. He observed that Doe d Carter was ‘difficult, if not impossible to reconcile with Asher v Whitlock (1865) LR1QB 1’. 117. In some cases the documentary owner will hold Torrens title land, rather than old system title land.Where this is so another level of complexity is introduced. In short, it will mean that the adverse possessor will be defeated by the title of the registered proprietor unless the adverse possessor can bring himself or herself under ss 45B–45G of the Real Property Act 1900 (NSW). See 5.147 on possessory title and Torrens land. 118. On the finding of chattels and possession, see Parker V British Airways Board [1982] QB 1004. 119. See Newington v Windeyer (1985) 3 NSWLR 555, where McHugh J stated, with the agreement of Kirby P and Hope JA, at 563-4 that ‘the modern law of real property continues to invoke the medieval doctrine that possession is prima face evidence of seisin in fee and that an estate gained by wrong is nevertheless an estate in fee simple’ (relying on Wheeler v Baldwin (at 632–33); Perry v Clissold [1907] AC 73 at 79). McHugh J continued, ‘Seisin gives ownership good against everyone except a person who has a better,

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5.50  Adverse possession permits the documentary titleholder’s interest to be statutebarred in favour of the holder of a possessory interest, after the effluxion of a specified period of time and if the possession itself meets requisite standards.120 The doctrine of adverse possession, therefore, ultimately operates to block the title of the documentary owner and, as noted above, does so without the provision of compensation for loss. Hence, the effect of a successful adverse possession claim is to liberate the adverse possessor from the superior title of the documentary owner.121 In this way the concept of relativity of titles, discussed above and which is at the heart of common law property, remains intact because the extinguishment of the documentary owner’s cause of action has the effect of enhancing the adverse possessor’s title relative to that of the documentary titleholder. It is worth reinforcing at this point that the dispossessed documentary titleholder does not lose his or her interest immediately another person goes into adverse possession. The documentary titleholder has a relatively long period of time (set by statute) in which to bring a claim to recover possession. (See 5.73 on the limitation period.) 5.51  It is also worth noting that, in many of the older cases, the term ‘adverse possession’ had a more technical meaning than it bears today.122 Today, the term simply means that a person can demonstrate factual possession (and intention), without the consent of the

because older, title’. ‘A person who is in possession of land adverse to the true owner has a legal interest in the land even though the twelve year limitation period has not expired: Perry v Clissold. As long as a person does not abandon his possession, possession for less than twelve years enables him to exclude from the land any person who does not have a better title.’ McHugh J also observed by reference to Spark v Whale Three Minute Car Wash (Cremorne Junction) Pty Ltd (1970) 92 WN (NSW) 1087 that the same principles apply to Torrens land as well as old system title. 120. See  5.68–5.69. Clearly, adverse possession has been part of Australian law (and, more specifically, New  South  Wales law) since ‘settlement’. For an early case on the issue, see  Blower v  Larkin [1833] NSWSupC 94 in Dowling, Proceedings of the Supreme Court, Vol 83, State Records of New South Wales, 2/3266, cited in Decisions of the Superior Courts of New South Wales: 1788–1899, published by the Macquarie Law School, Macquarie University (accessed 20 April, 2022), and click on ‘Access to document’; B Edgeworth, Butt’s Land Law, Thomson Reuters, Sydney, 2017, p 1095, observes that while the law seeks to uphold the paramountcy of prior possession, it takes the view that ‘there comes a time when long-continued possession of land must be regarded as good against everyone, including those who claim earlier rights to possession. Otherwise, no purchaser could safely buy land — even from a person who had been in possession for a considerable period and who could trace title back through predecessors who had been in possession for even longer’. 121. It follows that the documentary titleholder will be unable to bring an action to eject an adverse possessor after his or her own title is barred. The principle tends to operate in a passive rather than active sense and, hence, its application does not simply invest title in the adverse possessor. The process is an extinctive one, which contrasts with the acquisitive process by which a prescriptive easement or profit à prendre, is created. However, adverse possession, and the creation of prescriptive easements and profits a prendre share some similarities. Prescriptive easements and profits a prendre both limit the documentary owner’s title to land, without his or her consent. They do so by limiting his or her right to exclude others, in favour of enhancing the access rights of another. Note that in this chapter the terms ‘true owner’, ‘documentary titleholder’ and ‘documentary owner’ are used interchangeably. 122. See Harpum, Bridge and Dixon, Megarry and Wade:The Law of Real Property, note 15 above, p 1463.

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documentary owner, and that the relevant statutory limitation period has begun to run against the documentary owner.123 It is used that way throughout this chapter.

Rationale 5.52  Why extinguishment of the documentary titleholder’s interest should occur at all, and simply as a result of the duration and style of possession, is a contentious issue.124 To some commentators, allowing documentary title to be lost by way of the application of limitations statutes, represents a form of legalised theft.125 To others, it raises human rights concerns in relation to the loss of property.126 (See  5.58). To others still, it is a useful doctrine that: (a) represents an efficient mechanism for identifying who can deal with land; (b) encourages alienability; and (c) supports an alternative set of human rights concerns embedded in land-use sharing127 and housing. A range of policy considerations have lain behind the upholding of the doctrine.128 Some of these are examined in more detail below.

Sleeping on rights 5.53  It has been suggested that one reason to permit adverse possession claims is to discourage documentary owners from ‘sleeping on their rights’.129 An active use of rights is seen as encouraging the land’s potential through exploitation of it. However, as the documentary owner is able to sleep on his or her rights while the limitation period is 123. JA Pye (Oxford) Pty Ltd v Graham [2003] 1 AC 419 at 432–8 per Lord Browne-Wilkinson; Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 60 and 61. 124. D Irving,‘Should the Law Recognise the Acquisition of Title by Adverse Possession?’ (1994) 2(2) Australian Property Law Journal 112–19; K Green,‘Citizens and Squatters: Under the Surfaces of Land Law’ in S Bright and JK Dewar (eds), Land Law: Themes and Perspectives, Oxford University Press, New York, 1998, p 229. Note that the concept of squatting is well embedded in Australian culture and history. Observe the role of the squattocracy in Australian history. See J Merritt, That Voluminous Squatter: W E Abbott, Turalla Press, Bungendore, 1999; G Farwell, Squatter’s Castle, the Story of a Pastoral Dynasty; the Life and Times of Edward David Stewart Ogilvie 1814–96, Lansdowne Press, Melbourne, 1973; Manning Clark’s History of Australia, abridged by M Cathcart, Penguin, Australia, 1995. 125. Issue discussed in MJ Goodman, ‘Adverse Possession of Land — Morality and Motive’ (1970) 33 Modern Law Review 281–282; B Edgeworth, ‘Adverse Possession, Prescription and their Reform in Australian Law’ (2007) 15 Australian Property Law Journal 1 at 11. 126. B Edgeworth, ‘Adverse Possession and Human Rights: The Last Act in JA Pye (Oxford) v United Kingdom’ (2007) 15 Australian Property Law Journal 107–14. Whether the doctrine of adverse possession should apply to registered land has been raised by scholars including L McCrimmon, ‘Whose Land is it Anyway? Adverse Possession and Torrens Title’ in D Grinlinton, Torrens in the Twenty First Century, LexisNexis, Wellington, NZ, 2003, and Gray and Gray, Elements of Land Law, note 13 above, pp 120, 1167 and 1170. 127. For example, as reflected in Art 5(xxiii) of the Brazilian Constitution. See also M Dockray, ‘Why Do We Need Adverse Possession?’ [1985] Conveyancer and Property Lawyer 272. 128. See TJ Miceli and CF Sirmans, ‘An Economic Theory of Adverse Possession’ (1995) 15(2) International Review of Law & Economics 161. See  also J Wallace, ‘Principles of the Law of Possession’, Leo Cussen Institute Seminar Paper, Melbourne, February 1994. For a discussion of adverse possession in the context of the move towards a scheme of land registration, see  L Chen and SBC Gordon, ‘Whither Adverse Possession in Hong Kong: A Comparative and Statistical Study’ (2014) 5 Conveyancer and Property Lawyer 413–29. 129. Marquis of Cholmondeley v Lord Clinton (1820) 2 Jac & W 1 at 139–40; 37 ER 527 at 577 per Sir Thomas Plumer MR.

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satisfied, it is arguable that the doctrine of adverse possession does not actually serve to encourage greatly the owner’s use of his or her rights. Admittedly, beyond the limitation period the consequences for the documentary owner are dire, but up until that point there is little active encouragement to avoid sleeping on rights.130 5.54  Furthermore, it is arguable that the view in favour of exploiting land may be losing some of its potency in a political and social climate that is increasingly sympathetic to environmental and sustainability principles. As society recognises the value of ‘living lightly on the land’, development and ‘use’ is more likely to be closely scrutinised and less exploitation, rather than more, may increasingly be regarded as a favourable outcome.

The law’s acknowledgment of the actual situation 5.55  Another reason in support of the adverse possession doctrine is that the law has greater credibility when it reflects the truth. If an adverse possessor is in possession, rather than the documentary owner, there is a strong argument that the law should acknowledge this fact. If the reality of adverse possession is acknowledged, it also allows purchasers to be informed as to the quality of the title they take. The effect is to encourage stability.131 This may be a powerful argument in regard to old system title where documents are often lost and establishing ownership may be difficult, yet it may be more tenuous in relation to Torrens land where interests in land are registered.132 Upholding interests that exist outside the Torrens Register, such as adverse possession interests, could be said to undermine stability.133

130. M Dockray, ‘Why Do We Need Adverse Possession?’ [1985] Conveyancer and Property Lawyer 272 at 274. In other jurisdictions, such as Brazil, for example, where there is an acute housing shortage among the poor, the objective of not sleeping on rights is perhaps more robustly supported. However, there is still a limitation period for adverse possession claims in Brazil before which documentary owners may indeed sleep on their rights, but the period is much shorter than many other jurisdictions. It is five years (Brazilian Constitution, Art 183). To some extent, the objective of not sleeping on rights has found voice in Art 5(xxiii) of the Brazilian Constitution, which states that ‘property shall observe its social function’. For a discussion of some of the housing issues in Rio de Janeiro, see J Gray, ‘Stories from a Favela: The Limits of Property Law’ (2005) 30(4) Alternative Law Journal 184;Y Zhang,‘Rightful Squatting: Housing Movements, Citizenship, and the “Right to the City” in Brazil’ (2021) 43(10) City-Journal of Urban Affairs, pp 1405–22, especially 1414. Available at  (accessed 19  April  2022). Note the present limitation period in New South Wales is discussed at 5.73. 131. J Netter, ‘An Economic Analysis of Adverse Possession Statutes’ (1986) 6 International Review of Law & Economics 217; M Goodman, ‘The Morality of Adverse Possession of Land’ (1968) 31 Modern Law Review 82. 132. For example, Allen v Roughley (1955) 94 CLR 98. For a general discussion, see L Griggs, ‘Possessory Title in A System of Title by Registration’ (1999) 21 Adel LR 157. Note that some scholars suggest that a successful adverse possession claim should also involve the payment of compensation to the documentary owner, a point raised in L Griggs, ‘Possession, Indefeasibility and Human Rights’ (2008) 8(2) Queensland University of Technology Law Journal 286. 133. See Chapter 8. For an interdisciplinary perspective on the issue see M Park,‘The Effect of Adverse Possession on Part of a Registered Title Land Parcel’, PhD thesis, Department of Geomatics, University of Melbourne, January 2003, (accessed 9 June, 2022).

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5.56  Then again, in New  South  Wales the stability of the Register proposition may perhaps carry less force than in some other jurisdictions. In New  South  Wales, under Pt  6A of the Real Property Act  1900 (NSW), an adverse possessor who accrues the requisite period of time necessary to satisfy the limitation period and who seeks to become the (new) registered proprietor, must lodge a possessory application that, if accepted by the Registrar, will cause the applicant to be registered as the proprietor, under s 45C of the Act. In this regard, s 45C of the Real Property Act 1900 (NSW) overrides s 65 of the Limitation Act  1969 that, if operating alone would allow satisfaction of the limitation period to extinguish the documentary title owner’s title.134 The approach taken under the Real Property Act 1900 (NSW) is, from a policy perspective, designed to maintain the conclusiveness of the Register. An additional reason for acknowledging the actual situation (that a squatter is in possession) may be to give due recognition to the assistance that the squatter’s possession is providing society. A growing body of literature, for example, concludes that the squatter’s presence on land may contribute to more effective crime management.Vacant properties are vulnerable to break-ins and damage.135 Having someone in possession helps reduce that vulnerability.

Hardship 5.57  The hardship argument suggests that if an adverse possessor has been in possession for many years, paying the rates and taxes and improving the land, it would be unfair to deny him or her remedies indefinitely, for interference with that property. Indeed, to deny rights and benefits would be to discourage exploitation of the land. However, the converse of this argument is that the documentary titleholder suffers hardship on the eventual barring of his or her rights, and the very possibility of being statute-barred encourages the ‘acquisition’ of property by a means that involves going beyond voluntary assignments or the sale of property.136 For this reason, it has been suggested by some that separate rules should apply to inadvertent squatting and deliberate squatting; that is,‘good faith’ squatting and ‘bad faith’ squatting.137 However, such dichotomisation represents a very blunt approach and, as the Indigenous experience demonstrates, the issue is quite challenging. To explain, on one analysis at least, European occupation and the development of Australia could be

134. Public Trustee v Bellotti (1986) 4 BPR 9196 at 9200; Refina Pty Ltd v Binnie (2010) 15 BPR 28,633 [2010] NSWCA 192. 135. A De Biasi,‘Squatting and Adverse Possession — Countering Neighbour Blight and Disinvestment’ (2019) 23 (1) City — Analysis of Urban Change, Theory, Action, pp 68–82. Available at  (accessed 20 April 2022). 136. Miceli and Sirmans, ‘An Economic Theory of Adverse Possession’, note 120 above. 137. Miceli and Sirmans, ‘An Economic Theory of Adverse Possession’, note 120 above. The authors do, however, admit that good faith errors are difficult to distinguish from intentional boundary encroachments. In McPhail v Persons, Names Unknown [1973] Ch 447 at 460; [1973] 3 All ER 393 at 399, Lord Denning raised the notion of squatting with justification, when he stated that, although he was compelled to give the owner of the house the order sought, he trusted that ‘the owners [would] act with consideration and kindness in the enforcing of it — remembering the plight which the homeless are in’.

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said to have been founded on the ‘bad faith’ squatting on Indigenous land, by Europeans. If so, on this reasoning a new set of rules would need to apply to these circumstances, too.

Adverse possession and human rights 5.58  As observed in Chapter  1, in jurisdictions beyond New  South  Wales, the intersection  of human rights law and the doctrine of adverse possession has been the subject of judicial consideration.138 One proposition under review has been that in order to preserve human rights, the doctrine of adverse possession needs to be dismantled, cut-back or abolished, in part because loss of land under the adverse possession doctrine, is non compensable. 5.59  The proposition that human rights may defeat adverse possession claims found favour in a 2006 English Court of Appeal decision,139 where the expropriation of registered land without compensation was found not to advance the legitimate aims of the relevant statutory provisions. However, the doctrine of adverse possession was ultimately affirmed in JA Pye’s protracted litigation that concluded in 2008.140 5.60 In Pye’s case,141 a licensee  for a term stayed on in possession (and without the consent of the documentary owner) after the expiration of a licence, for the requisite limitation period.142 On appeal from the Court of Appeal, the House of Lords found the effect of such conduct was to statute-bar the documentary owner, (Pye), causing it to lose its land without compensation.143 In response to the House of Lords’ decision, the documentary owner switched jurisdictions and mounted a case against the United Kingdom Government, in the European Court of Human Rights (ECtHR), claiming 138. See JA Pye (Oxford) Pty Ltd v United Kingdom (2006) 43 EHRR 3; [2005] ECHR 921 (Application no 44302/02, Strasbourg, 15 November 2005) (ECtHR); JA Pye (Oxford) Ltd v United Kingdom (2008) 46 EHRR 45 (ECtHR Grand Chamber, 30 August 2007); L Griggs, ‘Possession, Indefeasibility and Human Rights’ (2008) 8(2) Law and Justice Journal 286. See also Australian Law Reform Commission, Traditional Rights and Freedoms- Encroachments by Commonwealth Laws, Report No 129 [2016] Ch 79. 139. Beaulane Properties Ltd v Palmer [2006] Ch 79. Note that this case traces the statutory history of the law of adverse possession at [68] to [110]. 140. Pye’s litigation is discussed below. The case was heard by Neuberger J in the English High Court but then went on appeal to the Court of Appeal and the House of Lords, after which it moved to the ECtHR; JA Pye (Oxford) Ltd v Graham (2000) 3 WLR 242; JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 (HL); JA Pye (Oxford) Pty Ltd v United Kingdom (2005) 43 EHRR 3; JA Pye (Oxford) Ltd v United Kingdom (2008) 46 EHRR 45 (ECHR Grand Chamber, 30 August 2007). 141. JA Pye (Oxford) Ltd v Graham (2000) 3 WLR 242; 142. JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 (HL). Note that Mr Graham, the adverse possessor, died in a shooting accident before the trial and his wife continued the litigation. 143. The English law of adverse possession is governed by the Land Registration Act  2002 (UK), which significantly amends the approach taken to adverse possession in England and Wales, one effect of which is to require that notice be given to the registered owner. For a discussion of the rationale for the Land Registration Act, see  Law Commission and HM Land Registry, Land Registration for the 21st Century: A Conveyancing Revolution, Land Registration Bill and Commentary, report, Law Com No 271, 2001, p 5 (accessed 1  July  2017), . See  also Law Commission, Updating the Land Registration Act 2002: A Consultation Paper, Consultation Paper No 227, 2016, particularly p 360 onwards, which relates to adverse possession (accessed 1  July  2017), . Note that, at the time of going to press, consultations are ongoing.

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that the result in the House of Lords’ decision was in contravention of Art 1 of Protocol 1 to the European Convention on Human Rights and Fundamental Freedoms (1950) (ECHR), because the decision deprived Pye of its property.144 5.61  At first instance, the majority of the ECtHR145 found (in a four to three majority) that the ‘domestic rules on adverse possession … [were] incompatible with Article 1 of Protocol No 1’ of the ECHR and that the loss of Pye’s land was not in the public interest.146 Ultimately, however, in a narrow majority of ten to seven, the Grand Chamber147 found that, although the documentary owner’s title was barred under English domestic law, that law did not operate by way of a ‘depriv[ation of] possessions’, but instead by a ‘control of use’ of property in accordance with the public interest. Hence, the law regulated land rather than confiscated it. If it did not operate by way of a ‘depriv[ation of] possessions’, then it did not come under Art 1 of Protocol No 1 to the ECHR.148 5.62  JA Pye (Oxford) Ltd v United Kingdom is not only useful because it serves to raise the connection between the law of adverse possession and human rights at a doctrinal level, but because it also serves to highlight how human rights, which are imbued with policy considerations, may be deployed in attempts to undermine the very basis or rationale for certain laws in the first place; in this case, to deny the basis for the law of adverse possession.149 5.63  However, reliance on human rights as a basis to deny the validity of adverse possession law may be somewhat double-edged. This is, in part, because there is a broad spectrum of human rights and while some human rights may be used to attack the rationale for adverse possession law, others may arguably be used to support or uphold it. Accordingly, it may be possible that, in some circumstances at least, a human right to family and private life under Art 8 of the ECHR could be relied on as the basis for the continuation (as opposed to the denial or diminution) of the adverse possession doctrine. It may also be possible to rely on the International Covenant on Economic, Social and Cultural Rights (ICESCR) to support adverse possession claims.Article 11 of the ICESCR, to which Australia is a party, could perhaps be relied on to uphold the continuation of the doctrine of adverse possession rather than wind it back. That article affirms that all people

144. JA Pye (Oxford) Pty Ltd v United Kingdom (2005) 43 EHRR 3; JA Pye (Oxford) Ltd v United Kingdom (2008) 46 EHRR 45 (ECtHR Grand Chamber, 30 August 2007). 145. JA Pye (Oxford) Pty Ltd v United Kingdom (2005) 43 EHRR 3. 146. JA Pye (Oxford) Pty Ltd v United Kingdom (2005) 43 EHRR 3. 147. JA Pye (Oxford) Ltd v United Kingdom (2008) 46 EHRR 45 (ECHR Grand Chamber, 30 August 2007). 148. Article 1 of Protocol No 1 to the ECHR states: ‘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 interests or to secure the payment of taxes or other contributions or penalties.’ 149. Abbatangelo v Whittlesea City Council [2008] V Conv R 54-750 explores this issue a little further in relation to the respect for property by way of the Charter of Human Rights and Responsibilities Act 2006 (Vic).

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have a right to adequate housing.150 A right to housing and an adequate standard of living may arguably be supported by squatting. 5.64  Yet, as noted in Chapter 1, Australian has passed little human rights legislation and given its geographical position, it is also not a signatory to the ECHR. Nevertheless, there are persistent calls for the introduction of human rights legislation at the federal level and in those states that have thus far, not passed such legislation. Accordingly, human rights concerns may come to interact with adverse possession law more commonly and more directly in the future. 5.65  Irrespective of which position we hold in relation to the rationale for, and reasonableness of the doctrine of adverse possession, what the foregoing discussion demonstrates is that rights to property are not absolute rights and that their protection is limited by other concerns; a point which was made clearly in JA Pye (Oxford) Ltd v United Kingdom where the interests of society were considered.151 Whether or not adverse possession will be inconsistent with human rights will depend on the circumstances of the legislation and the policy arguments supporting the deprivation.152 5.66  These diverse policy considerations demonstrate that the rationale for adverse possession is complex and inconsistent. It is based on divergent policy considerations that presently support ease of conveyancing,‘efficient’ use of land and the reduction of hardship, for example.153 McHugh J summarised many of the relevant considerations behind the use of a statutory limitation—a tool that is fundamental to the adverse possession doctrine. He stated: The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. But it is not the only one. Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost. Second, it is oppressive, even ‘cruel’, to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed.Third, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them … The final rationale for limitation periods is that the public interest requires that disputes be settled as quickly as possible.154

150. Article 11 of the ICESCR recognises ‘the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing’ and states that ‘States Parties will take appropriate steps to ensure the realisation’ of that right. 151. JA Pye (Oxford) Ltd v United Kingdom (2008) 46 EHRR 45 (ECHR Grand Chamber, 30 August 2007). 152. This idea may be pursued through consideration of Pt 9 and Sch 6 of the Land Registration Act 2002 (UK), which demonstrate how the United Kingdom acted in anticipation of a negative result in Pye’s case at the ECtHR. 153. For consideration of adverse possession in the context of another country, see D Fitzpatrick, Land Claims in East Timor, Asia-Pacific Press, Canberra, 2002. In East Timor, like so many countries throughout the world, there is a vast set of competing land claims. Those with claims derived from the period of Portuguese colonialism are in competition with those whose land claims date back to Indonesian occupation, and those who currently occupy land but do not necessarily have any documentation to support their claims. 154. Brisbane South Regional Health Authority v Taylor [1996] HCA 25 at [15].

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5.67  Despite this, some judges such as Neuberger J in JA Pye (Oxford) Ltd v Graham155 have colourfully expressed distaste for the effect of a statutory limitation in the squatting context. He described the effect as,‘draconian to the owner, and a windfall to the squatter’.156 However, as noted above, the final appellate court in Pye’s case upheld the doctrine and went on to find in favour of the adverse possessor.157 Later, in New South Wales, Tamberlin JA in Bridges v Bridges also affirmed the doctrine and reminded us that the limitation period is a positive feature designed to serve the welfare of society. His Honour stated: A limitation period should not be seen … as an arbitrary cut off point unrelated to the demands of justice or the general welfare of society. It represents the legislature’s judgment that the welfare of society is best served by causes of action being litigated within the limitation period, notwithstanding that the enactment of that period may often result in a good cause of action being defeated.158

Source of Adverse Possession Rights 5.68  The source of adverse possession rights is established by the conjunction of common law and statute. The common law establishes what amounts to possession that is adverse to the documentary owner’s title.159 The common law also demonstrates in Asher v Whitlock160 that more than one party may have a legal fee simple interest in the same property and that a legal fee simple interest may be created as a result of possession.161 5.69  Meanwhile, s  27(2) of the Limitation Act  1969 (NSW) (an Act that came into effect in 1971)162 sets the limitation period to bar title of persons other than the Crown, at 12 years.163 After that period the documentary owner is barred from asserting his or her title.164

155. JA Pye (Oxford) Ltd v Graham (2000) 3 WLR 242. 156. JA Pye (Oxford) Ltd v Graham (2000) 3 WLR 242 at 271. 157. JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419. See 5.62. 158. Bridges v Bridges [2010] NSWSC 1287 at [12]. 159. See, for example, Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464. 160. Asher v Whitlock (1865) LR1QB 1. 161. In Asher v Whitlock, Asher took her interest through a line of inheritance, while Williamson, Lucy and Mary Ann took their interests through possession. Note that this case is also often cited to demonstrate that the jus tertii does not apply to land. However, this view is a little contentious because the jus tertii defence was not specifically argued in this case. Perry v Clissold [1907] AC 73 is, however, authority that the jus tertii is inapplicable in Australia in regard to land. 162. This Act commenced on 1 January 1971. Before it, the adverse possession periods were set by an Act known as the Real Estate (Limitation of Actions) Act 1837 (NSW) (8 Will IV No 3). 163. Limitation Act 1969 (NSW) s 27 (the limitation periods); s 28 (cause of action accrues on dispossession and discontinuation); s 38(1) (adverse possession taken by another). For a summary of the effect of s 38(1) see Australian Retirement Holdings Pty Ltd v Tracey Anne Higgins in her capacity as administrator of the estate of the late Monica Mary Pritchard [2021] NSWSC 1158, para 214. 164. Note that possessory title is acknowledged by both s 23E(c) of the Conveyancing Act and Pt 6A of the Real Property Act.

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Adverse Possession and the Crown 5.70  There are special provisions relating to adverse possession where land of the Crown is concerned. Although s 27(1) of the Limitation Act165 sets a 30-year limitation period in relation to the Crown, s 13.1 and s 13.2 of the Crown Land Management Act 2016 set out a range of circumstances in which it is simply not possible to claim adverse possession against the Crown. Adverse possession claims are not possible in relation to ‘land of the Crown’166 that has been ‘set out as a road under an Act or in connection with the alienation of land of the Crown’,167 ‘left between Crown grants for use as a road or driftway’,168 or ‘reserved in a Crown grant or recorded in a folio of the Register as being reserved to the Crown’.169 Further, any Crown land dedicated or reserved for a public purpose170 and ‘any other Crown land’171 cannot be claimed or established by way of adverse possession. However, s 13.1 does not affect any land referred to in the rather limited circumstances set out in s 170(5) of the now repealed Crown Lands Act 1989 (NSW).172 The Real Property Act 1900 also contains special provisions relating to adverse possession and the Crown.173 In brief, adverse possession cannot be claimed over land that is registered to various entities including a Minister of the Crown and a statutory body representing the Crown,174 but it would be possible to make a claim in respect of unalienated Crown land for which the Crown was not formally the registered proprietor.175 5.71  It is clear from the above that claiming adverse possession against the Crown is regarded differently from claiming adverse possession against a private citizen or company. One rationale for the difference lies in the fact that Crown land holdings 165. Young v Richmond Valley Council [2021] NSWCA 255 rejected the proposition that the term ‘action’ in s 27(1) applied to an ‘action’ taken in the Crown Lands Department to correct the register. Such ‘action’ was not within the meaning of s 27(1), so even though it may have occurred beyond the 30-year period set by the Limitation Statute, it did not fall foul of the statute. Section 27(1) applies to legal proceedings not administrative proceedings at para 29. 166. The term ‘Crown land’ (cf ‘land of the Crown’) is defined in Crown Land Management Act 2016, s 1.7. 167. Crown Land Management Act 2016, s 13.1(1)(a)(i). 168. Crown Land Management Act 2016, s 13.1(1)(a)(ii). 169. Crown Land Management Act 2016, s 13.3(1)(a)(iii). 170. Crown Land Management Act 2016, s 13.1(1)(b). Declaration by gazette of a resumption of land for the purpose of a public park was a ‘dedication’ for the purposes of s 170 of the earlier Crown Lands Act 1989 (NSW). See Townsend v Waverley Council (2001) 120 LGERA 164, particularly [65]. Townsend came under the now repealed Crown Lands Act and found that declaration by gazette of a resumption of land for the purpose of a public park is a ‘dedication’ for the purposes of s 170 of that Act. Whether s 13.1(1)(b) of the Crown Land Management Act 2016 will be interpreted similarly to s 170 of the earlier Act, is as yet unknown. 171. Crown Land Management Act 2016 s 13.1(1)(c). 172. Crown Land Management Act 2016 s 13.1(3)(b); An additional exception involving land held on trust for a public purpose, is set out in s13.1(2). 173. See Real Property Act 1900 (NSW) s 45D(3). 174. Real Property Act 1900 (NSW) s 45D(3). 175. Townsend v  Waverley Council (2001) 120 LGERA 164 at  235-236. Note that pursuant to s  13.1 of the Crown Land Management Act 2016 (NSW) title would need to have been extinguished prior to 19 July 1982.

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are vast and an undue burden would be placed on the Crown if it had to be constantly vigilant about checking its holdings for evidence of adverse possession. This may be particularly so, where land has never been alienated or used by the Crown. However, as much Crown land is actually in use by government departments, for example, it may be the case that the task of checking is not as onerous as first anticipated. If so, that would suggest that a blanket rule against adverse possession claims against the Crown on the basis of overly burdensome checking responsibilities, may not be well founded. However, it cannot be denied that there are also powerful policy reasons against ever permitting Crown land to be the subject of adverse possession. These reasons are based on the view that enough of the state’s land is already held privately and that no more should be permitted to pass out of the public domain, and so constitute a diminution of a valuable public asset.176 Yet, when the Crown decides to sell Crown land it, by definition, also diminishes public assets in the form of Crown holdings. Weber v Ankin177 raised some of these concerns in relation to an adverse possession claim over a public lane. 5.72  But what of the reverse situation, that is, where the Crown possesses adversely against one of its citizens? Should the law uphold such possession and allow the true owner’s title to be extinguished by the Crown? Roberts v Swangrove Estates Ltd178 considered that issue in relation to a documentary titleholder, who held land on the Welsh side of the Severn River. In that case, the court rejected the appellant’s argument that the Crown cannot commit a wrong against one of its subjects: a wrong that formed the basis of an adverse possession claim. Instead, the court found that there was no principle preventing the Crown from disseising a subject of his or her land. Accordingly, if the statutory period has fully run against the documentary owner, it would seem that the possibility of the Crown barring the documentary owner from asserting his or her title is, at least, open.179

176. P Latovick, ‘Adverse Possession of Municipal Land: It’s Time to Protect this Valuable Asset’ (1998) 31(2) University of Michigan Journal of Law Reform 475. See also P Latovick, ‘Adverse Possession Against the States: The Hornbrooks Have it Wrong’ (1996) 29(4) University of Michigan Journal of Law Reform 939, which demonstrates how, despite the fact that in some of the states of the United States adverse possession statutes do not run against the state, state land can still be held adversely. Note, as discussed later, that it is not possible to bring a successful adverse possession claim against the Crown in relation to Torrens title land, and s 170 of the Crown Lands Act prevents the adverse possession claims in relation to ‘Crown lands’ a term defined in that statute. 177. Weber v Ankin (2008) 13 BPR 25,231. There the defendants claimed adverse possession over a lane in Marrickville, Sydney that the court found to be a public lane. The claim failed under s 45D of the Real Property Act and would have also failed at common law pursuant to Dawes v Hawkins [1860] EngR 968; (1860) 8 CB NS 848; 141 ER 1399, a case where the court found:

[O]nce a highway always a highway … for the public cannot release their rights, and there is no extinctive presumption or prescription. The only methods of legally stopping a highway are, either by the old writ of ad quod damnum, or by proceedings before magistrates under the statute. 178. Roberts v Swangrove Estates Ltd [2008] 2 WLR 1111; Ch 439, noted (2008) ALJ 693. 179. See  Mr  Justice P Young, ‘Recent Cases: Can the Crown Claim Adverse Possession Against a Subject?’ (2008) 82 Australian Law Journal 693.

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The Limitation Period When does the limitation period start? 5.73  It is useful to conceive of the limitation period as rather like a clock ticking. In the case of adverse possession, the clock starts to tick from the time the documentary owner’s cause of action to recover the land first accrues.180 The clock then has 12 years in which to tick, after which the documentary owner is statute-barred and cannot bring an action for the recovery of his or her land.181

What needs to occur for the cause of action to accrue? 5.74  The cause of action will accrue:182 • when there is: - dispossession, which involves the adverse possessor driving another off the land,183 and therefore involves ouster; or - discontinuance, which refers to the person in possession going out of possession and another coming into possession,184 and effectively means abandonment by the documentary owner. Hence, the land must be vacated by one of these two methods and another person must enter into possession.185 In practical terms, many cases of barring by statute arise as a result of discontinuance because, where there is dispossession of the documentary titleholder, the documentary titleholder will usually institute proceedings within the limitation period to avoid being statute-barred.186 5.75  In the case of land subject to an interest in remainder, the cause of action will not accrue until the remainder falls into possession.187 So, although a possessor may hold adversely against a life tenant for 12 years and defeat the interest of the life tenant, the 180. See  Limitation Act  1969 (NSW) s  28. In McFarland v  Gertos (2018) NSWSC 1629 paras 79 7 80; 98 NSWLR 954; 19 BPR 38969, Darke J rejected the plaintiff ’s argument that the cause of action did not accrue until a grant of administration was made. 181. Limitation Act 1969 (NSW) s 27(2). See s 38(1) of same Act for the position when a documentary owner has discontinued before the adverse possessor has moved into possession. Discussed in Australian Retirement Holdings Pty Ltd v  Tracey Anne Higgins in her capacity as administrator of the estate of the late Monica Mary Pritchard [2021] NSWSC 1158 at [214]. 182. See Limitation Act 1969 (NSW) s 28. 183. For a discussion of what constitutes possession, see Roy v Lagona [2010] VSC 250, relying on Whittlesea City Council v Abbatangelo (2009) 259 ALR 56. 184. See Limitation Act 1969 (NSW) s 38. On the effect of discontinuance see Australian Retirement Holdings Pty Ltd v Tracey Anne Higgins in her capacity as administrator of the estate of the late Monica Mary Pritchard [2021] NSWSC 1158. 185. Limitation Act 1969 (NSW) s 38(1). 186. See Asher v Whitlock (1865) LR1QB 1 and Allen v Roughley (1955) 94 CLR 98 for examples of what needs to occur for the cause of action to accrue. See also Appendix A of the 2nd edition of this book for earlier details of possessory claims. 187. See Limitation Act 1969 (NSW) s 31.

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adverse possessor will not be able to defeat the remainder-person188 until the expiration of another 12 years of adverse possession (ie, until the full statutory period has run again) against the remainder-person. When the statute is running against the remainder-person, he or she may bring an action for recovery of possession at  any time. This scenario demonstrates how it is possible for an adverse possessor to be in possession for well in excess of 12 years without statute-barring the documentary owner. 5.76  To take an example: If, by 2017, A had adversely possessed as against B (a life tenant under T’s will) for 12 years or more, then B’s life estate would have been extinguished. If, however, B died in 2022, C, who was entitled to a fee simple estate in remainder under T’s will, would have been entitled to possession in 2022. This is because C’s cause of action to recover the land from the adverse possessor, A, only began to accrue in 2022 when C became entitled (in possession) to his or her interest under the will, on the death of B. A cannot defeat C until 2034 (ie, 12 years after 2022). To reiterate: although an adverse possessor may hold adversely against a life tenant for as long as 12 years, the adverse possessor will not be able to defeat the remainder-person until the expiry of another 12 years of adverse possession against that remainder-person. Periods of adverse possession against the remainder-person cannot simply be added to prior periods of adverse possession against the life tenant so as to statute-bar the remainder-person. The clock must re-start against the remainder-person on the death of the life tenant. At any point during the statutory period, the remainder-person may bring an action for recovery of possession. This scenario reinforces the concept of the relativity of titles and the idea that possession can be a good basis of title. 5.77  The situation is similar in regard to leases. A tenant under a lease may bring a claim for recovery of land against an adverse possessor in the 12-year period after the cause of action has accrued. However, the clock does not begin ticking against the lessor until the lease has expired and the lessor is able to go into possession again.189 Further, if an adverse possessor goes into possession against a tenant, but before the 12-year period has elapsed the lessor grants a new lease, then the tenant under the new lease has another 12 years from the commencement of that new lease to assert his or her rights against the adverse possessor.190 5.78  It is also useful to consider some additional circumstances relating to the question of when time begins to run against the documentary owner. Where a person claims to be the beneficiary of property under a will or claims to be entitled to property by way of intestacy, and the deceased (not being the documentary owner) was in possession at his or 188. Note that the terms ‘tenant in remainder’ and ‘remainder-person’ are used interchangeably throughout this book. Older cases rely on gendered language, such as the ‘remainderman’ 189. See  Ace Property Pty Ltd v  Australian Postal Corp [2010] QCA 55; P Butt (ed), ‘When Does a Tenant “Part with Possession” in Breach of the Lease’ (2010) 84 Australian Law Journal 522; SE Jones, ‘Double Illusion: Parting with Possession, or Occupation by Proxy?’ (2010) 24(7) Australian Property Law Journal 101. See Bridges v Bridges [2010] NSWSC 1827 at [14]. 190. Chung Ping Kwan v Lam Island Co Ltd [1997] AC 38 (PC). Note the situation is different if the new lease is simply the result of an exercise of an option in the original lease. In such a case, the tenant’s title in the new lease is extinguished in the same way as it would be under the old lease.

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her death, s 29 of the Limitations Act 1969 is relevant. That section states that the cause of action to recover the land accrues at the date of death of the testator or the intestate. The situation is different where a person claims to be entitled to a possessory interest by way of an instrument other than a will. In those circumstances, if the grantor was in possession on the date of the grant, then the limitations clock will start ticking on the date of the grant.191 Further, as explained previously, where the plaintiff claims to be entitled to a future interest, such as an interest in remainder, the clock starts ticking when the future interest becomes a present interest.192

Suspending or cancelling time running Disability 5.79  If the documentary owner is under a disability, the running of the statutory period will be suspended.193 In New South Wales, a person who is under 18 years of age is regarded as being under a disability.194 A person may also be under a disability if, ‘for a continuous period of 28 days’, he or she ‘is incapable of ’, or ‘impeded in’, the ‘management of his or her affairs’ by reason of ‘any disease’ or ‘impairment’ of ‘his or her physical or mental condition’,195 ‘war or warlike operations’,196 or imprisonment.197 Death, however, has been held not to be a disability that causes suspension of the limitation period pursuant to s 52 of the Limitations Act 1969 (NSW).198 ‘Death is something more than an impairment of one’s physical condition.’199 New  South  Wales’s disability provisions are more liberal than those of some other states. For example, in New South Wales, the disability may either have existed at the time the adverse possessor went into possession, or may have developed during the limitation period. In either case, the limitation period will be suspended during the period of the disability. 5.80  Should the statutory period be destined to expire within three years of the documentary titleholder ceasing to be under the disability, the statutory period will be prolonged so that the documentary titleholder has three full years after the disability ceases in which to reassert his or her title.200 If the adverse possessor acknowledges or confirms the documentary owner’s title in this same three-year period, it will bring the period of adverse possession to an end. 191. Limitations Act 1969 (NSW) s 30. 192. Limitations Act 1969 (NSW) s 31. 193. See 5.74 on when the limitation period starts. 194. Limitation Act 1969 (NSW) s 11(3)(a). 195. Limitation Act 1969 (NSW) s 11(3)(b)(i). 196. Limitation Act 1969 (NSW) s 11(3)(b)(iii). Note also s 11(3)(b)(iv) of the Limitation Act, which refers to circumstances arising out of ‘war or warlike operations’. 197. Limitation Act 1969 (NSW) s 11(3)(b)(ii). 198. McFarland v Gertos (2018) NSWSC 1629 para 89; 98 NSWLR 954; 19 BPR 38969. 199. McFarland v Gertos (2018) NSWSC 1629 para 91; 98 NSWLR 954; 19 BPR 38969. The person needs to be alive to come under s 52 of the Limitations Act, 1969 (NSW). 200. Limitation Act 1969 (NSW) s 52(e).

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Fraud 5.81  Another circumstance where the commencement of the limitation period may be delayed is where there has been fraud or fraudulent concealment of either the cause of action or the adverse possessor’s identity. In such cases, the limitation period will not begin to run until the documentary titleholder has discovered the fraud or should have discovered it, had reasonable diligence been applied.201 Seymour v Seymour202 found that, although the relevant fraud in these circumstances was not as narrow as common law fraud, ‘a consciousness’ of the wrongfulness was still required.203 Acknowledging the documentary owner’s title 5.82  If the adverse possessor acknowledges or confirms the superior title of the true owner, time will stop running against the adverse possessor.204 Unlike a suspension of time, an acknowledgement of the documentary owner’s title, wipes the slate clean and cancels the benefits of time running. Should the adverse possessor acknowledge the documentary owner’s title but then stay on in possession, the clock will start ticking afresh towards the satisfaction of a new 12-year (limitation) period. 5.83  Acknowledging or confirming title may be achieved in several ways. For example, it may be achieved if there is writing signed by the adverse possessor.205 In such circumstances, an email is regarded as writing.206 At times the acknowledgment may be given inadvertently; for example, in the form of a letter about a related subject.207 5.84  Merely realising that someone else owns the land, and consequently cancelling a licence, has not amounted to an acknowledgment of the rights of the owner.208 Yet the seeking of an exemption to pay rent has been held to confirm or acknowledge the true owner’s title.209 Admitting the documentary owner’s title in proceedings for possession of land also has been found to be an acknowledgment of title that stops time running,210 as has requesting a contribution towards the payment of rates.211 However, offering to purchase the relevant land is more problematic. It may,212 but will not necessarily,213 be treated as an acknowledgment of title.214 If title is acknowledged, that acknowledgment

201. Limitation Act 1969 (NSW) s 55. 202. Seymour v Seymour (1996) 40 NSWLR 358. 203. Seymour v Seymour (1996) 40 NSWLR 358 at 372. 204. Browne v St Clair Peerry [1991] 1 WLR 1297 (PC). Ofulue v Bossert [2009] 2 WLR 749. 205. Limitation Act 1969 (NSW) s 54(4). 206. McGuren v Simpson [2004] NSWSC 35. 207. In Edgington v Clark [1964] 1 QB 637, a signed offer to purchase land amounted to an acknowledgment of the true owner’s title. 208. Sze To Chun Keung v Kung Kwok Wai David [1997] 1 WLR 1232. 209. Furdson v Clogg (1842) 10 M & W 572; 152 ER 599. 210. Ofulue v Bossert [2000] WLR 749 (HL) at [72], [79]. 211. Furdson v Clogg (1842)10 M &W 572; 152 ER 599. 212. Edgington v Clark [1964] 1 QB 367 at 376–77. 213. Refina Pty Ltd v Binnie [2009] NSWSC 914 at [29]. 214. The effect of a ‘without prejudice’ offer to purchase is discussed at 5.101.

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is binding on any successor in title to the adverse possessor or any person who might dispossess the adverse possessor and time will run afresh from the date of acknowledgment.

Ultimate time limit on actions to recover land 5.85  Although disability, fraud and acknowledgement of title provisions exist to suspend or cancel time running against the documentary owner, there is an upper limit on actions to recover land.215 No claim may be brought more than 30 years from the date the cause of action accrued.216

What are the Criteria for Adverse Possession? Introduction 5.86  The Limitation Act  1969 (NSW) defines adverse possession as possession in whose favour the limitation can run.217 The court in Australia Retirement Holdings Pty Ltd observed that because this definition ‘does not specify the criteria governing the circumstances in which the limitation can run for the person in possession’,218 it is necessary ‘to look to the common law principles governing adverse possession to determine how the Limitation Act operates’.219 An adverse possessor must be able to demonstrate two particular possessory requirements. They are: • factual possession (demonstrating the appropriate level of physical control); and • the requisite animus possidendi (an intention to possess).220 The meaning of these requirements has proved challenging and there is no simple check-list of behaviours or actions that will automatically lead to satisfaction of the requirements. It is well established that what will amount to possession may vary from one situation to the next. Indeed, the court in Guggenheimer v Registrar of Titles observed that: 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.221

Instead, courts have dealt with the required elements on a case-by-case basis and have been very influenced by context. 215. This is so despite disability or fraud suspending the accrual of time. 216. Limitation Act 1969 (NSW) s 51. 217. Limitations Act 1969 (NSW) s 38(4)(a). 218. Australian Retirement Holdings Pty Ltd v Tracey Anne Higgins in her capacity as administrator of the estate of the late Monica Mary Pritchard [2021] NSWSC 1158 at para 217. 219. Australian Retirement Holdings Pty Ltd v Tracey Anne Higgins in her capacity as administrator of the estate of the late Monica Mary Pritchard [2021] NSWSC 1158. 220. See Slade J in Powell v McFarlane (1977) 38 P & CR 45. Applied in cases such as Braye v Tarnawskyj [2019] NSWSC 277; (2019) 19 BPR 39213; and Australian Retirement Holdings Pty Ltd v Tracey Anne Higgins in her capacity as administrator of the estate of the late Monica Mary Pritchard [2021] NSWSC 1158. 221. Guggenheimer v Registrar of Titles [2002] VSC 124 at [4].

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What constitutes a sufficient degree of exclusive control ‘must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed’.222 Further, although both factual possession and the animus possidendi are always necessary elements, it will not always be necessary to adduce further evidence to prove intent. In some cases, the physical acts of possession will alone be enough because those acts will unequivocally indicate an assertion of possession that excludes all the world.223 In other words, the acts of physical possession are so strong, that they embed proof of intent.

Factual possession 5.87  Factual possession requires ‘possession in the ordinary sense of the word’.224 Hence, an adverse possessor must simply go ‘into ordinary possession of the land for the requisite period without the consent of the owner’.225 An adverse possessor must be able to demonstrate that he or she has taken factual possession, and has not merely engaged in conduct that constitutes something less than or different from possession.226 An occupier whose use of land ‘falls short of adverse possession’227 will be unable to succeed in an adverse possession claim. 5.88  In commenting on what amounts to possession, courts have consistently referred to a range of variables, with the court in Lord Advocate stating that it is necessary to take into account: … the character and value of the property, the suitable and natural mode of using it [and] the course of conduct, which a proprietor might be expected reasonably to follow with regard to his [or her] own interests …228

222. Powell v McFarlane (1977) 38 P & CR 45 quoted in Australian Retirement Holdings Pty Ltd v Tracey Anne Higgins in her capacity as administrator of the estate of the late Monica Mary Pritchard [2021] NSWSC 1158 at para 231. 223. For an example see McFarland v Gertos (2018) NSWSC 1629 para 67; 98 NSWLR 954; 19 BPR 38969. 224. JA Pye (Oxford) Pty Ltd v Graham [2003] 1 AC 419 at 433–34 per Lord Browne-Wilkinson. 225. JA Pye (Oxford) Pty Ltd v Graham [2003] 1 AC 419 at 434–35. For a discussion of possession, see AES Tay, ‘Possession in the Common Law: Foundations for a New Approach’ (1964) 4 Melbourne University Law Review 476 at 490, where it is described as ‘the present control of a thing, on one’s own behalf and to the exclusion of others’. Elsewhere it has been referred to as the objective realisation of ownership. See R von Ihering, ‘Über den Grund Besitzschützes’, translated in Salmond, Jurisprudence, 10th ed, Sweet & Maxwell, 1947, pp 311–12, and cited in Tay, ‘Possession in the Common Law’, above in this note, p 481. See also the earlier discussion of possession at 5.8. 226. See Kierford Ridge Pty Ltd v Ward [2005] VSC 215 where it was argued (unsuccessfully) that the possession did not amount to legal possession because it was accidental. See also Roy v Lagona [2010] VSC 250, which relied on Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 in deciding what test for possession was applicable. 227. Australian Retirement Holdings Pty Ltd v Tracey Anne Higgins in her capacity as administrator of the estate of the late Monica Mary Pritchard [2021] NSWSC 1158, para 233. See also Clement v Jones (1909) 8 CLR 133 at 140. 228. Lord Advocate v Lord Lovat (1880) 5 App Cas 273 at 288.

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5.89  In a similar vein, Slade J in Powell v McFarlane229 commented that, in considering what amounts to physical control — an appropriate degree of physical control being an indication of factual possession — the court needed to have regard to a range of factors. It needed to consider ‘the nature and manner of the land and the manner in which land of that nature is commonly used and enjoyed’.230 In Powell’s case, neighbouring animals strayed onto land and grazed on it. To establish the requisite level of possession, the court found that the number of straying animals must be great enough to displace the original animals, and it noted that the same degree of possession that is required to sue in trespass is needed to establish adverse possession.231 5.90  Slade J stated: Everything must depend on the particular circumstances, but broadly speaking … what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no-one else has done so.232

Hence, carrying out improvements or erecting buildings on the land would be strong evidence that the Slade J test had been satisfied.233 5.91  According to Lord Browne-Wilkinson, in JA Pye (Oxford) Pty Ltd v Graham, the factual possession aspect of adverse possession is established by ‘a sufficient degree of physical custody and control’.234 In that case, the Grahams remained in possession for the statutory period and physically excluded Pye from the land by hedges and a lack of key to the road gate. They spread dung on the land, harrowed it and rolled it. They also overwintered dry cattle and yearlings in a shed on the land, which went beyond what they were permitted to do under the initial grazing agreement. These acts constituted factual possession for the purposes of establishing adverse possession. 5.92  Bowen CJ in Mulcahy v Curramore Pty Ltd235 stated in now oft-repeated words, that possession must be ‘open, not secret; peaceful, not by force; and adverse, not by the consent of the true owner’.236

Open 5.93  Possession should occur in a manner whereby a documentary owner who ‘was reasonably careful about his or interest’ would notice it.237 Put somewhat dramatically by a United States court, the possessor, ‘must unfurl his flag on the land, and keep it flying 229. Powell v McFarlane (1977) 38 P & CR 452. 230. Powell v McFarlane (1977) 38 P & CR 452 at 471. 231. Powell v McFarlane (1977) 38 P & CR 452 at 469 per Slade J. 232. Powell v McFarlane (1977) 38 P & CR 452 at 471. 233. See Cooke v Dunn (1998) 9 BPR 16,489. 234. JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 435, referred to at 5.60. 235. Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464. 236. Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 at 475.The question of whether there was continuing factual possession in the context of building a fence was raised in Patsios v Glavinic [2006] VSC 92. 237. Re Riley and the Real Property Act (1965) 82 WN (NSW) 373.

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so that the owner may see, if he will, that an enemy has invaded his dominions and planted his standard of conquest’.238 Despite this formulation, factual possession has been established where the documentary titleholder did not know of the adverse possession. In Rains v Buxton,239 for example, A occupied a cellar under the ground of B for 60 years. B had no knowledge of the occupation, but Fry J found that the requisite possession existed and that the relevant limitation period had been satisfied. Consequently, adverse possession was effective to statute bar the title of the documentary owner. Similarly, in the United States, a party exploited the tourism potential of a cave under the ground of another’s land for a period of 12 years. Although the documentary owner of the land where the cave existed continued to use the surface land, the court found that there had been sufficient possession of the underground space and satisfaction of other criteria to amount to adverse possession.240 Nevertheless, as has been observed ‘openness may strengthen a claim of adverse possession’.241

Peaceful 5.94  Despite the requirement in Mulcahy v Curramore Pty Ltd that possession be ‘peaceful, not by force’,242 some cases have found factual possession established where force has been used.243 According to some scholars, s 28 of the Limitation Act implicitly recognises that force may be part of factual possession because that section  recognises that the clock will start ticking against the documentary owner when the owner ‘discontinues’ or is ‘dispossessed’. ‘Dispossession’, in turn, is based on the documentary owner being driven out; an act that involves some degree of force.244 If time starts on the basis of forceful acts, surely force may also be used to maintain the ticking of the adverse possession clock. However, if, for example, a documentary owner is so intimidated by the force used that he or she is unable to enforce his or her rights through the courts, it may be the case that the possession will not be regarded as peaceable.245 5.95  It is clear from Lord Hope of Craighead’s words, that although possession must be adverse, there is no requirement that the possession be confrontational. His Honour observed: [The term, ‘adverse’] suggests that an element of aggression, hostility or subterfuge is required … But … this is not so. It is used as a convenient label only, in recognition simply 238. Barrell v Renehan 39 A (2d) 330 (Vermont 1944) at 333. 239. Rains v Buxton (1880) 14 Ch D 537. 240. Marengo Cave Co v Ross 7 NE (2nd) 59 (1937). See also Cox v Colossal Cavern Co, 276 SW 540 (1925). 241. Moore, Grattan and Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, note 17 above, p 135, referencing Ellis v Lambeth LBC (2000) 32 HLR 596. 242. Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 at 475. See also Shaw v Garbutt (1996) 7 BPR 14,816, where peaceable possession was equated with uninterrupted, exclusive and continuous possession. 243. Harnett v Green (No 2) (1883) LR 4 LR (NSW) 292, where the squatter maintained possession by way of a shotgun and warnings. See also Beever v Spaceline Engineering Pty Ltd (1993) NSW ConvR ¶55-678; Shaw v Garbutt (1996) 7 BPR 14,816 at 14, 831–32. 244. B Edgeworth, Butt’s Land Law, Thomson Reuters, 2017, p 1106, argues that if force can be used to commence a period of adverse possession, it would be anomalous that it could not be used to maintain it. 245. Bartlett v Ryan (2000) 10 BPR 18,077.

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of the fact that the possession is adverse to the interests of the paper owner or, in the case of registered land, of the registered proprietor.246

Permission 5.96  If the documentary titleholder grants permission for the possession, the possession cannot be adverse.247 Time does not even commence running. In some situations it may be difficult to establish whether the possession is inconsistent with the documentary owner’s title or whether it is possession by way of a lease or a licence, for example, and therefore is possession with permission.248 This is particularly the case in family situations where arrangements that are oral and unclear often emerge over time.249 In Richardson v Greentree,250 the court specifically examined how an agreement or arrangement between family members can negative the ‘adverse’ aspect of possession, because permission is taken to have been granted.251 In that case, Einstein J found that the defendant did not hold adversely, but as the result of: … an agreement or arrangement … which broadly provided that [the defendant] was given a licence to reside in the property until his death, on condition that he pay the rates in lieu of the rent and maintain the property in a reasonable condition.252

Einstein J went on to say that ‘the allegation of adverse possession is clearly negatived by the family relationship in the course of which the agreement or arrangement was entered into’ and the defendants failed to establish an intention ‘to exclude the whole world from the land or an intention to take possession from the documentary title holder’.253

246. JA Pye (Oxford) Pty Ltd v Graham [2003] 1 AC 419 at 445. 247. JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419, quoting Slade J in Powell v McFarlane (1977) 38 P & CR 452 at 470: ‘In the absence of evidence to the contrary, the owner of land with the paper title is deemed to be in possession of the land, as being the person with the prima facie right to possession’.Where the paper owner or someone claiming through him or her is not in possession, the law will attribute ‘possession of land to a person who can establish no paper title to possession [if that person can] be shown to have both factual possession and the requisite intention to possess (“animus possidendi”)’. See also Bridges v Bridges [2010] NSWSC 1287. Note that in Payne v Dwyer [2013] WASC 271, one of the reasons the claim to adverse possession of minerals failed was because permission had been granted. See  E Webb, ‘Adverse Possession of Minerals in Land’, (2013) (August) Australian Property Law Bulletin 208 at 209. 248. In Hughes v Griffin [1969] 1 WLR 23 at 30, the court stated that time cannot begin to run in favour of a possessor if a licence has been granted. 249. Smith v Lawson (1997) 75 P & CR 466. 250. Richardson v Greentree (NSWSC, Einstein J, 1 December 1997, unreported, BC9706375). 251. Bartha v O’Riordan [2004] QSC 205 provides another example of an adverse possession claim in a domestic context. Note the manner in which it deals with the effect of a joint tenancy on a claim for adverse possession. 252. Richardson v Greentree (NSWSC, Einstein J, 1 December 1997, unreported, BC9706375) at 35. In this case, the court also sets out 22 principles regarding adverse possession generally. 253. Richardson v Greentree (NSWSC, Einstein J, 1 December 1997, unreported, BC9706375) at 36. See also Cleret v  Rago [2014] QCA 158, where a former partner stayed on in possession after the relationship breakdown, but without an agreement. Court held there was an implied licence to remain and that time could only commence running after a demand to leave had been made.

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5.97  In considering Richardson’s case, the court referred to Hughes v Griffin,254 a case in which a plaintiff went to live with her husband in a house that the husband held under freehold title. Although the husband told his wife (the plaintiff) that the property was to be hers on his death, he executed a conveyance inter vivos in favour of his nephew. The wife knew nothing of the conveyance and, initially, nor did the nephew. Later, the husband went as far as offering to vacate the house in favour of the nephew.This offer was not accepted but, on the husband’s death, the nephew sought possession and the widow refused to vacate the premises. One of her arguments was that she took the property pursuant to her late husband’s will and that he was able to pass an interest to her via the will because he held adversely to his nephew. As we observed earlier in Asher v Whitlock,255 possessory interests are devisable, but here the question hinged on whether the husband held adversely to the nephew. (He needed to do so in order to have an interest to devise.) The Court of Appeal held that the continued occupation by the husband was by virtue of a licence and not as a result of adverse possession. Einstein J, paraphrasing Hannan LJ in Hughes v Griffin, stated that: … the facts negatived an intention on the part of the husband to obtain a statutory title before his death and that it would be contrary to common sense to suppose that a man can become the owner under the Limitation Act 1939, when his whole intention was not to become such an owner.256

5.98  Although a contrary view was taken in Roy v Lagona,257 where a foster daughter was found not to be in possession under any legal right, nor any right in equity, the more commonly held position is that possession by a person in a family relationship with the documentary owner will be regarded as in possession ‘with permission’. However, each case will turn on its facts. 5.99  In some cases, permission to possess may be given at the outset, but the permission may be revoked during the course of possession.258 This scenario has been known to arise when a party is in possession pursuant to a contract for sale but stays on in possession after the contract ceases to bind the parties.259 In such circumstances, Lakshmijit v Faiz Sherani260 found that the possession could only be adverse after the parties’ rights were no longer affected by the contract, meaning that the permission had come to an end.

254. Hughes v Griffin [1969] 1 WLR 23. 255. Asher v Whitlock (1865) LR1QB 1. See 5.34–5.37. 256. Richardson v  Greentree (NSWSC, Einstein J, 1  December  1997, unreported, BC9706375) at  24. Morris v  Tarrant [1971] 2 QB 143 supports the view that persons in possession as the result of close family relationships will not be held to be trespassers. 257. Roy & Anor v Lagona [2010] VSC 250. 258. See the discussion in Bridges v Bridges [2010] NSWSC 1287 at [16], quoting Butt, Land Law, note 60 above, p 904. 259. For example, where the contract is rescinded or terminated. 260. Lakshmijit v Faiz Sherani [1974] AC 605. See also Hyde v Pearce [1982] 1 WLR 560.

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5.100  Sandhu v  Farooqui261 dealt with a similar issue. There, the court demonstrated that a potential purchaser may acquire a possessory title even when permission is initially granted to take possession. This case involved a potential purchaser going into possession with the vendor’s permission, but staying on in possession after it was clear that the sale of the property was never going to proceed. Key to the Court of Appeal’s decision was the issue of when the licence, under which the purchaser went into possession, ended. The court noted that if a purchaser goes into possession with permission, the purchaser must prove withdrawal of that permission before the adverse possession clock can begin to tick. Communication of an intention not to proceed to completion (of the sale) must be communicated between the parties although that communication may be implied from conduct and need not be express. 5.101  BP Properties v Buckler262 also considered the issue of permission. It found that it is possible for the documentary owner to grant permission of adversely possessed land at any time before the expiration of the statutory period.This is the case even where the grant of permission is unilateral and unsolicited.The effect is not only to stop time accruing against the documentary owner, but also to bring about the loss of all benefit from previously accrued time. Concern has been expressed as to whether this case represents good law.263 Given that the prevention of time running is often achieved by quite formal mechanisms, such as by way of institution of proceedings, the mere granting of permission may seem a somewhat lax method to achieve the same effect.264 Yet scholars such as Butt have argued that halting the adverse possession clock from ticking merely by granting permission for possession is both logical and consistent with the law that prevents rights being acquired by way of prescription, once permission is granted.265 Nevertheless, a more conclusive method of stopping time would seem to be where the adverse possessor makes a written offer to lease, licence or buy the land, for example. Such an offer would act as a clearer affirmation by the adverse possessor of the documentary owner’s title.266 However, there may be cases where not even an offer to purchase will act as an acknowledgment of the documentary owner’s title, which causes time to stop running. The English case of Ofulue v Bossert267 considered the question of whether a ‘without prejudice’ offer to purchase the relevant property, made by an adverse possessor to the documentary owner, amounted to confirmation of title. The court did not doubt that ordinarily an offer to purchase would affirm the title of the documentary owner and so stop the accrual of time against that owner. However, given that the offer to purchase in this case was made ‘without prejudice’, in the course of earlier legal proceedings, and could not, therefore, be 261. Sandhu v Farooqui [2004] 1 P & CR 3. The purchaser’s claim failed on the facts in this instance. 262. BP Properties Ltd v Buckler (1988) 55 P & CR 337. 263. H Wallace, ‘Limitation, Prescription and Unsolicited Permission’ [1994] Conveyancer and Property Lawyer 196 considers whether this is good law; referred to in B Edgeworth, Butt’s, Land Law, Thomson Reuters, 2017, note 20, p 1107. 264. See views of Moore, Grattan and Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, note 17 above, p 136. 265. Butt, Land Law, note 60 above, p 904. 266. See Garbutt v Shaw (1996) 7 BPR 14, 816 at 14,826. 267. Ofulue v Bossert [2009] 2 WLR 749.

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admitted into evidence, the court held that the offer had no operative effect in affirming the documentary owner’s title. Hence, the adverse possessor had accumulated the requisite amount of time to bar the title of the documentary owner.

Animus possidendi or intention to possess 5.102  The party seeking to establish adverse possession must not only demonstrate factual possession, but also an intention to possess.268 As observed above, some acts of possession are unequivocal. The intent is indisputably enmeshed in them. Hence, if a squatter uses land in the way that any normal documentary owner would use the land, there is no need to undertake an additional inquiry into his or her intent.269 It is obvious from the acts of possession that there is an intention to possess. Intent is more difficult to establish where the acts of possession are equivocal.270 By equivocal we mean that the acts suggest an intent to exclude the documentary owner, but that they equally suggest an intent merely to use the land in a way that is entirely consistent with the manner in which the documentary owner wishes to use the land. Where the acts are equivocal, further inquiry is necessary to reveal evidence of intent. Proof of an actual intention to possess (along, of course, with possession itself) must be demonstrated. Where that cannot be demonstrated, the squatter’s claim will fail. The requisite animus possidendi will not be established.271 ‘[T]he necessary intention … must be to exclude the world at  large including the documentary owner.There must be affirmative evidence of the intention to possess, which the occupier must have made clear to the world.’272 Hence, Robb J in Australian Retirement Holdings v Tracey Anne Higgins, went on to find that the absence of a boundary fence and the lack of proof of a locked gate, along with the evidence of seven local residents, who explained that locals continued to use the relevant land for recreational purposes, dog walking and bike riding meant that there was no exclusive possession.273 The plaintiff ’s evidence simply showed use of the land rather than exclusive possession. There was no intention to exclude the world at  large. The relevant land was used to provide access from the road to Australian Retirement Holding’s development site and so was, on the

268. See  M Dockray, ‘Adverse Possession and Intention I’ [1982] Conveyancer and Property Lawyer 256; O Radley-Gardner, ‘Civilised Squatting’ (2005) 25(4) OJLS 727; William Bros Direct Supply Ltd v Raftery [1958] 1 QB 159; George Wimpey & Co Ltd v Sohn [1967] Ch 487; Riley v Penttila [1974] VR 547; Littledale v Liverpool College [1900] 1 Ch 19. 269. JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at [76] per Lord Hutton. 270. Riley v Penttila [1974] VR 547. 271. Cervi v Letcher (2011) 33 VR 320 at [17](4) (but note that Dixon J makes it a joint requirement for there to be a failure to make it clear to all the world that there is an intention to exclude the documentary owner); South Maitland Railways Pty Ltd v Satellite Centres Australia Pty Ltd [2009] NSWSC 716. 272. Australian Retirement Holdings Pty Ltd v Tracey Anne Higgins in her capacity as administrator of the estate of the late Monica Mary Pritchard [2021] NSWSC 1158 at para 232. 273. Australian Retirement Holdings Pty Ltd v Tracey Anne Higgins in her capacity as administrator of the estate of the late Monica Mary Pritchard [2021] NSWSC 1158.

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reasoning of Permanent Trustee Co Ltd v Pangas,274 effectively for personal convenience and did not constitute an act of exclusive possession. No intention to possess was evident. 5.103  Consideration of the subjective intention of the adverse possessor will be relevant in cases where the acts are equivocal.275 However, statements by the adverse possessor, as to his or her intention, have been regarded as problematic, particularly because they could be self-serving. Nevertheless, the case of Whittlesea City Council v Abbatangelo affirmed that the adverse possessor’s statements of intention may, in concert with other considerations, be used to help establish the requisite level of intention. In that case, the court stated: … while a statement by a person that he or she intended to possess 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.276

5.104  The intention that is relevant is always the intention of the squatter, not the documentary owner.277 According to Powell v McFarlane,278 what must be demonstrated is an intention to possess the land as though it were the possessor’s own.279 Slade J in Powell v McFarlane put it thus: … the animus possidendi involves the 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.280

In that case, his Honour concluded that ploughing and cultivating agricultural land was an act ‘so drastic as to point unquestionably in the absence of evidence to the contrary, to an intention on the part of the doer to appropriate the land concerned’.281 5.105  At trial, in Moran’s case the requirement was framed as ‘not an intention to own or even an intention to acquire ownership but an intention to possess’.282 This position was affirmed on appeal, where the court held that ‘an intention for the time being to possess’ was sufficient.283 Intention was also considered, in the Victorian context, in Kierford Ridge Pty Ltd v Ward.284 There, the court affirmed Slade J’s requirement in Powell v McFarlane that the squatter needs to demonstrate an intention to possess and that the intention needs to 274. Permanent Trustee Co Ltd v Pangas (1992) 75 LGRA 412 at 418–21. 275. Buckinghamshire County Council v Moran [1990] Ch 263; [1989] 2 All ER 225. 276. Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 60 [6]. 277. But see South Maitland Railways Pty Ltd v Satellite Centres Australia Pty Ltd [2009] NSWSC 716. Intention will commonly need to be demonstrated through acts and conduct rather than simple reliance on the adverse possessor’s statements of intention. See  also JA Pye (Oxford) Ltd v  Graham [2003] 1 AC 419: MP Thompson, ‘Adverse Possession:The Abolition of Heresies’ [2002] Conveyancer and Property Lawyer 480. 278. Powell v McFarlane (1977) 38 P & CR 452. 279. Murnane v Findlay [1926] VLR 80; Riley v Penttila [1974] VR 547. 280. Powell v McFarlane (1977) 38 P & CR 452 at 471–72 per Slade J. This reasoning was applied in Sunny Corporation Pty Ltd v Elkayess Nominees Pty Ltd [2006] VSC 314. 281. Powell v McFarlane [1977] 38 P & CR 452 at 477–78 282. Moran v Buckinghamshire County Council (1988) 86 LQR 472 at 479. 283. Buckinghamshire County Council v Moran [1990] Ch 623 at 643; [1989] 2 All ER 225 at 238. 284. Kierford Ridge Pty Ltd v Ward [2005] VSC 215 at [132].

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be conveyed to the world.The Victorian Court elaborated on this requirement by quoting Bayport v Watson285 in the following terms: When the law speaks of an intention to exclude the world at large, including the true owner, it does not mean that there must be a conscious intention to exclude the true owner. What is required is an intention to exercise exclusive control: see Ocean Estates v Pinder [1969] 2 AC 19. And on that basis an intention to control the land, the adverse possessor actually believing himself or herself to be the true owner, is quite sufficient: see Bligh v Martin [1968] 1 WLR 804. As a number of authorities indicate, enclosure by itself, prima facie indicates the requisite animus possidendi. As Cockburn CJ said in Seddon v Smith (1877) 36 LT 168, 169: “Enclosure is the strongest possible evidence of adverse possession.” Russell LJ in George Wimpey & Co Ltd v Sohn [1967] Ch 487, 511A, similarly observed: “Ordinarily, of course, enclosure is the most cogent evidence of adverse possession and of dispossession of the true owner”.286

Generally speaking, Australian cases have tended to follow the test set out by Slade J in Powell v McFarlane,287 but they have been less inclined to explore further the proposition that the intention to possess must be conveyed to all the world. Some commentators suggest that such a manifestation of intention is, nevertheless, required.288 5.106  The ‘intention to possess’ (rather than own) test was re-affirmed in the later case of JA Pye (Oxford) Ltd v Graham. In that case Lord Browne-Wilkinson endorsed it, commenting that it was ‘manifestly correct’,289 and Lord Hope of Craighead explained that it was not necessary ‘to show that there was a deliberate intention to exclude the paper owner or the registered proprietor’, but rather what needed to be demonstrated was ‘an intention to occupy and use the land as one’s own’.290 5.107 In Whittlesea City Council v  Abbatangelo, the court affirmed yet again that an adverse possessor must prove an intention to possess exclusively which is different from proving an intention to own.291 The court also highlighted the difference between an intention to possess exclusively and the mere deprivation of special benefits from land. The latter will be insufficient to meet the test for establishment of the requisite animus possidendi. However, if deprivation of special benefits accompanies an intention to possess, the requisite level of intention may still be established.292 Abbatangelo’s case is also significant because it affirmed that actions or words that acknowledge the existence of ownership in another party will not, of themselves, preclude the establishment of the requisite level of 285. Bayport v Watson [2002] VSC 206 at [40]. 286. Kierford Ridge Pty Ltd v Ward [2005] VSC 215 at [132]. 287. Powell v McFarlane (1977) 38 P & CR 452. 288. Moore, Grattan and Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, note 17 above, p 141. 289. JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at [42] per Lord Browne-Wilkinson; at [71] per Lord Hope. See L Griggs, ‘Possession, indefeasibility and Human Rights’ (2008) 8(2) QUTLJ 286. 290. JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at [71] per Lord Hope of Craighead. See Marchesi v Apostoulou [2006] FCA 1122 for a recent application of the principle that the intention of the possession must be to exclude everyone including the documentary owner. See also Cervi v Letcher (2011) 33 VR 3206. 291. Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 81 [101]. 292. Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 80 [96]–[98].

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intention to possession by the adverse possessor.293 Hence, Mrs Abbatangelo’s statements that she did not own the land were not inconsistent with her intention to possess the land exclusively. Applying the same logic, the payment of rates by a party who is not the adverse possessor will not of itself be regarded as evidencing a failed intention to possess. Put another way, the payment of rates will not necessarily destroy the adverse possessor’s claim.294 5.108  Cervi v Letcher295 applied Abbatangelo’s case296 in relation to the question of the animus possidendi. The court in Cervi’s case summarised what is required to prove an intention to possess in the following terms: The animus possidendi, which is also necessary to constitute possession, … involves the 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 courts will, in my judgment, require clear and affirmative evidence that the trespasser, claiming that he has acquired possession, not only had the requisite intention to possess, but made such intention clear to the world. If his acts are open to more than one interpretation and he has not made it perfectly plain to the world at large by his actions or words that he has intended to exclude the owner as best he can, the courts will treat him as not having had the [requisite] animus possidendi and consequently as not having dispossessed the owner.297

5.109  What will amount to the requisite animus possidendi or intention will, like factual possession, therefore vary according to circumstance. Further, the intention may be, and frequently is, as noted above, deduced from the physical acts of possession themselves.298 Hence, at times, the acts that go towards demonstrating factual possession will be the same acts as those that go towards demonstrating an intention to possess. Nevertheless, the two requirements are regarded as distinct. 5.110  To recapitulate, thus far, the following observations may be made. First, enclosure is an important act in helping to establish adverse possession and has, by itself, on a number of occasions been said to demonstrate the requisite intention to possess.299 Yet this will

293. Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 81 [101]. 294. Whittlesea City Council v  Abbatangelo (2009) 259 ALR 56 at  82 [106]. Note that Quach v  Marrickville Municipal Council (No 2) (1999) 22 NSWLR 65 at [67] pointed out that the payment of rates is often seen as an indication of an intention to possess. See Quarmby v Keating [2008] TASSC 71, which considered s 138U of the Land Titles Act 1980 (Tas). That distinctive provision does not permit time to run against the documentary owner if he or she has paid rates and taxes on the relevant land. 295. Cervi v Letcher (2011) 33 VR 320. 296. Whittlesea City Council v Abbatangelo (2009) 259 ALR 56. 297. Cervi v Letcher (2011) 33 VR 320 at [17](4). 298. JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 435. 299. Seddon v Smith (1877) 36 LT 168 at 169; George Wimpey & Co Ltd v Sohn [1966] 1 All ER 232 at 240. Abbatangelo v Whittlesea City Council [2007] VSC 529 at 20.Affirmed in Whittlesea City Council v Abbatangelo (2009) 259 ALR 56.

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not always be the case.300 Significantly, Buckinghamshire County Council v Moran301 affirmed the importance of examining the issue of intention with reference to the particular circumstances at hand, thereby reinforcing the need for the contextualisation of enclosure or other acts. 5.111  Second, the intention to possess may also be demonstrated by the payment of rates and taxes,302 yet such payment is not necessarily evidence of the requisite animus possidendi.303 It would seem that the payment of rates and taxes needs to be supported by other acts evincing an intention to possess. Other acts may include enclosing/fencing, cultivating or living on the land.304 In cases where there has been no payment of rates, the court has, on some occasions, found in favour of the adverse possession claimant.305 Hence, the payment of rates and taxes is not necessary to the success of an adverse possession claim. Nevertheless, refusing to pay rates has been found to run counter to a claim of the requisite animus possidendi.306 5.112  Possession may also be adverse to predecessors in title of the registered proprietor, not just the present registered proprietor. Barrett v McGuiness307 answered the following related question: Against whom exactly does the intention to possess for the statutory period need to be demonstrated? That case concerned two parties, McGuiness and the Barretts, who were each in possession of land to which the other party was the registered proprietor. The predecessors of each party had been in possession of the other’s land long enough to satisfy the statutory period. The Barretts wished the Torrens Register to be rectified and the correct lot numbers recorded, but McGuiness did not wish such an action to proceed, because the lot for which he was registered was more valuable than the lot for which he should have been registered. One of the arguments for McGuiness in resisting the transposition of the lot numbers on the Torrens Register was that, in order for s 45D(1)(b) of the Real Property Act to be satisfied, the relevant period of adverse possession must be demonstrated to be against the actual registered proprietor whose cause of action the possessor sought to extinguish (ie, against McGuiness himself, and not his predecessors in title). Hodgson CJ rejected this reasoning, finding that the period of 300. In Riley v Penttila [1974] VR 547, although the land was fenced for use as a tennis court there was not an intention to take actual possession and exclude the documentary owner. The intention was simply to gain special enjoyment. In both Watu-Ofei v Danquah [1961] 1 WLR 1238 at 1243 and Fowley Marine (Emsworth) Ltd v Gafford [1967] 2 QB 808 at 832–33, the court pointed out that the type of conduct necessary to prove adverse possession will vary with the particular land. 301. Buckinghamshire County Council v Moran [1990] Ch 263; [1989] 2 All ER 225. 302. Quach v Marrickville Municipal Council (No 2) (1990) 22 NSWLR 55 at 67. An adverse possessor who is not in occupation, but is paying rates on the relevant land will not usually be able to demonstrate the requisite intention. See Shaw v Garbutt (1996) 7 BPR 14, 816 at 14,833; Cooke v Dunn (1998) 9 BPR 16,489 at 16 and 505. 303. O’Neil v Hart [1905] VLR 107 at 120. 304. Bank of Victoria v Forbes (1887) 13 VLR 760 at 764–65. 305. Shaw v Garbutt (1996) 7 BPR 14,816 at 14,833–4. 306. Bree v Scott (1904) 29 VLR 692 at 701–2. 307. McGuiness v  Registrar-General; Barrett v  McGuiness [1998] NSWSC 215, in part reported as McGuiness v Registrar-General (1998) 44 NSWLR 61.

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adverse possession could include periods as against the predecessors in title of the present registered proprietor against whom the claim was being made. He said, with reference to s 45D(1)(b): In my opinion, the reference there to “the registered proprietor of an estate or interest” does not mean that the extinguishment must first have occurred as against the particular person who is the registered proprietor at the time of the application, much less that the whole period of adverse possession must have run against that person. In my opinion those words have to be given an ambulatory application, and the paragraph applies wherever the title of any registered proprietor of an estate or interest in the particular land would, at or before the time of the application, have been extinguished. In my opinion, the interpretation contended for by [counsel] is inconsistent with s 45D(4), which protects registered proprietors who have become so registered without fraud and for valuable consideration.308

How the adverse possession doctrine interacts with Torrens title is discussed in more detail at 5.147–5.157.

Additional issues Use inconsistent with the documentary owner’s intended use of land 5.113  On the basis of older cases such as Leigh v Jack,309 English law (at least for a time) required that, in order to establish an adverse possession claim, the possession had to be inconsistent with the purpose for which the documentary titleholder intended to use the land. Where no inconsistency with the documentary titleholder’s intended use could be established, the documentary titleholder was deemed to have granted an implied licence to the squatter whereby possession was permitted.The effect of permission or consent was to prevent the possession being characterised as adverse to the documentary titleholder. 5.114  In some cases the documentary titleholder had no present use for the property, but was merely keeping it for later use.310 In such circumstances, a trend developed whereby courts found the squatter was in possession under an implied licence.The effect of this was that conduct which, in other circumstances may have been evidence of possession capable of establishing an adverse possession claim, such as cutting down timber and removing it, or grazing cattle on a fenced-off, unused section of a golf course, was not found to

308. McGuiness v  Registrar-General; Barrett v  McGuiness [1998] NSWSC 215, in part reported as McGuiness v Registrar-General (1998) 44 NSWLR 61 at 69. See  5.147–5.157 for a discussion of possessory title and Torrens land. 309. Leigh v Jack (1879) 5 Ex D 264 at 271. See also South Maitland Railways Pty Ltd v Satellite Centres Australia Pty Ltd [2009] NSWSC 716, where Tamberlin JA held that to defeat a title by dispossessing a former owner, acts must be done that are inconsistent with the enjoyment of the land for the purposes for which the owner intended to use it. If the possession is ‘equivocal’ there usually will be insufficient evidence to demonstrate from those acts that the possession of the owner was excluded. 310. See Leigh v Jack (1879) 5 Ex D 264, where the possessor’s acts of placing rubbish on the owner’s land were not regarded as inconsistent with the owner’s plan to dedicate the land as road for the public some time in the future.

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establish adverse possession.311 Those acts were not regarded as being inconsistent with the documentary owner’s use of the land, for the purposes for which the documentary owner intends.312

Rejection of implied licence doctrine  5.115  English courts have now rejected application of the implied licence doctrine in the context above.313 Evidence that the implied licence doctrine is no longer favoured may be observed in Buckinghamshire County Council v Moran.314 In that case one of the main issues to be decided was whether the fencing of property, planting of bulbs and the installation of a locked gate (for the statutory period) amounted to adverse possession, even though the documentary owner (the Council) had no present use for the land but did have a planned future use of the land, as a road. 5.116  The court found that the relevant acts were sufficient to amount to the dispossession of the documentary titleholder. The requisite level of intention had been established, with the court affirming that ‘an intention for the time being [emphasis added] to possess the land to the exclusion of all other persons, including the owner with the paper title’ was sufficient.315

311. West Bank Estates Ltd v Arthur [1967] 1 AC 665 at 677; Ashburnam Golf Club Ltd v Hogan (22 July 1982, unreported), cited in Butt, Land Law, note 60 above, p 870. In the latter case, the land was unused but it effectively provided a buffer zone for poor golfers, whose balls went astray and deviated from the fairway. The squatter’s possession was not seen as inconsistent with use of the land as a buffer zone for wayward balls. See Williams Bros Direct Supply Ltd v Raftery [1958] 1 QB 159 for another case where acts including the cultivation of land, building sheds and greyhound breeding did not support a claim for adverse possession over land on which development was later planned. 312. Leigh v Jack (1879) 5 Ex D 264. 313. Treloar v Nute [1976] 1 WLR 1295 at 1302; Powell v McFarlane (1977) 38 P & CR 452; Buckinghamshire County Council v Moran [1990] Ch 623; [1989] 2 All ER 225; JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 437–38 demonstrate the rejection. Note also that s 15(6) and Sch 1 para 8(4) of the Limitation Act 1980 (UK) inhibits application of the implied licence doctrine, but does not totally prevent its application. If the facts of the case suggest a finding of a licence is justified, the court may still imply one. Also note that the English High Court decision in Beaulane Properties v Palmer [2005] EWHC 1460 (Ch) expressed the view that the law had gone awry since Buckinghamshire County Council’s case. In Beaulane’s case, the court stated that as (a) Beaulane had no immediate plans for the land and (b) Beaulane was content for Palmer to remain on the land, Palmer could not show that his use was inconsistent.The position taken in Beaulane has been strongly criticised. See R Kerridge and AHA Brierley, ‘Adverse Possession, Human Rights and Land Rights Legislation: And They All Lived Happily Ever After’ [2007] Conveyancer and Property Lawyer 552–8. 314. Buckinghamshire County Council v Moran [1990] Ch 263; [1989] 2 All ER 225. 315. Buckinghamshire County Council v Moran [1990] Ch 263; [1989] 2 All ER 225 at 238 per Slade J. Moran’s case followed Stamp LJ in dissent in Wallis’ Cayton Bay Holiday Camp Ltd v Shell Mex and BP Ltd [1975] QB 94; [1974] 3 All ER 575. Moran’s case rejected the implied licence doctrine, demanding instead that the issue of intention be determined by reference to the facts. If the facts demonstrated an intention to possess, that intention would not be negatived simply because the true owner was undecided about the future or present use of the property.

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5.117  The House of Lords in JA Pye (Oxford) Ltd v Graham,316 also discussed the implied licence doctrine. Lord Browne-Wilkinson stated that to claim that ‘the sufficiency of possession can depend on the intention not of the squatter but of the true owner’ was ‘heretical and wrong’.317 He observed that the Wallis’ Cayton Bay Holiday Camp Ltd v Shell Mex and BP Ltd318 line of cases was wrong. 5.118  On the facts of Pye’s case, the House of Lords found in favour of the Grahams, the adverse possessors, even though Pye had no present use for the land. However, the court did acknowledge that, in rare circumstances, the lack of present use may assist the documentary titleholder to establish that the squatter did not have the requisite level of intention to possess. The court stated that at  best the lack of present use ‘may provide some support for a finding as a question of fact that the squatter had no intention to possess the land in the ordinary sense but only an intention to occupy it until needed by the paper owner’.319 Lord Browne-Wilkinson added that he thought there would be ‘very few occasions’ where this was the case but observed it was a possibility, albeit quite an improbable one.320 5.119  In England, the rejection of the implied licence doctrine was ultimately enshrined in statute.321 In Australia, courts have not adopted the implied licence doctrine. Cases such as Monash City Council v Melville322 and Whittlesea City Council v Abbatangelo323 demonstrate this. Indeed, Underwood J in Woodward v Wesley Hazell Pty Ltd324 noted, at an earlier point, that ‘even if the Shell-Mex case and Gray v Wykeham-Martin [cases that applied the implied licence doctrine] were binding upon me, they should no longer be regarded as good law’. However, South Maitland Railways Pty Ltd v Satellite Centres Australia Pty Ltd325 offered a contrary position. 316. JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 especially at 437–38. Note that Lord Browne-Wilkinson in JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 437 attributed the English court’s mistaken requirement that the acts of the stranger must be inconsistent with the ‘purposes for which [the documentary owner] intended to use [the land]’ to the judgment of Bramwell B in Leigh v Jack (1895) 5 Ex D 264. 317. JA Pye (Oxford) Ltd v  Graham [2003] 1 AC 419 at  433–34; 437–38 per Lord Browne-Wilkinson and 445–46 per Lord Hope of Craighead. 318. Leigh v Jack (1897) 5 Ex D 264; Wallis’ Cayton Bay Holiday Camp Ltd v Shell-Mex and BP Ltd [1975] QB 94 at 103; [1974] 3 All ER 575 at 584. 319. JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 437–38. 320. JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 437–38. See also Buckinghamshire County Council v Moran [1990] Ch  623; [1989] 2 All ER 225; Richardson v  Greentree (NSWSC, Einstein J, 1  December  1997, unreported, BC9706375) at 21. 321. The recommendations of the English Law Reform Committee were incorporated into s 15(6) and Sch 1 para 8(4) of the Limitation Act. It does away with a blanket implied licence, but states that the court is still able to find implied permission ‘where such a finding is justified on the actual facts of the case’. 322. Monash City Council v Melville (2000) V ConVR 54-261. 323. Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 61 [6(h)]. Note, however, that South Maitland Railways Pty Ltd v Satellite Centres Australia Pty Ltd [2009] NSWSC 716 at [17] muddies the waters a little by stating, ‘[t]o defeat a title by dispossessing a former owner, acts must be done which are inconsistent with the enjoyment of the land for the purposes for which the owner intended to use it’. 324. Woodward v  Wesley Hazell Pty Ltd (1994) ANZ ConvR 624 at  627. See  also D Skapinker, ‘Adverse Possession’ [1994] Law Society Journal 32. 325. South Maitland Railways Pty Ltd v Satellite Centres Australia Pty Ltd [2009] NSWSC 716 at [17].

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Co-ownership and adverse possession 5.120  Where a property is co-owned, the question may arise as to whether one co-owner may succeed in an adverse possession claim against another co-owner or owners. Given that, at common law, all co-owners have the right to use and possess the whole of the property, the starting point is that it is not possible to bring a successful adverse possession claim against other co-owners. 5.121  However, s 38(5) of the Limitation Act overturns that presumption, deeming the possession of a co-owner who takes possession of more than his or her own share (not for the benefit of the other co-owners) as possession that is adverse to the other co-owner(s). In such circumstances, the co-owners who are out of possession must bring their action for recovery of possession within the limitation period if they are not to have their rights extinguished. Much turns on whether possession by one co-owner of ‘more than his or her share’ is regarded as being for the benefit of all the co-owners or not.326 5.122  Re Franklin, a Victorian case, considered the issue of adverse possession in the context of co-ownership.327 In that case, a man transferred property to himself and his sister as joint tenants. Although the two were registered as joint tenants, the man dealt with the property as though he were the only registered proprietor. He paid the outgoings and mortgaged the property for the purposes of his business. His sister did not ever enter possession either as a resident or a visitor.After the man died, his son brought an application for a declaration that he, the son, as administrator of the estate, had acquired title to the joint tenancy by way of adverse possession. Hence, the court was charged with deciding whether a donor of a co-ownership interest in land could regain title to the donated land, by way of an adverse possession claim against his or her co-owner. Kaye J found that the sister’s interest had been extinguished by her brother, exercising sole rights of possession for the relevant period. This decision was largely based on the application of s 14(1) of the Limitations of Actions Act 1958 (Vic), which, although considerably lengthier than the equivalent New  South  Wales provision, consistently deems a co-owner who is in possession or receipt of more than his or her share to be an adverse possessor. Although some commentators have questioned whether there was sufficient evidence of the animus possidendi to accompany factual possession in this case, the court did not exhibit any concerns in this regard.328

Acquisition by lessees 5.123  There are two main reasons why a lessee  (tenant) in possession under a lease cannot claim adverse possession against his or her lessor. They are (a) because the lessee is 326. See Webeck v Foley (1992) NSW ConvR 59, 717. 327. Re Franklin [2009] VSC 496. 328. N Skead, ‘Giveth with One Hand, Taketh Away with Possession?’ (2010) 19 Australian Property Law Journal 103 at 107. Re Franklin also raises the issue of what happens to the interest of a joint tenant on his or her death if a possessory interest exists at the same time. See Chapter 9 on joint tenancies. See earlier editions of this book for discussion of adverse possession and mortgages and adverse possession and property held on trust.

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in possession with the lessor’s permission, meaning that the possession is not adverse and/ or (b) a lessee is not able to deny the lessor’s title.329

Examples of Adverse Possession 5.124  It is well established that what will amount to possession may vary from one set of circumstances to the next. Many courts including Guggenheimer v Registrar of Titles have commented to that end.330 [See 5.86] 5.125  As what amounts to adverse possession is so heavily dependent on the circumstances, the case law at times can seem somewhat disparate and unpredictable. In order to elucidate what may amount to adverse possession, some further examples of decisions are discussed below. 5.126  In relation to some unoccupied marshy land, which was too overgrown to be easily used for agriculture and which, in fact, was a vacant building block, the court found that entering the land and engaging in recreational shooting evidenced factual possession.331 By contrast, it was held in Harnett v  Green332 that walking over unfenced bushland near Sydney once a week and warning off anyone who tried to enter the land, as well as sporadically collecting payment from those who removed timber, did not amount to evidence of factual possession. 5.127 In Tecbild Ltd v Chamberlain,333 children playing on land and tethering ponies on the land amounted to acts insufficient to establish adverse possession. Similarly, in Riley v Penttila,334 enclosing land and using it first as a tennis court and later as a garden were not considered acts that amounted to adverse possession. 5.128  Further, if the land in question is a large area, adverse possession of some paddocks might well be enough to claim adverse possession over the whole parcel of land.335 This is more particularly so if the land in question is farming land and different paddocks are used each year.336 5.129  However, on other occasions the reverse has been held. Some and not all the land has been the subject of a successful adverse possession claim. In Quach v Marrickville Municipal Council,337 the plaintiffs owned land, a small section of which was acquired by the local council for use as a drainage reserve (pursuant to s 398 of the Local Government 329. Cuthbertson v Irving (1859) 4 H & N 742; 157 ER at 754 (H & N), at 1039 (ER); Lee v Ferno Holdings Pty Ltd (1993) 33 NSWLR 404; National Australia Bank Ltd v Golden Sea Dragon (Hobart) Pty Ltd (1992) 4 Tas R 250 at 253; Bruton v London & Quadrant Housing Trust [2000] 1 AC 406 (HL). 330. Guggenheimer v Registrar of Titles [2002] VSC 124 at [4]. 331. Red House Farms (Thorndon) Ltd v Catchpole [1977] 244 EG 295; 121 Sol J 136. 332. Harnett v Green (No 2) (1883) 4 LR (NSW) 292 at 300. 333. Tecbild Ltd v Chamberlain (1969) 20 P & CR 633. 334. Riley v Penttila [1974] VR 547. 335. Staughton v Brown (1875) 1 VLR (L) 150 at 163. 336. Higgs v Nassauvian Ltd [1975] AC 464. 337. Quach v Marrickville Municipal Council (No 2) (1990) 22 NSWLR 55.

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Act 1919 (NSW)).The plaintiffs continued to use the land for 34 years without the council claiming it. Young J ultimately found that the drainage reserve land had been adversely possessed by the plaintiffs and that, where there is a retained use of a specifically defined part of the premises, the adverse possessor need not prove that his or her acts are directly inconsistent with the acts of the true owner. He also found that the council retained a right similar to an easement that allowed it to keep its pipes in the ground.The facts of this case also demonstrate how an adverse possessor and a documentary owner cannot both be in possession of the land at the same time.338 Possession must be single and exclusive339 and, where the adverse possessor cannot prove this, the documentary titleholder will be assumed to be the single and exclusive possessor.340 5.130  The issue of how much land must be adversely possessed was discussed again by Tamberlin JA in South Maitland Railways Pty Ltd v Satellite Centres Australia Pty Ltd.341 His Honour stated that: … [it] is not necessary for an owner to show that physical use has been made of every section of the land and acts of possession done on parts of a parcel of land may be evidence of possession of the whole: see Higgs v Nassauvian Ltd [1975] AC 464 at 474. It is sometimes difficult to arrive at  a single description adequate to cover all aspects of the use of land. Often there may exist a dominant use with other subsidiary uses which are less intensive or equivocal.342

5.131  Bearing in mind the contextual variables discussed in Lord Advocate v Lord Lovat,343 and other cases, the following situations and acts may (but will not necessarily) amount to evidence of possession: • • • •

building on the property;344 occupying the property by residing on it;345 paying rates and taxes;346 fencing the property;347

338. In Re Riley and the Real Property Act (1964) 82 WN (Pt 1) (NSW) 373 at 380, McLelland CJ stated that ‘the possession relied upon to establish adverse possession must be actual open, manifest and exclusive and must be continuous for a full period of 20 years’ (20 years was then the relevant period). See again Mulcahy v Curramore Ltd [1974] 2 NSWLR 464 at 475. 339. This requirement is affirmed in JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419. 340. M Dockray, ‘Adverse Possession and Intention II’ [1982] Conveyancing Reporter and Property Lawyer 345 at 346. See also Quach v Marrickville Municipal Council (No 2) (1990) 22 NSWLR 55 at 66–9 for a discussion of factual possession. 341. South Maitland Railways Pty Ltd v Satellite Centres Australia Pty Ltd [2009] NSWSC 716. 342. South Maitland Railways Pty Ltd v Satellite Centres Australia Pty Ltd [2009] NSWSC 716 at [20]. 343. Lord Advocate v Lord Lovat (1880) 5 App Cas 273 at 273. 344. Mulcahy v Curramore Ltd [1974] 2 NSWLR 464 at 475. 345. Mulcahy v Curramore Ltd [1974] 2 NSWLR 464 at 475. 346. Newington v Windeyer (1985) 3 NSWLR 555 at 564; Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 at 475; Kirby v Cowderoy [1912] AC 599 at 603. 347. Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 at 475; Harnett v Green (No 2) (1883) 4 LR (NSW) 292; 5 ALT 61.

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maintaining trees and gardens;348 blocking access so others cannot use the land;349 allowing cattle to agist (graze for a fee) on the land;350 and bounding premises with a retaining wall along with maintaining garden beds, cleaning the disputed land and maintaining signage spelling out that the disputed land was for a particular purpose (such as a fast-food drive-thru).351

5.132  Courts have found a lack of intention to possess in the following circumstances: (a) fencing a garden with the intention of excluding everyone except the documentary owner;352 (b) fencing off part of a communal park for use as a tennis court and garden, but not excluding others who were permitted to use the land along with the possessor;353 and using a laneway as access to the possessor’s own property, but also permitting others to use it and requesting that the council surface it.354 5.133  In all the cases where the possessor is seeking to establish that his or her possession is adverse, the onus lies on the possessor, and the standard of proof is the civil onus;355 that is, the possessor must demonstrate that on the balance of probabilities his or her possession was adverse.356

Summary of requirements for factual possession and the animus possidendi 5.134  A crisp judicial summary of the law on both factual possession and the animus possidendi was offered by Tamberlin AJ in Bridges v Bridges.357 He summarised the law as follows (emphasis added): (i) For a person to acquire possessory title he or she must be shown to have had both factual possession and a requisite intention to possess the land. (ii) Factual possession signifies an appropriate degree of physical control and it must be single and exclusive possession and this is a question of fact dependent on particular circumstances such as the nature of the land and the manner in which such land is commonly used or enjoyed. There is no universally applicable principle to resolve this question. (iii) The intent to possess is that of the claimant to title by possession and involves an intention in relation to the whole world, including the owner with the paper title. 348. Newington v Windeyer (1985) 3 NSWLR 555 at 564. 349. Newington v Windeyer (1985) 3 NSWLR 555 at 564. 350. Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 at 475. Further examples are available in D Elvin and J Karas, Unlawful Interference with Land, Sweet & Maxwell, 2nd ed, London, 2002. 351. Hungry Jack’s Pty Ltd v The Trust Company (Australia) Ltd [No 2] [2020] WASC 427; The Trust Company (Australia) Ltd v Hungry Jack’s Pty Ltd [2021] WASCA 29. 352. George Wimpey & Co Ltd v Sohn [1967] Ch 487; 353. Riley v Penttila [1974] VR 547 at 560–68. 354. Weber v Ankin (2008) 13 BPR 25,231 at [103]–[104]. 355. Wogama Pty Ltd v Harris [1969] 1 NSWR 245; (1968) 89 WN (Pt 2) (NSW) 62. 356. Cawthorne v Thomas (1993) 6 BPR 13,840. 357. Bridges v Bridges [2010] NSWSC 1287 at [14].

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(iv) There must be clear and affirmative evidence that the claimant has acquired possession. Equivocal acts will normally not suffice. (v) The acts must be indicative of the requisite intention to possess. (vi) The concept of adverse possession in the Act is to possession by a person in whose favour time can run and not to the nature of the possession. The question is whether the claimant adverse possessor has dispossessed the paper owner by having possession without the consent of the owner. (vii) The intention required by the law is not an intention to own or even an intention to acquire ownership of the land, but an intention to possess it. The claimant, although in adverse possession, need not subjectively believe that he or she is the owner of the land. (viii) A statement of intention by a claimant adverse possessor must be treated cautiously as it may be self-serving, but it may be relevant with other evidence to support the inference of an intention to possess. (ix) Use falling short of possession will not suffice. For example, a use of land may amount to enjoyment of a special benefit of the land by casual, cursory or occasional acts of trespass and this may not suffice to establish factual possession nor demonstrate the requisite intention. (x) There is no requirement that the use to which the land is put by the claimant adverse possessor must be inconsistent with the paper owner’s present or future use of the land.

Abandonment 5.135  This section focuses on ‘ordinary’ abandonment. If an adverse possessor abandons the land, time ceases to run against the documentary owner.358 Vacation of the land must be complete. Simply not using the land does not automatically equate with abandonment. Instead, each case must be considered on its facts. In regard to farmland, for example, as noted above, lack of use will not amount to abandonment if the land was rendered unusable because of seasonal change, such as drought.359 Where land is not occupied because some tenants of the adverse possessor have left and others have not yet entered, there will be no abandonment.360 5.136  If the land is abandoned by the adverse possessor, the true owner is free to recover the land as though there had never been any adverse possession. In Mulcahy v Curramore, the court stated that abandonment leaves ‘no cloud on the true owner’s title’.361 If there is an intervening period of abandonment between two periods of adverse possession, the two periods of adverse possession cannot be added together, because the first period has ceased to count for all adverse possession purposes.362 If another party takes adverse

358. See Limitation Act 1969 (NSW) s 38(3). 359. Nicholas v Andrew (1920) 20 SR (NSW) 178 at 184. 360. Grave v Wharton (1879) 5 VLR 97. 361. Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 at 476. 362. As Bowen CJ stated in Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 at 476, ‘Possession by successive trespassers must be continuous’.

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possession after the first adverse possessor’s abandonment, the earlier adverse possessor has no right of action (against the second) based on his or her earlier possessory title, because he or she forfeited his or her inchoate possessory title.363 5.137  If the adverse possessor abandons after the statutory period has been satisfied, it would seem the adverse possessor does not simply lose his or her rights according to the law of abandonment.364 Indeed, pursuant to the reasoning in Allen v  Roughley and Asher v Whitlock,365 the adverse possessor by then has best title to the land and that title is enforceable against all the world whether or not his or her possession continues. The adverse possessor does not acquire the rights of the documentary titleholder; rather he or she merely bars the latter’s title. Such a view366 is expressed in Fairweather v St Marylebone Property Co Ltd,367 where it is said that the adverse possessor: … 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.

This seeming anomaly can occur because the principle of relativity of titles is based on the idea that there can be more than one fee simple estate in the same land.368

Adding Consecutive Periods of Adverse Possession Together 5.138  As noted above, in order to statute bar the true owner’s title there must be an uninterrupted period of adverse possession equal to the statutory period.369 As also observed above some acts such as an acknowledgment of the true owner’s title will cause adverse possession to cease altogether and, consequently, the statutory requirement to bar the title will not be met by a continuous period of adverse possession.370 However, separate consecutive periods of adverse possession that are independently less than the statutory period may be added together in order to satisfy the statutory period.371 What will matter in terms of accumulating time is whether or not there is an uninterrupted, continuous period of adverse possession. If each consecutive adverse possessor takes through the previous adverse possessor in the chain, then the party in adverse possession at the date the limitation period is satisfied 363. See  Allen v  Roughley (1955) 94 CLR 98; Holdsworth, A History of English Law, note 53 above, Vol 2, pp 57–81. 364. Perry v Clissold [1907] AC 73; Allen v Roughley (1955) 94 CLR 98; Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464. See also Ferguson v Registrar of Titles [1919] VLR 509; Kirk v Sutherland [1949] VLR 3. 365. Allen v Roughley (1955) 94 CLR 98; Asher v Whitlock (1865) LR1QB 1. 366. See 5.50. 367. Fairweather v St Marylebone Property Co Ltd [1963] AC 510 at 535. 368. The position in relation to Torrens is slightly different. 369. See 5.132–5.133. 370. P Butt, ‘Adverse Possession: Stopping Time Running’ (2001) 75 Australian Law Journal 727. 371. Mulcahy v  Curramore Pty Ltd [1974] 2 NSWLR 464 at  477; Limitation Act  1969 (NSW) s  38(2); see discussion in Australian Retirement Holdings Pty Ltd v Tracey Anne Higgins in her capacity as administrator of the estate of the late Monica Mary Pritchard [2021] NSWSC 1158 para 215.

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will be able to bar the title of the documentary owner. This is because the initial adverse possessor acquired a title through his or her possession, and that title, which is good against all the world,372 may be devised, conveyed373 or voluntarily assigned. In the above circumstances, there is no need for each adverse possessor to effect a conveyance to the next possessor.374 Hence, if A, B, C, D and E comprise the chain of adverse possessors, when the statutory limitation period is satisfied, it will be adverse possessor, E, who bars the documentary owner and E who has better title than adverse possessors A, B, C and D. 5.139  If the successive adverse possessors do not hold through each other, but rather against each other, the situation is a little different. Clearly, the first adverse possessor is in possession wrongfully as against the documentary owner but, in addition, all the other adverse possessors are in possession wrongfully as against each other. Pursuant to Shaw v  Garbutt and Mulcahy v  Curramore,375 the general position is if the total of the several periods of adverse possession satisfies the statutory period, the documentary titleholder’s title will be barred.376 However, it will not be the last in the chain of adverse possessors who bars the documentary owner, but rather the first. For example, if A, B, C, D and E comprise the chain of adverse possessors, each taking his or her interest independently of one another, then it is adverse possessor A who bars the title of the documentary owner at  the expiration of the statutory period. Adverse possessor E, who is in possession at the time the statutory period expires, will have a title by virtue of his or her possession, and that title will be good against all the world — except someone with better title. In these circumstances, adverse possessors D, C, B and A all have better title. 5.140  It is worth re-iterating that, it is essential for the adverse possessors to maintain the chain of adverse possession continuously. There must be no breaks between the periods of adverse possession. If the land is at any time no longer held adversely, the clock will stop ticking and the benefit of all accumulated time will be lost.377 Time will begin to accrue again from the point where the land is once again possessed, without the documentary owner’s consent, by someone in whose favour the limitation statute can run.378

372. Asher v Whitlock (1865) LR1QB 1 at 5 and 6. See also Perry v Clissold [1907] AC 73. 373. Allen v Roughley (1955) 94 CLR 98 at 118. 374. Mulcahy v Curramore Pty Ltd [1974] 1 NSWLR 464 at 471; Shelmerdine v Ringen Pty Ltd [1993] 1 VR 315; Cawthorne v Thomas (1993) 6 BPR 13,840; Roy v Lagona [2010] VSC 250. In regard to Crown land, see s 27(1) of the Limitation Act.Where land is held adversely against the Crown, Butt argues that it would seem the Crown Suits Act 1769 (UK), known as the Nullum Tempus Act, requires each adverse possessor in the chain to take by virtue of a conveyance or by inheritance: Butt, Land Law, note 60 above, p 832. 375. Shaw v Garbutt (1996) 7 BPR 14,816; Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 at 476. See also Limitation Act 1969 (NSW) s 38(2). 376. Limitation Act 1969 (NSW) s 38(2). 377. See Limitation Act 1969 (NSW) s 38(3). 378. Trustees, Executors and Agency Co Ltd v Short (1888) 13 App Cas 793; Limitation Act 1969 (NSW) s 38(3).

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Sometimes it is the case that although the land remains in continuous adverse possession for the statutory period, the successive adverse possessor neither takes through nor against the previous adverse possessor. Instead, one or more of the successive, independent adverse possessors abandons possession as against the succeeding adverse possessor. While this scenario clearly involves abandonment, it is not abandonment in the regular sense. This type of abandonment is known as qualified or modified abandonment and it does not cause the cancellation of all benefits. Under qualified or modified abandonment, periods of continuous, independent adverse possession may still be accumulated so as to satisfy the limitation period. The clock does not stop ticking. Qualified or modified abandonment has implications for who will be entitled to possession when the limitation period is satisfied. Assume that there is a chain of adverse possessors A, B, C, D and E, and adverse possessor E is in possession when the limitation period is satisfied. If A abandoned possession against B, then should A bring proceedings to recover possession against E, E will be able to defeat A’s claim.379 E may also be able to defeat claims by B, C and D if they each had taken land abandoned by the preceding adverse possessor. Accordingly, it is important to ascertain the circumstances under which each adverse possessor took possession.

How Can the Documentary Owner Recover Possession? 5.141  If the documentary owner wishes to prevent his or her title from being statutebarred, he or she must re-assert his or her title before the limitation period has expired. In other words, if the documentary owner is to recover possession, time will need to cease accruing against him or her before the limitation period has expired. The recovery of possession may be achieved by two methods: (1) by the documentary owner bringing an action to recover the land; or (2) by way of a physical re-entry onto the land. 5.142  If a documentary owner commences court proceedings before the limitation period is satisfied, the adverse possession clock stops ticking. The commencement of proceedings is unequivocal evidence of an assertion of rights.380 Therefore, practitioners often resort to the aphorism ‘litigate first, negotiate later’ when speaking of effective means to assert title.381 5.143  In Australia, the issue and service of a summons for possession, along with an intention to obtain an order for possession, would appear to be sufficient to amount to the retaking of possession by court proceedings.382 Further, it seems that possession will still be 379. Mulcahy v Curramore [1974] 2 NSWLR 464. For an example, see Site Developments Ltd v Cuthbury Ltd [2011] Ch 226 at [173]–[176]. 380. See Symes v Pitt [1952] VLR 412 at 430; Simpson v North West County District Council (1978) 4 BPR 9277. 381. This aphorism was also employed in Symes v Pitt [1952] VLR 412 at 429. 382. See Shaw v Garbutt (1996) 7 BPR 14,816 at 14,825. Should the documentary titleholder later change his or her mind and no longer have an intention to obtain an order for possession or alternatively if the summons is dismissed, it will not matter. Recovery of possession by virtue of court proceedings will still have taken place. Should the order be dismissed and the adverse possessor remains in possession, the adverse possession clock will start ticking afresh from the date the proceedings are dismissed. English

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re-taken even if the intention later changes or if the summons is dismissed. Time will start running again from the date the proceedings are dismissed.383 5.144  Alternatively, the documentary owner may make a peaceable, but effective physical entry onto the land.This is often achieved by turning out the possessor,384 but acts such as removing fences (that were installed by the adverse possessor) have been held to be sufficient in some circumstances.385 A mere formal entry will not be treated as the assertion of a better right.386 The aim of any assertion of rights is to demonstrate a retaking of possession,387 and this cannot be achieved by mere paper dealings such as the granting of a lease (without the tenant entering into actual possession)388 or the granting of a mortgage over the land.389 Nor can it be achieved by mere oral protests.390 What constitutes the re-taking of possession is dependent on the acts undertaken and the nature of the land on which they are undertaken. It will not matter how little time the assertion of rights is maintained.391 As long as it took place at all, it will be sufficient to prevent time accumulating in satisfaction of the limitation period.392

To what rights does adverse possession give rise? 5.145  While the land is adversely possessed, but before the statutory period has elapsed, the adverse possessor does not hold best title. The adverse possessor’s interest is, at  this point, a possessory one and as such is enforceable against all the world except the true owner. After the statutory period has expired and the true owner (the documentary owner) is unable to assert his or her title, the adverse possessor still retains a possessory title, but it takes on the characteristics of a proprietary title, being enforceable against the whole world including the true owner (although for Torrens title land there are additional requirements before this is so).393 On the expiration of the statutory period, the adverse possessor acquires a fee simple estate or a life estate, for example, of his or her own and the documentary owner’s title is extinguished by way of s 65(1) of the Limitation courts have attempted to prevent a documentary owner simply using the issuance of a summons to stop the clock every 12 years, by requiring that proceedings be pursued. See Markfield Investments Ltd v Evans [2001] 1 WLR 131. See Butt, Land Law, note 60 above, p 912. 383. Shaw v Garbutt (1996) 7 BPR 14,816 at 14,825 citing McKinnon v Portelli (1959) 60 SR (NSW) 343 at 347. 384. Randall v Stevens (1853) 2 El & Bl 641 at 652; 118 ER 908 at 911–12. 385. Worssam v Vandenbrande (1858) 17 WR 53. 386. Limitation Act 1969 (NSW) s 39. 387. Symes v Pitt [1952] VLR 412. 388. Simpson v North West County District Council (1978) 4 BPR 9277 at 9293–4. 389. O’Neil v Hart [1905] VLR 107. 390. Mount Carmel Investments Ltd v Peter Thurlow Ltd [1988] 1 WLR 1078; Cooke v Dunn (1998) 9 BPR 16,489 at 16,499. 391. Randall v Stevens (1853) 2 El & Bl 641; 118 ER 908. 392. Worssam v Vandenbrande (1858) 17 WR 53; Scanlon v Campbell (1991) 11 SR (NSW) 239; Robertson v Butler [1915] VLR 31 at 37. 393. Note that under the Real Property Act 1900 NSW there are additional requirements. An adverse possessor will need to make a possessory application. See 5.148.

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Act. No (statutory) conveyance of the title from the documentary owner to the adverse possessor takes place, but the adverse possessor’s title is no longer subject to the existence of a better, enforceable title belonging to the documentary owner.394 5.146  By characterising adverse possession as an act that extinguishes rather than creates rights, it becomes easier to understand the enforceability of the rights of third parties over the land.395 For example, if a third party holds an easement over land, and that land is subject to a successful adverse possession claim, the easement will remain unaffected by the success of the adverse possession claim.396 This is so because only the right of the true owner to bring an action in regard to land has been barred, and the definition of ‘land’ in the Limitation Act does not extend to incorporeal hereditaments.397 Further, where two or more people together acquire a possessory title, they do so as joints tenants.398

Possessory Title and Torrens Land 5.147  The Torrens system of land titling has at its heart the paramountcy of the Register. Hence, the recognition of rights in land that are not recorded in the Register would appear, at  first blush, to run counter to the objectives of the system. It was perhaps a desire to maintain the Register as an accurate account of interests held that precluded the holding of  Torrens land by virtue of adverse possession until 1979 when the Real Property Act 1900 was amended.399 However, as explained in Chapter 8, some unregistered interests are (and have always been) recognised by the Torrens system. Before proceeding, it is useful to note two things in relation to Torrens title and adverse possession.The first, as Australian Retirement Holdings v Tracey Anne Higgins, citing McHugh J in Newington v Windeyer affirmed, is that the common law principles of adverse possession apply to Torrens land.400 The second is that it has always been possible and continues

394. See Tichborne v Weir (1892) 67 LT 735 at 737; Fairweather v St Marylebone Property Co Ltd [1963] AC 510 at 535. 395. A leaseholder is an example of such a third party. For an example of a Land and Property Information (LPI) primary application notice, see Wentworth Courier, 8 March, 2017, p 152. This advertisement pertains to the bringing of old system title land in Woollahra, Sydney, under the Torrens system. The land was also subject to an adverse possession claim. It is an extremely rare type of advertisement. 396. See Quach v Marrickville Municipal Council (No 2) (1990) 22 NSWLR 55. 397. Limitation Act 1969 (NSW) s 11(1). The definition of ‘land’ under the Act excludes easements. 398. Ward v Ward (1871) LR 6 Ch App 789 at 791; JA Pye (Oxford) Ltd v Graham [2003] AC 419 at 445 per Lord Hope. 399. It has always been possible to hold Torrens title land by virtue of long-continued possession, rather than registration, but that right of possession was, until 1979, not able to be enforced against the registered proprietor. It could only be enforced against others. Today it can still be enforced against others and may, in the correct (and limited) circumstances, be enforced against the registered proprietor. For a discussion of adverse possession and Torrens title in other states, see T Hunter, ‘Uniform Torrens Title Legislation — Is There a Will and a Way?’ (2010) 18 Australian Property law Journal 201 at 213–214. 400. Australian Retirement Holdings Pty Ltd v Tracey Anne Higgins in her capacity as administrator of the estate of the late Monica Mary Pritchard [2021] NSWSC 1158 at para 218.

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to be the case, that a person may have a right to possession of Torrens title land that is enforceable against everyone except the registered proprietor (ie, the documentary owner). Returning to the Torrens provisions, it may be seen that after the 1979 amendments were passed, it became possible for an adverse possessor to make a possessory application of Torrens land under Pt 6A of the Real Property Act 1900. 5.148  The statutory amendments allow a party who has held Torrens land by virtue of possession for a period of time equal to or greater than the statutory period contained in the Limitation Act 1969 and whose possessory interest would have extinguished the registered proprietor’s interest, to lodge a possessory application.401 However, if the registered proprietor’s land is the subject of qualified or limited title, the relevant possession required to ground a possessory application must have begun after the qualified or limited folio was issued.402 Meanwhile, possession begun before the qualified or limited title was issued is protected as a subsisting interest, and the qualified or limited title will be subject to such an interest.403 The issue of a limited title or folio arose in Sidoti v Hardy with the New South Wales Court of Appeal split, on the application of s 45C(2).404 A possessory application pursuant to s  45D(1) of the Real Property Act 1900 is a request for the Registrar-General to record the adverse possessor, as the proprietor, in the Torrens Register. Although the provisions under Pt 6A of the Act are designed to provide an administrative mechanism for recognising title by adverse possession, it would seem that the court could still play a role where there is a real dispute between the adverse possessor and the documentary owner.405 If the possessory application is granted by the Registrar-General, the Register is altered and the adverse possessor’s name will appear on the Register as the proprietor, but, as we know, his or her title will not have been derived through the documentary owner — it 401. Note that the ability to bring an adverse possession claim in relation to Torrens title land varies markedly across Australian jurisdictions. In Tasmania, for example, it is possible to claim adverse possession of Torrens title land but not if the registered proprietor has paid rates during the relevant period of adverse possession. See s 138U of the Land Titles Act 1980 (Tas). See Quarmby v Keating [2008] TASSC 71. 402. See  Chapter  8, Torrens Title. To explain, a qualified title may be issued when old system title land is being converted to Torrens land. Initially, the registered proprietor’s interest is not protected from certain interests beyond the Register. Only at a later point, will complete indefeasibility be granted, providing for absolute protection. Sidoti v  Hardy (2021) NSWCA 105 involved land subject to limited Torrens titles. Limited titles are granted if the land’s boundaries are not yet properly defined and therefore remain inconclusive. For a discussion on how slivers of land (small strips of land that are sometimes created when limited title parcels are surveyed for the purpose of creating ordinary Torrens titles) are treated under the Torrens system, see Land Registry Services, New Requirements for the Identification and Claiming of Slivers of Land, January 2021. Available at  (accessed 1 June, 2022). 403. See s 45C(2), which needs to be read in conjunction with ss 28A, 28P(1)(d) and 28T(7). Some authors argue that the operation of s  45C(2) seems to have been misunderstood in South Maitland Railways Pty Ltd v  Satellite Centres Australia Pty Ltd (2009) 14 BPR 26, 823; [2009] NSWSC 716 at [29]–[30]. See B Edgeworth, Butt’s Land Law, Thomson Reuters, Sydney, 2017, p 1117. 404. Sidoti v Hardy (2021) NSWCA 105. 405. Bartlett v Ryan (2000) 10 BPR 18,007.

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will have been derived by virtue of possession only.406 Nevertheless, it will be possession significant enough to extinguish the title of the documentary owner.407 Recording of the adverse possessor’s title will occur only after all the steps pursuant to ss 45C–45E of the Real Property Act 1900 have been followed. By altering the Register, in response to the possessory application, the Register retains its status as a conclusive record.408

Whole parcels of land 5.149  Unlike land under old system title, the general position in relation to Torrens land is that possessory applications under Pt 6A of the Real Property Act 1900 may only be made if they relate to ‘whole parcel[s] of land’.409 This position was confirmed in Seyffer v Adamson.410 Hence, small areas that do not amount to whole parcels of land cannot be the subject of such applications. However, there are exceptions. Section 45D(6) of the Real Property Act 1900 permits applications where the adverse possessor has occupied up to an ‘occupational boundary’,411 but that boundary is still within the true boundary. In those cases, the adverse possessor is able to claim the area of land up to the true boundary, even though he or she has not actually occupied all of that land.412 5.150  Another exception to ‘whole parcels’ of land being necessary for an adverse possession claim under the Torrens system relates to ‘residue lots’ such as ‘service lanes’ and ‘spite strips’.413 Most service lanes were originally designed for the collection of human bodily waste before the introduction of water-based sewerage systems. The lanes are euphemistically known as ‘night soil lanes’ or in the Australian vernacular, ‘dunny lanes’. Meanwhile, spite strips are small islands of land included by planners to prevent direct access to a road. A possessory application may be made over a service lane or spite strip if the applicant has been in possession and an application would have been possible had the land in question been a whole parcel. 406. See Real Property Act 1900 (NSW) ss 45D, 45E(1) and 45E(3).The Registrar-General should only grant a possessory application if there is not serious dispute about it. If he or she has reservations, discretion should be exercised and the application should not be granted. See Bartlett v Ryan (2000) 10 BPR 18,077 at [11]. 407. See Real Property Act 1900 (NSW) s 45C and Limitation Act 1969 (NSW) s 65. The latter overrides the former. 408. See Real Property Act 1900 (NSW) s 45C. 409. See Real Property Act 1900 (NSW) s 45B(1) and s 45D(1). 410. Seyffer v Adamson [2001] NSWSC 1132 at [51]. 411. The occupational boundary may be marked out with a fence, a wall or by a river, for example. 412. See Real Property Act 1900 (NSW) s 45D(6). Refina Pty Ltd v Binnie [2009] NSWSC 914 at [32]. Upheld on appeal in Refina Pty Ltd v Binnie (2010) 15 BPR 28,633; [2010] NSWCA 192. On the facts of this case the ‘occupational boundary’ was beyond the true boundary. To satisfy the ‘occupational boundary’ requirements, the occupational boundary needed to be inside the true boundary, not beyond it. For a diagrammatic representation of how this works, see  RA Woodman, K Nettle, F Ticehurst, P  Butt and L Hughes, Torrens System in NSW, Lawbook Co, loose-leaf, ‘Possessory Title to Land Under the Act, Occupational Boundary’, [45D.60]. 413. Applications may be made in relation to ‘residue lots’ pursuant to s 45D(2A), (2B) and (5) of the Real Property Act. Only ‘dunny lanes’ that are the subject of private (rather than public) property may be claimed as residue lots by way of adverse possession. Weber v Ankin (2008) 13 BPR 25,231 at [94] noted that ‘the amendments did not affect public lanes’.

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Importantly, the provisions regarding service lanes do not apply to service lanes vested in councils.414 This is so, even if the council is not the registered proprietor but rather has had the relevant land vested in it by way of local government, roads of other legislation. The reason the residue lot provisions do not extend to council service lanes where the council holds the land by way of other legislation is because s 45D(1) of the Real Property Act 1900 only applies to a person, who is in possession of land ‘under the provisions of this Act’. Land vested in the council under another Act is clearly not vested in the council under the Real Property Act 1900.415 5.151  Additionally, a possessory application cannot, pursuant to s 45D(3) of the Real Property Act, be made in regard to land registered in the name of: (a) Her Majesty or a Minister of the Crown; (b) a statutory body representing the Crown; or (c) certain corporations. Service lanes as the subject of adverse possession claims were discussed in Sidoti v Hardy, a case which the judge at first instance (Kunc J) described as one ‘concern[ing] two very Australian phenomena: the “dunny” and dedication to home improvement’.416 His Honour went on to explain that at issue was ‘the ownership of a 3.35 square metre remnant of a “dunny lane” in Redfern, a suburb of historic significance for First Australians and in the development of Sydney as a city’.417 The dunny lane in question ran across the back of the documentary owner’s land (ie, across the land eventually owned by Sidoti) and ‘extend[ed] the length of the block between two streets’.418 Only a portion of the dunny lane formed part of Sidoti’s title.419 On the other side of the dunny lane (and running the full length of the lane) was a lot owned by Hardy, the adverse possessor. Hardy began expanding his back garden into the Sidoti portion of the dunny lane by taking down the fence between his (Hardy’s) land and the dunny lane. Later (after becoming the documentary owner), Sidoti rebuilt the fence along his boundary with Hardy’s land, causing Hardy to be denied access to the portion of the dunny lane at the rear of the Sidoti land. This meant that Hardy no longer had access to the part of the dunny lane that he had improved by way of surfacing and paving. In response, Hardy commenced proceedings, claiming that he had been in adverse possession for 12  years and accordingly had acquired a fee simple estate under general law principles. (Both Hardy’s land and the Sidoti land were old system title lots that were eventually converted to qualified Torrens title.) At first instance, Hardy argued and the court accepted, that Sidoti could not recover possession based on his status as the registered proprietor, because even before he became the registered proprietor, the documentary title had been statute-barred. 414. See Real Property Act 1900 (NSW) s 45D(3)(d). 415. Weber v Ankin (2008) 13BPR 25,231 at [92]. See also B Edgeworth, Butt’s Land Law, Thomson Reuters, Sydney, 2017, p 1118. 416. Sidoti v Hardy [2021] NSWCA 105. 417. Hardy v Sidoti [2020] NSWSC 1057. NB the appeal from this case was dismissed. 418. There were in fact two defendants. Sidoti v Hardy [2021] NSWCA 105 at [para 1] per Basten J. 419. Note a diagrammatic representation of the relevant land is appended to the first instance judgment.

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On appeal, one of the key matters for consideration was whether s 45D of the Real Property Act 1900 was applicable. Basten JA found that none of the subsections under s  45D that allowed for the acquisition of title were applicable. He pointed out that the Hardy claim did not relate to possession after the land was brought under the Real Property Act  1900 (NSW) and that is a requirement of s  45D(1). Nor was the claim for a whole parcel of land as s  45D(2) contemplates. Further, s  45D(2) requires compliance with s 45D(1)(b)-(c) and there was no such compliance. He also observed that s 45D(2)(b) assumes there is an ‘occupational boundary’ as defined by s 45D(6)(a), but the back fence on Sidoti’s land did not satisfy that requirement. The relevant portion of the dunny lane was not a residue lot either, so s 45D(2A) was inapplicable. Finally, the facts did not allow s 45D(4) to be made out and hence no application could be made to the Registrar to obtain title by registration pursuant to that section.420 Brereton JA similarly found that s 45D(1) was not available because the relevant land was not a whole parcel. Section 45D(2) was also not available because the portion of the whole parcel in dispute lay between the occupational boundary and the true boundary and no other parts of s 45D applied.421 Meanwhile, Simpson AJA agreed with both Basten JA and Brereton JA, finding that s 45D was not applicable as the claim was not for a whole parcel of land as s 45D(1)-(2) requires. Further, the land was not a residue lot as contemplated by s 45D(2A). It was part of a service lane but unfortunately for Hardy, it was not contained in a separate title.422 The provisions in s 45D of the Real Property Act that cover service lanes were designed to make claims of adverse possession over land comprising such lanes easier.423  The rationale for the amendments was that they permitted the better exploitation of the land, by assisting the land to be used for more socially beneficial purposes.424 In reality, many of the lanes were too narrow for vehicular access and, if they had not been possessed by adjoining owners, they had reportedly ‘fallen into disrepair’ or had ‘become a haven for illegal drug use’.425 Nevertheless, the amendments raise several policy issues, including whether adjoining owners should be the beneficiaries of windfalls, particularly in areas where land is very valuable.426 5.152  That parties choose to litigate adverse possession claims over small areas of land when sensible negotiations could resolve matters more successfully ‘at a great saving of [the parties’] money, time and attention, and with a better contribution to peace and 420. Sidoti v Hardy [2021] NSWCA 105 at [25]-[30] per Basten JA. Registration had taken place without fraud and for valuable consideration. 421. Sidoti v Hardy [2021] NSWCA 105 at [90] per Brereton JA. 422. Sidoti v Hardy [2021] NSWCA 105 at [196]-[199] per Simpson AJA. 423. See Real Property Act 1900 (NSW) s 45D(2A), (2B). 424. In some areas, local residents complained that unused night soil lanes became places for drug abuse, drinking and violence. 425. See New South Wales, Parliamentary Debates, Legislative Assembly, Second Reading Speech, Land Titles Legislation Amendment Bill 2001 (NSW), 19 September 2001 (Donald Page, Member for Ballina). 426. In Sydney, for example, Paddington and Glebe are suburbs where many ‘night soil’ lanes exist. Land in those suburbs is highly valued.

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order than [the court] can make’, led Bryson J in Seyffer v Adamson to comment, ‘[a]s in Shakespeare’s Hamlet Act IV Scene 4, “We go to gain a little patch of ground That hath in it no profit but the name”’.427 Yet, His Honour concluded that as the courts, like the Ritz Hotel, are open to all, he had to both hear and decide such matters.

Caveats and possessory title 5.153  If a party claims a legal or equitable interest in Torrens land that is subject, or could be subject, to a possessory application, a caveat may be lodged pursuant to s 74F(3) of the Real Property Act.The provisions of Pt 7A of that Act which govern caveats against dealings are generally applicable to caveats against possessory applications.Those provisions cover matters including formal validity, lapse, withdrawal and compensation for wrongful lodgment of a caveat.

Adding consecutive periods of adverse possession together under Torrens 5.154  As is the case with old system title land, successive periods of adverse possession may be added together to total the limitation period under Torrens title land.428 Similarly, there can no gaps or breaks in those periods of possession if they are to count cumulatively against the true owner. The adverse possession must be uninterrupted and continuous.

Crown grants or leases, Torrens and adverse possession 5.155  We observed above that pursuant to s  45D(3) possessory applications are not possible for land registered in the name of various Crown or Crown-related entities. Further, whereas under old system title, a Crown grant or lease has the effect of stopping time from running, s 45D(8) and (9) of the Real Property Act do not operate to stop time running against the documentary owner. Hence, if, under the Torrens system, the Crown grants a folio over land that is the subject of adverse possession, time continues to run against the documentary owner, despite the granting of that folio. However, if land subject to adverse possession is sold, the limitation period starts running anew against the purchaser, unless the purchaser has been guilty of fraud.429

What kind of interest does an adverse possessor have before a possessory application is granted? 5.156  The answer to this question is open to debate. It is arguable that an adverse possessor of Torrens title land, who has been in adverse possession (factual possession with an intention to possess) for the full limitation period, is in the same position as other 427. Seyffer v Adamson [2001] NSWSC 1132 at [1]. 428. Public Trustee v Bellotti (1986) 4 BPR 9196. 429. Webeck v Foley (1992) 5 BPR 11,694; Real Property Act 1900 (NSW) s 45D(4). It is possible, however, for the adverse possessor to register before the expiration of the statutory period if he or she registers subject to the interest of the registered proprietor. It would seem that this facility would be available only to an adverse possessor registering an interest less than that held by the registered proprietor.

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unregistered interest holders under Torrens.430 Alternatively, it may be that he or she is in no better a position than a ‘mere trespasser’.431 Meanwhile, the adverse possessor who has not yet satisfied the limitation period is in a more tenuous position. Section 45C of the Real Property Act 1900 (NSW) suggests that such a possessor has no interest at all because an interest is only obtainable by way of Pt 6A of the Act and the adverse possessor cannot meet the requirements of that Part. At best, the adverse possessor may, like the squatter in a similar position under old system title, have an inchoate interest.432

Preserving the integrity of the Torrens Register 5.157  As noted above, the Real Property Act 1900 (NSW) aims to preserve the sanctity of the Register in relation to adverse possession claims over Torrens title land. It does this by requiring that a possessory application is lodged — an application that, in turn, must be accepted before the Register can be altered to reflect the fact that the adverse possessor has barred the title of the documentary owner. As a result, in New  South  Wales it is not possible to bar the documentary owner simply by being in possession for the relevant statutory period, with the relevant intention, and without the owner’s consent. Until the possessory application is granted and the Register altered, the Register reflects the title of the documentary owner (see 5.145). In that sense, the Register remains conclusive until such time as it is altered. Although there may be other kinds of rights that are not recorded on the Register, such as in personam rights or equitable interests under a trust, for example, a person dealing with the Register can be comfortable in the knowledge that there are not unrecorded possessory rights in existence that have extinguished the registered proprietor’s  interest. Section  45C(1) of the Real Property Act 1900 makes this plain by providing that, except to the extent that the limitations statutes are taken into account in relation to Pt 6A, it is not possible to acquire title to Torrens title land by way of adverse possession. It is also not possible for limitations statutes to extinguish the registered proprietor (ie, the documentary title owner’s) title. In this way, the provisions of the Real Property Act  1900 (NSW) help preserve the conclusiveness of the Register.

Reform Paper dealings 5.158  In regard to the issue of the documentary titleholder retaking possession and asserting title, it is perhaps worthwhile revisiting the view that paper dealings are insufficient. If paper dealings are not relied on, the retaking of possession must be in the form of the commencement of litigation or the physical (but peaceful and effective) 430. See Refina Pty Ltd v Binnie (2010) 15 BPR 28,633; [2010] NSWCA 192 at [83] which suggests that an adverse possessor, who has been in adverse possession for the limitation period has a statutory right to be registered. 431. New South Legislative Assembly, Parliamentary Debates (28 February 1979). 432. As discussed in R Woodman and P Butt, ‘Possessory Title and the Torrens System in New South Wales’ (1980) 54 Australian Law Journal 79.

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retaking of the land. The former is expensive and the latter could often involve physical danger. Hence, permitting paper dealings as evidence of the retaking of possession might well result in a less costly and cumbersome solution. Furthermore, if one of the objectives is to demonstrate that the documentary title owner is asserting his or her own title to the extent that it overrides the possessory title in question, surely correspondence between the two is capable of proving this intention. It is suggested that the degree of intention that must be exhibited by the documentary holder and that is likely to be contained in the correspondence itself, would become highly significant in determining whether title had been confirmed or acknowledged.

Nature of the adverse possessor’s rights before a successful claim over Torrens title land 5.159  It would be useful also if the courts or the legislature provided further clarity on what type of interest the adverse possessor of Torrens land holds before a possessory application is accepted (see  5.156). As we have seen, opinions on this vary: to some, the adverse possessor is, until the Register is altered to reflect his or her interest, in no better a position in relation to the registered proprietor than a trespasser;433 while to others his or her interest is to be regarded as synonymous with the many other unregistered interests that are recognised by the Torrens system; to others still, his or her interest amounts to an inchoate title echoing the inchoate title held by an adverse possessor under old system title.434 It is suggested that clarification would be beneficial for many reasons, including determining the priority as between competing equitable interests.435

Abolition of adverse possession doctrine 5.160  Following the decisions in JA Pye (Oxford) Ltd v Graham and JA Pye (Oxford) Ltd v United Kingdom,436 the issue of whether Australia (and, in particular, New South Wales) should abolish the doctrine of adverse possession altogether became topical once more. Although, as is discussed above, the ECtHR ultimately did not find the then relevant English legislation on adverse possession to be in conflict with Art 1 of Protocol No 1 of the ECHR, concerns have been raised as to whether the doctrine of adverse possession remains justifiable in legal systems where title to land is registered. If interests in land are registered but adverse possession claims may still be made against the title of the registered 433. Words of the Minister introducing Pt 6A into the Real Property Act; cited in B Edgeworth, Butt’s Land Law, Thomson Reuters, Sydney, 2017, note 250 above, p, 1121. Reported in New  South  Wales Government, Parliamentary Debates, Legislative Assembly, 28 February 1979. See also Refina Pty Ltd v Binnie [2009] NSWSC 914 at [37]–[43]. 434. Woodman and Butt raise the idea of an inchoate title existing prior to the possessory grant. See R Woodman and P Butt, ‘Possessory Title and the Torrens System in New South Wales’ (1980) 54 Australian Law Journal 79. 435. For a more general discussion of adverse possession in the context of registered land in the English jurisdiction, see  B Bogusz, ‘Bringing Land Registration into the Twenty-First Century — The Land Registration Act 2002’ (2002) 65(4) Modern Law Review 556. 436. JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419; JA Pye (Oxford) Ltd v United Kingdom (2006) 43 EHRR 3; [2005] ECHR 921 (Application no 44302/02, Strasbourg, 15 November 2005) (ECtHR).

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proprietor, the integrity of the Register may, according to detractors, be questioned. The veracity of this claim, at least in relation to New South Wales, is considered at 5.55—5.56; 5.147. It would seem that such an objection is not well founded in that jurisdiction because the provisions of the Real Property Act 1900 successfully preserve the conclusiveness of the Register, through the requirements for a possessory application. Another argument against upholding the adverse possession doctrine relates to proportionality. That argument suggests that although the documentary titleholder has a reasonably long period (12 years) in which to neutralise the squatter’s possession, either by asserting his or her own documentary title or by commencing proceedings to recover the land, the deprivation suffered by the documentary owner that follows from a successful adverse possession claim does not strike a fair balance with any legitimate public interest being served. In other words, it is disproportionate.This is made all the more so, according to the first instance decision of Pye in the ECtHR, when loss of title is not accompanied by compensation.437 These arguments militate in favour of either abolishing the doctrine of adverse possession in relation to registered land or perhaps alternatively reframing it so as to bring it under the provisions similar to ss 88K and 89 of the Conveyancing Act 1919 (NSW), which are provisions giving the court the power to create, modify and extinguish easements.438 When Lord Bingham stated that the finding (in favour of the adverse possessor, by the House of Lords) in Pye’s case was ‘arrive[d] at with no enthusiasm’ he seemed to reflect a growing disquiet about whether the law of adverse possession still served society well.439 Such disquiet has, in part, stemmed from the view that adverse possession is simply a form of legalised theft.440 Further, some critics have noted that ‘if property is indeed a relationship of socially approved control over a valued resource, it is quite clear that, in the Britain of the 21st century, the adverse possession of land has become a form of control that is no longer socially approved’.441

437. JA Pye (Oxford) Ltd v United Kingdom (2006) 43 EHRR 3; [2005] ECHR 921 (Application no 44302/02, Strasbourg, 15 November 2005) (ECtHR). It is interesting to consider these comments in the light of the loss (without compensation) of Indigenous land to Europeans at ‘settlement’. The following jurisdictions, among others, have permitted adverse possession claims without compensation: Northern Ireland, Scotland, Ireland, Hungary, Poland, Sweden, The Netherlands, Spain, Germany and France. 438. See also W Saxe, ‘When “Comprehensive” Prescriptive Easements Overlap Adverse Possession: Shifting Theories of “Use” and “Possession”’ (2006) 33(1) Boston College Environmental Affairs Law Review 175. P Butt, ‘Property and Conveyancing’ (2004) 78 Australian Law Journal 775 notes that although the doctrines of prescriptive easements and adverse possession might seem related, they are distinct. He notes that prescription allows ‘the acquisition of rights superimposed on the rights of others’ while ‘“adverse possession” extinguishes the rights of others. The former leaves the underlying ownership of land intact; the latter extinguishes that ownership’. 439. JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 426. In Pye’s case, the adverse possessor’s claim was over land reputedly worth £10 million. 440. See  also H Charlton, ‘The Criminalisation of the Squatter’ (1993) 143 (6627) National Law Journal at 1721; D O’Leary, ‘Adverse Possession at the Dawn of the Twenty-First Century’ (2004) Irish Student Law Review 12. 441. Gray and Gray, Elements of Land Law, note 13 above, p 1116.

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5.161  Whether dissatisfaction with the law of adverse possession is also at the same level in Australia is not clear, although there is some literature on the issue.442 The Victorian criminal law case of Rosa Rossi443 is one case that focused public attention on adverse possession, in a rather negative way. Rossi was a police officer, who accessed police data bases to identify vacant properties, with a view to going into possession of such properties, installing tenants and collecting rents. She had mail for the documentary owners redirected to herself and she lied on statutory declarations to local councils and utility providers. She also visited the properties wearing her police uniform. In May 2020, Rossi pleaded guilty before a judge in the Victorian County Court to obtaining property by deception (five  charges), attempting to obtain property by deception  (one charge), unauthorised accessing of police information (one charge), and perjury (two charges); and to a related summary offence, obtaining a financial advantage for another.444 She was sentenced to four and a half years’ goal but appealed the sentence. Such cases tend to capture the public’s imagination and simultaneously serve to undermine the many positive justifications for the doctrine of adverse possession. Perhaps one argument against the view that the doctrine of adverse possession is inappropriate or outmoded in the Australian context (where registration of land title is the norm) lies in the doctrine’s history of deliberate incorporation. To explain, far from seeking to deny adverse possession a role in the Torrens system, amendments to the Real Property Act 1900 (NSW) were passed in 1979 that consciously incorporated the doctrine of adverse possession into the Torrens system, albeit initially only in relation to whole parcels of land. Expansion of the doctrine within the Torrens system followed with the amendments now contained in s 45D(2A) and (2B) (colloquially known as the ‘Dunny Lane’ amendments) of the Real Property Act  1900 (NSW). Presumably these amendments were passed because lawmakers believed that recognition of some adverse possession claims, within a system of title by registration, was beneficial. Rather than harm the registration system and its integrity, it is arguable that these amendments were thought to enhance the aims and operation of land law. That being the case, it does not so easily follow that adverse possession has no place in the New South Wales Torrens system. Nor does it follow that the Register’s integrity is undermined in relation to Torrens title land in New South Wales if, as discussed above, the Register remains conclusive in relation to the registered proprietor’s interest, until such time as a possessory application is granted.To reiterate, the mere accrual of sufficient time to statute bar the documentary owner will not, in New South Wales, alone be sufficient to extinguish the title of the documentary owner. Until such time as the possessory application is accepted, the Register remains valid as a reflection of the registered proprietor’s interest — an interest that is not extinguished by the mere accumulation of time and the satisfaction of the relevant common law requirements. 442. See P Omar, ‘Limitation and Prescription in English Law: Argument and Pressures for Reform’ (2006) 14 Australian Property Law Journal 72–89; B Edgeworth, ‘Adverse Possession, Prescription and their Reform in Australian Law’ (2007) 15 Australian Property Law Journal 1; L Griggs, ‘Possessory Titles in a System of Titles by Registration’ (1999) 21 Adelaide Law Review 157. 443. DPP v Rossi [2020] VCC 1471; decision appealed in Rossi v The Queen [2021] VSCA 296. 444. As outlined in Rossi v The Queen [2021] VSCA 296.

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5.163

5.162  Another argument against abolishing adverse possession is the role that the doctrine plays in supporting the housing needs of the homeless. Where public housing is insufficient or unavailable, and private housing out of the reach of the poor, the doctrine may be seen as a measure to reduce homelessness. Possessory title, which ultimately can be used to bar the documentary titleholder, consequently provides some security of tenure for those who otherwise would have no home.445 The favelas of Brazil, the townships of Africa and kampongs of Asia, where the doctrine of adverse possession is vividly played out, serve to highlight the underpinning moral issues about whether it is better to have land used (and possessory title upheld), particularly by those who are homeless, than it is to have land not used at all. Although, the level of poverty in Australia is not comparable with many other parts of the world — including South America, Africa and South-East Asia — increasing levels of Australian homelessness (especially among women 55 years of age and older)446 may mean that squatting becomes more prevalent and the impetus to uphold possessory title, becomes more evident. 5.163  Given that (a) such competing and strongly held views exist, and (b) that New South Wales has, unlike some other jurisdictions,447 not undertaken a comprehensive review of adverse possession law, it may be useful to subject the different positions on the doctrine to considered and comprehensive scrutiny by way of a New South Wales Law Reform Commission reference. This would allow New  South  Wales’ legislators and policymakers, as well as the wider community, to consider carefully significant issues such as the integrity of the Register, the role of human rights and adverse possession, compensation, the nature of any pre-possessory application rights and the extent of land exploitation that sustainability principles permit. 445. For an understanding of how adverse possession law serves the poor, consider the favela dwellers of Brazil or the rural dwellers in the Missiones region of Argentina. See J Gray, ‘Stories from a Favela: The Limits of Property Law’ (2005) 30(4) Alternative Law Journal 184. For further insight into international urban squatting, see R Neuwirth, Shadow Cities: A Billion Squatters, A New Urban World, Routledge, New York, 2006. 446. Parliament of Victoria, Inquiry into Homelessness in Victoria, Final Report, March 2021 (accessed 10 June 2022); Older Women’s Network, Homelessness (accessed 8  June  2022); Australian Government,Australian Institute of Health and Welfare, Homelessness and Homelessness Services, 7 December, 2021 (accessed 10 June 2022). 447. For examples of how other jurisdictions have considered reforming the area, see: Alberta Law Reform Institute, Limitations Act — Adverse Possession and Lasting Improvements, 2003; Ireland, Law Reform Commission, Title by Adverse Possession, 2002; United Kingdom Law Commission, Land Registration for the Twenty-First Century: A Conveyancing Revolution, 2001; Limitations of Actions, 2001; Queensland Law Reform Commission, Review of the Limitation of Actions 1974 (Qld), 1998; Law Reform Commissioner of Tasmania, Report on Adverse Possession and Other Possessory Claims to Land, 1995; United Kingdom Law Commission, Law Commission and Her Majesty’s Land Registry, Land Registration for the Twenty-First Century, UK Law Comm No 254, September 1998. For support for the view that the adverse possession doctrine does not undermine Torrens policy in New South Wales, see Butt, Land Law, note 60 above, p 916.

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Chapter 6

Law, Equity and Trusts Introduction 6.1  This chapter will examine the formalities necessary to create and transfer interests in property. These formalities originate in two areas of law: first, the general common law requirements for the creation and transfer of proprietary interests; and second, equity and those of its doctrines that are the more important mechanisms for the fragmentation of interests in property. The strict requirements for the creation and transfer of interests in land perform the important function of providing certainty in both commercial and non-commercial contexts. However, these requirements can also have the effect of sometimes creating injustice in the very different context of intra-family transactions — transactions that are often characterised by informality and tacit trust. The possibility of injustice is even more evident in light of modern changes in gender roles and family structures. Legislatures and, to a lesser degree, the courts have responded constructively to some of these changes over the last couple of decades, and have extensively reformed the law. This is an ongoing process, reflecting, among other things, the recognition of the LGBTI (Lesbian Gay Bisexual Transgender and Intersex) movement and marriage equality, in the landscape of contemporary Australian policy and legislative debates. It is, therefore, no longer possible to examine the common law and equitable rules regarding the creation and transfer of interests in property independently of these reforms without giving a misleading impression of their scope and application. The object of this chapter is to develop an understanding of, first, the difference between legal and equitable interests; and, second, the manner in which the fragmentation of rights into legal and equitable interests occurs. Finally, the chapter will focus on legislative reforms that substantially overreach the common law and equitable rules in the domestic context.

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Legal and Equitable Ownership Historical introduction 6.2  As we have seen, the common law developed rules to allow this fragmentation of interests over chattels.1 The common law also recognised many overlapping interests in land, in the form of tenures and estates. A particular parcel of land could have a number of persons claiming rights over it, from the Crown, to a tenant in chief, down to the freehold tenant in demesne.2 However, the common law would not enforce a fragmentation of rights over property in a case where A, a freeholder, conveyed land to B on the understanding that B would hold it for A’s, or C’s, benefit. At common law, the conveyance to B conferred a legal title on B, but the obligation undertaken by B to allow A or C the benefit of the land would not be enforceable. The common law protected rights over land (eg, by protecting seisin),3 but the person for whose benefit the arrangement was made did not have seisin. It followed that legal ownership of land could be fragmented only in the limited ways provided by the doctrine of tenures and estates. 6.3  Incentives to allow a fragmentation of rights so that land could be entrusted from one person to another for the benefit of a designated person, or persons, were plentiful. The most attractive of these incentives was the avoidance of the often onerous feudal ‘incidents’. The Crown, as the paramount lord, acquired the greatest benefits from these rights. In general, the incidents were levied on the death of the landholder.4 If land were legally held by a person who did not ‘die’, such as a number of joint tenants who arranged for a replacement on each death, and the joint tenants held for the benefit of a line of descendants, there would be no point at  which a feudal incident could arise. This was because the death of a joint tenant did not give rise to an inheritance of land: the surviving joint tenants took by right of survivorship, not by inheritance. Further, any transfer inter vivos by a small number of joint tenants to a larger group to avoid such an event would not attract incidents. The same arrangement made it possible for property holders to circumvent the prohibition on wills. From the middle of the 15th century,5 petitions were being made successfully to the Court of Chancery for the recognition of the obligations of conscience imposed on such joint tenant transferees, or ‘feoffees to uses’, in favour of the beneficiary, or ‘cestui que use’.6 In time, both the Lord Chancellor and later the court, in the exercise of its separate jurisdiction, began to compel trustees to honour their obligations. In this way, it came to be possible to talk of two interests in the land: the trustee’s or ‘legal’ interest, recognised 1. See 1.11 and 2.46. 2. See 3.8–3.19. 3. For a discussion of seisin, see Chapter 3. 4. See B Edgeworth, CJ Rossiter, MA Stone and PJ O’Connor, Sackville and Neave Australian Property Law, 11th ed, LexisNexis Butterworths, Sydney, 2021, pp 162–70. 5. JH Baker, An Introduction to Legal History, Butterworths, London, 1971, p 131. 6. The plural of this term is cestui que usent, ‘an expression’, concludes Simpson, ‘calculated to give a grammarian bad dreams’: Simpson, An Introduction to the History of Land Law, Oxford University Press, Oxford, 1961, p 164.

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by the common law; and the beneficiary’s or ‘equitable’ interest, which could be enforced only in a court of equity. In so far as the common law refused to acknowledge such fragmentation of rights over property, equity’s jurisdiction in this area was exclusive. As we shall see below, different rules govern the formalities for transferring or fragmenting legal interests, on the one hand, and equitable interests, on the other.7 The resulting loss of revenue to the Crown led to legislation to restore the status quo. The Statute of Uses 1535 deemed the beneficiary to be the legal owner, so that, when he or she died, the incidents were incurred as if there had been no trust created in the first place.The resulting financial burdens placed on landowners led them to seek a way around the legislation and so, by the middle of the 17th century, the ‘use upon a use’ appeared, such as a gift ‘to A and his heirs to the use of B and his heirs to the use of C and his heirs’. A gift of this nature was held by courts of equity to give the legal interest to B (by the operation of the statute), and C would be able to enforce the obligation imposed on B by the instrument in equity.8 The Statute of Uses was effectively circumvented, and the modern trust was successfully established. Conventional interpretations of this oscillating historical process suggest that the Court of Chancery was remedying a ‘defect’ in the common law. But, as the historian E W Ives makes clear, the process of change is better understood as part of a protracted political battle over revenue between the Crown and the wealthier landowners.9 6.4  In addition to the exclusive jurisdiction exercised by equity in relation to the trust, equity developed a concurrent jurisdiction. The essence of its concurrent jurisdiction lay in the provision of remedies that were unavailable to successful litigants in the common law courts. One example of the concurrent jurisdiction was the remedy of specific performance, where the common law’s exclusive remedy was damages for breach of contract.The effect of concurrent jurisdiction has important consequences for property law; if A can compel B to transfer a specific block of land to A in accordance with a contractual promise to do so, it is possible to say that A has a proprietary interest in the land. Accordingly, from the time that the equitable remedy of specific performance is available to A, there is a fragmentation of property rights: the proprietary right of the vendor as recognised by the common law; and the property right of the purchaser protected by the equitable remedy.10 It follows that there are two distinct jurisdictional origins of property rights: common law and equity. The relevant property rights are known as ‘legal’ and ‘equitable’ interests respectively, depending on the principles that establish them and the courts in which they were enforced. Interests in land may be created at  law (legal interests), and transferred at law; while equitable interests, or equitable property rights, can be created and transferred 7. See 6.5–6.36. 8. For a general discussion, see Baker, An Introduction to Legal History, note 8 above, pp 129–36. 9. EW Ives, ‘The Genesis of the Statute of Uses’ (1967) English Historical Review 673. 10. As to the precise nature of these interests, see  6.14–6.19. Note also equity’s auxiliary jurisdiction, where equity assists in the establishment of legal rights — for instance, by means of quia timet injunctions and discovery. See, generally, JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, 5th ed, LexisNexis Butterworths, Sydney, 2014, pp 11–12.

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only in accordance with equitable rules. Moreover, because equitable interests were simply not recognised by the common law, it was not possible for the holder of an equitable interest to confer a legal interest on someone else. As there are marked differences in the formal requirements for the creation and transfer of legal and equitable interests, and in the doctrinal bases on which they arise, they will be treated separately for the remainder of this chapter.

Creation and Transfer of Interests in Land at Law Deeds 6.5  The general rule is that interests in land must be created and transferred by deed to be effective at law. Section 23B(1) of the Conveyancing Act 1919 (NSW) provides: No assurance of land shall be valid to pass an interest at law unless made by deed.

An ‘assurance’ of land is defined as including ‘a conveyance and a disposition made otherwise than by will’.11 A deed is a formal document which at common law had to be written on vellum or parchment, and had to be sealed and delivered.The requirements for a valid deed are specified in s 38(1): Every deed … shall be signed as well as sealed, and shall be attested by at least one witness not being a party to the deed; but no particular form of words shall be requisite for the attestation.

A document is sealed if some mark is placed on it intended to be a seal.12 Sealing will not be necessary where the instrument is expressed to be sealed or expressed to be a deed, and is signed and attested.13 Delivery of the deed was an essential condition of its validity at common law. This continues to be the case after the enactment of s 38, but the term has a special meaning: in order for delivery to take place, makers of the deed must demonstrate that they intend the deed to be immediately binding on execution.14 This may occur whether or not the deed is physically handed over.15 A witness to the deed must be someone who is not a party to it and, in the case of a deed with multiple parties, the witness or witnesses cannot be other parties to the deed.16 As we saw in Chapter  2, there are many interests in land other than freeholds and leaseholds.17 Generally speaking, these must also be created and transferred by deed to be effective at law. For example, to create or transfer a mortgage or easement, the instrument must be in the form of a deed that meets the requirements of s 38. 11. 12. 13. 14.

Conveyancing Act 1919 (NSW) s 7(1). Re Sandilands (1871) LR 6 CP 411. Conveyancing Act 1919 (NSW) s 38(3). Xenos v Wickham (1867) LR 2 HL 296. Compare Hooker Industrial Developments Pty Ltd v Trustees of the Christian Brothers [1977] 2 NSWLR 109 where the document was not intended to have formal effect until formal exchange. 15. Doe d Garnons v Knight (1826) 5 B & C 671 at 689. 16. Mostyn v Mostyn (1989) 16 NSWLR 635. 17. See 2.1–2.2.

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The requirement for a deed does not apply to ‘land under the provisions of the Real Property Act  1900’ (NSW); that is, land under the Torrens system.18 The appropriate instrument for creating and transferring interests under the Torrens system is a memorandum of transfer, which, to be effective at  law, must be registered.19 Section  7 of the Conveyancing Act provides a definition of ‘land under the provisions of the Real Property Act’; namely, ‘estates registered under that Act’. Therefore, unregistered dealings under the Torrens system, such as the assignment of an unregistered lease, must be by deed to be effective at law.20

Legal interests created by parol or by conduct 6.6  By s 23B(2)(d) of the Conveyancing Act, leases that are not required to be in writing are exempted from the requirement that they must be by deed to be effective at law. By s  23D(2), leases for a period not exceeding three years, at  a market rent, taking effect immediately in possession, and without taking a fine, may be validly created orally at law.21 A fine is a lump-sum payment in the nature of a premium. Other leases not required to be in writing to be valid at law are implied yearly tenancies at common law (as modified by s 127 of the Conveyancing Act), and general periodic tenancies implied from the manner of payment of rent.22 Furthermore, by s 23E(c) of the Conveyancing Act, interests acquired by taking possession, or possessory titles, which are legal in nature are valid at law without documentation of any kind.23 However, if such non-documentary legal interests are to be conveyed validly at  law, a duly executed deed must be used. So, if an adverse possessor wishes to transfer his or her inchoate title, the transaction may be only effected at law by means of a deed.

Interests in personalty 6.7  Since the enactment of s 8 of the Imperial Acts Application Act 1969 (NSW), the requirement under the Statute of Frauds 1677 that transfers of interests in personalty be made in writing has been repealed. Generally, interests in personalty therefore can be created without documentation of any kind, though certain types of choses in action, such as shares and some forms of intellectual property, may only be transferred at law by registration.24

18. Conveyancing Act 1919 (NSW) s 23B(3). 19. For the Torrens system generally, see Chapter 8. 20. Chronopoulos v Caltex Oil (Australia) Pty Ltd (1982) 45 ALR 481. 21. For a discussion of the operation of such leases, see 11.6. 22. For implied leases, see 11.12–11.15. 23. See Chapter 5. 24. See, generally, A Stewart, P Griffith and J Bannister, Intellectual Property in Australia, 6th ed, LexisNexis Butterworths, Sydney, 2017.

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Creation and Transfer of Interests in Land in Equity — Contracts for the Sale of Land General 6.8  Contracts for the sale of an interest in land, as distinct from conveyances or assurances, are subject to different formal requirements. A contract for the sale of land is unlike a conveyance or an assurance by virtue of the fact that it is a binding promise to convey or assure the interest at some time after the formation of the contract, usually on tender of the balance of the agreed purchase price. Until that time, the vendor (or landlord or mortgagor) remains the owner at law.25 By s 54A(1) of the Conveyancing Act 1919 (NSW), following the Statute of Frauds 1677: 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.

The effect of s 54A is that action, for example, for damages at common law for breach or for specific performance in equity, cannot be brought on a contract that fails to satisfy its requirements. A contract for sale signed by the other party is the most obvious way of meeting the requirement. The introduction of electronic transactions legislation means that ‘signatures’ need not necessarily be to paper copies of documents.26 In 2018, s 54A(4) was inserted to provide that a contract is ‘not invalidated or rendered unenforceable only because it has been created in electronic form and electronically signed or attested’.27 A sufficient memorandum of agreement exists if it contains a description of the land, identification of the parties and a reference to the transaction.28 Also, a telegram, a letter to a third party, a written offer and a recital of the transaction in a will all qualify as sufficient memoranda.29 In ANZ Banking Group Ltd v Widin,30 the parties executed a mortgage document that did not include any details of the title. Earlier authority had held that if a signed document makes reference to another document that contains the relevant details, those documents

25. For the application of the Statute of Frauds requirements to agreements to lease and mortgages, see, for example, Pirrie v Saunders (1961) 104 CLR 149 and Harrison v Murphy (1877) 3 VLR (E) 105. 26. Electronic Transactions Act  2000 (NSW). See, for example, Universal Music Australia Pty Limited v  Pavlovic  [2015] NSWSC 791  (in relation to settlement negotiations); and, generally, Stuart v  Hishon [2013] NSWSC 766. 27. Conveyancing Legislation Amendment Act 2018 No 75. 28. Toogood v Mills (1896) 23 VLR 106. 29. See, respectively, Godwin v Francis (1870) LR 5 CP 295; Gibson v Holland (1865) LR 1 CP 1; Parker v Clark [1960] 1 All ER 93; [1960] 1 WLR 286; Re Hoyle, Hoyle v Hoyle [1893] 1 Ch 84. 30. ANZ Banking Group Ltd v Widin (1990) 102 ALR 289.

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could be read together.31 In Widin, the bank manager’s diary notes contained details of the title, but Hill J held that those notes could not be incorporated. This was because the diary notes could only be linked to the mortgage by oral evidence. It follows that, in order to comply with the requirements of the statute where more than one document is relied on, the plaintiff must prove the existence of three things: first, a document signed by the defendant; second, an express or implied reference in that document to a second document; and third, a sufficiently complete memorandum represented by the two when read together. In Perpetual Trustee v  Motive Finance,32 these requirements were met, and so four documents could be read together. In that case, the four documents — a loan offer identifying the property subject to the mortgage, the loan contract, the mortgage form for registration purposes and a ‘Company Certificate’ — were capable of being read together because the ‘Company Certificate’ had been signed by the party to be charged and referred to each of the other documents.

Auctions 6.9  A special rule exists in relation to auction sales. An auction sale is generally believed to be concluded at the moment the hammer falls, but at this point in time the contract is merely oral, and so falls foul of s 54A of the Conveyancing Act. Moreover, there is no part performance at  this time,33 so no equitable interest is conferred on the successful bidder. Nonetheless, the requirements of s 54A have been held to apply to auction sales in the same manner as other sales of land.34 To resolve this predicament, the requirements of s 54A are met by an implied authority on the part of the auctioneer to sign on behalf of either vendor or purchaser.35 This right ensures that the oral contract becomes a written one on the intervention of the auctioneer in the event of either party refusing to proceed.36 However, the auctioneer’s authority must be exercised during the course of the sale transaction, and not afterwards.37

Overcoming the absence of formal requirements — the equitable doctrine of part performance 6.10  The courts of equity developed the doctrine of part performance to assist purchasers who were unable to satisfy the requirements of the Statute of Frauds, the requirements of which are now enshrined in s  54A of the Conveyancing Act. The doctrine of part performance has now been preserved by ss 23E(d) and 54A(2) of that Act. The origins of the doctrine lie in preventing the requirements of s 54A being used as an instrument of fraud: that is, if one party honestly believed a contract existed, and in doing so incurred Thomson v McInnes (1911) 12 CLR 562. Perpetual Trustee Co Ltd v Motive Finance & Leasing Pty Ltd (2011) 15 BPR 29,267. As to part performance, see 6.10–6.13. Daulia Ltd v Four Millbank Nominees Ltd [1978] 1 Ch 231. Sims v Landray [1894] 2 Ch 318. For a succinct summary of the relevant law, see P Butt, ‘Sale of Land by Auction in New South Wales’ (1980) L Soc J 720. 37. Wright v Madden [1992] 1 Qd R 343.

31. 32. 33. 34. 35. 36.

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expenses (which might include conferring benefits on the other party), it would be unjust for the other party to then plead the statute.38 That is, ‘equities’ should arise on which the defendant is ‘charged’.39 6.11  The classical statement of the test for part performance is contained in Maddison v  Alderson.40 In that case, the testator Alderson promised Maddison that if she acted as unpaid housekeeper he would leave her a life estate in the property in his will. However, although Alderson’s will purported to make this bequest, the will failed on the ground that it was not attested. The court held that in order to constitute sufficient acts of part performance, the party seeking to enforce the agreement must perform an act: … unequivocally and in its own nature … referable to ‘some such agreement as that alleged’. That is, it could be done with no other view than to perform such an agreement.41

Where a court finds that the acts constitute sufficient acts of part performance, the resulting order is not an enforcement of the oral (or otherwise unenforceable) agreement as that would be contrary to the statute. Rather, the court is, in the oft-quoted words of Lord Selborne LC, giving effect to ‘equities resulting from the acts done in execution of the contract, and not (within the meaning of the statute) upon the contract itself ’.42 On the facts of Maddison, however, Maddison could not satisfy this test. In contrast, in Regent v Millett43 the High Court upheld an oral contract as satisfying the Maddison test. There, the owners of land had offered to transfer it to their daughter and son-in-law, provided that they paid off the mortgage. In that context, a change in possession of the property was regarded as ‘the act of part performance “par excellence”’.44 It was not necessary for the contract to require the acts which were alleged to form the part performance; it was enough that they were carried out ‘pursuant to the contract’. The phrase ‘unequivocally and in its own nature referable to some such agreement as that alleged’ has been interpreted as requiring that the acts are ‘consistent only with some

38. On the origins of the doctrine, see further, Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, note 10 above, pp 678–9. 39. Maddison v Alderson (1883) 8 App Cas 467 at 475 per Lord Selborne LC. 40. Maddison v Alderson (1883) 8 App Cas 467.The statement was described by Nettle and Gordon JJ in Pipikos v Trayans (2018) 265 CLR 222 at [95] as a ‘seminal ex post facto rationalisation of the doctrine of part performance and the restrictions to which it is subject’. For an extensive discussion of the history and key developments in the doctrine, see Khoury v Khouri (2006) 66 NSWLR 241 at 262–9 per Bryson JA. 41. Maddison v Alderson (1883) 8 App Cas 467 at 479 per Lord Selborne LC. 42. Maddison v Alderson (1883) 8 App Cas 467 at 475 per Lord Selborne LC. On the basis of the doctrine see further the differing approaches of the Kiefel CJ, Bell, Gageler and Keane JJ and Edelman J in Pipikos v Trayans (2018) 265 CLR 222 at [46-57] and [140-145]. 43. Regent v Millett (1976) 133 CLR 679. 44. Regent v Millett (1976) 133 CLR 679 at 683 per Gibbs J. See also Reitano v Reitano [2012] NSWSC 1127 where the fact that the son was given sole possession of a property, and sole responsibility for its upkeep and maintenance, in addition to the son’s contribution to the purchase price of another property in which the mother was to live, was construed as sufficient acts of part performance of an oral contract to transfer legal title from the mother to the son.

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such contract subsisting’.45 In Khoury v Khouri,46 Bryson JA emphasised that the whole circumstances of the case must be considered in assessing whether sufficient acts of part performance arise: In the present case there are no acts of ownership such as taking possession, paying rates or paying for the upkeep or improvement of the property, or receipt of rent or profits, or any other act at all. Acts of part performance have been almost universally closely related to possession and use or tenure of the land itself, such as where a purchaser is put into possession by the vendor, or allowed to take possession by the vendor, or where the purchaser carries on improvements. They have not necessarily been acts which the contract required to be done. Acts on the land can much more readily be seen as unequivocally referable to the contract than payments of money. 47

A special example of the doctrine of part performance has traditionally been seen in the law of mortgages, where an equitable mortgage will be created if the mortgagor (the borrower) hands over the title deeds as security for the loan.48 Indeed, the doctrine of part performance operates in a more expansive way in deposit of title deeds cases: deposit by the mortgagor counts as part performance by both parties. Not all deeds in the chain of title need to be deposited as long as the relevant deeds are clear evidence of title.49 It follows that, unlike other instances of part performance, there is no possibility that the contract may be enforceable by one party only; that is, the party who has undertaken the acts of part performance. The extension of the doctrine in this context may be explained by the requirements of business efficacy. 6.12 The Maddison test sets a high threshold for acts of part performance.50 In Regent the High  Court refused to consider the more relaxed requirements of the House of Lords in Steadman v Steadman,51 which had held that acts of part performance must, ‘on the balance of probabilities’, point to the existence of some such contract as alleged. In Pipikos v Trayans (2018) 265 CLR 522, the High Court resolved any remaining doubts regarding the applicable rule, confirming Maddison’s test of ‘unequivocal referability’ and rejecting the application of Steadman’s ‘balance of probabilities’ approach.52 In Pipikos, Leon Pipikos, the appellant, claimed a half share in a property that was owned by his brother George Pipikos and the respondent, George’s ex-wife Velika Trayans. The High  Court found that Leon could not satisfy the more stringent Maddison test. In Phung v  Phung 45. 46. 47. 48. 49. 50. 51. 52.

J C Williamson Ltd v Lukey (1931) 45 CLR 282 at 297 per Dixon J. Khoury v Khouri (2006) 66 NSWLR 241. Khoury v Khouri (2006) 66 NSWLR 241 at 268 per Bryson JA. Russel v Russel (1783) 1 Bro CC 269; Theodore v Mistford (2005) 219 ALR 296. For further discussion, see S Hepburn, ‘Reconsidering the Scope of the Equitable Mortgage Arising from Deposit of Title Deeds’ (2007) 80 Australian Law Journal 121. Lacon v Allen (1856) 3 Drew 579. For further examples of acts that have, or have not, been held to be sufficient acts of part performance, see Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, note 10 above, pp 678–86. Steadman v Steadman [1976] AC 536. See further discussion in Leeming, ‘Pipikos v Trayans — The High Court Revisits Part Performance’ (2019) 93 Australian Law Journal 91.

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[2019] NSWSC 117, Darke J applied Pipikos and found that acts of taking possession of the property, carrying out renovations, and paying the outgoings, satisfied the Maddison requirement of ‘unequivocal referability’. 6.13  At times the stringency of the requirement of unequivocal referability can cause hardship. This is especially the case where the alleged acts of part performance are equally consistent with some other laudable motive; for instance, love and affection. Thus, as in Maddison itself, the plaintiff was unable to satisfy the test for part performance, as her acts as an unpaid housekeeper, and staying in the employ of the testator, could not ‘of itself ’ evince the promise she alleged, that he would leave her a life estate in his will. Similarly, in Ogilvie v Ryan,53 Miss Ryan had left her home to move in with the plaintiff ’s father, having been promised that if she looked after him she could remain there as long as she wished. The father left the house to his son in his will, with no mention of Miss Ryan rights.54 The court held that the acts relied on by Miss Ryan as part performance of the oral contract were equally consistent with the voluntary expression of love and affection as they were with an oral contract. These cases therefore illustrate that the stringency of the unequivocal referability requirement under the Maddison test can apply in a discriminatory way against women: as the prevailing sexual division of labour, and in particular unpaid labour, means that the acts of women in the cases failed the Maddison requirements because they were capable of being characterised as acts of love and affection.55 As will be seen later, the constructive trust, freed from a narrowly defined labour requirement, has proved to be rather more flexible in dealing with situations such as these.56 In Pipikos the High Court also discussed the connections between part performance and equitable estoppel; the latter doctrine also being capable of providing relief in informal property transactions.

Equitable interests arising under contract — the doctrine of conversion and requirement of specific enforceability 6.14  The essence of the contract for the sale of land is to promise a conveyance or transfer at a later stage; that is, at the time of settlement. Although a contract for the sale of land is enforceable if there is a sufficient memorandum signed by the party to be charged with it, a proprietary interest under an executory contract for the transfer of land cannot exist at law. Thus, the legal interest in the property does not pass until settlement.

53. Ogilvie v Ryan [1976] 2 NSWLR 504. 54. See also in Smilevska v Smilevska (No 2) [2016] NSWSC 397 where long-term acts of domestic support were insufficient to demonstrate part performance of an oral contract, particularly in the context of familial relations culturally defined by the duties of daughters-in-law to parents-in-law. In that case, Slattery J also found that the applicant could not demonstrate intention to create legal relations arising from conversations in relation to the disputed property. However, she was ultimately successful in her estoppel-based argument. On estoppel, see 6.37–6.44. 55. According to one line of feminist critique of law, the doctrine of part performance is another example of an abstract rule applied in a discriminatory way. See 1.41–1.47. See also D Otto, ‘A Barren Future? Equity’s Conscience and Women’s Inequality’ (1992) 18 Melbourne University Law Review 808. 56. See 6.31–6.36. The powers of the court under s 20 of the Property (Relationships) 1984 Act (NSW) may also go some way towards protecting the interests of carers. See further, 6.48.

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However, courts of equity may order the remedy of specific performance; that is, an equitable discretionary remedy to force the vendor to make good the promise to transfer the property. In equity, the maxim ‘equity looks upon that as done which ought to be done’, means that equity analyses the relationship between the parties as if the parties had performed their obligations.Thus, in equity, the purchaser of an interest in land is considered to be an owner in equity if, and when, the contract is specifically enforceable.57 In these circumstances, the purchaser acquires an equitable interest in the property at  the time that an enforceable contract is made, and the vendor is regarded as a constructive trustee for the purchaser.58 This is also known as the equitable doctrine of conversion. Without the order of specific performance of the contract, however, the purchaser’s remedy lies only in damages for breach of contract. The availability of the remedy of specific performance is therefore a condition precedent for the acquisition of this equitable proprietary interest by the purchaser.59 The right to a grant of an order for specific performance of the agreement is not automatic. As the remedy is an equitable one, relief is only possible if the legal remedy is inadequate. It is generally assumed that damages are not an adequate remedy for breach of a contract to transfer or create an interest in land.60 Also, there is a general equitable requirement that to be granted an order of specific performance, the plaintiff must not have been guilty of unconscionable or inequitable conduct, and must be ready, willing and able to perform the contract.61 Thus, persistent breach of an agreement, or failure to fulfil an essential contractual term,62 will mean that the court will not order specific performance. 6.15  The ‘long held view of the law’63 favoured conceptualising the purchaser’s interest under a specifically enforceable contract for the sale of land as analogous to a trust. The classical analysis is that in Lysaght v Edwards.64 In that case, a vendor died prior to completion of a contract for sale. The court held that although the vendor was still seised of the legal estate, the vendor had become ‘trustee’ in equity on exchange, and so held the property on constructive trust for the purchaser. Jessel MR described the vendor’s 57. For an overview of the interests in land pending settlement, see generally, ‘Rights Pending Completion’ in D Skapinker and P Lane, Sale of Land in NSW: Commentary and Materials, 6th ed, Thomson Reuters, Sydney, 2018, Ch 8. 58. See Lysaght v Edwards (1876) 2 Ch D 499; Bunny Industries v FSW Enterprises Pty Ltd [1982] Qd R 712. 59. Stern v McArthur (1988) 165 CLR 489 at 537 per Gaudron J; Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315. The remedy extends to protecting the putative interest by injunction: Stern v McArthur (1988) 165 CLR 489 at 522 per Deane and Dawson JJ. 60. Adderley v Dixon (1824) 1 Sim & St 607. 61. For example, being ready, willing and able to pay the outstanding purchase moneys in full. See, for example, Westpac Banking Corporation v Ollis [2008] NSWSC 824. 62. For example, in Westpac Banking Corporation v Ollis [2008] NSWSC 824 a contract was found not to be specifically enforceable because completion was conditional on a subdivision application being registered, and that application was refused. 63. C McClure, ‘Specific Performance and the Constructive Trust’ in E Bant and M Bryan (eds), Principles of Proprietary Remedies, Lawbook Co, Sydney, 2012, p 127. 64. Lysaght v Edwards (1876) 2 Ch D 499 at 506.

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position as something between a bare trustee for the purchaser, and a mortgagee who in equity is entitled to possession of the land and a charge on it for the purchase money. As the transaction proceeds from exchange of contracts until the payment of the purchase price in full, this trusteeship transforms from limited trusteeship into a bare trusteeship. The nature of the vendor’s trusteeship is unusual, however, because the vendor commonly retains a beneficial interest in the property as well: the right to remain on the property until settlement, and even later if the full purchase money is not paid.65 In Lysaght, it followed that the purchaser’s equitable interest could be enforced against the executors of the vendor’s estate. In Bunny Industries Ltd v FSW Enterprises,66 the court applied Lysaght to hold that if a vendor contracts to sell to A, but then the vendor sells to C, the vendor has committed both a breach of the contract to A and a breach of trust. Importantly, the recognition of the constructive trust gives the purchaser rights that are enforceable against C in a priority dispute, not simply a remedy against A for breach of contract. The Lysaght constructive trust was created by equity acting on the conscience of the vendor once the contract becomes specifically enforceable.67 The principle in Lysaght also applies to contracts to sell interests in land other than a fee simple. In Walsh v Lonsdale,68 for example, a tenant took possession of premises pursuant to a written and signed agreement to grant a lease for a term of seven years. No formal lease was ever drawn up. The tenant paid rent on a periodic basis, and the landlord claimed that only an implied periodic tenancy arose.69 It was held that the tenant had an equitable lease for seven years. As Jessel MR concluded: The tenant holds under an agreement for a lease. He holds, therefore, under the same terms in equity as if a lease had been granted, it being a case in which both parties admit that relief is capable of being given by specific performance.70

6.16  The recognition of a purchaser’s equitable ‘constructive trust’ style interest under a contract for sale has a number of consequences. As trustee, for example, the vendor must manage the property as a trustee would before it is formally given over to the purchaser. So, for example, a vendor will be liable to the purchaser where a trespasser enters and removes a large amount of topsoil prior to settlement.71 If the vendor hands over possession prior to receipt of the full purchase money, he or she retains an equitable lien over the property, which, like a mortgage, confers a right to an order of the court for sale to satisfy the debt.72 Under the rule in Lysaght, the purchaser also takes the risk of the property (eg, the house on the property is destroyed by fire) at the same time that the equitable interest 65. 66. 67. 68. 69. 70. 71. 72.

Phillips v Silvester (1872) LR 8 Ch App 173. Bunny Industries Ltd v FSW Enterprises Pty Ltd [1982] Qd R 712. Acorn Computers v MCS Microcomputer Systems Pty Ltd (1984) 6 FCR 277. Walsh v Lonsdale (1882) 21 Ch D 9. For implied periodic tenancies, see 11.12–11.15. Walsh v Lonsdale (1882) 21 Ch D 9 at 14–15. Clarke v Ramuz [1891] 2 QB 456. Mackreth v Symmons (1808) 15 Ves Jun 328. The case of Rice v Rice (1854) 61 ER 646 provides another example.

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came into existence. It follows that if the property is destroyed before settlement, it is the purchaser’s loss, and not the vendor’s. As a consequence, under these general law principles the purchaser had to arrange insurance for the property effective from the date of the contract, even though the purchaser did not have the benefit of the property at the time the risk arose. Legislation has varied these general rules: by s 66K of the Conveyancing Act, on the sale of land the risk does not pass until completion, or until a time after the purchaser takes possession of the land when risk is to pass according to the terms of the contract, whichever is the earlier. If the land is damaged prior to sale, the purchaser may either rescind the contract or proceed to settlement with a right to have the purchase price reduced by such amount as is just and equitable in the circumstances.73 The onus of proving the extent of the loss lies with the purchaser.74 6.17  However, the trust analogy from Lysaght cannot be pushed too far. Rather, as Jensen has observed, the analogy is used to underline the concept that the vendor is no longer free to deal with the property at will.75 In this context, ‘constructive trust’ has therefore been used as ‘shorthand for the purchaser’s right against the vendor’s right to the land and the vendor’s correlative duty to the purchaser in respect of that right’.76 In this sense, the Lysaght ‘trust’ has always been taken to mean ‘something less than’77 a typical express trust. This is because the vendor has not undertaken ‘to be a trustee’,78 nor is the vendor a fiduciary.79 Thus, as Heydon and Leeming explain, the vendor and purchaser’s interests ‘are to a degree hostile’80 as the vendor retains an interest in the property that permits the vendor to act in his or her own interest to the extent that the contract allows. The purchaser’s so-called ‘constructive trust’ therefore takes its substance from the terms of the contract (and the defeasible nature of that contract), and remains limited by the availability of the remedy of specific performance. 6.18  It is this ‘contingent and defeasible’81 nature of the purchaser’s rights, by virtue of its relationship to the contractual terms and their dependence on a court’s the grant of the discretionary remedy of specific performance, that has led to a critique of the ‘trust’ conceptualisation of the purchaser’s equitable interest under an executory contract. The High Court raised, but did not resolve, these issues in Tanwar Enterprises Pty Ltd v Cauchi.82 In that case, the purchaser had delayed completion of the contract for sale of a number of parcels of land, in the context of a contract that had stipulated that time was of the essence. 73. Conveyancing Act 1919 (NSW) ss 66L, 66M. 74. See Pryke v Blazai (2000) 10 BPR 18,489. 75. D Jensen, ‘A Typology of Trusts by Analogy’ in E Bant and M Bryan (eds), Principles of Proprietary Remedies, Lawbook Co, Sydney, 2012, p 63. 76. Jensen, ‘A Typology of Trusts by Analogy’, note 75 above, p 62. 77. Jensen, ‘A Typology of Trusts by Analogy’, note 75 above, p 61. 78. Jensen, ‘A Typology of Trusts by Analogy’, note 75 above, p 61 (original emphasis). 79. McClure, ‘Specific Performance and the Constructive Trust’, note 63 above, p 139. 80. JD Heydon and M Leeming, Cases and Materials on Equity and Trusts, 9th ed, LexisNexis Butterworths, Sydney, 2018, p 159. 81. McClure, ‘Specific Performance and the Constructive Trust’, note 63 above, p 137. 82. Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315. See also Chang v Registrar of Titles (1976) 137 CLR 177 at 184 per Mason J; at 190 per Jacobs J.

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The purchaser sought relief against forfeiture — a claim that was ultimately unsuccessful. In the course of determining whether relief should be granted, the High Court observed that the purchaser’s equitable interest must, necessarily, be ‘commensurate with the availability of specific performance’.83 As such, the plurality reasoned that the constructive trust analogy was ‘bedevilled by circularity’,84 and so should be ‘no longer accepted’.85 Instead, where specific performance is available, the court noted that the extent of the purchaser’s equitable interest in the property would vary, depending on the interests under contract as the transaction approached settlement. In that case, the purchaser was in serious breach, and so could not insist on specific performance. As a consequence, the characterisation of the Lysaght-interest as an equitable lien was to be preferred to that of a ‘constructive trust’86 and the purchaser was limited merely to a lien over payments made by it to the vendor to which it was entitled to return under the contract. The High  Court’s discussion of the purchaser’s interest in an executory contract in Tanwar has itself not escaped criticism. For example, McClure P has argued, extra-judicially, that: … it is too late in the day to challenge the existence of the vendor-purchaser constructive trust. It is so much part of the legal landscape that it is recognised in legislation relating to the formalities for dealings with land. Moreover, the vendor-purchaser constructive trust is not the (non) functional equivalent of a human appendix. … It cannot be said that the removal of the constructive trust from the body of law relating to the transfer for assignment of property would go unnoticed and without any adverse consequence.87

6.19  Lower courts have proceeded on the basis that, post-Tanwar, the ‘use of the language of the trust … has fallen out of favour’,88 but that the fundamental principle that a purchaser under a specifically enforceable contract has proprietary rights prior to acquiring legal ownership has not been questioned.89 Careful attention must therefore be given to describing the purchaser’s interest as delimited by reference to the extent to which the equitable remedy of specific performance is available in the given case.90 83. Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 333. 84. Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 333. 85. Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 332. See discussion in M Campbell, ‘The Case Against the Equitable Lien’ (2019) 42(3) MULR 813. 86. Affirmed in Black v Garnock [2007] HCA 31; (2007) 230 CLR 438 at [32]. 87. McClure, ‘Specific Performance and the Constructive Trust’, note 63 above, pp 139–40. See also Heydon and Leeming, Cases and Materials on Equity and Trusts, note 80 above, who observe (at p 159) that ‘so many judges of the greatest eminence have described the vendor as a trustee as from the date of the contract, that the proposition is beyond challenge’. 88. Golden Mile Property Investments Pty Ltd (In Liq) v Cudgegong Australia Pty Ltd (2015) 89 NSWLR 237 at 261 [100] per Emmett JA. 89. See, for example, Golden Mile Property Investments Pty Ltd (in liq) v  Cudgegong Australia Pty Ltd (2015) 89 NSWLR 237; Fuentes v  Bondi Beachside Pty Ltd [2016] NSWSC 531; Australian Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd [2017] NSWCA 99. 90. See, for example, Atwell v Roberts (No 3) [2009] WASC 96 at [106]–[109] per Emmett JA; Circuit Finance Australia Ltd v Panella (2012) 16 BPR 30,347 at [21] per Pembroke J; Australian Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd [2017] NSWCA 99 at [96]–[109] per Ward JA (McColl JA and Gleeson JA agreeing).

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In Golden Mile Property Investments Pty Ltd (in liq) v Cudgegong Australia Pty Ltd,91 Emmett JA explained that as a contract proceeds towards completion, the equitable interests in the property pass to the buyer in stages, and comprise ‘four separate rights, or “equities”’: (i) the purchaser’s interest enforceable against third parties; (ii) the purchaser’s equitable right that the vendor exercise due care to preserve and maintain the land pending completion; (iii) the purchaser’s equitable right to the rents and profits received by the vendor between the agreed date for completion and the actual date of completion; and (iv) the purchaser’s equitable lien for repayment of the purchase price in the event of non-conveyance by the vendor. In Golden Mile, Emmett JA noted that even where specific performance may not be available, a purchaser may nevertheless be able to obtain a remedy (such as an injunction) to enforce one of the ‘four “equities”’ arising from the transaction.92

Creation and Transfer of Interests in Land in Equity — Trusts Express trusts — general 6.20  A trust is a relationship in which one person (the trustee) holds property, real or personal, for another (the beneficiary) on certain conditions. A trust may be express or non-express. In the case of express trusts, no particular form of words is necessary; as long as the person who creates the trust expresses a clear intention to create a relationship of the type that the law regards as a trust and meets the requisite documentary formalities, it is validly created.93 The trust may be created in two ways: by declaration or by settlement. In the case of a declaration, the person seeking to set up the trust continues to own the property, but declares that he or she now holds it as trustee for a stated beneficiary. If the declaration is formally valid, the former owner becomes a trustee, retaining the legal interest in the property while the beneficiary has an equitable interest enforceable against the whole world, including the trustee. In the case of a settlement, the owner transfers the property to a third party as trustee and so relinquishes any rights over the property. The trustee then holds the property subject to an obligation to use it for the benefit of the beneficiaries that it is held on trust for beneficiaries.

Transfer of equitable interests 6.21  Once a trust has come into existence, both trustee and beneficiary have separate proprietary interests that may be freely transferred. We have already examined the formalities necessary for the transfer of legal interests.94 In this section, we will analyse the different formalities necessary for the creation and transfer of equitable interests. 91. Golden Mile Property Investments Pty Ltd (in liq) v Cudgegong Australia Pty Ltd (2015) 89 NSWLR 237 at 262 [104] per Emmett JA. 92. Golden Mile Property Investments Pty Ltd (in liq) v Cudgegong Australia Pty Ltd (2015) 89 NSWLR 237 at 263 [105] per Emmett JA. 93. See Bahr v Nicholay (No 2) (1988) 164 CLR 604, 618–619 per Mason CJ and Dawson J. Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62 at [10]–[11] per French CJ; [109] per Gageler J. 94. See 6.5–6.6.

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In addition to the creation of trusts by declaration or settlement, equitable interests may form the subject matter of a trust or transfer. The three ways in which equitable interests may be voluntarily disposed of are detailed in a classic summary by Dixon J in Comptroller of Stamps v Howard-Smith.95 First, the owner of an existing equitable interest may declare that he or she holds the interest on trust for a named beneficiary. The person who makes the declaration is now subject to the obligations specified in favour of the beneficiary. Second, the holder of an equitable interest already in existence, such as the beneficiary under a trust, may transfer that interest to a third party. Third, the equitable interest holder may direct his or her trustee to hold the interest from that time for a nominee.96 In each of the three ways, the intending donor needs to meet the formal requirements for the creation and disposal of equitable interests. It is to these that we now turn.

Formalities 6.22  The key provision is s 23C of the Conveyancing Act 1919 (NSW): (1) Subject to the provisions of this Act with respect to the creation of interests in land by parol: (a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent thereunto lawfully authorised in writing, or by will, or by operation of law; (b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person’s will; (c) a disposition of an equitable interest or trust subsisting at  the time of the disposition, must be in writing signed by the person disposing of the same or by the person’s will, or by the person’s agent thereunto lawfully authorised in writing. (2) This section  does not affect the creation or operation of resulting, implied, or constructive trusts.

It is important to note that this provision is conceptually different from s 54A(1) of the Conveyancing Act. Section 54A(1) is concerned with the enforcement of contracts where ‘an owner is not himself actively disposing of that interest, and therefore does not need to comply with paragraph (a)’ of s 23C(1).97 That is, if an owner wishes to use an agent, the agent does not need to be given signed authority in the case of a contract,98 but does require such an authority if he or she proceeds to convey an interest.

95. Comptroller of Stamps v Howard-Smith (1936) 54 CLR 614 at 621–2 per Dixon J. 96. As noted above, there is also a further way to dispose of an equitable interest: by means of a contract for valuable consideration. See 6.14. 97. D Everett, ‘Reconciliation of the Statutory Requirements for Writing in Land Transactions’ (1987) 17 University of Western Australia Law Review 301 at 304. 98. Conveyancing Act 1919 (NSW) s 54A(1).

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The distinction between s 54A(1) and s 23C(1) has been recognised in Marist Bros Community Inc v  Shire of Harvey,99 where the court held that the Western Australian equivalent of s 23C(1)(a)100 does not apply to contracts for the sale of land ‘as distinct from [instruments] creating an interest in land’. That case has clarified much contradictory authority on the interrelationship between the two provisions. It was followed by the decision of the New South Wales Court of Appeal in Baloglow v Konstantinidis,101 where Giles JA identified the different rationales underpinning the two provisions. He held that s 54A: … arises at the stage of agreement to create or dispose of an interest in land. It has its own requirement of writing, less stringent than the requirement in s  23C in that a note or memorandum of the agreement is sufficient and the signing agent need not be authorised in writing. The latter [s 23C] arises at the stage of performance of an agreement or where there is no prior agreement, and in keeping with the importance attached to property rights has a more stringent requirement of writing and the signing agent must also be authorised in writing.

6.23  The meaning of paras (a)–(c) of s 23C(1) of the Conveyancing Act is not easy to discern, as they appear to overlap to a significant degree.102 The extent of the overlap appears from the judgments of the members of the High Court in Adamson v Hayes.103 In this case, the parties, who had a written agreement by which mining claims were shared, orally agreed to vary the arrangement. The question arose as to whether the oral agreement was enforceable. A majority of the court (Menzies, Walsh, Gibbs and Stephen JJ, Barwick CJ dissenting) held that the lack of writing invalidated the transaction. Menzies J thought that para (a) of s 23C(1) had no application because that paragraph was confined to legal interests. However, this interpretation was rejected by Walsh, Gibbs and Stephen JJ, who held that para (a) applied only to equitable interests. This argument seems to be entirely convincing on the ground offered by Walsh J: s 23B of the Conveyancing Act would be unnecessary if s  23C(1)(a) applied to legal interests. For Walsh J, the oral agreement in this case created an equitable interest, and so was caught by para (a). By contrast, Menzies, Stephen and Gibbs JJ concluded that the oral agreement amounted to a declaration of trust and, as writing existed that was signed and manifested and proved such a declaration, as required by para (b), the agreement was unenforceable. Menzies J added that even if the transaction could not be seen as a declaration of trust, and so be covered by para (b), it came within para (c) as a disposition of subsisting equitable interests. There is much to be said to support the majority in Adamson on the non-overlap between paras (a) and (b).

99. Marist Bros Community Inc v Shire of Harvey (1994) 14 WAR 69 at 85 per Pigeon J, Seaman J concurring at 91. 100. Property Law Act 1969 (WA) s 34(1)(a). 101. Baloglow v Konstantinidis (2000) 11 BPR 20,721 at 20,757–8. 102. On the interaction of the provisions and the relationship between s  23C and s  54A, see  also Khoury v Khouri (2006) 66 NSWLR 241 at 256–7 per Bryson J. 103. Adamson v Hayes (1973) 130 CLR 276. The following account of the case is necessarily simplified. For a fuller analysis, see, Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, note 10 above, pp 306–7.

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If para (b) is not to be otiose, it must deal exclusively with declarations of trust which for the same reason must be beyond the reach of para (a). 6.24  The range of disagreement between the judges in Adamson renders this area of law somewhat uncertain. A further question is whether s 23C(1)(c) applies to personalty as well as realty. Unlike paras (a) and (b), there is no confinement of the ‘equitable interest or trust’ in s  23C(1)(c) to interests in land. Gibbs J, in obiter, suggested that it applied to personalty as well as land, while Menzies J disagreed. In Grey v Inland Revenue Commissioners,104 the House of Lords resolved this particular question by holding that the paragraph was intended to apply to personalty, and so covered a disposition of a beneficial interest in shares. It followed that an oral direction by the settlor to the trustees to dispose of a subsisting equitable interest in a block of shares in favour of his grandchildren was ineffective. In Secretary, Department of Social Security v James,105 the respondent purchased a unit as accommodation for her adult invalid daughter. In a subsequent application for an invalid pension, the respondent stated that she presently retained title to the unit, but only for her daughter’s protection, and that it was to pass to her daughter under the terms of her will. The Department of Social Security considered the unit as part of the respondent’s property. In the Federal Court, Lee J concluded that in order for para (b) not to be ‘either an odd exception or otiose’, it had to be interpreted as requiring different formalities for declarations of trust as distinct from other dealings with equitable interests (ie, being manifested and proved by writing rather than being in writing). His Honour concluded that, while the paragraph permitted a number of documents to be read together, it did not allow oral evidence to form part of the proof of the declaration. Accordingly, he remitted the matter to the Administrative Appeals Tribunal for it to determine whether all the available signed writing would suffice to ‘manifest and prove’ the essential elements of the trust. In contrast, an oral declaration made while holding a Bible, such as ‘I promise to live in the house and care for the home and property for all of us’ is not an effective declaration of trust.106 Section 23C(1)(b) does not apply to a transaction that purports to create and declare a trust; in this instance, the requirements of s 23C(1)(a) must be met.107

Non-express trusts 6.25  Non-express trusts arise by virtue of the conduct of the parties.They may be either resulting trusts or constructive trusts. Unlike express trusts, no documentary formalities are necessary.108

104. Grey v Inland Revenue Commissioners [1960] AC 1; [1959] 3 All ER 603. 105. Secretary, Department of Social Security v James (1990) 95 ALR 615 at 622. 106. Wratten v Hunter [1978] 2 NSWLR 367. 107. Re JS and GP (2006) 35 Fam L R 88. 108. Conveyancing Act 1919 (NSW) s 23C(2).

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Resulting trusts 6.26  Resulting trusts are an exception to the requirement of writing,109 and so come into existence informally by way of a presumption of law from certain facts. However, the presumption of a resulting trust is a rebuttable one, so there will be no resulting trust if parties clearly indicate that they did not want a trust to come into operation. Resulting trusts arise in the following situations. 6.27  Failed express trust  Where a settlor fails to dispose of the entire beneficial interest, while at the same time conferring the entire legal interest on trustees, a resulting trust will arise in his or her favour.110 Thus, a grant to A on trust for B for life, but with no remainder, will give rise to a reversionary interest in favour of the settlor. To do otherwise would be to enrich the trustee unjustly. Also, where an express trust is either void or unenforceable, the trustee will hold the property on resulting trust for the settlor.111 6.28  Purchase in the name of another  Where one person purchases property and puts it into the name of another, equity presumes that a trust was intended, so that the holder of the legal title holds on trust for the purchaser. So, where A purchases Greenacre, but B’s name appears on the title deed or certificate of title, B holds Greenacre on trust for A. The basis for this trust is that equity presumes that the person who pays for a property is the owner of that property. However, it is possible to rebut the presumption by adducing evidence that the intention was to benefit the person whose name is on the title documents, or by operation of the presumption of advancement (see below). 6.29  Contribution to purchase price  Where a party contributes to the ‘purchase price’, and that contribution is not accurately reflected in the ownership of the legal title to the property, a presumption of resulting trust may arise whereby the parties will hold the beneficial title to the property in the proportions in which they have contributed to the purchase price.112 So, if the legal title to Greenacre is solely in A’s name, but A and B each contribute 50% of the ‘purchase price’, A will hold the property on resulting trust for himself or herself and B in equal portions. Also, if A contributed 40% of the purchase price and B contributed 60%, but the title deed or certificate of title simply states that A and B are tenants in common, equity will impose a resulting trust so that they will hold in proportion to their respective contributions. ‘Purchase price’ in this context is narrowly defined as a direct financial contribution to the purchase price. Purchase price includes the full settlement price (comprising cash payments and, where a mortgage is required, the liability under the mortgage), legal fees and governmental fees (eg, stamp duty and registration fees) and the purchase price.113 109. Conveyancing Act 1919 (NSW) s 23C(2). 110. Longley v Longley (1871) LR 13 Eq 133. 111. Re West Sussex Constabulary’s Widows, Children and Benevolent (1930) Fund Trusts [1971] Ch 1. 112. Note, however, that a presumption of advancement may arise in the alternative, depending on the relationship between the parties. See further, 6.30. 113. Ryan v Dries (2002) 10 BPR 19,497; Dinsdale v Arthur [2006] NSWSC 809; Tonna v Mendonca (No 2) [2020] NSWSC 306.

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As the key criterion is the direct contribution to the purchase price, contribution to the repayment of the mortgage debt — which occurs after settlement over the course of the mortgage term — is not relevant to the calculation of a share under a resulting trust.114 As it operates presumptively on payment of the purchase price, this trust can be rebutted in one of two ways: first, by operation of the presumption of advancement (discussed below); or second, by evidence that the actual intention of the parties at the time of the purchase was that the beneficial ownership mirror the legal ownership.115 However, the extent to which the presumption of a purchase price resulting trust may be modified in the context of the family home, or by the later imposition of a constructive trust, is discussed below. In Calverley v Green,116 a couple who lived in a de facto relationship agreed to purchase property. It was to be held in their joint names.The purchase money was to be made up of a $9000 cash contribution from Mr Calverley and an $18,000 loan from a bank, secured by a mortgage over the home for which they would be jointly liable. The purchase went ahead as planned, and for five years Mr Calverley paid the mortgage instalments, while Ms Green paid household expenses. The High Court confirmed that the starting point for analysis is whether the presumptions of resulting trust (or advancement) applied. The court found that there was a resulting trust, measured by the contributions of the parties to the purchase at  the time of purchase. Thus, Ms Green was the equitable owner of approximately one-third of the property. By contrast, the court held that contributions made after the purchase were irrelevant to the principles governing resulting trust.117 The High Court considered the operation of the purchase price resulting trust in the context of the family home in Trustees of the Property of Cummins (a bankrupt) v Cummins.118 The question in that case was the extent of Mr Cummins’ beneficial ownership in the family home. Mr Cummins was a bankrupt barrister, and in an effort to recover unpaid income tax the Australian Tax Office instituted proceedings claiming that he had owned a 50% beneficial interest in the property. Legal title in the home was held by Mr  and Mrs Cummins as joint tenants.119 Mrs Cummins, who had separated from her husband by this time, argued that the presumption of resulting trust should apply, as she had contributed 76.3% of the purchase price of the property. Rather than apply the Calverley principles, however, the High  Court quoted with approval the following passage from Scott and Fratcher: 114. Payment of mortgage instalment payments will be relevant, however, as a contribution in the recognition of a constructive trust. See further, 6.31. 115. See, for example, Flourentzou v Spink [2019] NSWCA; Zhang v Metcalf [2020] NSWCA 228. 116. Calverley v Green (1984) 155 CLR 242. See also Calverley, Jain v Amit Laundry Pty Ltd [2019] NSWCA 20 at [89] per Beazley P. 117. However, the court considered that after-purchase contributions to the property were relevant to the question whether the court should further alter the proportionate ownership of the property by means of a constructive trust, a topic discussed further below. See 6.31. 118. Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278. 119. Mr Cummins had earlier attempted to transfer his interest in the property to Mrs  Cummins, but this transfer was declared void under s 121 of the Bankruptcy Act 1966 (Cth).

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Where a husband and wife purchase a matrimonial home, each contributing to the purchase price and title is taken in the name of one of them, it may be inferred that it was intended that each of the spouses should have a one-half interest in the property, regardless of the amounts contributed by them.120

Thus, rather than start from the position that Mrs Cummins was entitled to a 76.3% share in the home by virtue of her greater contribution to the purchase price, the starting point in Cummins was that Mr and Mrs Cummins had both contributed to the purchase of the family home. The inference of equal beneficial ownership in marriage therefore applied. On the facts of Cummins, the court concluded that the joint legal title accurately reflected the parties’ beneficial interests, and so the Australian Taxation Office was able to recover the unpaid tax debt from Mr Cummins’ share of the property. As Sarmas has argued, Cummins has introduced ‘layers of obfuscation’ to the analysis of resulting trusts and, as she has shown, this has led to ‘lack of doctrinal clarity and consistency’ particularly its application by lower courts.121 As she notes, for example, it is not clear whether the inference of equality applies exclusively in marriages, or only to the matrimonial home, or how the principle operates with the presumption of advancement.122 Post–Cummins, however, equality of ownership appears to be the starting assumption, displacing the presumption of a resulting trust in the context of marital homes.123 This starting point remains subject to displacement where evidence can be provided that demonstrates that the parties expressly, or impliedly, agree to hold property in unequal shares (evidence that could not be adduced in Cummins). Pre-Cummins principles remain applicable to properties that are not purchased as family homes by married couples. 6.30  Presumption of advancement  The presumption of advancement operates as a limitation on the operation of resulting trusts. This is because, in certain situations, equity presumes that the person who purchases property in the name of another intends to make a gift of the property.The other person holds the property, not as trustee (as in the normal case of the resulting trust), but as outright owner. The presumption of advancement arises where: (a) a husband or male fiancé purchases property and puts it in the name of his wife or future wife;124 or (b) where a person in loco parentis puts the property in name of the child.125 120. Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278, 303 at [71], quoting with approval from AW Scott and W Fratcher, The Law of Trusts, Little Brown, 4th ed, 1989, Vol 5, pp 197–8 (footnote omitted in original). 121. L Sarmas, ‘Trusts,Third Parties and the Family Home: Six Years since Cummins and Confusion Still Reigns’ (2012) 36 Melbourne University Law Review 216 at 249, 237–44. 122. Sarmas, ‘Trusts, Third Parties and the Family Home’, note 121 above, p 230. 123. The policy assumptions underlying this approach have been criticised. See discussion at 6.54–6.55. 124. Wirth v Wirth (1956) 98 CLR 228. 125. Dullow v  Dullow (1985) 3 NSWLR 531. Traditionally the presumption of advancement operated only from father to child, but in Nelson v Nelson (1995) 184 CLR 538 this was extended to mother to child. See further, A Dowling ‘The Presumption of Advancement between Mother and Child’ [1996] Conv 274. The presumption may also arise in favour of a stepchild: see Olivieri v Olivieri (1993) 38 NSWLR 665.

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There is no presumption of advancement from a wife to her husband,126 nor does the presumption of advancement apply in de facto relationships (whether heterosexual or same-sex).127 It was once the case that no presumption of advancement arose between mother and child. However, since Brown v Brown128 and Nelson v Nelson129 the presumption of advancement has been held to apply equally to gifts made to children by mothers as well as fathers.130 The presumption is rebuttable if it is clear that the intention is that the transfer is not to be donative.131 For example, in Brown v Brown,132 a mother purchased a house for herself and her children to live in. She put the title in the names of her two sons. On the evidence, it was held that she did not intend to make a gift of the property to her sons, so the presumption of advancement did not apply. Accordingly, there was a resulting trust in her favour.133 As this case illustrates, the operation of a presumption will have significant consequences for the parties, as it will determine questions of evidence and onus of proof.134 Given that the presumption of advancement only arises in family circumstances, where informal arrangements may be more likely, the allocation of the burden of proof is likely to be significant.135

Constructive trusts 6.31  The constructive trust arises independently of both documentary formalities and an express arrangement between the parties. Rather, it is imposed on parties by courts of equity in order to prevent unconscionable behaviour arising from their conduct. As Dal Pont has observed, ‘when and why constructive trusts are imposed’ remains ‘[o]ne of the most contentious areas of equity doctrine’.136 Courts have traditionally separated constructive trusts into remedial and institutional categories. Institutional constructive trusts tend to arise in situations where fiduciary or

126. March v March (1945) 62 WN (NSW) 111. 127. Mason and Brennan JJ in Calverley v  Green (1984) 155 CLR 242 at  259–60 drew a clear distinction between marriage and de facto relationships in the application of the presumption of advancement. 128. Brown v Brown (1993) 31 NSWLR 582. See also Paulet v Stewart [2009] VSC 60. 129. Nelson v Nelson (1995) 184 CLR 538. 130. See, for example, Flourentzou v  Spink [2019] NSWCA 315. On the application of the presumption in favour of a stepchild, see Olivieri v Olivieri (1993) 38 NSWLR 665. 131. Martin v Martin (1959) 110 CLR 297. On the evidence that can be adduced to rebut the presumption, see discussion in Buffrey v Buffrey [2006] NSWSC 1349. 132. Brown v Brown (1993) 31 NSWLR 582. 133. See  also Swettenham v  Wild [2005] QCA 264 (presumption of advancement of a gift from father to daughter rebutted by evidence of a joint endeavour). 134. As was discussed in Commissioner of Taxation v Bosanac (No 7) [2021] FCA 249. 135. On the contemporary significance of the presumption of advancement, see  further: J Glister, ‘Is there a Presumption of Advancement?’ (2011) 33 Sydney Law Review 39; L Sarmas, ‘A Step in the Wrong Direction: The Emergence of Gender “Neutrality” in the Equitable Presumption of Advancement’ (1994) 19 Melbourne University Law Review 758; and JC Campbell QC, ‘The Consequences of Rebutting a Presumption of Advancement’ (2018) 46 Australian Bar Review 229. 136. G Dal Pont, Equity and Trusts: Commentary and Materials, 7th ed, Thomson Reuters, Sydney, 2019, p 1227 (see  also, at  p 1225, judicial and academic commentaries exploring the many and disparate forms of constructive trust, and the consequent confusion in this area of equitable doctrine).

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contractual duties exist, such as receipt of trust property;137 or due to the failure of an express trust.138 The ‘more common’139 form of constructive trust, and that discussed in brief below, is the remedial constructive trust. Although the categories are not closed, constructive trusts of this kind have been recognised in two key areas: (i) the so-called ‘common intention constructive trust’; and (ii) a constructive trust based solely on unconscionable reliance on legal title to deny a beneficial interest in the property.140 6.32  Common-intention constructive trust  A constructive trust will arise in the context of a transaction for the acquisition of an interest in land where the holder of the legal title has, in conjunction with the non-owner, demonstrated a common intention that the non-owner will receive an interest and the legal title holder ‘has so conducted himself that it would be inequitable to allow him to deny to the cestui que trust a beneficial interest in the land acquired’.141 But when will equity consider it inequitable so to deny the cestui que trust? In Gissing v Gissing, Lord Diplock observed: And he will be held so to have conducted himself if by his words or conduct he has induced the cestui que trust to act to his own detriment in the reasonable belief that by so acting he was acquiring an equitable interest in the land.142

This principle has been applied to cover a case where an owner sold land at an undervalue to the purchaser, who promised to let her live there rent free for as long as she wished.The purchaser was held to hold the property on constructive trust for the former owner.143 Also, where the owner induced the plaintiff to pay for an extension to the owner’s home by promising her that she could live there as long as she wished, the owner was held to be subject to a constructive trust in favour of the plaintiff.144 The plaintiff ’s beneficial interest in the property was held to be proportionate to her contribution. 6.33  A further reason for the imposition of a constructive trust is that a court of equity will not allow a statute to become an instrument of fraud. So, where A sold his half share to B on the basis of an oral agreement that, if B did not live in the property for 12 months, B would transfer the share back to A, and B breached the condition, B will be found to

137. The rule in Barnes v Addy (1874) LR 9 Ch App 244 (the knowing receipt of trust property) is discussed further in its relation to actions in personam in the Torrens system at 8.102–8.105. 138. See Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566. 139. P Young AO, C Croft, M Smith, On Equity, Lawbook Co, Australia, 2009, p 442. Dal Pont observes that these trusts arise most commonly in cases of the breakdown of a relationship, in circumstances where equity would hold that beneficial ownership should be held in a manner inconsistent with the legal ownership. See G Dal Pont, Equity & Trusts in Australia, 7th ed, Thomson Reuters, Sydney, Australia, 2019. Chapter 38. 140. See Giumelli v Giumelli (1999) 186 CLR 101. 141. Gissing v Gissing [1971] AC 886 at 905 per Lord Diplock. ‘Cestui que trust’ is an alternative expression for cestui que use. See 6.3. 142. Gissing v Gissing [1971] AC 886 at 905. 143. Bannister v Bannister [1948] 2 All ER 133. 144. Hussey v Palmer [1972] 1 WLR 1286; [1972] 3 All ER 744.

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hold the half share in the property on trust for A.145 To do otherwise would be to allow B to commit a fraud on A. In Allen v Snyder,146 it was held that a common intention must arise from an express or implied agreement between the parties. The implied agreement may be evidenced by conduct, but there is no scope for the court to impute a common agreement. Thus, the court will not impose an intention on the parties from an examination of their conduct if they did not actually reach such an agreement.147 On the facts of that case, the court held that there was no evidence of an actual or implied common intention that the woman would have an equitable interest in the property. The couple had been in a de facto relationship for 13 years, but the court found that the performance of household chores or contributions to domestic expenses was not sufficient to establish a common intention. In Ogilvie v Ryan, as we have seen above,148 although Miss Ryan failed to establish an equitable interest arising under the part performance of an oral contract, the court enforced her interest in the property by means of a constructive trust. This was because it would have been unconscionable for the plaintiff (Mr Ogilvie’s son) to rely on the statutory requirements to defeat Miss Ryan’s claim. The circumstances in that case were that Miss Ryan had moved into Mr Ogilvie’s house on terms that she would look after him and that she would be able to live in the house as long as she wished. Holland J held, first, that there was clearly a common intention that Miss Ryan receive an interest in the land; second, that she was induced to alter her position, and confer great benefit on Mr Ogilvie, in reliance on the common intention; and third, it would be an unconscionable use of Mr  Ogilvie’s legal title to deny the claim. His Honour acknowledged that the facts in this case differed from others in that the acts beneficial to Mr  Ogilvie, and otherwise detrimental to Miss Ryan, were not in any way directed to the acquisition or improvement of the property.149 Yet the fraud on her would be no less if such acts were not to form the basis of the constructive trust. In this way, the constructive trust proved itself more flexible in delivering a just result than the doctrine of part performance. 6.34  Constructive trust based solely on unconscionable use of legal title  In certain circumstances, the absence of a clear common intention can work to the significant disadvantage of the person who contributes labour or money to improving a property.The limitation on courts of equity imputing a common intention after Allen v Snyder150 further restricts the scope to do justice in these circumstances. However, courts have recently found other ways of establishing the existence of a constructive trust in circumstances where parties either failed to turn their minds to the particular question of property rights or, where, if they did, they intended a different distribution of rights from those which a common-intention constructive trust would have given them. 145. Last v Rosenfeld [1972] 2 NSWLR 923. 146. Allen v Snyder [1977] 2 NSWLR 685. 147. Allen v Snyder [1977] 2 NSWLR 685 at 690. 148. Ogilvie v Ryan [1976] 2 NSWLR 504. See 6.13. 149. Hussey v Palmer [1972] 1 WLR 1286; [1972] 3 All ER 744. 150. Allen v Snyder [1977] 2 NSWLR 685.

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In Muschinski v Dodds,151 a couple in a de facto relationship agreed to purchase land and build a house on it. Mr Dodds and Mrs Muschinski respectively contributed approximately one-eleventh and ten-elevenths to the purchase price, but they separated before the house was built. The presumption of resulting trust was rebutted in this case, because the parties clearly indicated that they wanted to hold the property equally. But this common intention to hold equally would, on conventional analysis, give rise to a constructive trust that would be unfair to Mrs Muschinski: she would receive only a half share of the property despite contributing a much greater share of the purchase price. The High Court held that the facts of the case gave rise to a constructive trust in favour of Mrs Muschinski based on the principle of unconscionability. The court held that, where one party makes contributions to a joint endeavour that fails without attributable blame, he or she is entitled to those contributions as beneficiary under a constructive trust if: … the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it.152

6.35  This principle was extended in Baumgartner v Baumgartner.153 The parties were in a de facto relationship when the man bought land in his own name. Later, a house was built on the land, and they moved in. The woman (who had changed her name by deed poll to Baumgartner) was in paid employment for all of the four years they were together, except for a period of three months after the birth of their child. She generally handed over her pay packet to the man, which he used, in conjunction with his own pay, to meet household expenses, including mortgage loan repayments. The parties agreed that their respective contributions to the pool of earnings were in the proportion 55:45, with the man contributing the larger amount. The High  Court held that in this case there was no common intention that the woman would have a beneficial interest in the property. However, following Muschinski, they emphasised that constructive trusts were not confined to cases of common intention, but that ‘the imposition of a constructive trust’ may be warranted where unconscionable conduct arises.154 Where parties pool their earnings, as in this case, ‘it is proper to regard the arrangement … as one which was designed to ensure that their earnings would be expended for purposes of their joint relationship and for their mutual security and benefit’.155 In such circumstances, it was inappropriate to consider 151. Muschinski v Dodds (1985) 160 CLR 583. 152. Muschinski v Dodds (1985) 160 CLR 583 at 620 per Deane J, with whom Mason J agreed. See also Sirtes v Pryer [2006] ANZ ConvR 188 (gift of a share of property to a daughter-in-law on the understanding that marriage would continue. The court found that the gift was to be held on constructive trust for the donor, but subject to charge in favour of the daughter-in-law for improvements she made to the property). 153. Baumgartner v Baumgartner (1987) 164 CLR 137. 154. Baumgartner v Baumgartner (1987) 164 CLR 137 at 147 per Mason CJ, Wilson and Deane JJ (emphasis added). 155. Baumgartner v  Baumgartner (1987) 164 CLR 137 at  149. The principles in Baumgartner are not limited to marital or de facto relationships, but can include domestic relationships between parent and child. See  discussion by McCallum J in O’Neill v  Robertson-Staton [2015] NSWSC 1949 (holding that the requisite intention could not be found in that case).

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the woman’s contribution as a gift and as such an unconscionable use of the man’s legal title to deny her interest in the property. The court therefore concluded that there was a constructive trust proportionate to their respective contributions; that is, 55:45. The ‘Baumgartner calculus’156 takes into account both financial and non-financial contributions, and so, in computing the woman’s share, the court included within the calculation credit for time she had taken off after the birth of their baby, but not for any general domestic labour or care of the child.157 6.36  A failure to pool earnings — for instance, where one partner is homemaker and does the unpaid domestic labour while the other partner is engaged in paid employment, and thereby is in a position to pay off the mortgage and bills — is a factor that can weigh against the existence of a Baumgartner constructive trust. In Bryson v Bryant,158 for example, a majority of the New South Wales Court of Appeal held that even where the parties were married for a period of 60 years, the husband’s use of his legal title to defeat the wife’s interest after benefiting from her labour for all that time was not unconscionable. However, in Miller v Sutherland,159 the court held that a woman who substantially assisted in renovating the house of her de facto partner came within the Baumgartner rule. Cohen J held in that case that the contributions to the renovations on the part of the woman, and her father, amounted to a ‘pooling of labour’ that had been accepted by the man ‘on the basis that these would contribute to the making of a home for their joint occupation and enjoyment’.160 ‘In those circumstances’, Cohen J reasoned, ‘it would be unconscionable of the defendant to deny to the plaintiff an equitable interest in the house and accordingly a constructive trust will arise in favour of the plaintiff.’161

Estoppel Proprietary estoppel 6.37  The doctrine of proprietary estoppel is so described because it prevents, or estops, a person relying on his or her strict legal property rights as against a third party. In this way, it indirectly confers an equitable proprietary interest on another party. The basis of the principle is that: where the documentary titleholder, A, induces or encourages another person, B, to perform certain acts; which involve detriment to B; in the belief that, as a consequence of those acts, B will acquire rights over the property; A’s rights based on his or her documentary title may be held in equity to be restricted or extinguished in favour of B. Equitable doctrine thus redistributes rights in these circumstances. 156. This descriptor was suggested to the author by Michael Tarlowski (Australian National University). 157. In contrast, following an extensive discussion of the principles in Baumgarter, Campbell J concluded in West v Mead [2003] NSWSC 161 that Ms West was entitled to only an 11% share of the property for, although she had established circumstances such as to make it inequitable for Ms Mead to retain the entire benefit of the assets that were built up during the relationship and for the purposes of the relationship, the extent to which assets were built up in that way was comparatively small. 158. Bryson v Bryant (1992) 29 NSWLR 188. 159. Miller v Sutherland (1990) 14 Fam LR 416 at 424. 160. Miller v Sutherland (1990) 14 Fam LR 416 at 424. 161. Miller v Sutherland (1990) 14 Fam LR 416 at 424.

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Proprietary estoppel may arise in two ways: 1. The documentary titleholder may induce the belief by means of a representation. 2. The belief may be induced by means of acquiescence in the other party’s expenditure of money or other detrimental acts where that party is mistaken as to his or her legal rights.

Belief induced by representation 6.38  The first form of proprietary estoppel is illustrated by Inwards v Baker.162 In that case, a father made an oral offer to his son of a parcel of land on which to build a house. The son proceeded to build the house.The trustees under the father’s will claimed that the son had only a licence to occupy the land. It was held that, where a landholder encourages a licensee to expend money in the expectation of being allowed to stay on the land, an equity arises in the licensee. It is not necessary for the landholder to promise a particular proprietary interest in return for the expenditure. The court will determine the equity from the circumstances. In this case, the court held that the son had a life interest, and so could remain on the land for as long as he desired to live there. Similarly, in Dillwyn v  Llewellyn163 a father made his son an offer of a fee simple in the land in a defective instrument. The House of Lords held that the son was induced to act to his detriment by the promise and, accordingly, was entitled in equity to a fee simple. 6.39  The fact that different plaintiffs receive different entitlements in equity reflects the principle at work in these cases, namely, that a court of equity will order the minimum equity to do justice to the plaintiff. In Crabb v Arun District Council,164 for example, Crabb was led by the local council to believe that he would be granted a right of access to a part of his land that he was proposing to subdivide. After subdivision, the council decided not to proceed with the grant of an access point and right of way. The English Court of Appeal held that it would be unconscionable to allow the council to resile from its representation when, first, the plaintiff relied on it; and second, the plaintiff suffered detriment in consequence of the reliance. ‘The minimum equity to do justice to the plaintiff ’ was to estop the council from not proceeding with its promise.165 The minimum equity may require the plaintiff to make some payment for the land, but not, as was the case here, where the council’s actions rendered the land sterile for some years. In contrast, in Cameron v Murdoch,166 a representation was made by two brothers who owned land to another brother that he would be able to acquire land if he built a house on it and farmed it. He did this, but they refused to transfer the land to him. The Privy Council held that the brother had an equity entitling him to buy the land at a one-third discount.

162. Inwards v Baker [1965] 2 QB 29. 163. Dillwyn v Llewellyn (1862) 4 De GF & J 517; 45 ER 1285. 164. Crabb v Arun District Council [1976] 1 Ch 179. 165. Crabb v Arun District Council [1976] 1 Ch 179 at 198 per Scarman LJ. 166. Cameron v Murdoch (1986) 63 ALR 575.

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Belief induced by acquiescence 6.40  An example of the second way in which the doctrine of proprietary estoppel is established is by acquiescence on the part of the documentary titleholder. This principle is also known as an ‘equity of acquiescence’. In E R Ives Investment v High,167 the plaintiffs’ predecessor in title, Mr Westgate, acquiesced to Mr High’s building of a garage on his land, to which he could gain access only by crossing the plaintiff ’s land.The acts of acquiescence were evidenced by Mr Westgate’s failure to raise any objections to Mr High’s entry to and exit from the garage over their property, and various compliments offered to Mr High on the construction of the garage. It was held that these acts created a reasonable expectation in Mr High’s mind that access would not be disturbed, and in these circumstances the court found that it would be inequitable to allow the reasonable expectation to be defeated.

Equitable estoppel 6.41  The conclusion reached in the above proprietary estoppel cases was endorsed and extended by the High Court in Waltons Stores (Interstate) Ltd v Maher.168 The Mahers were owners of land. They negotiated the grant of a lease over the land with Waltons. The negotiations reached a stage where a lease was drawn up and executed by the Mahers, and the lease was then sent to Waltons’ solicitors to be signed. Waltons decided to go slow on the deal and failed to sign the lease, in full knowledge that the Mahers were engaged in extensive demolition work in accordance with the terms of the lease. A majority of the High Court found that the Mahers were acting in the belief induced by Waltons, that is, that Waltons would proceed with the execution of the lease. The court in Waltons Stores held that both proprietary and promissory estoppel are instances of a single doctrine of equitable estoppel.169 The object of the doctrine of equitable estoppel is not to make good representations but rather to prevent unconscionable conduct. Unconscionability is not established merely by the failure to honour a representation, but where the representation induces the plaintiff to act to his or her detriment and the person who makes the representation fails to fulfil the representation. It followed that in Waltons Stores, equitable estoppel was made out because on the facts: the owner of the land was encouraged to believe that the execution of the lease was a mere formality and that it would be carried out; the owners acted to their detriment in reliance on that representation by carrying out extensive demolition work; and Waltons ‘failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise’.170 The court held that equitable estoppel was not confined to cases where the owner has made representations, as in each of the cases noted above. Rather, it would be equally 167. E R Ives Investment v High [1967] 2 QB 379; [1967] 1 All ER 504. 168. Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387. 169. On the debate regarding the interaction of the various forms of estoppels, including attempts by some judges to establish ‘a single overarching doctrine’ which would fuse common law and equitable estoppel (not simply merging species of equitable estoppel), see further, Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, note 10 above, Ch 1 and Q (a pseudonym) and E Co (a pseudonym) [2020] NSWCA 220. 170. Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 429 per Brennan J.

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applicable where a prospective owner, or tenant as in this case, induces the plaintiff to act to his or her detriment. Analogously with the doctrine of part performance, there can be no estoppel until there has been an unambiguous inducement. For example, in Austotel Pty Ltd v Franklins Self-Serve Pty Ltd171 there was found to be no lease on the basis of equitable estoppel in circumstances where two large business organisations were engaged in protracted negotiations over a lease of a part of a shopping centre. The prospective tenant ordered equipment to be used on the premises and failed to renew a lease on other premises in the expectation that a lease would be granted. However, the parties had yet to agree on the rent payable under the lease and so in these circumstances it was not possible to find that there was encouragement that a contract would come into existence, and accordingly it was not unconscionable for the prospective landlord to refuse to proceed with the grant of a lease. In determining the nature of the representation and inducement the court will consider the particular circumstances of the case, including whether it was a business or family.172 In contrast, the House of Lords in Thorner v  Major173 held that a farmer who did substantial work over a period of almost 30 years, without pay, on the farm of his father’s cousin had established a proprietary interest by estoppel. It was found that the property holder had encouraged him to act in this way in the expectation that he would inherit the farm on the owner’s death.The latter’s words and actions over time would have reasonably induced a belief that he would be inheriting it. In such domestic situations, the courts will not require evidence of a specific promise, but rather a pattern of behaviour over time, so that imprecise understandings at one point may be given clarity by later actions. In the words of Lord Hoffmann, ‘subsequent events throw retrospective light upon the meaning of past events. The owl of Minerva spreads its wings only with the falling of the dusk.’174 In Trentelman v  The Owners — Strata Plan No 76700 [2021] NSWCA 242, the New  South  Wales Court of Appeal affirmed that there must be sufficient certainty in the promise to give rise to the expectation. However, the promise or representation need not be so certain as to amount to a contract, nor need it define precisely the interest the party was expected to receive.175 In that case representations were made that the Owners Corporation of a strata property would maintain an interest in a swimming pool after a proposed redevelopment. The court found that reliance was proven, as the lot holders 171. Austotel Pty Ltd v Franklins Self-Serve Pty Ltd (1989) 16 NSWLR 582. See also Yeoman’s Row Management Ltd v Cobbe [2008] 4 All ER 713 where an experienced property developer was encouraged to secure planning permission, at great personal expense, on the basis of an expectation induced by the landowner that he would be granted an interest in the property on doing so. It was held that he was not entitled to half the increase in the value of the land attributable to the grant of permission, for the reason that he knew that a formal, written contract was required to give him an interest. 172. See, for example, Grant v Roberts [2019] NSWSC 843. 173. Thorner v Major [2009] 3 All ER 945. 174. Thorner v Major [2009] 3 All ER 945 at [8]. 175. Trentelman v The Owners — Strata Plan No 76700 [2021] NSWCA 242 [120] per Bathurst CJ, [170] Bell P and [171] Leeming JA.

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had consented to the redevelopment proposal on the basis of this understanding. As the owners had suffered detriment as a result of this reliance, the court held that it would be unconscionable for Ms Trentelman to resile from the representations. The High  Court in Sidhu v  Van Dyke176 established that it is not necessary for the representation to be the sole inducement or basis for the relying party’s conduct.The party seeking to establish an estoppel bears the onus of proving detrimental reliance. In that case, the Van Dykes occupied a cottage on property belonging to the Sidhus, and subsequently Mrs Van Dyke and Mr Sidhu commenced a sexual relationship. Mr Sidhu represented that he wanted Mrs Van Dyke to have a home and that he intended to subdivide the property in order to transfer the cottage to Mrs Van Dyke. He later provided a handwritten note to Mrs Van Dyke confirming that intention. When the Van Dykes subsequently divorced, Mrs Van Dyke did not seek a property settlement from her husband, and continued to live in the cottage with her son, and paid nominal rent to the Sidhus. In this period, Mrs Van Dyke did not seek full-time employment, and also undertook maintenance on the property. However, when Mrs  Van Dyke later asked to purchase the cottage from the Sidhus, they refused. Mrs  Van Dyke left the cottage, and later successfully claimed equitable compensation to the value of the cottage (the cottage itself having burned down), on the basis that Mr Sidhu was estopped from denying her interest in the cottage. The High  Court concluded that, taking into account Mrs  Van Dyke’s circumstances, Mr  Sidhu’s promises were ‘objectively likely to have had a significant effect’177 on her decision-making and have been a contributing cause to her actions. 6.42  What ‘detriment’ is required? In Sidhu, the detriment suffered by Mrs Van Dyke included the financial disadvantage she suffered through her decision not to seek a property settlement in her divorce, and not to seek out full-time employment. That is, detriment caused both by positive actions and action that the party has omitted to take is relevant.178 Waltons Stores (Interstate) Ltd v Maher provides a different illustration: if all that the Mahers had done prior to discovering that Waltons were pulling out of the deal was to get tenders from a number of demolition contractors, would they have succeeded in their action? Would such detriment be enough for it to be unconscionable to allow a departure from the assumed state of affairs, and so to give them an equitable lease with Waltons? An indication of a possible answer to this question arises in the judgment of Deane J in Commonwealth v Verwayen.179 In that case, Deane J gave the example of the detriment of a $100 shed to suggest that the flexibility inherent in the doctrine of estoppel might preclude a finding of estoppel if the allegedly estopped party offered adequate compensation, or an order for compensatory damages would make good the detriment. 176. Sidhu v Van Dyke (2014) 251 CLR 505. 177. Sidhu v Van Dyke (2014) 251 CLR 505 at 525 [69] per French CJ, Kiefel, Bell and Keane JJ. 178. See also Smilevska v Smilevska (No 2) [2016] NSWSC 397 at [122], and discussion in Bassett v Cameron [2021] NSWSC 207. In Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26 the court found that the representation (that the tenants would be ‘looked after at a renewal time’) had not in fact been relied upon, and so the tenants failed to establish that Crown was estopped from denying the existence of a collateral contract. 179. Commonwealth v Verwayen (1990) 170 CLR 394 at 441–3.

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The High  Court decision of Giumelli v  Giumelli180 provides an example of how the court’s discretion can be utilised to make good the detriment suffered by the person to whom a representation was made. The appellants were the parents of Robert Giumelli, the respondent. They had made three key representations to Robert over a number of years: (i) that he could have part of a property that he had developed, working without wages; (ii) that he could have that part of the property on which he built a house, on completion of construction; and (iii) that, if he did not accept work elsewhere, he could have the subdivided lot where the house stood. Robert Giumelli claimed that each of the three promises gave rise to an estoppel. The High  Court granted relief, relying on the notion of unconscionability and the equitable discretion relevant to cases such as these. Citing Verwayen, the High Court overturned the decision of the Full Court of the Supreme Court of Western Australia, which had ruled that the parents held the property on constructive trust for their son on the basis of estoppel. The High  Court held that the order to be made must meet the requirements of ‘conscientious conduct’181 and no more. It followed that the estoppel gave rise only to a right to the monetary value of the interest that he was promised.This was because an order that Robert receive the beneficial interest in the property would exceed what was required for conscientious conduct, and would also disadvantage third parties; namely, Robert’s brother Steven, and his family, who continued to reside on the promised lot. Importantly, however, the estoppel in this instance gave rise to a proprietary interest, as evidenced by the court’s order that the monetary sum be a charge on the land. 6.43  While the above illustrations have arisen in the context of claims of proprietary interests, equitable estoppel can also arise in relation to interests in personalty. For example, in Olsson v Dyson,182 the property in question was a debt (a chose in action)183 that a testator had ineffectively assigned by way of gift to the donee, his wife.The High Court held that if, after failing to make an effective gift, the donor had, by some subsequent conduct, induced the donee to act to her prejudice, either by not stopping her from acting in the belief that the gift was perfect or by actively encouraging her to act, it might be ‘unconscionable for the donor to withhold the property or interest from the donee, and equity may on that ground hold the donee entitled to the property’.184 The wife claimed that she had failed to make an application under the testator’s family maintenance legislation because of her husband’s inducement. However, it was held that, on the facts, there was no evidence that the husband had given any such inducement. The mere attempt to make the gift was not 180. Giumelli v  Giumelli (1999) 196 CLR 101. For further discussion, see  F Burns, ‘Giumelli v  Giumelli Revisited: Equitable Estoppel, the Constructive Trust and Discretionary Remedialism’ (2001) 22 Adelaide Law Review  123; S Evans, ‘Defending Discretionary Remedialism’ (2001) 22 Sydney Law Review 463; YK  Liew, ‘Proprietary Estoppel in Australia: Two Options for Exercising Remedial Discretion’ (2020) 43(1) University of New South Wales Law Review 281. 181. Giumelli v Giumelli (1999) 196 CLR 101 at 123 [42] per Gleeson CJ, McHugh, Gummow and Callinan JJ, citing Commonwealth v Verwayen (1990) 170 CLR 394 at 442 per Deane J. See also Repatriation Commission v Tsourounakis (2007) 239 ALR 491; Harbour Port Consulting v NSW Maritime [2011] NSWSC 813. 182. Olsson v Dyson (1969) 120 CLR 365. 183. For more information on choses in action, see 13.8. 184. Olsson v Dyson (1969) 120 CLR 365 at 376 per Kitto J.

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enough to establish an equity.The case is an example of equity not perfecting an imperfect gift in the absence of an estoppel.185 6.44  Use of the language of ‘equities’ in these cases gives rise to the difficult question of whether the interest in land found by courts is a fully fledged equitable interest, or whether it is a rather more shadowy ‘equity’ in the form of a right to equitable relief. The distinction is important where priorities arise,186 as holders of equities are generally in a weaker position than the holder of an equitable interest. The cases are very unclear on this point, though it is arguable that where, as in E R Ives Investment v High187 and Inwards v Baker,188 the courts refer to the standard priority rule, this might be taken to imply that they have the status of equitable interests. In principle, it is difficult to see why someone in the position of the son in Inwards v Baker should be in a weaker position than the holder of an equitable interest under the doctrine of part performance, given that the bases for the two doctrines are so similar.

Gifts Personalty 6.45  A gift of property will be effective at law when the donor has transferred the legal title to the donee. If the property is personalty, the gift is perfect at law on delivery of the chattel, and it does not matter whether the chattel is delivered to the donee before or after the expression of intention to donate.189 The position is rather more complicated in equity. The position of the donee is rather more precarious, because of the equitable maxim that ‘equity will not assist a volunteer’ and that, in consequence, ‘equity will not perfect an imperfect gift’. Despite these maxims, however, equity does have a role to play in the case of gifts not effective at law. The leading case is Milroy v Lord.190 In this case, the donor made a gift of a parcel of shares in favour of his daughter. The court held that, in order for the gift to be effective in equity, the donor must do everything according to the nature of the property that is necessary to be done to effect the gift. The donor had executed a deed setting out the terms of the trust, but failed to execute a transfer of the shares to the trustees. The gift failed. In Re Rose,191 the donor executed a transfer of shares and as agent for the donee handed them to the company secretary to be registered. He died before registration. The donee was held to have an equitable interest in the shares on the basis that the donor had done all in his power to transfer title to them.

185. For discussion of this principle, see 6.45–6.46. 186. For the difficult question of mere equities and priorities, see 7.45–7.46. 187. E R Ives Investment v High [1967] 2 QB 379; [1967] 1 All ER 504. 188. Inwards v Baker [1965] 2 QB 29. 189. Re Stoneham; Stoneham v Stoneham [1919] 1 Ch 149; [1918–19] All ER Rep 1051. 190. Milroy v Lord (1862) De GF & J 264; 45 ER 1185. 191. Re Rose [1952] Ch 499.

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If a cheque made out to the donor is not delivered to an intended donee, but remains in the possession of the donor, an expression of intention to give it to the donee will not be sufficient for an effective gift, even when accompanied by a symbolic but temporary handing over.192

Land 6.46  In the case of land, the gift will be complete at law when, in the case of old system title, the donor duly executes a deed in the donee’s favour; or, in the case of Torrens title, when the donee becomes the registered proprietor. It is possible for a gift to be effective in equity if it meets the requirements of s 23C of the Conveyancing Act 1919 (NSW). So, if the donor executes a document and signs it, creating an equitable interest in favour of the donee, the donee will acquire a valid equitable interest. Equally, if the donor declares that he or she holds land on trust for the donee, the gift will be valid if ‘manifested and proved’ by writing.193 A gift of land will also be effective in equity if the donor has done everything to put the gift beyond his or her recall; that is, the donor has put the donee in the position where he or she can secure the legal title without any further intervention by the donor. In Corin v Patton,194 for example, Mr and Mrs Patton held Torrens title land as joint tenants. Mrs Patton was suffering a terminal illness, and executed a memorandum of transfer in favour of her brother, Mr Corin, and a deed of trust whereby he would become trustee of her interest in the property. However, she failed to either give Mr Corin the certificate of title of the property, or authorise the bank (which had custody of the certificate of title) to produce the document for the purposes of registering the transfer of her interest to her brother. The High Court applied the principle in Milroy v Lord, and held that the gift was imperfect. Mrs Patton, by neither giving the certificate of title to her brother, nor giving him a right to acquire the document from the bank, had not perfected the gift in equity. As a consequence, the joint tenancy was not severed and the right of survivorship meant that Mr Patton acquired the whole interest in the property.

Trusts and Domestic Relationships — Statutory Intervention 6.47  Changing patterns of domestic relationships place dramatically different demands on the old law of property interests. The equitable property doctrines that have allowed interests in land to be created in the absence of documentary formalities have now been overtaken by statutory reforms.The reforms have appeared in two key statutes: the Family Law Act 1975 (Cth) and Property (Relationships) Act 1984 (NSW).195 This legislation, which is briefly discussed below, allows courts much wider discretion to determine, and 192. Jones v Lock (1865) 1 Ch App 25. 193. Conveyancing Act 1919 (NSW) s 23C(1)(b). 194. Corin v Patton (1990) 169 CLR 540. The position has now been changed by statute. See 9.33. 195. A discussion of the detail of these Acts, and their operation within the wider landscape of family law in Australia, is outside the scope of this chapter. See  further, B Fehlberg, R Kaspiew, J Millbank, F Kelly, J Behrens, Australian Family Law:The Contemporary Context, 2nd ed, Oxford University Press, Melbourne, 2015.

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vary, property rights in the context of a breakdown of relationships, be they marriage, de facto or certain other domestic relationships. While the reforms have extensively affected the scope of operation of the equitable doctrines, they have not eliminated them. In particular, the equitable doctrines will continue to apply in two situations: 1. where the relationship does not qualify as a marriage, de facto or domestic relationship as defined by these Acts; and 2. where the parties to a marriage or qualifying domestic relationship are not terminating the relationship or marriage, or have terminated their relationship outside the limitation periods stipulated within these Acts. In these situations, as Sarmas observed, ‘the question of “who owns what?” in the relationship is central’196 and remains governed by common law and equitable rules.

Property (Relationships) 1984 Act (NSW) s 20 6.48  Most of the relationships where constructive trusts were found to exist in the cases discussed in this chapter would now be covered by the Property (Relationships) Act 1984 (NSW). By s 20 of that Act, the court has power to divide property held by the parties on the breakdown of the relationship in a manner that ‘seems just and equitable having regard to … [the parties’] contributions’. Claims under the Act are subject to time limits. The proceedings must be commenced within two years from the end of the relationship, unless the court gives a party leave to apply out of time.197 In making an order, the court must take into account the financial and non-financial contributions each party has made to the acquisition, conservation or improvement of any of the property or financial resources of the parties.198 These contributions may be direct or indirect, and, in particular, the court must have regard to contributions made as homemaker and parent, and contributions to the welfare of the other party, in determining what is just and equitable.199 The Act applies to ‘domestic relationships’, which are defined in s 5 as de facto and ‘close personal’ relationships.200 A de facto relationship is defined as ‘a relationship between two adult persons who: (a) live together as a couple; and (b) are not married to one another or related by family’.201 When determining whether a de facto relationship exists for the purposes of the Act, a court may have regard to a range of matters, although these factors are expressed not to be determinative.202 Some of these factors include: the ‘nature and extent of common residence’; whether the relationship is sexual; the ‘degree of financial 196. Sarmas, ‘Trusts, Third Parties and the Family Home’, note 121 above, p 217. 197. Property (Relationships) Act 1984 (NSW) s 18(1). 198. Property (Relationships) Act 1984 (NSW) s 20(1). 199. Property (Relationships) Act 1984 (NSW) s 20(1)(b). 200. Property (Relationships) Act 1984 (NSW) s 5. On the definition of ‘close personal relationship’ see Jurd v Public Trustee [2001] NSWSC 632 (and discussion in Fehlberg et al, Australian Family Law:The Contemporary Context, note 196 above, pp 98–9) and Saravinovksa v Saravinovski [2016] NSWSC 964. 201. Property (Relationships) Act 1984 (NSW) s 4(1). 202. Property (Relationships) Act 1984 (NSW) s 4(3).

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dependence … between the parties’; the ‘ownership and use of property’; the ‘care and support of children’; and the ‘performance of household duties’.203 6.49  Importantly, the reference to ‘the ownership, use and acquisition of property’ under s 4(2) of the Property (Relationships) Act preserves the common law and equitable rules in relation to property, but affords them a minor role in how property is to be distributed on the breakdown of the relationship. However, many of the themes developed by the courts in relation to constructive trusts form part of the matters to be taken into account in finding that a de facto relationship exists in the first place. Thus, matters such as the mutual financial interdependence and ‘mutual commitment to a shared life’ evoke the joint responsibilities assumed by the parties as justifying the imposition of a constructive trust in Baumgartner v Baumgartner.204 The relevance of the performance of household duties also has resonances of Ogilvie v Ryan,205 while ‘the ownership, use and acquisition of property’ echoes the detailed computation undertaken by the court in Muschinski v Dodds.206 However, unlike the position in equity, where the requirements of establishing an express or implied common intention and detrimental acts in reliance on that intention are central, a much wider range of considerations may be brought before the court under the Act. 6.50  In contrast to earlier New  South  Wales legislation, the definition of ‘de facto relationship’ in the Property (Relationships) Act is not restricted to heterosexual de facto couples. ‘Close personal relationships’, also categorised as ‘domestic relationships’ under the Act are still more broadly defined, as a: … relationship (other than a marriage or de facto relationship) between two adult persons, whether or not related by family, who are living together, one or each of whom provides the other with domestic support and personal care.207

The typical relationships envisaged by the definition of ‘close personal relationships’ are those between parents and children, siblings sharing accommodation, and even friends who live on the same premises. In this way, the Act would therefore encompass interdependent and care-type relationships. However, care relationships encompassed by the Act are those undertaken voluntarily. Support and personal care provided for a fee or reward, or on behalf of another person or organisation (such as a charity), are excluded from the operation of the Act.208 Section 17 of the Property (Relationships) Act provides that a person can apply for a property order under s 20 of the Act provided that the domestic relationship exhibits of the following characteristics: it has lasted for two years or more; there is a child of the relationship; ‘serious injustice’ would result in circumstances where a partner who has

203. Property (Relationships) Act 1984 (NSW) s 4(2). See, for example, Burton v Prior [2019] NSWSC 518. 204. Baumgartner v Baumgartner (1987) 164 CLR 137; Property (Relationships) Act 1984 (NSW) s 4(2)(f). 205. Ogilvie v Ryan [1976] 2 NSWLR 504; Property (Relationships) Act 1984 (NSW) s 4(2)(e). 206. Muschinski v Dodds (1985) 160 CLR 583. 207. Property (Relationships) Act 1984 (NSW) s 5(1)(b) (emphasis added). 208. Property (Relationships) Act 1984 (NSW) s 5(2).

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made substantial contributions that would not otherwise be compensated; or one partner has the ‘care or control of a child’ of the other partner.

Family Law Act (Cth) s 79 6.51  Section 79 of the Family Law Act 1975 (Cth) gives the Family Court considerable discretion to vary rights to property that couples would have under the traditional common law and the equitable principles outlined above.209 Unlike the Property (Relationships) Act 1984 (NSW), however, the Family Law Act only applies to couples: married, de facto or same sex. As in the New South Wales legislation, under the Family Law Act the Family Court will take into account a range of factors in determining whether persons seeking the court’s jurisdiction are genuinely living together as a couple. These factors similarly include a range of social and financial indicia, such as: the duration of the relationship; the extent and nature of the common residence; ‘whether a sexual relationship exists’; the ‘degree of mutual commitment to a shared life’; the care of children; financial dependence; and, the ownership of property.210 Under s  79 of the Family Law Act, the Family Court may make such orders as it considers appropriate altering the interests of the couple in the property, and those of third party creditors.211 This may include an order for a settlement or transfer of property in substitution for any interest in the property.212 The section requires the court not to make an order ‘unless it is satisfied that, in all the circumstances, it is just and equitable’ to do so.213 In Mallett v Mallett,214 Dawson J described the ‘just and equitable’ requirement as the ‘overriding requirement’ of s 79. The primacy of this requirement was confirmed by the High Court in Stanford v Stanford,215 and accordingly the provision confers a wide discretion on the court.216 In particular, the case cast doubt on an early approach of the Family Court to proceed from a starting point of equality of contribution in long-term

209. For further discussion of s 79 of the Family Law Act 1975 (Cth), see, generally, Fehlberg et al, Australian Family Law:The Contemporary Context, note 196 above, Ch 13. 210. Family Law Act 1975 (Cth) s 4AA(2). See, for example, Gissing and Sheffield [2012] FMCAfam 111; Jonah and White [2011] FamCA 22. 211. See further, Sarmas, ‘Trusts, Third Parties and the Family Home’, note 121 above, p 248. 212. Family Law Act 1975 (Cth) s 79(1) (emphasis added).The court may make an order in relation to de facto couples only in the event of a breakdown in the relationship. Stanford v Stanford (2012) 247 CLR 108 illustrates that s 79 permits a court to make orders under the Family Law Act while a marriage is ongoing. In that case, the wife’s daughter initiated s 79 proceedings (in her capacity as the wife’s guardian) when she was unhappy with the nursing care arranged by the wife’s husband. The proceedings were continued after the wife’s death. While the couple were not co-habiting while the wife was in a nursing home, the 37-year marriage had not been dissolved. See further, discussion in Fehlberg et al, Australian Family Law: The Contemporary Context, note 196 above, pp 497–8, 501–10. 213. Family Law Act 1975 (Cth) s 79(2) (emphasis added). 214. Mallett v Mallett (1984) 156 CLR 605 at 647. 215. Stanford v Stanford (2012) 247 CLR 108. 216. Bevan v Bevan [2014] FamCAFC 19 at [92] per Bryant CJ and Thackray J.

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relationships. Rather, Stanford requires courts to have a ‘principled reason for interfering with the existing legal and equitable interests of the parties to the marriage’.217 6.52  When a court determines that it is ‘just and equitable’ to make a property order, s 79 of the Family Law Act requires it to consider a variety of factors, including financial and non-financial contributions made directly or indirectly by the parties to the acquisition, maintenance or improvement of the property, and any contribution made to the welfare of the family, including contributions as homemaker or parent.218 In this way, s 79 overcomes many of the limitations of the traditional doctrinal principles, and, in particular, the traditional hesitation of courts to give primacy to non-financial, and homemaking, contributions to a relationship. Significantly, the Family Court must also take into account the future effects of an order on earning capacity and liability for child support in determining property rights, as well as the future needs and earning capacities of the couple.219 In contrast to the exclusively ‘backward-focused’220 principles of equity, the Family Law Act therefore adopts a 360-degree perspective, examining past contributions as well as future contributions and needs.

Reform Uncertainty surrounding Conveyancing Act 1919 (NSW) s 23 6.53  As noted above in the discussion of Adamson v  Hayes,221 s  23C(1) of the Conveyancing Act 1919 (NSW) presents grave difficulties of interpretation. The reasons for this are twofold: 1. There appears to be substantial overlap between the relevant provisions. Thus, s 23C(1)(a) deals with the creation and disposition of interests in land, while s 23C(1)(c) deals with the disposition of subsisting equitable interests. Section 23C(1)(c) differs to the extent that it has been interpreted to cover personalty as well as land; however, it is difficult to see that a ‘disposition of a subsisting equitable interest [in land]’ is not also within the meaning of s 23C(1)(a). 2. The definitions of ‘disposition’ and ‘dispose’ in s 7 of the Act are expressed to include a declaration of trust, so that para (b) of s 23C(1) would appear to be unnecessary.The uncertainty of the meaning of the provisions has, if anything, been rendered all the more acute by the judicial disagreement as to their meaning, evidenced in Adamson v Hayes. In consequence, as Meagher, Gummow and Lehane conclude, transactions

217. Stanford v Stanford (2012) 247 CLR 108 at [41]. See further, Fehlberg et al, Australian Family Law: The Contemporary Context, note 196 above, pp 523–4; and K Feeney, ‘Property Settlements and Spousal Maintenance for the Elderly’ (2019) 29 Australasian Dispute Resolution Journal 173. 218. Family Law Act  1975 (Cth) s  79(4)(a)–(c). See, for example, Kartal v  Dustanee [2018] FamCA 918. See further Fehlberg et al, Australian Family Law:The Contemporary Context, note 196 above, Chs 13 and 14. 219. Family Law Act 1975 (Cth) s 79(4)(d), (g). 220. Sarmas, ‘Trusts, Third Parties and the Family Home’, note 121 above, p 248. 221. Adamson v Hayes (1973) 130 CLR 276. See 6.23.

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may be rendered needlessly void ab initio, and unnecessary revenue liabilities may result from excessive caution in ensuring that the requirements are met.222 In light of these and other difficulties of interpretation,223 it is difficult to disagree with Meagher, Gummow and Lehane’s conclusion that the effect of s 23C: … on dealings with equitable interests is in many respects thoroughly obscure … In the absence of further legislative intervention there is little that a conveyancer can do except bewail the consequences of the transplanting (without amendment) of an English provision — not impeccably drafted in the first place — to an inappropriate context in the local statute.

Presumptions of resulting trust and advancement 6.54  The presumptions of resulting trust and advancement give expression to two cardinal ideas about property: 1. in the case of the purchase-money resulting trust, that a person buying property is presumed to be acting to benefit himself or herself, not another person; and 2. that in certain rigidly defined circumstances where the purchaser is under an obligation to support the person whose name appears on the title document, the purchaser is presumed to be making a gift. It is difficult to see how these presumptions are helpful in determining the property rights of family members. To begin with, because the rules have been developed over hundreds of years, they are unsuited to the very different family structures, variety of family forms, and changes in the sexual division of labour that are characteristic of contemporary advanced societies. As Murphy J noted, in 1984, in Calverley v Green: Presumptions arise from common experience … If common experience is that when one fact exists, another fact also exists, [the law] sensibly operates on the basis that if the first is proved, the second is presumed. It is a process of standardised interests. As standards of behaviour alter, so should presumptions, otherwise the rationale for the presumptions is lost, and instead of assisting the evaluation of evidence, they may detract from it. There is no justification for maintaining a presumption that if one fact is proved, then another exists, if common experience is to the contrary.224

Implicit in the presumptions of advancement and resulting trust in the family context is a notion of women as dependants in a marriage, rather than as equal contributors to it and equal partners in it. Underpinned by older ideas of beneficence and moral obligation, the presumptions presuppose more fundamentally different roles for men and women than is the case in contemporary marriage. It follows that their present effect can only be of a discriminatory nature. Recognition of the changed landscape of marriage and 222. Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, note 10 above, p 306. 223. See Edgeworth, Rossiter, Stone and O’Connor, Sackville and Neave Australian Property Law, note 4 above, pp 263–66. 224. Calverley v Green (1984) 155 CLR 242 at 264.

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family relationships was referred to in 1993 by Kirby P as requiring property rights to be determined ‘by the application, not of fixed presumptions … but by the application of unencumbered reason and logic’.225 Equally, noting that the resulting trust arose historically as a mechanism for dealing with the medieval practice of concealment of ownership of land behind a purchase in favour of others, Hope JA in Dullow v Dullow concluded: It seems rather ridiculous that troubles in England at the end of the Middle Ages should be the basis, in the late twentieth century, for making findings of fact, for that is what the presumption essentially involves.226

In Cummins,227 the High  Court further complicated the landscape in relation to the presumptions by introducing the concept of the ‘equality of ownership’ principle for marital homes. As Sarmas has indicated, how this starting point operates in relation to either or both of the presumptions of advancement and resulting trust is unclear.228 The continuing relevance of the presumption of advancement in contemporary Australia is further marked by two factors. First, the presumption of advancement is premised on the historically contingent and discriminatory understanding of a binary in provider/carer and dominant/subordinate relationships. This understanding is increasingly inconsistent with contemporary community and legal recognition of non-binary and transgender identities in Australia. Second, the pattern of real-estate holdings in Australia is marked by a significant age disparity, in which residential and farm-holdings are held increasingly by ageing parents, while their adult children have been priced out of the market.These factors, if coupled with circumstances of physical and/or mental frailty, may make aged parents vulnerable to exploitation or abuse. In this circumstance the presumption of advancement further compounds the vulnerability of ageing individuals.This is because the operation of the presumption places the evidentiary burden on those individuals to establish that they did not intend a gift. In light of this array of powerful criticisms, it is time to do away with these presumptions once and for all.

Domestic labour and unconscionability 6.55  Despite the advances made in legislative reforms for the purpose of doing justice in distributing property rights on the breakdown of marriages and de facto relationships, the judicial development of the constructive trust in this area has not been so marked. To be sure, the expansion of the constructive trust into the area of unconscionable use of legal title, as in Muschinski v  Dodds229 and Baumgartner v  Baumgartner,230 has reduced the scope for unfairness in the allocation of property rights within the family. However, 225. Brown v Brown (1993) 31 NSWLR 582 at 601. 226. Dullow v Dullow (1985) 3 NSWLR 531 at 535. 227. Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278. 228. Sarmas, ‘Trusts, Third Parties and the Family Home’, note 121 above, p 230. 229. Muschinski v Dodds (1985) 160 CLR 583. 230. Baumgartner v Baumgartner (1987) 164 CLR 137.

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there is still a significant gap in the protection offered, particularly to those who work exclusively or predominantly unpaid in the home. The key philosophical principle here, one which clearly informs many of the legislative and judicial reforms noted above, is that property rights should not afford a means for overpowering and exploiting others. This general principle evokes a prominent theme in the writings of the ‘justice and equality’ theorists discussed at  1.32–1.35; however, in the context of the traditional family, a feminist reworking of those theories reveals a site of gendered injustice and inequality. The greater formal legal property rights of men, therefore, can be seen to reflect both a generally unequal distribution of economic power and an increased power in domestic relations, because the traditional division of labour (man as wage-labourer, woman as unpaid domestic worker) has been historically reflected in property doctrines that have given little recognition to domestic labour. As we have seen above, in the last one-third of the 20th century there was a revolution in property law in the context of the family, no less than in the structure of the family itself and the social division of labour. Yet the unconscionability principle as articulated in Baumgartner tends to confine contributions and pooling arrangements to financial contributions, or non-financial contributions such as house renovations that can be given a clear economic value.231 It can be seen, therefore, as a limited gain for non-legal titleholders where no common intention to create an equitable interest exists. It also appears to revive, as Kirby P noted in Bryson v Bryant,232 a narrow feature of the family property law of 20 years before (ie, pre-Ogilvie v Ryan),233 where a requirement of common-intention constructive trusts was that the detriment suffered was in the form of expenditure on the property. A fairer solution would be to factor into the question of unconscionable use of legal title the responsibility for housework and care of dependent family members. It is difficult to argue that it would do violence to the reasoning in Baumgartner, which favoured a constructive trust on the basis that ‘it is proper to regard the arrangement for the pooling of earnings as one which was designed to ensure that their earnings would be expended for their joint relationship and for their mutual security and benefit’.234 The ‘pooling of domestic and non-domestic labour’ would make for fairer results than the narrower ‘pooling of earnings’. In this regard, the powers of the Family Court both offer a model and provide a mechanism for recognising the ongoing impact of structural imbalances in society.235

231. As in Miller v Sutherland (1990) 14 Fam LR 416. 232. Bryson v Bryant (1992) 29 NSWLR 188 at 204. 233. Ogilvie v Ryan [1976] 2 NSWLR 504. 234. Baumgartner v Baumgartner (1987) 164 CLR 137 at 147 per Mason CJ, Wilson and Deane JJ (emphasis added). 235. F Bartlett, ‘Formal Equality and Third Party Interests in the Family Home:Trustees of the Property of John Daniel Cummins, a Bankrupt v Cummins’ in H Douglas, F Bartlett, T Luker and R Hunter, Australian Feminist Judgments: Righting and Rewriting the Law, Hart Publishing, Oxford, 2014, p 207.

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Chapter 7

Old System and Priorities Introduction 7.1  Priority rules determine how conflicting claims over interests in land are resolved. In Chapter 6, we explored the many ways in which such interests in land could be created. This chapter examines the common law and equitable rules that govern these disputes in land yet to be converted to Torrens title, so-called ‘old system’ land. Under old system title, there are four key rules, which depend on the nature of the interest and the timing of the acquisition of each interest. These are competitions between: 1. 2. 3. 4.

an earlier legal versus a later legal interest; an earlier legal versus a later equitable interest; an earlier equitable versus a later legal interest; and an earlier equitable versus a later equitable interest.

As discussed in Chapter 6, courts have also recognised the existence of ‘mere equities’ in land. The priority rules applicable to mere equities are discussed within the context of the final (fourth) rule. 7.2  While currently New  South  Wales land is overwhelmingly Torrens title,1 the importance of these rules for a contemporary understanding of New South Wales land law belies the smaller land mass still governed by them. This is for two reasons. First, the old system rules provided the historical framework that the drafters of the Torrens regime railed against, and so an understanding of the old system rules illuminates the intent that informs Australia’s contemporary land registration scheme. Second, the Torrens system does not represent a complete override of the old system rules. Thus, particularly in the context of disputes between unregistered interests (see  8.161–8.170), an appreciation of the old system priority rules remains significant.

1. In 2017 the total number of old system titles remaining in New South Wales was estimated at less than 0.027% of titles.While this figure has reduced further, the percentage remaining cannot currently be confirmed beyond noting that old system title indeed remains in New South Wales.

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The balance of this chapter then examines the statutory deeds registration system applicable to old system, or ‘general law’ land, and the priority rules applicable under that system.

Common Law and Equitable Priority Rules Earlier legal interest versus later legal interest 7.3  Imagine the following scenario: A is the holder of the legal fee simple. In 2015, A granted a legal lease to E for 10 years. In 2017, A completed the sale of the legal fee simple to B. Is B bound by E’s lease? The priority rule governing this situation is nemo dat quod non habet: no one can give what he or she does not have (the nemo dat rule). In 2017, A was not the holder of an unencumbered fee simple, but rather held a reversionary interest in the fee simple, falling into possession in 2025. Thus, B, as transferee of A’s revisionary interest, is subject to E’s lease until 2025. In a competition between B and E, E therefore prevails over B to the extent of his or her interest. 7.4  The language of competition and of a priority dispute is also traditionally used to describe the following simple example: A completed the sale of the unencumbered legal fee simple to B on 2 January, and later purported to complete the sale to C on 3 February. In this scenario, B would prevail in the ‘competition’ because, on 3 February, A had no interest to transfer to C. Although C in this circumstance has no interest, the language of priority is used to describe C’s claim. This is important in light of the court’s recognition of an equitable exception to the nemo dat rule. At law, the nemo dat rule will prevail, with the result that B is holder of the legal title. However, this exception holds that if B had been guilty of ‘postponing conduct’, C’s interest will prevail — in equity. Accordingly, B will hold the legal title on trust for C under this rule. This rule is discussed below.

Earlier legal interest versus later equitable interest 7.5  The operation of the nemo dat rule, discussed above, would seem at first instance to prevent a later equitable interest being in competition with an earlier legal interest. If the legal interest has been transferred, how is it possible to create a later equitable interest, given that the grantor has already parted with his or her interest in the land? The priority rule applied between an earlier legal and later equitable interest is ‘where the equities are equal, the law prevails’.2 Under this rule, equity will intervene to prevent a legal owner from taking priority in circumstances where there has been inequitable conduct on his or her part. It is the conduct of the legal interest holder that justifies the intervention of equity. 7.6  The facts of Walker v Linom3 illustrate how a dispute between an earlier legal interest and a later equitable interest can arise, and the determination whether the ‘equities are equal’ in such circumstances. In that case, a dispute arose between trustees of certain trusts (the 2. Bailey v Barnes [1894] 1 Ch 25 at 36 per Lindley LJ. 3. Walker v Linom [1907] 2 Ch 104.

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holders of the legal interest in the land) and a later equitable interest holder.When the trust was created, the settlor had handed over the title deeds, but dishonestly withheld the deed that had conveyed title to the settlor himself. Armed with that deed, which showed him as the holder of the legal estate, the settlor then created the later equitable interest. In the subsequent dispute between the trustees’ legal interest and the equitable interest holder, the latter prevailed. This was because the subsequent interest could not have been created but for the trustees’ ‘gross’ negligence in failing to make inquiries about the missing deed.4 Had the trustees inquired, and not been given a reasonable explanation5 for the absence to the deeds, this too would be sufficient conduct to justify postponement. 7.7  In addition to failing to obtain possession of title deeds, legal interest holders may also lose priority under this rule in circumstances where they have obtained the title deeds but subsequently part company with them. The case of Northern Counties Fire Insurance Co v Whipp6 suggests that a high threshold is required. In that case, the legal interest holder, Mr Crabtree, owned several properties and mortgaged them to his employer, Northern Counties Fire Insurance. The deeds to the properties were held in the company safe, one key to which was retained by Crabtree in his role as manager of the company. Crabtree took the title deeds from the safe and, removing the mortgage to the company from the chain of title documents, then utilised those documents to obtain a loan from Mrs Whipp.When the company went into liquidation, the liquidator sought to foreclose. Mrs Whipp sought a declaration that the company’s legal mortgage should be postponed to her equitable mortgage. Her action was unsuccessful, however, for the court found that although the company had acted with more than ‘mere carelessness or want of prudence’, it had not acted with ‘great carelessness’. Accordingly, the company’s conduct was not sufficient to render the equities unequal.7 The requisite standard has been described in subsequent cases as one of ‘gross negligence’ on the part of the legal interest holder.8 7.8  While conduct in relation to the custody (or failure to obtain custody) of title deeds accounts for many priority disputes of this category, courts have found that other conduct by the legal interest holder can also justify postponement of their interest, on the basis that that conduct rendered the equities unequal. Unsurprisingly, the legal interest holder will be postponed if he or she is party to some fraud by means of which the later equitable interest holder is deceived as to the existence of the legal interest.9 This was an example 4. Walker v Linom [1907] 2 Ch 104. 5. As to what constitutes a reasonable explanation, it was found to be reasonable when the mortgagee was informed that the title deeds were in a jurisdiction other than where the mortgaged property was actually situated, and where the mortgagor told the first mortgagee that he was too busy to produce the deeds immediately, but would do so later: Agra Bank v Barry (1874) LR 7 HL 135; Hewitt v Loosemore (1851) 9 Hare 449. Note, however, that these cases were decided in an age in which transportation times varied significantly. It is arguable that, in modern times, such explanations may not be judged to be ‘reasonable’. 6. Northern Counties of England Fire Insurance Co v Whipp (1884) 26 Ch D 482. 7. Northern Counties of England Fire Insurance Co v Whipp (1884) 26 Ch D 482 at 496 per Fry LJ. 8. Evans v Bicknell (1801) 6 Ves 174 at 190. On the difference between mere negligence and gross negligence, see further Armitage v Nurse [1998] Ch 241 at 254 per Millett LJ. 9. Peter v Russel (1716) 1 Eq Ca Abr 321 (Thatched House case); Northern Counties of England Fire Insurance Co v Whipp (1884) 26 Ch D 482 at 490.

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given by the court in Whipp, although on the facts of that case the court found that the company had been careless but not fraudulent. Entrusting the title deeds to an agent who exceeds his or her authority will also be postponing conduct; for example, when the agent has been authorised to raise money on the basis of a mortgage for one sum, and the agent raises a mortgage for a larger sum.10

Earlier equitable interest versus later legal interest 7.9  Imagine that A is the holder of the legal fee simple, and, in 2015, granted a 10-year lease to E. The lease is in writing, but not by deed. In 2017, A completes the sale of the legal fee simple to B. In a priority dispute between E’s equitable lease and B’s legal fee simple, who will prevail? The rule governing this dispute, derived from the 1872 case of Pilcher v Rawlins,11 is that the equitable interest prevails unless the later legal interest was acquired by a bona fide purchaser for value who takes without notice of the equitable interest. Thus, if B can satisfy these requirements, B will have an ‘absolute, unqualified, unanswerable’12 defence against E’s claim.

Bona fide purchaser and for value 7.10  The first requirement of this priority rule is that the legal interest holder must be a purchaser. While in our example above (at 7.9), the purchaser B completed the purchase of the fee simple, a ‘purchaser’ for the purposes of this priority rule may be the purchaser of any interest (eg, leases, mortgages, easements).13 The ‘purchaser’ requirement in this rule derives from the equitable maxim that equity will not assist a volunteer. Accordingly, a person who inherits a legal estate, or receives the legal estate as a gift, will take his or her interest subject to all prior equitable interests. Thus, in our example, if A had died in 2017 and left Blackacre by will to B, B would take the reversionary interest until E’s lease expired in 2025. 7.11  To modern ears, the requirement that a purchaser be ‘for value’ is redundant. In contemporary parlance, to ‘purchase’ means to pay value for an item. However, historically the legal definition of ‘purchaser’ meant a person taking by way of grant, and so a purchaser could include a volunteer. The requirement of ‘value’ thus ensured that this rule only protected the legal interest holder who had provided money, or money’s worth, for the interest. Anything that would constitute consideration under a contract can therefore constitute ‘value’ under this priority rule. For example, money, chattels, services, or the satisfaction of an existing debt,14 can constitute value. However, love and affection,15 is not ‘value’.  As the contract law principles dictate,‘value’ need not be market or full value,16 but 10. Brocklesby v  The Temperance Permanent Building Society [1895] AC 173. See  also Perry-Herrick v  Attwood (1857) 2 De G & J 21; 44 ER 895. 11. Pilcher v Rawlins (1872) LR 7 Ch App 259. 12. Pilcher v Rawlins (1872) LR 7 Ch App 259 at 269 per James LJ. 13. Brace v Duchess of Marlborough (1728) 2 P Wms 491. 14. Thorndike v Hunt (1859) 3 De G & J 563 15. Goodright d Humphreys v Moses (1774) 2 Wm B1. 16. Bassett v Nosworthy (1673) Rep t Finch 102.

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must be more than nominal value.17 Accordingly, for example, in a recent Torrens title case, the High Court held that the payment of $1 for a transfer of an estate in fee simple of a property called the ‘Dairy Farm’ did not constitute valuable consideration.18 7.12  The requirement of ‘bona fide’ means that the purchaser must act in good faith. An element of taking in good faith means that the purchaser must not have notice of the prior equitable interest. However, in Midland Bank Trust Co Ltd v Green,19 Lord Wilberforce noted that the test of good faith is ‘a separate test which may have to be passed even though absence of notice is proved’.20 Equitable doctrines such as fraud, or undue influence or unconscionability are therefore likely to be encompassed within the good faith test.

Doctrine of notice 7.13  A purchaser who does not have notice of the equitable interest holder will take the legal estate free of the equitable interest. Two questions therefore arise: 1. At what time is the purchaser’s notice assessed? 2. What is ‘notice’ of the equitable interest? 7.14  Timing of notice  The purchaser who takes free from notice at the time of acquiring his or her legal interest gains the protection of this rule. In our example, this means that if B does not have notice of E’s lease at the time of the completion of the sale between A and B, B will not be bound by E’s lease. However, if B learned of E’s lease following exchange of contracts, but before completion, B could not gain the protection of the ‘bona fide purchaser’ rule. This is because at exchange, B does not have a legal estate. However, what is the situation if B has paid full consideration, but there is a delay in taking the legal title? In this circumstance, the doctrine of tabula in naufragio (discussed below at 7.31) allows the holder of the later equitable interest to take priority over the earlier interest, provided that the transfer of the legal interest is not in breach of trust. 7.15  What is ‘notice’?  Section  164 of the Conveyancing Act  1919 (NSW) sets out the three types of notice recognised by the common law as relevant to the bona fide purchaser priority rule: (i) actual notice; (ii) imputed notice; and (iii) constructive notice.21 Section 164 provides: (1) A purchaser shall not be prejudicially affected by notice of any instrument, fact or thing unless: (a) it is within the purchaser’s own knowledge;

17. Bullen v A’Beckett (1865) 1 Moo NS 223; 15 ER 684. 18. Cassegrain v Gerard Cassegrain & Co Pty Ltd (2015) 254 CLR 425 at 444. See further discussion of this case at 8.20, 8.62–8.63 and 8.127. 19. Midland Bank Trust Co Ltd v Green [1983] AC 513. 20. Midland Bank Trust Co Ltd v Green [1983] AC 513 at 528 per Lord Wilberforce. 21. See Nguyen v Corbett [2017] NSWSC 1689 (considering the three forms of notice under s 164, and the similar but not identical provision, s 37A). Subsequent appeals did not cast doubt on this aspect of the case.

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Property Law in New South Wales (b) it … would have come to the purchaser’s knowledge, if such … inquiries, and inspections had been made as ought reasonably to have been made by the purchaser; or (c) in the same transaction with respect to which a question of notice to the purchaser arises, it has come to the knowledge of the purchaser’s counsel as such, or of the purchaser’s solicitor or other agent as such, or would have come to the knowledge of the purchaser’s solicitor or other agent as such, if such searches, inquiries, and inspections had been made as ought reasonably to have been made by the solicitor or other agent.

7.16  Actual notice  A purchaser with actual confirmation of the existence of the prior equitable interest will take subject to the prior interest.Vague rumour regarding a relevant fact does not constitute actual notice of that fact.22 However, provided that the information is clear, it does not matter how the legal interest holder came to have knowledge of the earlier interest.23 7.17  Constructive notice Constructive notice will fix the purchaser with notice of those facts, or instruments the purchaser would have discovered had the purchaser conducted the usual and proper inquiries that a reasonably prudent purchaser should make. This principle ensures that equitable interests are not made vulnerable in circumstances where purchasers, through laziness or negligence, have failed to discover the existence of the interest. Thus, a purchaser who fails to conduct the relevant inquiries will be fixed with notice of all relevant facts that the purchaser would have discovered had those reasonable and proper inquires been made.24 In addition, if the purchaser receives notice of a relevant fact, and then abstains from making further inquiries, the purchaser will be fixed with notice of those facts that the purchaser would have discovered had he or she conducted those inquiries. At common law, the purchaser’s reasonable inquiries fall in two areas: (i) a duty to inspect the land; and (ii) a duty to inspect the title documents. Each duty is discussed below. Constructive notice — duty to inspect the land

7.18  The basic rule regarding physical inspection of the land, from Barnhart v Greenshields,25 provides that: … possession of the tenant is notice that he has some interest in the land, and that a purchaser having notice of that fact, is bound, according to the ordinary rule, either to inquire what the interest is, or to give effect to it, whatever it may be.26

Under these principles, the purchaser is fixed with constructive notice of the interest of the person in possession. Thus, in our example above (at 7.9), if E was the tenant in possession, the doctrine of constructive notice will fix B with notice of E’s interest. The 22. 23. 24. 25. 26.

Williamson v Bors (1900) 21 NSWLR (Eq) 302. Lloyd v Banks (1868) 3 Ch App 488. Kakavas v The Crown (2013) 250 CLR 392 at [152]. Barnhart v Greenshields (1853) 9 Moo PC 18. Barnhart v Greenshields (1853) 9 Moo PC 18 at 32 per Mr Pemberton Leigh.

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fact of occupation provides constructive notice of an interest.27 Thus as an ordinary and prudent purchaser, if B would have discovered E in possession following B’s physical inspection of the land, as a prudent purchaser, B would have inquired of E about the nature of E’s interest.28 7.19  Constructive notice will extend also to fixing a purchaser with notice of interests collateral to the tenancy agreement, such as options to renew,29 or options to purchase.30 The principle is limited, however, to those interests that the purchaser could identify from making reasonable inquiries of the instrument. Thus, in Smith v Jones31 a purchaser was held not to have constructive notice of a right to rectification that the tenant held in respect of a lease. Nor is a purchaser required to inquire as to the identity of the ultimate recipient of rental payments of tenants in possession.32 7.20  While it is generally the case that a purchaser will be fixed with constructive notice of an interest where a person other than the vendor is in possession, such as in our example of B and E above, the position is more complex when the vendor is also in possession. Imagine, for example, that the legal estate to a property is solely in the name of Mr P, but his wife, Mrs P, has an equitable interest in the property arising under a Baumgartner constructive trust,33 as she had contributed most of the purchase price. Mr P executed a mortgage, and a priority dispute arose between Mrs  P and the mortgagee. In Platzer v Commonwealth Bank of Australia,34 the court found that as the mortgagee had knowledge of Mr  and Mrs  P’s relationship, including that they were living together in a different property, and that they were constructing the house on the disputed property together, this was sufficient to give rise to constructive notice of Mrs P’s interest. McPherson JA observed in that case that: Under prevailing social conditions, the subsistence of equitable interests in land is a phenomenon now so widespread that it cannot be safely ignored. Trusts, whether express, resulting or constructive, are nowadays a common feature of matrimonial and other such relationships.35

Accordingly, the mortgagee’s duty to make such inquiries as ‘ought reasonably’ be made extended in that case to asking Mrs P herself about her interest in the property. 7.21  Other examples where a purchaser of the legal estate for value has been held to have constructive notice of an equitable interest on the basis of occupation include: a clear and demonstrable use of a right of way;36 and easements to discharge sewage through 27. 28. 29. 30. 31. 32. 33. 34. 35. 36.

See, for example, discussion in Perpetual Trustee Co Ltd v Smith [2010] FCAFC 91 at [78]. Marsden v Campbell (1897) LR (NSW) Eq 33; Clyne v Lowe (1968) 69 (NSW) 433. Taylor v Stibbert (1794) 2 Ves 437; 30 ER 713. Daniels v Davison (1809) 16 Ves 249; 33 ER 978; Allen v Anthony (1816) 1 Mer 282; 35 ER 978. Smith v Jones [1954] 1 WLR 1089. Hunt v Luck [1902] 1 Ch 428. Baumgartner v Baumgartner (1987) 164 CLR 137. See 6.34–6.36. Platzer v Commonwealth Bank of Australia [1997] 1 Qd R 266. Platzer v Commonwealth Bank of Australia [1997] 1 Qd R 266 at 288. Jensen v Hawksley [1955] VLR 470.

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sewerage lines if inspection points were visible.37 However, the purchaser will not be bound by the vague and ill-defined rights of a person in occupation.38 Constructive notice — duty to inspect title

7.22  Under the traditional common law rules, a purchaser was fixed with constructive notice of all documents in the chain of title. Common law conveyancing practice required the purchaser to search the chain of title for a ‘good root of title’, of at least 60 years prior to the transaction. This meant that the reasonably prudent purchaser would search the chain of title to locate an instrument that: conveyed the entirety of the legal and equitable estate (eg, a conveyance of the legal fee simple, or a legal mortgage); described the property adequately; and, did not throw doubt on the title. That instrument was required to be at least 60 years prior to the date of the transaction. This would mean that, for example, if the title offered by the vendor consisted of a series of conveyances of 55, 75 and 80 years prior to the date of the transaction, the purchaser was required to call for the production of the 75-year-old conveyance, and each more recent conveyance after that date. The doctrine of constructive notice would fix the purchaser with notice of all interests that the purchaser would have discovered had he or she properly and diligently investigated the whole title for the requisite period. These principles would, of course, not impact on the enforceability of legal interests created at any time, or interests created by adverse possession. Such legal interests remain enforceable under the nemo dat rule.39 7.23  Section  164 of the Conveyancing Act confirms the common law rule that the purchaser is fixed with notice if he or she fails to inspect title, or does so without reasonable diligence. However, s 53(1) of the Act has significantly varied the common law standard, by halving the required period for a good root of title to only 30 years. Section 53(3) also protects a purchaser from constructive notice of equitable interests prior to that good root of title. These protective provisions do not apply if the purchaser fails to investigate the title at all,40 or only investigates part of the period, or makes no objection or inquiry in relation to a doubtful transaction.41 In such cases, the purchaser will be fixed with notice of everything that might have been discovered by such an investigation. In addition, s 53(3) does not protect the purchaser if he or she actually searches beyond the 30-year good root of title. In circumstances where the purchaser has conducted a longer search, the purchaser will then be fixed with constructive notice of interests that he or she would have found had the longer search been conducted to the standard of the reasonably prudent purchaser.42

37. State Transit Authority of NSW v Australian Jockey Club (2003) 11 BPR 21,107 (reversed on another point on appeal: Williams v State Transit Authority of NSW (2004) 60 NSWLR 286). 38. Short v Gill (1892) 13 LR(NSW) Eq 155. 39. As to the operation of this priority rule, see 7.3–7.4. 40. Worthington v Morgan (1849) 16 Sim 547; 60 ER 987. 41. Re Nisbet and Potts’ Contract [1906] 1 Ch 386. 42. P Butt, Land Law, 6th ed, Thomson Reuters/Lawbook Co, Sydney, 2010, p 721.

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7.24  Imputed notice Imputed notice arises when a purchaser is deemed to know the relevant facts learned by his or her agent (eg, a solicitor or real estate agent).43 Section 164 of the Conveyancing Act confirms that the agent is under the same obligations as the purchaser, to inspect both the land and title documents, and so the purchaser will be fixed with the actual and constructive knowledge of the agent. Section 164(1)(b) also provides that the agent’s notice will only be imputed to the principal if it is obtained in the course of the same transaction. This means that if an agent acquires knowledge in the course of previous business dealings, that knowledge is not brought home to the principal.44

Successors in title and the rule in Wilkes v Spooner 7.25  Where the legal interest holder is a bona fide purchaser for value without notice of the equitable interest, the rule in Wilkes v Spooner45 provides that that purchaser can pass good title clear of the equitable interest. Accordingly, a person who claims an interest through a bona fide purchaser for value who is without notice is entitled to the same protection as that purchaser, even if the person making the claim acquired his or her interest with notice. In our example at 7.9, imagine that B later sold the legal fee simple to C, who had had actual notice of E’s lease. Had B been a bona fide purchaser for value without notice of E’s equitable lease, C would take free of the lease under the rule in Wilkes, even though C himself or herself had notice and therefore would not satisfy the bona fide purchaser rule. However, the rule in Wilkes is subject to two exceptions that prevent the bona fide purchaser being used as part of a scheme to ‘clean’ the title. Thus, the later owner will remain subject to the prior equitable interest, despite the intervening sale to a bona fide purchaser without notice, if: (a) that later owner is a trustee who had sold the property to the bona fide purchaser in breach of trust; or (b) if the later owner had acquired the property through actual fraud.46

Prior equitable interest versus later equitable interest 7.26  The general principle governing the competition between two equitable interests is the equitable maxim qui prior est tempore potior est jure: ‘whoever is first in time is in the stronger position in law’.47 Therefore, the onus lies with the later interest holder to demonstrate that it is inequitable for the first equitable interest to prevail.48 43. It is not necessary for the agent to be remunerated or professional: Nguyen v Corbett [2017] NSWSC 1689 (7 December 2017). 44. On the application of agency principles in the context of Torrens title land, see  Cassegrain v  Gerard Cassegrain & Co Pty Ltd (2015) 254 CLR 425. 45. Wilkes v Spooner [1911] 2 KB 473. 46. Re Stapleford Colliery Co (1880) 14 Ch D 432 at 445. 47. Many of the Australian cases on the priority rule between two equitable interests arise in the context of land registered under the Torrens system. The relevance of the ‘first in time’ rule within that system is discussed further at 8.161–8.170. 48. See, for example, Lapin v Abigail (1930) 44 CLR 166 at 204 per Dixon J; Breskvar v Wall (1971) 126 CLR 376 at 388 per Barwick CJ (with whom Owen and Windeyer JJ agreed). See recently, Australia Capital Financial Management Pty Ltd v  Linfield Developments Pty Ltd [2017] NSWCA 99 at  [231], and IWC Industries Pty Ltd v Sergienko [2021] NSWCA 292 (1 December 2021) at [65].

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As the New South Wales Court of Appeal in Australia Capital Financial Management Pty Ltd v Linfield Development49 observed in 2017, there continues to be academic and judicial debate regarding the ‘correct approach’ to be taken to resolving disputes between two equitable interests through the ‘first in time’ rule. On the one hand, the maxim suggests that temporal order is the critical issue in determining priority. On the other hand, the leading case of Rice v Rice50 endorsed the position that the test is not to be applied by reference to a ‘technical rule’,51 but rather by reference to the question: ‘As between persons having only equitable interests, if their equities are in all other respects equal, priority of time gives the better equity’.52 However, if it is conceded that the maxim is not to be applied ‘mechanically’53 according to temporal priority, the question remains, is the ‘first in time’ rule a ‘rule of first or last resort’54? 7.27 In Latec Investments Limited v Hotel Terrigal Pty Ltd (in liq),55 Kitto J emphasised that the inquiry as to ‘where the better equity lies’56 under the ‘first in time’ rule requires a consideration of the following: If the merits are equal, priority in time of creation is considered to give the better equity. … But where the merits are unequal, as for instance where conduct on the part of the owner of the earlier interest has led the other to acquire his interest on the supposition that the earlier did not exist, the maxim may be displaced and priority accorded to the later interest.57

After endorsing Kitto J’s approach in this passage, Mason and Deane JJ in Heid v Reliance Finance Corp Pty Ltd58 observed that the court’s role in determining the ‘better equity’ was to examine all the circumstances of the case. This inquiry includes a consideration of whether the conduct by the owner of the prior equity led the later interest holder to acquire their interest in the mistaken belief that the earlier interest did not exist.59 However, Mason and Deane JJ also observed that a prior equitable interest may not be postponed merely because of the existence of such a ‘causal nexus’. Rather, the court will ultimately consider whether ‘in fairness and justice’, in light of the conduct of both parties and all the circumstances of the case, the first in time interest holder should be postponed 49. Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd [2017] NSWCA 99 at [229]; and, generally, at [228]–[260] per Ward JA (McColl and Gleeson JJA agreeing). 50. Rice v Rice (1853) 61 ER 646. 51. Rice v Rice (1853) 61 ER 646 at 648 per Kindersley VC. 52. Rice v Rice (1853) 61 ER 646 per Kindersley VC (italics in original). 53. Latec Investments Limited v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 at 276. See also the extensive discussion of the test, and the debate as to the weight to be attached to the chronology of the acquisition of interests, by Holmes JA in AG(CQ) Pty Ltd v A&T Promotions Pty Ltd [2011] 1 Qd R 306 at [26]–[36] (McMurdo P and McMeekin J agreeing). 54. Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd [2017] NSWCA 99 at [229]. 55. Latec Investments Limited v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265. 56. Latec Investments Limited v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 at 276. In Lapin v Abigail, Isaacs J also referred to the search for the better equity as that of seeking ‘the most meritorious’ interest: Lapin v Abigail (1930) 44 CLR 166 at 185–6 per Isaacs J. 57. Latec Investments Limited v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 at 276. See, to similar effect, Lapin v Abigail (1930) 44 CLR 166 at 183 per Knox CJ. 58. Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 at 339. 59. Heid v Reliance Finance Corp Pty Ltd (1983) 154 CLR 326 at 339 per Mason and Deane JJ.

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to the later interest.60 This does not mean, however, that the priority issue is resolved solely by an assessment of the ‘unfairness’ of the eventual outcome.61 Critical to the assessment is the existence of ‘tangible conduct’ by the holder of the first interest, in the form of some ‘causative act, neglect or default’ of the first in time interest,62 leading to the creation or acquisition of the later equitable interest or by a subsequent interest hold failing to protect its rights.63 7.28  One ‘common illustration’64 of circumstances in which the first in time interest holder has been postponed is the so-called ‘arming’ conduct cases. In Rice v  Rice,65 for example, the competition was between the holders of a prior equitable unpaid vendor’s lien and a later equitable mortgage. In that case, the vendor signed a receipt declaring that the full purchase price had been paid. This receipt was given to the purchaser, who then held himself out as the holder of the unencumbered fee simple in order to secure an equitable mortgage. Applying the ‘first in time’ rule, the court held that the vendor had ‘voluntarily armed the purchaser with the means of dealing with the estate as the absolute and beneficial owner, free from every shadow of encumbrance or adverse equity’.66 While there are many illustrations of first in time interest holders losing priority by virtue of ‘arming conduct’, the court in Heid recognised that ‘arming conduct’ does not automatically postpone the holder. In that case, for instance, Mason and Deane JJ intimated that entrusting title documents to a solicitor for the purposes of effecting the transaction would not be postponing conduct.67 These arming cases illustrate situations in which the conduct by the first in time interest holder lead to the creation of the later interest in ignorance of the first interest. However, in Australia Capital Financial Management Pty Ltd v Linfield Development68 the New South Wales Court of Appeal observed that postponing conduct is not to be narrowly conceived, and so may also arise in circumstances where the first in time interest holder encouraged

60. See AG(CQ) Pty Ltd as Trustee for AG(CQ) Family Trust v A & T Promotions Pty Ltd as Trustee for Toowoomba Unit Trust [2011] 1 Qd R 306 at [26]–[36] per Holmes JA (McMurdo P and McMeekin J agreeing). 61. Circuit Finance Australia Ltd (in Liq) v Panella [2011] NSWSC 311 at 13 per Pembroke J. 62. Circuit Finance Australia Ltd (in Liq) v Panella [2011] NSWSC 311 at 13 per Pembroke J. 63. Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd (2017) 18 BPR 36, 683 at 253 per Ward CJ. 64. Heid v Reliance Finance Corp Pty Ltd (1983) 154 CLR 326 at 339 per Mason and Deane JJ. 65. Rice v Rice (1853) 61 ER 646. 66. Rice v Rice (1853) 61 ER 646 at 450 per Kindersley VC (emphasis added). See also Farrand v Yorkshire Banking Co (1888) 40 Ch D 182. For a more recent illustration, in the context of Torrens title land, see also IWC Industries Pty Ltd v Sergienko [2021] NSWCA 292 (1 December 2021). 67. Heid v Reliance Finance Corp Pty Ltd (1983) 154 CLR 326 at 344–5. It was also found not to be ‘arming’ conduct where the title deed had come into the possession of a third party, in circumstances where the first in time interest holder had not been negligent: Allen v Knight (1846) 5 Hare 272; Re Castell & Brown Ltd [1898] 1 Ch 315. 68. Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd [2017] NSWCA 99.

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the later interest holder to ‘alter [their] position’69 by not to taking steps to protect their existing contractual rights.70

Relevance of notice in the application of the ‘first in time’ rule 7.29  In contrast to the ‘bona fide purchaser’ rule, on its face it would not appear that notice would necessarily be a decisive factor in the assessment of priority between two competing equitable interests under the ‘first in time’ rule. Applying Mason and Deane JJ’s test in Heid, the fact that the second in time interest holder was a bona fide purchaser for value without notice will not automatically secure the second in time purchaser priority.The lack of notice is instead taken into account in assessing the equities in the case. However, what is the position if the second in time interest holder has notice of the earlier notice? In Moffett v  Dillon,71 Brooking JA (with Buchanan JA concurring) held that if the later interest holder had actual notice of the earlier equitable interest this was a threshold consideration, that would automatically deprive the later interest holder of priority.72 As actual notice was in dispute in Moffett, the issue of constructive notice and the ‘first in time’ rule did not directly arise. The preferable approach would seem to be that constructive notice by the later interest holder should not operate as a threshold issue. Rather, applying Mason and Deane JJ’s approach in Heid, constructive notice will be a factor evaluated by the court in considering the causal nexus between the interests and an assessment of ‘fairness and justice’ in a particular case. In Perpetual Trustees Co v Smith,73 for example, Moore and Stone JJ held that the prior interest holders’ possession of the property gave rise to constructive notice of their interest, and that this was a significant factor in determining whether they had engaged in ‘postponing conduct’.74

The special position of beneficiaries under a trust 7.30  Where the earlier equitable interest holder is a beneficiary under a trust, the general position is that the beneficiary will retain priority if the trustee acts in breach of trust.75

69. Australia Capital Financial Management Pty Ltd v  Linfield Developments Pty Ltd [2017] NSWCA 99 at  [242]–[243], quoting Lapin v Abigail (1930) 44 CLR 166 at 196 per Gavan Duffy and Starke JJ (in dissent). 70. Australia Capital Financial Management Pty Ltd v  Linfield Developments Pty Ltd [2017] NSWCA 99 at  [228]–[260] per Ward JA (McColl and Gleeson JJA agreeing). 71. Moffett v Dillon [1999] 2 VR 480. 72. Moffett v  Dillon [1999] 2 VR 480 at  492 [46] per Brooking JA (referring to the rule about notice ‘as a distinct and fundamental one’); at  506 per Buchanan JA (agreeing). However, Ormiston JA did not describe the consequences of notice in such a definitive manner: see [79]–[87].This principle was affirmed in Capital Finance Pty Ltd v Struthers [2008] NSWSC 440. See also Perpetual Trustee Co v Smith (2010) ALR 469 at [86]. See further, discussion in S Rodrick, ‘Resolving Priority Disputes Between Competing Equitable Interests in Torrens Title Land — Which Test?’ (2001) 9 Australia Property Law Journal 172. 73. Perpetual Trustee Co v Smith (2010) ALR 469. 74. Perpetual Trustee Co v Smith (2010) ALR 469 at 490 [73]. In this case, the prior interest holders’ possession was weighed against their failure to caveat their interest in Torrens title land, as part of assessing potential postponing conduct. Failure to caveat is discussed at 8.164–8.168. 75. Shropshire Union Railways & Canal Co v R (1875) LR7HL 496.

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However, the three exceptions to the basic rule that the beneficiaries (ie, the ‘first in time’ interest) will prevail, are as follows: 1. Where the trustee fails to acquire all the deeds in the first place, the beneficiaries will lose priority in the same way that the trustee will.76 2. A beneficiary under a voluntary settlement will be postponed where a later equitable interest is created for value without notice of the earlier interest.77 3. A beneficiary will be postponed where the trustee would be postponed on normal equitable principles.78 Thus, imagine a situation where a trustee sells trust property to X and retains an unpaid vendor’s lien because purchaser X has not paid the full purchase price. Purchaser X then creates an equitable interest in favour of Y. In this scenario,Y will take priority over the beneficiary as under normal equitable rules the trustee’s conduct (by arming purchaser X) would have led to the trustee’s equitable interest being postponed to the later equitable interest holder Y.79

Tabula in naufragio 7.31  The term tabula in naufragio (‘plank in a shipwreck’)80 provides a mechanism for the second in time equitable interest holder to escape the consequences of postponement.81 It is most commonly associated with priority disputes between mortgagees, but is not confined to such disputes.82 It applies where a later equitable interest holder obtains notice of an earlier equitable interest (after the acquisition of his or her equitable interest), and proceeds to acquire the legal estate.83 In these circumstances, he or she will take priority over the earlier equitable mortgage. The doctrine not only appears as an exception to the rule governing priority as between competing equitable interests, but also allows a later equitable interest holder to escape the effects of a bona fide purchaser for value where there is a competition between an earlier equitable interest and a later legal interest.84 In this instance, the doctrine of tabula in naufragio allows the holder of the later equitable interest, on discovery of the earlier equitable interest, to take priority over the earlier interest even if he or she acquires the legal estate with notice.

76. Walker v Linom [1907] 2 Ch 104. 77. Taylor v London and County Banking [1901] 2 Ch 231. This result in this case is characterised as ‘celebrated, but obscure’ by JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, 5th ed, LexisNexis Butterworths, Australia, 2015, pp 334–5. 78. Rice v Rice (1853) 61 ER 646. 79. Lloyd’s Bank v Bullock [1896] 2 Ch 192. 80. See Brace v Duchess of Marlborough (1728) 2 P Wms 491 per Jeckyll MR. 81. Bailey v Barnes [1894] 1 Ch 25. 82. Mumford v  Stohwasser (1874) LR 18 Eq 556; McCarthy & Stone v  Julian S  Hodge & Co Ltd [1971] 1 WLR 1547 at 1556 per Foster J. As to mortgages, see Chapter 14. 83. Bailey v Barnes [1894] 1 Ch 25. 84. See 7.9–7.25.

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7.32  However, the doctrine does not apply where the transfer of the legal estate is a breach of trust towards the earlier equitable interest holder.85 For example, in Mumford v Stohwasser,86 a lessee agreed to grant a sublease to A, but later gave an equitable mortgage to B, who did not know of the sublease until after he advanced money to the lessee. The mortgagee was not able to take advantage of the doctrine, even though he took a later legal deed of mortgage of the lease, because this act was a breach of trust.87

Mere equities versus later legal or equitable interests 7.33  An equity, or ‘mere equity’, has a different status from an equitable interest. Palmer J in Mills v Ruthol Pty Ltd88 described a mere equity as a ‘slippery creature’, capable of being ‘cornered and illuminated by example but not captured and confined by definition’.89 The use of a variety of terms to describe this type of interest — equities, personal equities and mere equities — adds to the uncertainty. The crucial difference between an equity and an equitable interest is that an equity is ‘a right to sue which must be successfully exercised as a necessary condition of there being any relation back to the equitable interest established by the suit’.90 In other words, the equity, once proved, gives the plaintiff an equitable interest.While it can be said with some certainty that an equity of rectification,91 or an equity to set aside a transaction for fraud92 or undue influence93 are ‘mere equities’, the same cannot be said for an equity of acquiescence, or an interest arising under a constructive trust.94 7.34  The uncertainties surrounding mere equities were illustrated by the differing approaches of the members of the High  Court in the leading case of Latec Investments Ltd v  Hotel Terrigal Pty Ltd (in liq).95 In that case Hotel Terrigal, the mortgagor, sought to set aside the sale of the land by Latec, its mortgagee. Latec had sold the property to Southern, a subsidiary company. Hotel Terrigal was successful in demonstrating that Latec had fraudulently exercised its power of sale. However, prior to Hotel Terrigal bringing an action, Southern had created an equitable charge over the land in favour of MLC Nominees. All members of the court found that MLC Nominees had priority over Hotel

85. Mumford v Stohwasser (1874) LR 18 Eq 556. 86. Mumford v Stohwasser (1874) LR 18 Eq 556. 87. It is not clear from the reasoning in this case whether it is also necessary that the person who takes the legal interest has notice of the breach of trust (as was the case in Mumford), or whether the person assigning the legal estate has notice of the breach of trust: see Mumford v Stohwasser (1874) LR 18 Eq 556 at 563. 88. Mills v Ruthol Pty Ltd (2002) 10 BPR 19,381. 89. Mills v Ruthol Pty Ltd (2002) 10 BPR 19,381 at [126] per Palmer J. 90. Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 at 290 per Menzies J. 91. Garrard v Frankel (1862) 30 Beav 445; Smith v Jones [1954] 1 WLR 1089. 92. Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 per Kitto and Menzies JJ (Taylor J dissenting). 93. Bainbrigge v Browne (1881) 18 Ch D 188. 94. Muschinski v Dodds (1985) 160 CLR 583 at 615; 62 ALR 429 at 451 per Deane J. 95. Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265. See further discussion in Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, note 77 above, pp 128–32.

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Terrigal. However, different approaches emerged regarding how to characterise Hotel Terrigal’s interest, and the applicable priority rule. Taylor J found that Hotel Terrigal’s interest was a full equitable interest. However, because Hotel Terrigal required the assistance of the court to remove the impediment to its title, Taylor J did not apply the general rule as between equitable interests (ie, the ‘first in time’ rule), but instead held that Hotel Terrigal would lose its priority where the later equitable interest holder, MLC Nominees, was a bona fide purchaser for value without notice.96 Kitto J concluded that Hotel Terrigal’s interest was better described as a mere equity, not an equitable interest. He applied the bona fide purchaser rule, concluding that as MLC Nominees took without notice of Hotel Terrigal’s mere equity, MLC prevailed.97 Menzies J, the third member of the court, did not definitively resolve these differences.98 His decision was that, for the purposes of the priority dispute, Hotel Terrigal’s interest was a mere equity. However, Menzies J did not foreclose the possibility that that interest might be, for other purposes, an equitable interest. 7.35 In Double Bay Newspapers Pty Ltd v A W Holdings Pty Ltd,99 Bryson J applied Kitto J’s approach to find that mere equities ‘do not participate in competitions of priorities on the same basis as equitable interests’.100 Thus, a mere equity would only bind third parties in circumstances where the later interest was not taken by a bona fide purchaser for value. In contrast, as has been seen, if the competition is between two equitable interests, the ‘first in time’ rule applies. It is for this reason that the classification of a ‘mere equity’, as distinct from an equitable interest, remains a topic of practical significance.

Registration of Deeds and Priorities Introduction 7.36  Legislation has been in place since the earliest days of the Australian colonies to induce parties to private land transactions to register those dealings in a state-run register. Unlike the Torrens system, discussed in Chapter 8, statutory systems of deeds registration do not operate as guarantees of title. The instruments registered under a statutory deeds registration regime therefore have validity by virtue of the operation of general law principles.101 However, the incentive to induce parties to register instruments under these schemes is priority — that is, priority is afforded by reference to the time at which the instrument was registered.This type of registration system, therefore, represents something of a hybrid between the old system priorities and a statutory scheme for validating title. In New South Wales, that system is governed by Pt 23 of the Conveyancing Act 1919 (NSW). 96. Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 at 282–6 per Taylor J. 97. Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 at 276–9 per Kitto J. 98. Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 at 290–1 per Menzies J. 99. Double Bay Newspapers Pty Ltd v A W Holdings Pty Ltd (1996) 42 NSWLR 409. 100. Double Bay Newspapers Pty Ltd v A W Holdings Pty Ltd (1996) 42 NSWLR 409 at 424. See also Shawyer v Amberday Pty Ltd (in liq) (2001) 10 BPR 18,869 at [11]; Ruthol Pty Ltd v Mills (2003) 11 BPR 20,793. 101. See Chapter 8.

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Registration of ‘instruments’ 7.37  Section 184C of the Conveyancing Act establishes a ‘General Register of Deeds’. Despite the name of the register, s 184G of the Act allows for the registration of instruments generally, including those instruments that do not relate to land.102 However, instruments that are registrable under the Torrens system, and relate to Torrens title land, are specifically excluded from the General Register of Deeds.103 Where two instruments are created in the course of one transaction, both, or either, may be registered.104 The legislation confers priority only on interests that are created by instruments that are registered. Interests that arise other than from the execution of instruments, such as an interest that arises by part performance of an oral agreement, or an equitable mortgage created by deposit of title deeds without an accompanying written memorandum, continue to operate according to common law priority rules.105 In cases such as these, if the earlier equitable interest would have taken priority over a later interest created by an instrument under the common law rules, registration of the later instrument will not improve its position. Equally, the priority of an earlier legal interest created other than by instrument, such as a short-term lease by parol or an estate by adverse possession, will be unaffected by the registration of an interest created by a later instrument.106

Registration and priority 7.38  The purpose of the deeds registration provisions is to confer priority by the order of registration. Section 184G(1) of the Conveyancing Act is expressed to apply to: All instruments (wills excepted) affecting, or intended to affect, any lands in New South Wales which are executed or made bona fide, and for valuable consideration, and are duly registered …

No distinction is drawn between legal and equitable interests. It follows that if either an earlier legal or equitable interest is created but is unregistered, that interest will lose priority to a later legal or equitable interest that is registered bona fide and for valuable consideration.107 The provision as drafted appears to envisage competitions between registered instruments only and, therefore, would not cover situations where one instrument is registered and the other is not. It has been held that such an interpretation is too restrictive and that the section  should also give priority to later registered interests against earlier unregistered interests affected by instruments.108 As noted above, unregistered interests that are not created by instruments will operate under the normal priority rules.109 Registration is 102. Conveyancing Act 1919 (NSW) s 184B(1). 103. Conveyancing Act 1919 (NSW) s 184G(1). 104. Moonking Gee v Tahos (1961) 63 SR (NSW) 935. 105. White v Neaylon (1886) 11 App Cas 171; White v Hunter (1868) 5 WW & A’B (E) 178. 106. White v Neaylon (1886) 11 App Cas 171. See Chapters 5 and 11. 107. Darbyshire v Darbyshire (1905) 2 CLR 787. 108. Fuller v Goodwin (1865) 4 SCR (NSW) 66. 109. White v Neaylon (1886) 11 App Cas 171.

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irrelevant in that case, though of course it will be important for the purposes of protecting the later interest holder against interests created even later in time. In addition, the provision will only apply where there is a competition between the interests. That is, if the instruments can be read together and effect given to them, the provision will not apply. Where one agreement is not expressed to be subject to another, this may involve questions of construction concerning whether the later agreement was intended to apply generally, or concurrently with the earlier interest.110 Registration of one instrument will prevent the priority of a later instrument, not by virtue of the fact that the later interest will be deemed to have notice of the former, but because the earlier interest was registered first. It generally follows that the position of a later interest holder will be the same whether or not he or she searches the General Register of Deeds.111

Bona fide and for valuable consideration 7.39  Section  184G(1) of the Conveyancing Act provides that the interest holder who claims priority under a deeds registration scheme must take under an instrument ‘executed or made bona fide’.The bona fide requirement is imposed on the party taking an interest under the instrument; s 184G(2) provides that lack of bona fides on the part of the ‘conveying party’ is immaterial. Fraudulent, dishonest or malicious motives in the act of procuring the execution or registration of an instrument will clearly fail the ‘bona fide’ requirement.112 However, in this context, ‘bona fide’ goes beyond meaning and ‘honest’ intent.113 It also incorporates a requirement that the interest holder is free from notice, so that any instrument made where the purchaser has notice of an existing interest will be unable to take advantage of registration to gain priority.114 Notice in this context includes actual and constructive notice.115 Thus, in Marsden v Campbell,116 for example, where a tenant was in possession under an unregistered lease, a subsequent purchaser was fixed with constructive notice of his rights, and so did not defeat the lease by registration. If notice is received after the instrument is executed, the purchaser is still able to register bona fide, and so the purchaser will be able to take advantage of the priority offered by registration.117 In a standard conveyance, if notice is received after execution of the contract but before settlement, the deed will not be bona fide and, therefore, cannot attract priority by 110. Boyce v Beckman (1890) 11 LR (NSW)(L) 139 at 146. 111. Mills v Renwick (1901) 1 SR (NSW) Eq 173. 112. Mills v Renwick (1901) 1 SR (NSW) Eq 173. 113. Wilde v Spratt (1986) 70 ALR 171 (examining the provisions of the Bankruptcy Act 1966 (Cth) s 135). See further, discussion in Butt, Land Law, note 42 above, p 727. 114. Scholes v Blunt (1916) 17 SR (NSW) 36. See also Agra Bank v Barry (1874) LR 7 HL 135 at 148–9; Jones v Collins (1891) 12 LR (NSW) L 247; Sydney & Suburban Mutual Permanent Building Society Ltd v Lyons [1894] AC 260. 115. Sydney & Suburban Mutual Permanent Building Society Ltd v Lyons [1894] AC 260. 116. Marsden v Campbell (1897) 18 LR(NSW) Eq 33. 117. Blackwood v London Chartered Bank of Australia (1871) 10 SCR (NSW) Eq 91.

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registration.118 In these circumstances, however, it would be possible for the purchaser to get priority if he or she registered the contract (which instrument was not tainted by notice).119 7.40  A further requirement for the benefit of registration is that the instrument must be executed or made ‘for valuable consideration’.120 Importing contract law principles, the courts recognise that consideration must be ‘sufficient’, but need not be full value or market value, or even adequate, to satisfy this requirement provided that the consideration is not nominal.121

Effect of registration on void instruments 7.41  In contrast to the Torrens system of registration, a forged deed registered under a deeds registration system remains void,122 as will an instrument void for fraud.123 However, an instrument that under the old system priority rules would fall victim to the nemo dat rule, and therefore be completely ineffective,124 can be given priority, and therefore efficacy, by virtue of registration. To take the example from the commencement of this chapter (at 7.3): imagine that A, the owner of the fee simple in the property ‘Blackacre’, conveys the legal fee simple to B, and then replicates a conveyance of the fee simple in favour of C. Under the nemo dat rule, the conveyance to C would be void. However, if C registered the instrument first, without notice of B’s interest at the time of the acquisition of the legal estate, C would take priority.125

Reform 7.42  Three reforms of this area of the law seem particularly pressing: 1. the general persistence of a title system based on title deeds; 2. the doctrine of tabula in naufragio; and 3. the conceptual and practical difficulties surrounding the distinction between equities and equitable interests.

Persistence of old system title generally 7.43  As the above priority rules demonstrate, old system title is hampered by its fundamental reliance on the acts of private parties to ensure valid title. The opportunity for documents that form part of the chain to go missing (through accident or fraudulent conduct), be invalidly executed or be forged can leave purchasers vulnerable and uncertain 118. Burrows v Crimp (1887) 4 WN (NSW) 11b. 119. Moonking Gee v Tahos (1961) 63 SR (NSW) 935. 120. Conveyancing Act 1919 (NSW) s 184G(1). 121. Bullen v A’Beckett (1865) 1 Moo NS 223; 15 ER 684. 122. Re Cooper (1882) 20 Ch D 611. 123. Sutherland v Peel (1864) 1WW & A’B 18. 124. See 7.3. 125. Blaxland v Grattan (1887) 8 LR (NSW) (L) 287. See also Fuller v Goodwin (1865) 4 SCR (NSW) 66; Smith v Deane (1889) 10 LR (NSW) Eq 207.

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as to the  validity of the vendor’s title. After paying for and receiving the conveyance, the purchaser does not want to find that his or her title is at risk of being disturbed by someone claiming another earlier interest — such as a legal easement — which, as we have seen, binds subsequent purchasers regardless of notice. It is difficult to guard against the deliberate removal by the vendor (or another person) of documents from a chain of title. Equally, the task of verifying the documents that form the chain of title, such as deeds of conveyance, deeds of mortgage, wills and deeds of trust, is time consuming, fraught with difficulty and expensive. In the language of economists, these difficulties drive up ‘transaction costs’. In addition, sometimes searches do not reveal defects in title (such as forgery). However, the nemo dat rule means that title is insecure in the face of such defects. Attempts to improve old system title through statutory reform, such as s  53 of the Conveyancing Act 1919 (NSW) and its reduction of ‘good root of title’ to 30 years, have failed to resolve all the difficulties associated with proof of good title, for the reason that legal interests are binding irrespective of notice.The other major attempt at reforming the shortcomings of old system title has been the statutory deeds registration scheme — but, as we have seen above, this, too, was built on a shaky foundation of deeds. The question of the continued use of a deeds-based system still manages to linger on in New South Wales. This is so notwithstanding the introduction, over a century ago, of the Torrens system.The additional costs, uncertainty and complexity of old system title are destined to diminish further within the next decade.We are surprised, however, that at the time of writing this edition, it is still not possible to state that land in New South Wales is entirely within the Torrens title system.. While old system title still exists, it can continue to create pitfalls for the unwary, and thereby unnecessarily complicate property law. The best reform of this system is its accelerated elimination and replacement.

Tabula in naufragio 7.44  The doctrine of tabula in naufragio has long had its detractors. In 18th-century England, for example, Lord Chancellor Hardwicke lamented that the doctrine ‘could not happen in any other country but this’.126 The Lord Chancellor was not to know that some Australian jurisdictions would follow suit. The rule seems to be beset by a number of different problems: 1. It does not seem to be soundly based. The case law appears to create an exception that would eat up the rule — namely, that if it can arise only where no breach of trust arises, then most, if not all, equitable interests would seem to be vulnerable. 2. It is uncertain. It is unclear what role notice plays in the doctrine from the rule in Mumford v Stohwasser.127 126. Wortley v Birkhead (1754) 2 Ves Sen 571 at 574, cited in R Megarry and H Wade, The Law of Real Property, 5th ed, Stevens, London, 1984, p 1006. 127. Mumford v Stohwasser (1874) LR 18 Eq 556.

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3. It confers undue benefits on the person who later acquires the legal estate. The intermediate equitable interest holder who has clean hands is unfairly disadvantaged by the operation of the rule. The statutory rules in relation to tacking under the Torrens system are as much of the doctrine as is necessary to do justice between competing interest holders.128

Equities and ‘mere equities’ 7.45  A further issue for reform is that of the status of equities, or ‘mere’ equities. This issue is not going to disappear with (eventual) abolition of old system title, as it also persists under the Torrens system.129 Indeed, the key case of Latec Investments Limited v Hotel Terrigal Pty Ltd (in liq)130 was a Torrens title case. Much commentary has surrounded the ambit of this vaguely defined category of rights.131 A  threshold question is whether such rights are proprietary at  all. The more convincing view is that, on the basis that equities can bind third parties (if there is notice of them at the time the later equitable interest is acquired), then they would seem to pass the basic test for a proprietary right noted in Chapter 1.132 Yet two further problems remain. First, is this category exhausted by rights of rectification and rights to set aside for fraud and mistake? Second, when does a proprietary interest arise? In relation to the first issue, the case law does not clearly distinguish between the different types of interests. While there is no doubt that rights of rectification and rights to set aside for fraud and mistake are equities, and that they, therefore, fall under a different priority rule rendering them more vulnerable than full equitable interests, can the same be said for equities of acquiescence, equitable estoppel, and interests under common-intention constructive trusts? There are two reasons for suggesting that the category should remain limited, excluding the latter forms of interests.133 First, what authority there is on this matter is against expansion.134 Second, while it may be a justifiable policy to give a weaker measure of protection for those who have a right to rectify or set aside transactions, on the grounds suggested by Upjohn J in Smith v  Jones,135 the same does not apply to parties such as 128. See 14.130–14.134. 129. See, for example, Ruthol Pty Ltd v Mills (2003) 11 BPR 20,793; Re Jonton Pty Ltd [1992] 1 Qd R 105. 130. Latec Investments Limited v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265. 131. See, for example, D Skapinker, ‘Equitable Interests, Mere Equities, “Personal” Equities and “Personal Equities” — Distinctions with a Difference’ (1994) 68 Australian Law Journal 593; D Wright,‘The Continued Relevance of Divisions in Equitable Interests in Real Property’ (1995) 3 Australian Property Law Journal 163; J Levine, ‘The Timing of the Imposition of a Constructive Trust’ (1997) 5 Australian Property Law Journal 74; M Stone, ‘The Reification of Legal Concepts: Muschinski v Dodds’ (1986) 9 University of New South Wales Law Journal 63; S Hepburn, ‘Reconsidering the Benefits of Equitable Classification’ (2005) 12  Australian Property Law Journal 157; Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, note 77 above, pp 124–32. 132. See 1.9. 133. See  further, S Hepburn, ‘Reconsidering the Benefits of Equitable Classification’ (2005) 12 Australian Property Law Journal 157. 134. See 7.33. 135. Smith v Jones [1954] 1 WLR 1089.

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cohabiting partners under a constructive trust. Their interest, if a full equitable interest, will only bind if they are in occupation or if the subsequent purchaser has notice of their interest by other means. There is therefore no justification for treating interests arising under constructive trusts differently to beneficiaries under an express trust, or the holder of an earlier equitable interest under an enforceable contract for sale. The second problem stems from the analysis of Deane J in Muschinski v Dodds,136 which drew distinctions between the institutional and remedial aspects of the constructive trust, and has provoked much discussion and commendation.137 While not addressing the distinction between equitable interests and equities specifically, his Honour suggested that the constructive trust might be treated as a remedy where ‘the legitimate claims of third parties [are] affected’.138 In these circumstances, ‘the constructive trust should be imposed only from the date of publication of reasons for judgment’.139 But this approach raises exactly the same problems as those listed above. Authority is against it: the purchaser under a contract for sale, for instance, is the beneficiary of a ‘trust’ type interest where specific performance is available under the rule in Lysaght v Edwards,140 and is not seen as so vulnerable to ‘legitimate third party rights’ as to have his or her interest effectively postponed by virtue of a purely prospective order in these circumstances; nor is there any policy that would justify such an approach in any situation other than the ‘equity’ cases.141

136. Muschinski v Dodds (1985) 160 CLR 583; 62 ALR 429. 137. See, for example, Stone, ‘The Reification of Legal Concepts: Muschinski v  Dodds’, note 131 above; P O’Connor, ‘Happy Partners or Strange Bedfellows? The Blending of the Remedial and Institutional Features of the Constructive Trust’ (1996) 20 Melbourne University Law Review 735. 138. Muschinski v Dodds (1985) 160 CLR 583 at 623; 62 ALR 429 at 458. 139. Muschinski v Dodds (1985) 160 CLR 583 at 623; 62 ALR 429 at 458 (emphasis added). 140. Lysaght v Edwards (1876) 2 Ch D 499. See Chapter 5. 141. See  further, Skapinker, ‘Equitable Interests, Mere Equities’, note 131 above; Wright, ‘The Continued Relevance of Divisions in Equitable Interests in Real Property’, note 131 above; Levine, ‘The Timing of the Imposition of a Constructive Trust’, note 131 above; Stone, ‘The Reification of Legal Concepts’, note 131 above.

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Chapter 8

Torrens Title

Introduction 8.1  As noted in Chapter 7, the main problems with old system title were the uncertainty, unreliability, complexity and cost caused by a land transfer system that was exclusively dependent on chains of title deeds.1 None of the many reforms enacted, such as the Deeds Registration Act 1898 (NSW), solved all the inadequacies endemic to this system. From the early years of settlement, therefore, the question of a more fundamental reform of the system of land titles came to be a prominent feature of local politics. The problems inherent in old system title were particularly evident in South Australia, where land speculation was rife. Indeed, by 1857 it was believed that over 40,000 land title documents dealing with transactions should have been in existence, but apparently up to three-quarters of these had been lost. Up to one-third were technically meant to be in the hands of people who lived overseas, but these proved difficult to trace.2 Furthermore, the validity of the titles themselves was also called into question, with it being said that as many as 5000 could have been invalid and perhaps even entirely defective.3 Aside from the web of problems associated with establishing a valid chain of title, the magnitude of legal costs became exorbitant. For instance, Pike identified a newspaper report in 1857 revealing that, on the sale of a portion of land worth £20, the conveyancing costs were £39.4 Unsurprisingly, this regime had many critics. The most prominent of these was Sir Robert Richard Torrens. Motivated by what he saw as the inadequacies of old system title, his dislike of the monopoly on land transfers exercised by the legal profession and his

1.

Dependence on a chain of title (ie, a written record) emerged once feoffment and livery of seisin, discussed in Chapter 3, fell out of favour. The ceremonies associated with feoffment and livery of seisin had been public, effectively providing an oral and visual record of land ownership. 2. A Castles, Australian Legal History, Law Book Co, Sydney, 1982, p 458, referring to D Pike, ‘Introduction of the Real Property Act in South Australia’ (1960) 1 Adelaide Law Review 169. 3. Pike, ‘Introduction of the Real Property Act in South Australia’, note 2 above, at 172. 4. The South Australian Register, 13 November 1857, cited in Pike, ‘Introduction of the Real Property Act in South Australia’, note 2 above, at 173.

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abhorrence of the high price of conveyancing, he sought to develop a more secure and efficient system of land registration and transfer.5

Sir Robert Torrens 8.2  Sir Robert Torrens is a controversial figure in Australian property law.6 He was aware that the old system of title transfer and validation, congenial as it may have been to its origins in the mother country, was one that on transfer to a different setting, produced dire and unpredictable results. It was wholly unsuited to a local environment where populations were rapidly mobile, land speculation was rampant, and where economic and ambitious settlement policies were inextricably entwined. Accordingly, Torrens made it his purpose ‘to escape from the grievous yoke of English Property Law’.7 8.3  The actual extent of Torrens’ contribution to the development and implementation of the improved system of conveyancing and registration embodied in the Real Property Act 1886 (SA) remains the subject of debate.8 Whether he was the creative architect behind the scheme or whether he merely collated a pastiche of ideas and approaches developed by others is still contentious. 8.4  Torrens oversaw the introduction of the Real Property Act from his position as Registrar-General of South Australia, but he did so in the face of often vicious attack from 5. For a discussion of the historical background to the introduction to the Torrens system and the ideal characteristics of a land registration scheme, see T Stutt, ‘Transition to Torrens: The Six Fold Path to the Ideal Land Administration Scheme’ (2008) 15 Australian Property Law Journal 115. For a discussion of Torrens, the man, see R Croucher, ‘150 Years of Torrens — Too Much, Too Little, Too Soon, Too Late?’ (2009) 31 Australian Bar Review 245. See also discussion in Deguisa v Lynn (2020) 268 CLR 638. 6. No less controversial than his father, who, as Henry Reynolds recounts, was instrumental in the denial of native title to land in the development of South Australia: see H Reynolds, The Law of the Land, Penguin, Melbourne, 2003, Ch 2. For further insight into Robert Torrens, see JH Heaton, Australian Dictionary of Dates and Men of the Time: Containing the History of Australians from 1842 to May 1879, G Robertson, Sydney, 1879; DJ Whalan, Torrens, Sir Robert Richard (1814–1884) in Australian Dictionary of Biography (accessed 28  March  2017), ; G Jessup, ‘Torrens of the Torrens System’, unpublished paper in the possession of the State Library of South Australia, 1950, p 26. 7. R Torrens, South Australian Registration of Title, Public Library of South Australia, Adelaide, 1962, p 44. 8. Torrens is thought by some scholars to have relied on ideas borrowed from Hurtle Fisher and Dr Heinrich Hübbe, both of whom had proposed systems of registration as far back as 1836. Hübbe, in particular, was familiar with the schemes of the Hanseatic League which were based on parcellation. See S Robinson, Transfer of Land in Victoria, LBC, 1979, pp 11–15. For further discussion of Torrens’ contribution as well as influences on him, see GE Loyau, Notable South Australians; or Colonists Past and Present, Carey, Page & Co, Adelaide, 1885, pp 247–48; G Taylor, A Great and Glorious Reformation? Six Early South Australian Legal Innovations, Wakefield Press, Adelaide, 2005; G Taylor, ‘Is the Torrens System German?’ (2008) 29 Journal of Legal History 253; R Croucher, ‘“Delenda Est Carthago!” Sir Robert Richard Torrens and his Attack on the Evils of Conveyancing and Dependent Land Titles: A Reflection of the Sesquicentenary on the Introduction of his Great Law Reforming Initiative’ (2009) 11(2) Flinders Journal of Law Reform 197; A Esposito, ‘A New Look at Anthony Forster’s Contribution to the Development of the Torrens System’ (2006–2007) University of Western Australia Law Review 251. Esposito’s article suggests that the British Royal Commission Report of English Royal Commissioners, proposing a system of registration of titles, may have also influenced Torrens. Note that the Torrens legislation of South Australia was varyingly replicated in all other states of Australia.

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Torrens Title

8.6

his opponents, many of them lawyers, who feared loss of work because of the introduction of a simpler scheme. As Kercher noted, resistance to the scheme might also be explained by the fact that: … nineteenth-century conservatives saw the Torrens system as more than a break from English law. It was a challenge to their self-perceptions of Englishness and of a stratified society based on land holding.9

Torrens remains a colourful and controversial figure in the introduction of the scheme that bears his name.10

Introduction of the Torrens scheme 8.5  The Torrens legislation in New South Wales had its genesis in the original scheme designed for South Australia by Sir Robert Torrens. In New South Wales, the system was introduced by the Real Property Act 1862 (NSW).11 Rather than ‘patch’ or ‘mend’ old system title, it, like its South Australian counterpart, created a new system of titling based on registration.12 The system used today still retains many key features of the 1862 Act.13

How land is brought under the Torrens system 8.6  Land is Torrens title land because either it was originally granted by the Crown as Torrens title land or because it was converted to Torrens title from old system title or Crown lands title. All Crown grants of freehold land in New South Wales after 1 January 1863 are held according to the Torrens system and are subject to the Real Property Act 1900 (NSW). All Crown grants of freehold title made before that date need to be converted

9. B Kercher, An Unruly Child: A History of Law in Australia, Allen & Unwin, Sydney, 1995, p 130. Land registration systems based on the Torrens system have sprung up in other countries including New Zealand, Malaysia, Singapore, Israel and some provinces in Canada. See also G Taylor, ‘The Torrens System in Nova Scotia and New Brunswick’ (2009) 16(3) Australian Property Law Journal 175.The land registration scheme operating in England under the Land Registration Act 2002 (UK) cannot be described as a replica of the Torrens system. 10. DJ Whalan, The Torrens System in Australia, Law Book Co, North Ryde, 1982, p 5. 11. The Act came into operation on 1 January 1863 and the first Torrens title (Vol 1, Folio 1) was issued in the same year for land at Randwick, Sydney. In the financial year 2015–16 more than 900,000 land title transactions were registered. See Department of Finance, Services and Innovation, Annual Report 2015–16. 12. Although the Torrens system introduced totally different methods of titling and transfer, the system retained elements and concepts of old system title, including the doctrines of tenure and estates, as well as many of the established interests in land. Hence, Torrens title recognises fee simple estates and life estates as well as, for example, leases, easements and profits à prendre, all of which were known under old system title. 13. It should be noted, however, that extensive amendments have taken place despite the retention of key features, including the introduction of e-conveyancing platforms. Unfortunately, however, despite the implementation of the Electronic Conveyancing National Law (see  further, 8.17) to impose national standards for electronically based conveyancing transactions, there is not a uniform Torrens system throughout the country. See M Neave, ‘Towards a Uniform Torrens System: Principles and Pragmatism’ (1993) 1 Australian Property Law Journal 114; S MacCallum, ‘Uniformity of Torrens Legislation’ (1993) 1 Australian Property Law Journal 135; T Hunter, ‘Uniform Torrens Title Legislation — Is there a Will and a Way?’ (2010) Australian Property Law Journal 18.

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if they are to be held under the Torrens system.14 The Real Property Act provides for conversion of old system land and Pts 4, 4A and 4B of the Real Property Act are relevant to this process.15 Not all parties with an interest in land can apply to have it brought under the Torrens system. Hence, a mortgagor cannot apply without the mortgagee’s consent, but a fee simple holder and a life tenant may do so. An applicant for conversion must surrender the title documents (where they exist) to the Registrar-General before the conversion process can proceed. After this, the Registrar-General must advertise the proposed conversion so that parties may object.16 If the Registrar-General is not satisfied that the evidence is sufficient to demonstrate good title, the Registrar-General may reject the application.17 However, whereas the threshold to establish good title was once quite high, it has now been lowered in order to encourage remaining old system owners to convert their titles. Parties who have statute-barred the documentary title holder by virtue of an adverse possession claim are also able to apply for conversion under the primary application provisions. Applications based on possessory title of old system land and brought under s 14(2)(b) of the Real Property Act may be made in respect of either a whole or part of a parcel. It is notable that traditionally the boundaries of old system land have been defined not only by documentary metes and bounds descriptions but by occupations such as fences or other structures on or near the boundary.18 (According to what was formerly the Department of Lands, quite a number of the primary applications lodged with it have historically been made in respect of strips of old system land that were fenced in with adjoining land.19) If another person claims an estate or interest in land that is the subject of a primary application, that person is, pursuant to s 74B(1) of the Real Property Act, able to lodge a caveat prohibiting the conversion of the land.20 If the application is successful, the Registrar-General will grant an ordinary folio pursuant to s 17(2) of the Real Property Act.

14. Land not falling into these categories was held under ‘Crown Lands titles’.That form of title was rather akin to old system title with a firm statutory overlay. For an example of a recent Land and Property Information (LPI) primary application notice, published in the Wentworth Courier on 27 July 2017. This advertisement related to the bringing of old system title land in Woollahra, Sydney, under the Torrens system. The land was also subject to an adverse possession claim. It is an extremely rare type of advertisement. 15. Primary applications are dealt with in Pt 4 of the Real Property Act 1900 (NSW), while qualified title is covered in Pt 4A and limited title in Pt 4B of the Act. Part 4A commenced in 1967. On the conversion of old system to Torrens title, see 8.9–8.10 below. 16. See Real Property Act 1900 (NSW) ss 12(1), (1A) and 17(1), (3). 17. Real Property Act 1900 (NSW) s 23(2). 18. Personal communication between Leanne Hughes, Senior Legal Officer, Department of Lands, and Janice Gray, 3 October 2006. 19. Personal communication between Leanne Hughes, Senior Legal Officer, Department of Lands, and Janice Gray, 3 October 2006. Note that s 23G(1b) of the Conveyancing Act 1919 (NSW) redefines Crown land that is brought under the Real Property Act. 20. See discussion of caveats at 8.131.

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Torrens Title

8.9

8.7  Land may also be brought under the Torrens system by virtue of a ‘qualified folio’. A qualified folio may arise by virtue of a primary application, subdivision, registered deed or on investigation by the Registrar-General. Additionally, it may arise in relation to aquaculture leases by virtue of s 13D(3) of the Real Property Act in conjunction with the Fisheries Management Act 1994 (NSW). A qualified folio initially creates only a limited form of Torrens title that later may develop into an interest attracting all the usual benefits of indefeasibility. The folio is qualified because it is subject to any ‘subsisting interest[s]’ in the land.21 Alternatively, the Registrar-General may issue a limited folio where the boundaries of land are not adequately defined, thus making an ordinary or qualified folio unsuitable.22 As may be seen from the material immediately below, the above provisions have become less significant today because most of the land in New  South  Wales has already been converted to Torrens title.

Old system title and computerisation conversions 8.8  Historically, two types of conversions have been undertaken by the relevant government entities administering land title.23 These are distinct, and should not be confused: (i) the initial conversion of old system title to Torrens title; and (ii) for land already within the Torrens system, the conversion of manual titles to electronic or computerised titles. The following outlines details of the progress in relation to each of these schemes.

Old system title to Torrens title 8.9  The process of conversion of all land to Torrens title has been sporadic. Between 1863 and 1999, the Land Titles Office, as it then was known, converted some 204,000 old systems titles to Torrens title.24 By 1975, it was estimated that 150,000 parcels or approximately 6% of old system land was left to be converted.25 By 1993, that number had reduced to approximately 60,000 to 80,000 parcels.26 However, between 1999 and 2003

21. Real Property Act 1900 (NSW) ss 28A, 28P(1)(d). 22. Real Property Act 1900 (NSW) s 28T. 23. The relevant entity is the former Department of Lands and its sub-departments, the names of which have changed over the years. In April 2011, the Land and Property Management Authority was abolished under a government re-structure and its former business divisions were transferred to new departments. Until April 2017, the relevant functions are carried out as the Land and Property Information Division of the NSW Department of Finance and Services. At the date of publication, registry and titling services are conducted by a private consortium — Australian Registry Investments — under a 35-year lease from the NSW Government. 24. Further, by 1999, 46,500 conversion matters had been raised, which resulted in approximately 62,000 qualified folios: personal communication between Peter McSorley, New South Wales Land Titles Office, and Janice Gray, 19 May 1999. 25. Artis Report 1975 (‘Suggestion Designed to Simplify Conveyancing in New South Wales’) Appendix A, as cited in P Butt, Land Law, 6th ed, Thomson Reuters, Sydney, 2010, p 747, fn 33. 26. New  South  Wales Law Reform Commission, Unilateral Severance of a Joint Tenancy, Report 73, 1994, [8.47]. At the time, this figure represented approximately 3% of land titles in New South Wales. (Evidence provided by the New South Wales Lands Office to the NSW Law Reform Commission.) See also Land and Property Management Authority, 2010 Annual Report, p 58.

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many thousands of parcels of land still remained under old system title and, therefore, outside the Torrens system. 8.10  Between December 2004 and August 2006, more than 12,500 old system land parcels were converted to the Torrens Integrated Titling System (ITS) and as a result more than 11,000 new legal identifiers were entered into Land and Property Information (LPI)’s databases.27 However, in 2009 a review revealed more old systems parcels than previously thought and estimates were revised upwards by 7000 parcels, leaving 36,000 old system parcels remaining to be converted.28 A further conversion project was undertaken in 2015, which brought the number of old system titles down to under 1000. As at  the time of writing, it is therefore estimated that under 0.027% of all titles in New South Wales remain under old system title.29

Conversion to computerisation 8.11  Computerisation of Torrens records and transactions began in New South Wales with the passing of amendments to the Real Property Act 1900 (NSW) in 1979,30 and in 1983 computerised titles were issued for the first time. Since 1983, there has been steady progress towards greater computerisation of Torrens recording and administration in New South Wales, so that by 2013 approximately 99% of the Torrens Title Register (the Register) had been computerised.31 In 2015, LPI reported that a further 5420 old system, Crown and manual Torrens title land parcels were converted to electronic titles in 2014–15, and held within the Integrated Titling system (ITS), presumably further raising this percentage.32

Torrens Register, folios and dealings The Register 8.12  The Register is central to the Torrens system. It is a record of land details and, according to s 31B(2) of the Real Property Act, it must include: folios, dealings, records kept pursuant to s 32(7), instruments of a prescribed class, and records that the regulations 27. Personal communication between Lyn Thomson, Administration and Policy Officer, Office of the General Manager, Land and Property Information, Department of Lands, and Janice Gray, 22 September 2006. Presumably some old system titles that were converted to Torrens title were not also converted to computerised title and remained manual, at least for a time. Between 2011 and 2011, a further 9500 were added: Department of Finance and Services, Annual Report 2010–12, p 157. 28. Land and Property Management Authority, Annual Report 2010, p 58. 29. Personal communication between Lyn Thomson, Manager of Policy and Administration, Land and Property Information, and Brendan Edgeworth, August 2015; personal communication between Robert Doherty,  Team Leader Old System, Title and Plan Services, Land and Property Information, Department of Lands, New South Wales Government, and Heather Roberts, 8 June 2017. 30. See  Real Property (Computer Register) Amendment Act  1979 (NSW). These amendments are discussed in AG Lang, ‘Computerised Land Title and Land Registration’ (1984) 10 Monash University Law Review 196. 31. Land and Property Information, Torrens Title Information and Search Guide, New South Wales Government, March 2013, p 12. 32. Department of Finance and Services, Annual Report 2014–15, p 69.

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require be kept as part of the Register. Section 31B(3) of the Real Property Act also states that the Register may be in ‘any medium or combination of mediums’. Accordingly, it may be both manual and/or computerised. As noted above, most titles are now recorded electronically on the Register. Parcels of land mentioned in the Register are identified by reference to a numbered deposited plan and each lot or parcel of land is the subject of a separate folio in the Register. Section 12D of the Real Property Act permits the Registrar to provide guidance and information with respect to approved forms, the preparation and lodgment of documents and plans for registration, recording and other appropriate matters. In the interests of transparency, these are to be published on the internet or made available through any other means the Registrar-General determines. It is envisaged that this facility will help maintain the accuracy of the Register.

Folios 8.13  Pursuant to s 32(1) of the Real Property Act, the Registrar-General creates a folio in the Register by recording a description of the land (which usually includes details of the dimensions and boundaries); a description of the proprietor (which usually includes his or her name and, if the proprietor is a minor, his or her date of birth as well);33 such particulars as the Registrar-General thinks fit; and any other estates or interests that affect the land. 8.14  Land is considered to be registered land under the Real Property Act on creation of a folio.34 When a folio is created, the Registrar-General will allocate a ‘distinctive reference’ to it.35 Historically and prior to computerisation, each Crown grant, along with the certificate of title, together constituted the folium. The Register was, in turn, made up of all the folios. Since computerisation the process operates slightly differently. See below at 8.16–8.18. 8.15  Folios may be created for fee simple estates and life estates.36 Further, in New South Wales a lessee with a lease of not less than 25 years, which pertains to land not held under the Torrens system, may apply to have his or her interest registered under the system.37 It is also possible for the Registrar-General to create a separate folio for a leasehold estate.38

33. The ‘registered proprietor’ is the person whose interest in land has been registered. See s 3(1) of the Real Property Act 1900 (NSW). 34. Real Property Act 1900 (NSW) ss 31B, 32(1). 35. Real Property Act 1900 (NSW) s 32(1). 36. Real Property Act 1900 (NSW) s 100(2). 37. Real Property Act 1900 (NSW) s 14(2). This is achieved by way of an application to bring the land under the Torrens system. 38. Real Property Act 1900 (NSW) s 32(3).

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Certificate of title 8.16  Before 11  October  2021, when land was brought under the provisions of the Torrens system, the Registrar-General prepared two identical instruments that were both called certificates of title.39 The certificate of title provided details of interests recorded in the Register related to a particular parcel of land. One certificate was bound in the Register Book after the Registrar-General had allocated a volume and folio number to it.This copy was known as the ‘folium’. The other certificate was given to the registered proprietor and was known as the ‘duplicate’ certificate of title. The version in the Register Book was manually altered to reflect later transactions. After amendments to the Act in 1970, the term ‘Register Book’ was replaced by ‘Register’, while after the 1979 amendments embodied in the Real Property (Computer Register) Amendment Act 1979 (NSW), the term ‘folio of the Register’ was introduced. On 11 October 2021, the Real Property Amendment (Certificates of Title) Act 2021 commenced. It removed all references to certificates of title from the Real Property Act.40 The effect of the amendments is to ensure that all conveyancing in New South Wales is conducted electronically from 11 October 2021.

Electronic conveyancing 8.17  It is not the purpose of this chapter to discuss the mechanics of e-conveyancing in detail. That is best left to other texts. However, an overview of the transition to paperless conveyancing is necessary in order to appreciate the manner in which the Torrens system rules and principles operate in the modern landscape. In July 2008, the Council of Australian Governments (COAG) agreed to the development and implementation of a single, national electronic conveyancing system as part of a larger agenda to address inconsistent national regulation in a range of areas.41 The National Partnership Agreement to Deliver a Seamless National Economy released by COAG in March 2009 gave responsibility to the states and territories to implement a ‘national coordinated approach’ to electronic conveyancing.42 In 2011, all states and the Northern Territory agreed to a framework for the implementation of electronic conveyancing, including the preparation, introduction and amendment of an Electronic Conveyancing National Law (ECNL).43 New South Wales was the first jurisdiction to adopt the national law in 2012, through the Electronic 39. See the Real Property (Amendment) Act 1970 (NSW). 40. The amendments give effect to provisions inserted into the Real Property Act in 2016 that allowed the Registrar-General to issue notice that certificates of title would no longer be issued; see Schedule 3 cl 31 of the Real Property Act, originally inserted as s 33AAA by the Real Property Amendment (Electronic Conveyancing) Act 2015 (NSW). 41. Communique, Council of Australian Governments, 3 July 2008. 42. National Partnership Agreement to Deliver a Seamless National Economy, Council of Australian Governments, December 2008, [21]. 43. Intergovernmental Agreement for an Electronic Conveyancing National Law, New South Wales,Victoria, Queensland, Western Australia, South Australia, Tasmania, Northern Territory, 1 November 2011.

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Conveyancing (Adoption of National Law) Act  2012 (NSW).44 With the exception of the Australian Capital Territory, all other states and territories either applied the New South Wales legislation45 or enacted corresponding legislation.46 The ECNL is intended to allow transactions in relation to land to be conducted entirely online by users (or ‘subscribers’) through regulated Electronic Lodgment Network Operators (ELNOs). ELNOs and subscribers are required to comply with the relevant Operating Requirements and Participation Rules issued in each jurisdiction concerning eligibility, use and security. In New South Wales, the Registrar-General has issued47 both Operating Requirements for ELNOs48 and Participation Rules for subscribers.49 Only one ELNO is currently operating in New South Wales.

Electronic certificates of title 8.18  In paper conveyancing transactions, possession of the duplicate paper certificate of title was considered evidence of ‘control of the right to deal’50 in conveyancing transactions, preventing other dealings from being registered without the consent of the certificate’s holder. The Registrar-General could refuse to register a dealing if it was not accompanied by the certificate51 and, in certain circumstances, orders may have been sought compelling its production.52 With the move to a system of 100% electronic conveyancing, there is no longer a requirement to provide the paper certificate of title to register a dealing.The Real Property Act provides that the Registrar-General is entitled to assume that the person lodging a dealing has the authority of every person with an interest in the subject land.53 However, in the case of the lodgment of certain dealings, the Registrar-General may determine that the written consent of some third parties is a requirement.54

44. The Appendix to the Electronic Conveyancing (Adoption of National Law) Act 2012 (NSW) contains the Electronic Conveyancing National Law (NSW). 45. Electronic Conveyancing National Law (Queensland) Act 2013 (Qld); Electronic Conveyancing (Adoption of National Law) Act 2013 (Vic). In the ACT, all land is held on leasehold, and it appears that, for this reason, the new electronic conveyancing protocols were not given effect in that jurisdiction. 46. Electronic Conveyancing (National Uniform Legislation) Act  2013 (NT); Electronic Conveyancing National Law (South  Australia) Act  2013 (SA); Electronic Conveyancing (Adoption of National Law) Act 2013 (Tas); Electronic Conveyancing Act 2014 (WA). 47. Electronic Conveyancing National Law (NSW) ss 22, 23. 48. NSW Registrar-General, NSW Operating Requirements for Electronic Conveyancing, Version 3, 9 November 2015. 49. NSW Registrar-General, NSW Participation Rules for Electronic Conveyancing,Version 3, 9 November 2015. 50. Land and Property Information, Certificate of Title Solution for Concurrent Electronic & Paper Conveyancing, NEC in NSW Consultation Paper No 5, New South Wales Government, 2012, [2.2]. 51. Real Property Act 1900 (NSW) s 34(1). 52. For example, see Conveyancing Act 1919 (NSW) s 96; Hypec Electronics Pty Ltd (in liq) v Registrar-General (2005) 64 NSWLR 679. 53. Real Property Act 1900 (NSW) s 33A. 54. At the time of publication the Registrar-General maintained a comprehensive list of dealings requiring written third-party consent; ‘Written Consent for Electronic Dealings’, Office of the Registrar General,

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Dealings 8.19  A dealing constitutes any instrument except a Crown grant or a caveat that, in the words of s 3(1)(a) of the Real Property Act, is: … registrable or capable of being made registrable under the provisions of this Act, or in respect of which any recording in the Register is by this or any other Act … required or permitted to be made.

A dealing must be in approved form pursuant to s 104(1) of the Real Property Act. According to s 104(2), the Registrar-General may register a dealing containing departures from the approved form, so long as those departures are not matters of substance.  A dealing in registrable form may still be registrable although a long period has elapsed before it is actually lodged for registration.55 Dealings may include, for example, transfers, mortgages, easements, profits à prendre and leases.56 It should be noted that some instruments, such as a trust instrument, cannot be the subject of a registrable dealing in New South Wales.57 However, a trust instrument, duplicate or attested copy of it may be lodged with the Registrar-General for safe keeping and reference.58 Should such an instrument be lodged, the Registrar must record a caveat forbidding registration of any instrument not in accordance with the trust.59 The Registrar-General may register a dealing even it contains an error or an omission;60 or, alternatively, he or she may correct any ‘patent’ error.61 The Registrar-General may refuse to register a dealing (memorandum or caveat) that does not comply with any requirement of the Act.62 A dealing is given a ‘distinctive reference’, pursuant to s 36(1A) of the Real Property Act, and registered when the Registrar-General makes a recording in the Register in respect of the dealing. In practical terms, this occurs when the computer record concerning the dealing is altered. At that point, the dealing takes effect as if it were a duly executed deed.63 Once registration has taken place, an up-to-date version of the certificate of title can be created and issued. In the past, where folios were manually updated, the updating process

55.

56. 57. 58. 59. 60. 61. 62. 63.

available at: . Watt v Lord (2005) 62 NSWLR 495 held that a memorandum of transfer remained an effective document for registration, although it had been signed some 43 years previously, and that the Registrar-General was not precluded from registering the transfer by reason of the deaths of the registered proprietors. Although, the matter is not without doubt; see Wang v Copko [2008] NSWSC 736 and Carolyn Deigan as executrix for the estate of the late James Boyd Lockrey v Barnard James Fussell [2019] NSWCA 299. Dealings may be refused if there is no notice in approved form. See  Real Property Act  1900 (NSW) ss 39(1B), 117(2). A trust is not registrable in New  South  Wales except in limited circumstances, although a trust may be created over Torrens land (or land outside the Torrens system) and the instrument lodged with the Registrar-General for safe-keeping pursuant to s 82(1) of the Real Property Act 1900 (NSW). Real Property Act 1900 (NSW) s 82(2). Real Property Act 1900 (NSW) s 82(3). Real Property Act 1900 (NSW) s 39(2). Real Property Act 1900 (NSW) s 39(3). Real Property Act 1900 (NSW) s 36(1C). Real Property Act 1900 (NSW) s 36(11).

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consisted of crossing out old dealings if they were no longer relevant (eg, a mortgage that had been discharged) and writing in new dealings (eg, transfer details). The changes were made to the folio itself. It is the practice of the relevant government entity to update information overnight so that up-to-date records are available the following day.64 When a dealing is registered, the folio of the Register is updated to reflect the newly registered interest. Both manual folios and computer folio certificates are evidence of the details recorded in them.65

Principles underpinning the Torrens system 8.20  In 2015, the High  Court reaffirmed in Cassegrain v  Gerard Cassegrain & Co Pty Ltd66 that a ‘central and informing tenet’ of the Torrens system is that it is not a system of registration of title, but a system of title by registration. The title certified by the Torrens Register is therefore not ‘historical or derivative’ but rather the ‘title which registration itself vests in the proprietor’.67 The system was designed to obviate the need for a chain of title and the necessity of tracing the vendor’s title through a series of documents.68 Under the Torrens system, title to land requires intervention by the state and is not created merely by private arrangements between parties. The Torrens system substitutes ‘conveyance by registration for conveyance by deed’.69 Prima facie, the Torrens system provides a title that is also guaranteed by the state while the Register provides a complete record of land falling under the system.70 The Torrens system of land titling attempts to make titles ‘independent’ by making the Register conclusive and thus avoiding the need to search the genealogy of title.71 The English commentator Sir Theodore Ruoff stated that the Torrens scheme reflects three principles, these being the: 1. mirror principle; 64. Manually updated registers, folios and certificates of title had the advantage that they provided helpful historical information to historians and urban geographers, for example. For a time, there was concern that computer-generated folios and certificates of title deleted this information. Nowadays, the relevant government department offers a ‘historical search’ that provides the history of dealings since the title became computerised. For details preceding that time, a manual search needs to be undertaken. Searches of the manual records are time-consuming and involve additional cost. 65. Real Property Act 1900 (NSW) s 40(1) and (1A)(a), (b). See also ss 40(1B)–(3), 96. It should be noted that although s 40 refers to dealings, interests may pass, not by way of dealings, but also by way of transmission. A transmission may occur on the death of a joint tenant or on bankruptcy, for example. 66. Cassegrain v Gerard Cassegrain & Co Pty Ltd (2015) 254 CLR 425; 316 ALR 11 at [16] per French CJ, Hayne, Bell and Gageler JJ. 67. Breskvar v Wall (1971) 126 CLR 376 at 381, 386 per Barwick CJ (emphasis added). 68. Old system title was really only as strong as the weakest link in the chain of title. 69. Clements v Ellis (1934) 51 CLR 217 at 232 per Rich J. 70. This sets the Torrens system apart from the deeds registration schemes discussed in Chapter 7 at  7.36. Under the latter schemes, defects were not cured on registration. However, as can be seen in this chapter, the Register is not a complete record of estates and interests in land. Possessory title may still exist outside the Register, as do many equitable interests, for example. 71. WN Harrison, ‘The Transformation of Torrens’ System into the Torrens System’ (1962) 4 University of Queensland Law Journal 125 at 129.

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2. curtain principle; and 3. insurance principle.72

Mirror principle 8.21  The mirror principle referred to above is evidence of the centrality of the Register: it reflects all interests in the land for the time being.The importance of the Register to the Torrens system was made evident in Waimiha Sawmilling Co v Waione Timber Co,73 where the court said that ‘the cardinal principle of the Statute is that the Register is everything’. Recent cases dealing with inconsistent statutes have reinforced the significance of the Torrens Register, as have amendments to the Real Property Act attempting to ameliorate the challenges posed by inconsistent statutes.74 Curtain principle 8.22  The significance of the curtain principle as central to the Register was referred to in Gibbs v Messer,75 where the court discussed the issue in the following terms: The object is to save persons dealing with registered proprietors from the trouble and expense of going behind the register, in order to investigate the history of their author’s title, and to satisfy themselves of its validity. That end is accomplished by providing that everyone who purchases, in bona fide and for value, from a registered proprietor and enters his deed of transfer or mortgage on the register shall thereby acquire an indefeasible right, notwithstanding the infirmity of his author’s title.

8.23  If registration is so important, one might expect that the Registrar-General would be under a duty to register all instruments that are lodged with the RegistrarGeneral’s Office. However, this is not so, and the redress of a registered proprietor whose instrument has been lodged but not registered lies in s 122 (in concert with s 121) of the Real Property Act.  Section 122 permits a party who is dissatisfied with a decision of the Registrar-General (made pursuant to s 121) to have that decision reviewed by the Supreme Court.76 Section 121 allows a person to apply to the Registrar-General for a copy of his or her reasons for the decision.77 Further, registration determines priority, and hence an earlier registered instrument has priority over a later registered instrument.78 The order of registration is determined by the order in which the documents (in registrable form) are lodged.79 T Ruoff, An Englishman Looks at the Torrens System, Law Book Co, Sydney, 1957. Waimiha Sawmilling Co v Waione Timber Co [1926] AC 101 at 106. See further discussion at 8.107–8.114. Gibbs v Messer [1891] AC 248 at 254. Ex parte Gallagher (1908) 8 SR (NSW) 230. Regarding a refusal to register, see Williams v Marac Australia Ltd (1985) 5 NSWLR 529 at 535. For a case where the court found that s 122 was not applicable, see Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (2013) 247 CLR 149. Sahab’s attempt to reopen the case was dismissed: Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (No 2) (2013) 303 ALR 84. 78. Real Property Act 1900 (NSW) s 36(9). 79. Real Property Act 1900 (NSW) s 36(5). The issue of priorities is discussed at 8.161.

72. 73. 74. 75. 76. 77.

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Torrens Title

8.25

Insurance principle 8.24  The final principle, the insurance principle, is concerned with ensuring that no innocent party whose interest is defeated by virtue of the operation of the mirror and curtain principles will have to suffer that loss.80

Indefeasibility of Title What is indefeasibility? 8.25  The Torrens system is founded on the concept of indefeasibility of title. The term is not used in the Real Property Act 1900 (NSW), but was used in Torrens’ writings, and is used freely in case law and commentary. Indefeasibility of title means that the registered proprietor has a title that is conclusive. Indefeasibility makes the interest one that is unable to be defeated by claims of prior defectiveness in the title.81 Hence, indefeasibility provides a protection or sanctity from erosion by certain other claims or interests. Although a registered interest in some ways parallels a legal interest (eg, it is a title considered to be good against the whole world), in other ways it is very different from a legal interest, particularly in relation to the doctrine of notice and methods of transfer. In summary, an indefeasible title is one that is unimpeachable in the face of pre-registration defects.82 The key indefeasibility provision is s 42(1) of the Real Property Act, which states: Notwithstanding the existence in any other person of any estate or interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Registrar-General shall, except in the case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded except:

(a) the estate or interest recorded in a prior folio of the Register by reason of which another proprietor claims the same land, (a1) 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, (b) in the case of the omission or misdescription of any profit à prendre created in or existing upon any land, (c) as to any portion of land that may by wrong description of parcels or of boundaries be included in the folio of the Register or registered dealing evidencing the title 80. On the Torrens Assurance Fund, see further 8.183–8.200. For an analysis of the Torrens system, see P White, ‘It Doesn’t Seem to Register … Is the Torrens System for Real Property Dealings Effective 150 years After Its Enactment?’ (2008) 19 Australian Property Law Journal 130. 81. For a discussion of ‘good’ and ‘not good’ titles in another context, see Scottish Law Commission, Land Registration: Void and Voidable Titles [2004] SLC 125 (DP), discussion paper, February 2004 (accessed 22  March  2017), . 82. The term ‘unimpeachable’ is used in Assets Co Ltd v Mere Roihi [1905] AC 176 at 182. See discussion of notice below at 8.66.

361

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of such registered proprietor, not being a purchaser or mortgagee thereof for value, or deriving from or through a purchase or mortgage thereof for value, and (d) 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.

Section  42 needs to be read in conjunction with s  40 (manual folio and computer folio certificate as evidence of title), s  41 (dealings not effectual until recorded in the Register),83 s 43 (purchaser not affected by notice), s 44 (suing for specific performance), s  45(1) (bona fide purchasers or mortgagees for value protected from deprivation of interest), s 45(2) (prohibits recovery of land from a registered purchaser merely because their vendor may have been registered through fraud)84 and s 118 (prohibits recovery of land from the person registered as the proprietor except as set out in the section) of the Real Property Act.

Deferred versus immediate indefeasibility 8.26  In the history of the Torrens system, two principles have striven for supremacy in defining the extent of the indefeasibility or protection afforded by registration: immediate indefeasibility and deferred defeasibility.85 Immediate indefeasibility means that a proprietor is protected as soon as he or she is registered, regardless of defects in his or her transferor’s title. Under the doctrine of deferred indefeasibility, if the instrument of the transferor is a nullity, the transferee is unable to defeat a claim by the true owner; indefeasibility is deferred to the next person to be registered as owner of the land. The debate around whether immediate or deferred indefeasibility should prevail raises the issue of how comprehensive the mirror and curtain principles are. The difference in effect of the deferred and immediate indefeasibility principles may be best illustrated by an example. Assume that A is the registered proprietor and B steals A’s certificate of title. Assume also that B then forges A’s signature on a memorandum of transfer of the property in favour of C. B then collects the purchase money from C and C (unaware that A’s signature is a forgery) registers the transfer and later contracts to sell 83. See Barry v Heider (1914) 19 CLR 197. 84. Section  45 also covers the case where the purchaser or mortgagor’s vendor may have procured the registration of the transfer or mortgage through fraud or error, or derived the right of registration through a person who was registered through fraud or error or, alternatively, may have derived the right through a person who became registered through fraud or error. 85. See PN Wikrama-Nayake, ‘Immediate and Deferred Indefeasibility: The Story Continues’ (1993) 8 Law Institute Journal 733.

362



Torrens Title

8.27

to D. Under immediate indefeasibility, C receives an indefeasible title once registered.86 Registration cures voidness. Under deferred indefeasibility, this transaction remains void. C’s title may be defeated by A. Moreover, A can also defeat D at  any time up until D registers. C’s title is defeasible but on registration D’s title would be indefeasible. Until 1967, the doctrine of deferred indefeasibility as established in Gibbs v Messer,87 and followed in Clements v Ellis88 and other cases,89 enjoyed significant judicial support in Australia. 8.27  The principle was stated by Dixon J, as he then was, in Clements v Ellis: The principle, in my opinion, is that a prior registered estate or interest, for the removal of which from the Register there is no authority but a forged or void instrument, is not destroyed unless afterwards a person, who according to the existing condition of the Register is entitled to do so, gives a registrable instrument which is taken bona fide for value and registered. The justification for destroying an existing legal estate or interest, which has already been duly established upon the Register, is, in other words, found only in the necessity of protecting those who subsequently deal in good faith and for value in a manner, which, upon its face, the Register appears to authorise, and who then obtain registration.90

This conclusion was based on the view of Lord Watson in Gibbs v  Messer,91 which supported the proposition that the protection afforded by the legislation is confined to those who actually deal with the registered proprietor, that is, the person whose name is on the Register. In Gibbs,92 a case that went to the Privy Council on appeal from the Supreme Court of Victoria, two forgeries were involved. Mrs Messer, the registered proprietor, executed a power of attorney in favour of her husband, and left the power and the certificate of title with her solicitor, Creswell, while she travelled to Scotland. First, Creswell forged Mrs Messer’s husband’s signature (as attorney) and transferred the property to a fictitious person, Hugh Cameron. Later, Creswell forged a mortgage, as the fictitious Cameron, in favour of the McIntyres (real people). Creswell then kept the money lent under the mortgage for himself.The McIntyres took their mortgage for value without fraud and became registered. Clearly, both Mrs Messer and the McIntyres were innocent parties in the circumstances. The Privy Council found in favour of Mrs Messer by holding that her title was not burdened by the mortgage in favour of the McIntyres.The McIntyres’ mortgage, although registered, did not give them an indefeasible title. Accordingly, Mrs  Messer’s name was restored to the Register without mention of the McIntyres’ mortgage.93 The effect of the 86. The instrument might be void as the result of forgery, but could also be void for breach of a statutory prohibition, as in Boyd v Mayor of Wellington [1924] NZLR 1174 (void proclamation) and Breskvar v Wall (1971) 126 CLR 376 (transfer void for non-compliance with stamp duty legislation). 87. Gibbs v Messer [1891] AC 248. 88. Clements v Ellis (1934) 51 CLR 217. In this judgment, the court was split 2:2 on the issue of indefeasibility and followed the deferred indefeasibility approach of the trial judge. 89. Caldwell v Rural Bank of New South Wales (1951) 69 WN (NSW) 246 at 250–52; Davies v Ryan [1951] VLR 283 at 289. 90. Clements v Ellis (1934) 51 CLR 217 at 237. 91. Gibbs v Messer [1891] AC 248 at 255. 92. Gibbs v Messer [1891] AC 248. 93. The McIntyres had no claim against the Assurance Fund either.

363

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decision was to uphold the deferred indefeasibility doctrine. Although the McIntyres’ interest did not attract indefeasibility on registration, the court did point out that if a party whose indefeasibility was deferred later dealt with another party who acted on the basis of the Register, then that other party’s interest would receive immediate indefeasibility on registration.94 There are a number of ways in which Gibbs95 may be read. Its ratio could, for example, be restricted to cases involving a forged instrument and it could be said that if one is dealing with a forger, then clearly one is not dealing with the registered proprietor. A literal interpretation of s 43 of the Real Property Act (which, for a time, was considered the key indefeasibility section rather than s 42) supports this approach, because that section refers to a person dealing with the ‘registered proprietor’.96 Another reading of Gibbs is dependent on aligning the Torrens legislation with some general principles of old system title relating to void documents.97 Under old system title, a void instrument remains null and void. Perhaps Gibbs may be said to apply a similar principle, that is, a void instrument remains void and registration will not cure the defect. Although the Torrens legislation says nothing specifically on the issue of void documents, this reading of Gibbs arguably aligns the principles in old system title, relating to void documents, with those under the Torrens system. Hence, a void document will not be validated by mere registration under the Torrens system.98 A third reading of the case would limit the ratio to circumstances where a fictitious person was involved. Such a reading would severely limit the circumstances in which the deferred indefeasibility principle could operate. 8.28  An attempt to contain and restrict Gibbs v Messer may arguably be seen in Assets Co Ltd v Mere Roihi,99 a New Zealand case that went on appeal to the Privy Council. Although the decision in Assets Co looked to uphold immediate indefeasibility, the court refused to disturb the authority of Gibbs.The result of this inconsistency was that New Zealand cases followed the immediate indefeasibility line, while on this side of the Tasman, Australian courts continued to follow the deferred indefeasibility doctrine in cases such as Clements v Ellis.100

94. Regarding forgeries and indefeasibility see L Aiken, ‘Indefeasibility and the Forged Mortgage’ (2009) 32 Australian Bar Review 25; L Aiken,‘Forged Mortgages in the Court of Appeal’ (2010) 24 (1) Commercial Law Quarterly 11. 95. Gibbs v Messer [1891] AC 248. 96. The more modern view is that s 42, and not s 43, is the key indefeasibility section. See Frazer v Walker [1967] 1 AC 569; Breskvar v Wall (1971) 126 CLR 376; Bogdanovic v Koteff (1988) NSWLR 472. 97. This point is explored by A Bradbrook, S MacCallum, A Moore and S Grattan, Australian Real Property Law, 5th ed, Thomson Reuters, Sydney 2011, pp 9–23. 98. See 7.41. 99. Assets Co Ltd v Mere Roihi [1905] AC 176. See also Boyd v Mayor of Wellington [1924] NZLR 1124, another New Zealand case which treated Assets Co as having affirmed immediate indefeasibility. 100. Clements v Ellis (1934) 51 CLR 217.

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8.29  However, in 1967 a more definitive break with the doctrine of deferred indefeasibility in the Australian context came with the decision in Frazer v Walker,101 a case that affirmed the immediate indefeasibility doctrine. In this case, Mrs Frazer forged her husband’s signature to obtain a new mortgage on their jointly owned property. She also discharged the old mortgage. The mortgagees, the Radomskis, registered their mortgage and later, when the Frazers did not pay the money owing under the mortgage, the Radomskis exercised their power of sale. They sold the Frazers’ property to Walker. Mr Frazer, an innocent victim, sought to be re-instated to the Register. Even under the doctrine of deferred indefeasibility, Mr  Frazer was bound to lose because, although the Radomskis had registered first, they then on-sold the property to Walker.The Radomskis took their interest on the basis of a void instrument, but once they passed their interest to the next person in the transactional chain and that person (Walker) registered, then that next person was able to enjoy the benefits of indefeasibility. The Privy Council held that, on registration of the mortgage, the mortgagees (the Radomskis) obtained an immediately indefeasible title. In doing so, the court went out of its way to affirm the doctrine of immediate indefeasibility. This decision was reaffirmed in Breskvar v Wall.102 8.30 In Breskvar, the appellants, the Breskvars, wished to borrow money from Petrie. Instead of entering into a mortgage to secure the loan, they executed a transfer of their land, but they did not complete the section calling for the name of the transferee. A failure to include the name of the transferee on the transfer meant that the instrument was void under s 53(5) of the Stamp Act 1894 (Qld). According to the Breskvars, the intention was for the transfer to act as a security rather than a genuine transfer. Presumably, if the loan were not repaid, Petrie would have had the property transferred to him. However, Petrie fraudulently inserted the name of his grandson, Wall, in the blank section on the transfer. Registration of this void instrument was secured. Wall then sold the land to Alban Pty Ltd and executed a memorandum of transfer in its favour. After this was done, but before the transfer had been registered, the Breskvars found out that these events had ensued and tried to prevent any further dealings by lodging a caveat. The High Court found that Wall and Petrie had been complicit in the fraud against the Breskvars, with the consequence that the transfer to Wall would have been defeasible by the Breskvars.103 However, the court took the opportunity to explore the consequences of the void transfer, indicating that although effected by a void instrument: … the conclusiveness of the certificate of title is definitive of the title of the registered proprietor … Consequently, a registration which results from a void instrument is effective according to the terms of the registration. It matters not what the cause or reason for which the instrument is void.104

101. Frazer v Walker [1967] 1 AC 569. 102. Breskvar v Wall (1971) 126 CLR 376. 103. Breskvar v Wall (1971) 126 CLR 376 at 387. 104. Breskvar v Wall (1971) 126 CLR 376 at 385–6.

365

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8.31  As a result of these decisions, immediate indefeasibility has been accepted throughout Australia.105 However, as observed above, the triumph of immediate indefeasibility has not been complete, because Gibbs v  Messer106 has never been expressly overruled.107 Nevertheless, attempts have been made to confine it to a very limited set of circumstances. For example, in Garofano v Reliance Finance Corp Ltd, Meagher JA commented that Frazer v Walker108 is ‘authority for the proposition that Gibbs v Messer, insofar as it is still good law, only applies where the forgery is in the name of the fictitious person’.109 8.32  From time to time, there have been revivals of the deferred indefeasibility doctrine, reflected in cases such as Chasfild v Taranto110 and Rogers v Resi-Statewide Corp Ltd;111 but arguably, decisions such as these may be limited to the jurisdictions from which they come (Victoria and South  Australia respectively), where the wording of the Torrens statutes is slightly different from that in New  South  Wales. Although the revivals look to have been short-lived and later cases in those jurisdictions, such as Vassos v State Bank of South  Australia,112 suggest that immediate indefeasibility has won judicial favour and become the dominant theory, some commentators have expressed a lack of satisfaction with that position.113 Others have argued that, perhaps somewhat surprisingly, there is evidence of land fraud being less prevalent in some jurisdictions where the doctrine of immediate indefeasibility operates.114

105. The following cases are examples where Breskvar v Wall has been followed: Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537; Palais Parking Ltd v Shea (1980) 23 SASR 425; State Bank of NSW v Berowra Waters Holdings Ltd (1986) 4 NSWLR 398. See also Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407; 106 ALR 595. 106. Gibbs v Messer [1891] AC 248. 107. Gibbs v Messer [1891] AC 248 discussed above at 8.27. 108. Frazer v Walker [1967] 1 AC 569. 109. Garofano v Reliance Finance Corp Ltd (1992) NSW ConvR ¶55-640 at 59,662. In Victoria, note Gray J in Chasfild Pty Ltd v Taranto [1991] VR 225. 110. In Victoria, Gray J in Chasfild Pty Ltd v  Taranto [1991] VR 225 favoured the deferred indefeasibility doctrine in regard to fraud. He adopted a wide interpretation of ‘fraud’ as used in s 44(1) of the Transfer of Land Act  1958 (Vic) and found that it was not limited to fraud on the part of the person whose interest was registered. (Part of the reason for the Victorian courts’ dalliance with deferred indefeasibility is attributable to the different wording of the legislation in that state as compared with, for example, New South Wales.) 111. Rogers v Resi-Statewide Corp Ltd (1991) 101 ALR 377. 112. Gray J’s approach was rejected in Vassos v State Bank of South Australia [1993] 2 VR 316; Eade v Vogiazopoulos [1993] 3 VR 889; Beatty v Australia and New Zealand Banking Group Ltd [1995] 2 VR 301; Public Trustee v Paradiso (1995) 64 SASR 387. 113. Bradbrook et al, Australian Real Property Law, note 97 above, p 208, citing K Low, ‘The Nature of Torrens Indefeasibility: Understanding the Limits of Personal Equities’ (2009) 33 Melbourne University Law Review 205; L  Griggs, ‘Resolving the Debate Surrounding Indefeasibility through the Eyes of the Consumer’ (2009) 17 Australian Property Law Journal 260; K Low and L Griggs, ‘Immediate Indefeasibility — Is It Under Threat?’ (2011) 19 Australian Property Law Journal 222. 114. Wu Tang Hang and Chung Loh Khian, ‘A Law Which Favours Forgers?: Land Fraud in Two Torrens Jurisdictions’ (2011) 19 Australian Property Law Journal 130. See also discussion in P O’Connor, ‘Deferred and Immediate Indefeasibility: Bijural Ambiguity in Registered Land Title Systems’ (2009) 13 Edinburgh Law Review 194.

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8.33  The dominance of the immediate indefeasibility doctrine was bolstered in New South Wales by the extension in s 3(1) of the Real Property Act of the definition of ‘fraud’ to include ‘a fictitious person’. Professor Butt has commented that the 2000 amendment ‘appears designed to confirm the judicial quarantining of Gibbs v Messer’.115 8.34  Having said this, the indefeasibility debate continues, with some of the academic literature contending that, in some circumstances at  least, the deferred indefeasibility doctrine may provide better outcomes.116 Further, some also argue that legislative reform, in the form of s  56C of the Real Property Act, has limited the scope of immediate indefeasibility by denying its benefits to mortgagees who fail to check satisfactorily the identity of mortgagors.117 8.35  As a point of reference, it is notable that not all jurisdictions operating a Torrens system of registration have taken the path of immediate indefeasibility. For example, the Malaysian jurisdiction has fluctuated but generally favoured the position of the original registered proprietor by embracing the doctrine of deferred indefeasibility.118

What will attract indefeasibility on registration? Ambit of indefeasibility 8.36  As we have seen above, s 42 of the Real Property Act provides for indefeasibility of an estate or interest on registration. 8.37  Yet, there is a growing body of case law and academic literature that ‘unpacks’ this seemingly simple proposition, revealing it to be more complex than it first appears. Further investigation demonstrates, for example, that registration also confers indefeasibility on the provisions of the dealing that are intimately connected with or have direct application to the interest. Indefeasibility is not restricted to the interest itself.119

115. B Edgeworth, Butt’s Land Law, 7th ed, Lawbook Co, Sydney, 2017, p 835, commenting on s 3(1) of the Real Property Act, which provides that fraud ‘includes fraud involving a fictitious person’. Edgeworth observes that if s 3(1) is read in conjunction with s 188(1)(d), the intent seems to be to curb the operation of Gibbs v Messer [1891] AC 248. 116. G Taylor, ‘Scotching Frazer v Walker’ (1970) 44 Australian Law Journal 248; A Mason, ‘Indefeasibility: Logic or Legend’ in D Grinlinton, Torrens in the Twenty First Century, LexisNexis, Wellington, 2003, pp 3–26; P O’Connor, ‘Registration of Invalid Dispositions:Who Gets the Property?’ in Cooke (ed), Modern Studies in Property Law, Vol 3, Hart, Oxford, 2005, Ch 3, pp 45–64; P O’Connor, ‘Immediate Indefeasibility for Mortgagees: A Moral Hazard?’ (2009) 21 Bond Law Review 133. 117. M Backstrom and S Christensen,‘Qualified Indefeasibility and the Careless Mortgagee’ (2011) 19 Australian Property Law Journal 109. 118. National Land Code 1965 (Malaysia) s 340. 119. PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 at 677–679; Duncan v McDonald [1997] 2 NZLR 669 at  681. As a result of this reasoning, registration of a mortgage protects the mortgage itself but it also protects additional rights that are intimately connected to the mortgage including the mortgagee’s right to sell, for example. See Consolidated Trust Co Ltd v Naylor (1936) 55 CLR 423 at 434.

367

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Property Law in New South Wales

8.38  Other cases, however, demonstrate that not every interest that is registered will necessarily attract indefeasibility. Hahndorf Golf Club Inc v John Nitschke Nominees Pty Ltd120 is a case in point. It held that registration will not confer indefeasibility on an interest if that interest is too uncertain. 8.39  Further, the decision in Re Lehrer and the Real Property Act 1900121 considered the issue of whether registration would provide the benefits of indefeasibility to an interest that is unknown to the law, such as a so-called ‘lease’ with an intrinsically uncertain term.122 That case found it would not. Meanwhile, Travinto Nominees v  Vlattas123 raised the indefeasibility issue in the context of an option to renew and found that, if a lease containing an option to renew was rendered illegal by statute, registration did not result in the validity of the option.

Touching and concerning the land 8.40  Even where indefeasibility does generally attach, not every provision in an instrument will necessarily receive its benefits, despite the fact that the instrument has been registered. For example, in Mercantile Credits Ltd v  Shell Co of Australia Ltd,124 the question of the indefeasibility of covenants relating to the renewal of a lease arose. There Gibbs J found that registration will not always ‘give priority or the quality of indefeasibility to every right which the instrument creates.’125 8.41  The decision in Mercantile Credits126 hinged on whether an option to renew, contained in a lease, received indefeasibility by virtue of registration of the headlease, or whether the leases arising from the exercise of the option needed to be registered independently in order to attract indefeasibility. In his judgment, Stephen J relied on the importance of the Register but, according to Gibbs J, the answer to the question depended on whether the covenant or term to renew the lease was a personal right only, or whether the covenant ‘touch[ed] and concern[ed]’ the land. In exploring the ambit of the phrase ‘touching and concerning’ the land, Gibbs J stated that: The right of renewal is so intimately connected with the term granted to the lessee, which it qualifies and defines, that it should be regarded as part of the estate or interest which the lessee obtains under the lease, and on registration is entitled to the same priority as the term itself.127

120. Hahndorf Golf Club Inc v  John Nitschke Nominees Pty Ltd (2003) 86 SASR 221. See  also Re  Lehrer and the Real Property Act  1900 (1960) 61 SR (NSW) 365 regarding interests that are unknown to the law, including leases with uncertain terms. 121. Re Lehrer and the Real Property Act 1900 (1960) 61 SR (NSW) 365. 122. For further discussion of leases, see Chapter 11. 123. Travinto Nominees v Vlattas (1973) 129 CLR 1. 124. Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326. See also Tenstat Pty Ltd v Permanent Trustee Australia Ltd (1992) 28 NSWLR 625. 125. Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326 at 342. 126. Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326. 127. Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326 at 345 per Gibbs J.

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Torrens Title

8.44

8.42  Accordingly, an option to renew contained in a registered lease receives the benefit of indefeasibility because of its intimate connection with the lease itself.To this conclusion, Barwick CJ (in Mercantile Credits) added an additional requirement. Picking up on the reasoning in Travinto Nominees Pty Ltd v Vlattas,128 he introduced a requirement whereby a covenant that was legal also needed to be specifically enforceable before it attracted indefeasibility. (Travinto Nominees had found that a covenant that was illegal could not attract indefeasibility because it could not be specifically enforced.) Hence, in Mercantile Credits,129 Barwick CJ found that whether indefeasibility attached to a legal covenant to renew depended not only on whether that covenant was intimately connected to the land but also on whether the covenant would have been enforceable under the general law. If it would not have been enforceable, the fact that the covenant was registered and intimately connected to the interest would still not be sufficient to allow it to attract indefeasibility. Some commentators have questioned the correctness of this view.130 Further, where an option to renew (contained in a registered lease) is found to create an interest in land, that interest (the option) will defeat a later registered interest such as that of a mortgagee, for example. 8.43  While the option to renew (contained in a registered lease) attracted indefeasibility in Mercantile Credits,131 an option to purchase was found not to attract the benefits of indefeasibility because it ‘does not directly affect or concern the land’ and is ‘not a provision for the continuance of the term, like a covenant to renew’.132 The court regarded a covenant to purchase as collateral. However, in New South Wales, statutory intervention in the form of s 53(3) of the Real Property Act now governs the position of covenants to purchase.The subsection states that if a covenant to purchase has specifically been included in a registered lease and the option to purchase is exercised, ‘the lessor shall be bound to execute a transfer of the said land to such lessee’. The effect of the subsection is, therefore, to make the option indefeasible.

Void instruments and indefeasibility 8.44  The issue of which covenants attract indefeasibility is more complex in circumstances where the registered instrument is void. Incidents of forged mortgages and identity fraud giving rise to void instruments, have, in recent years, been on the increase, 128. Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1. 129. Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326. 130. C Rossiter, ‘Options to Acquire Interests in Land — Freehold and Leasehold’ (1982) 56 Australian Law Journal 576 at  626. On this line of cases, see  further, P Carruthers and N Skead, ‘Rights to Renew and to Purchase in Registered Leases: Part I — A Case of Bad Timing for Rights to Renew’ (2016) 25(1) Australian Property Law Journal 1; P Carruthers and N Skead, ‘Rights to Renew and to Purchase in Registered Leases: Part II — A Real or Imagined Distinction?’ (2016) 25(2) Australian Property Law Journal 115. 131. Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326. 132. Gibbs J in Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326 at 346, quoting from Woodall v Clifton [1905] 2 Ch 257 at 279. Gibbs J observes (at 346) that ‘a covenant giving a right to purchase is essentially different in character from a covenant to renew’.

369

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Property Law in New South Wales

leading parliament to seek to address the problem by introducing legislative reforms.133 Although the starting point is, as we have observed above, that registration and the concomitant indefeasibility that attaches by way of s 42 of the Real Property Act cures a void instrument,134 questions have emerged as to whether registration cures all void covenants in void instruments.135 8.45  Registration may cure the proprietary covenants of a mortgage, such as the charge on the land that secures the debt, but whether it also cures the void non-proprietary covenants, such as the personal covenant to repay, is proving more contentious.136 Where the covenant to repay is contained in a forged instrument, such as a forged mortgage, the practical results of the two different positions emerge quite clearly. 8.46  For the purposes of clarity, the following scenario outlines the circumstances in which forged mortgages and the fraud associated with them commonly occurred.137 The first step involves the fraudster obtaining the registered proprietor’s certificate of title, after which the fraudster pretends to be the registered proprietor himself or herself and seeks a loan from a financial institution or moneylender. The mortgagee (lender), seeing the certificate of title, responds by thinking that there is good security for the loan and accordingly enters into a mortgage and then advances money to the fraudster.138 Once the fraudster has the money, he or she disappears along with the money. Meanwhile, the ‘mortgagor’ defaults on the mortgage because he or she does not even know that a mortgage has been entered into, let alone that he or she has obligations under it as a ‘mortgagor’.The next step in the scenario involves the mortgagee exercising the power of sale to recover the moneys advanced under the mortgage. Once the property is sold, the innocent ‘mortgagor’ is commonly left with nothing other than a right to make a claim on the Torrens Assurance Fund.139 Douglas J in Hilton v Gray140 observed that this scenario, or one similar to it, is often the result of parties descending into the ‘demimonde of low finance, of high interest, [and]

133. See Real Property Act 1900 (NSW) s 56C. See also Chapter 14 on mortgages. 134. For example, Grundy v  Ley [1984] NSWLR 467 where a forged discharge of mortgage attracted indefeasibility. For the more general proposition that a void instrument acquires indefeasibility on registration, see  Frazer v  Walker [1967] 1 AC 569; 1 All ER 649. It is immaterial what has caused the instrument to be void: Breskvar v Wall (1971) 126 CLR 376 at 386 per Barwick CJ; at 406–7 per Walsh J. 135. L Griggs, ‘Resolving the Debate Around Indefeasibility Through the Eyes of the Consumer’ (2009) 17 Australian Property Law Journal 17. 136. Perpetual Trustees Victoria Ltd v Van den Heuvel [2010] NSWCA 171. 137. On forgeries and the Torrens system, see further R Croucher, ‘Inspired Reform or Quick Fix? Or, “Well Mr Torrens, What Do You Reckon Now?” A Reflection on Voluntary Transactions and Forgeries in the Torrens System’ (2009) 30(2) Adelaide Law Review 291. 138. Arguably, the rendering of Certificates of Title as having no legal effect after 11 October 2021 (see  8.18 above) may mean that instances of fraud of this type will become rare or non-existent. However, a situation in which a fraudster effectively misrepresents themselves as the registered proprietor to a lender, although difficult, is still possible. 139. See Torrens Assurance Fund at 8.184. 140. Hilton v Gray [2007] QSC 401.

370



Torrens Title

8.46

short term loans granted by demanding lenders to desperate borrowers’.141 Notably, the era immediately preceding the Global Financial Crisis in 2008 appeared to capture many of these conditions. In a forgery scenario such as the one outlined above, if all the covenants in the mortgage (ie, both proprietary and non-proprietary) receive indefeasibility on registration, then the mortgagee may sue the ‘mortgagor’ personally for the balance of the debt owing in cases where an exercise of the power of sale does not satisfy the debt. By contrast, if indefeasibility does not attach to the personal covenant (ie, does not attach to a nonproprietary covenant) in a forged but registered mortgage, the mortgagee may sue for the debt which the mortgage secures by way of a charge over the land but may not additionally sue on the personal covenant for any balance owing. In other words, on the latter approach, the mortgagor’s liability will end once the mortgagee has received the proceeds of sale. The mortgagee cannot sue the mortgagor personally for the balance. Given that the mortgagor did not enter into the mortgage in the first place but, rather, was the victim of a forgery, there is perhaps some merit in the second approach, which limits the mortgagor’s liability.142 The two approaches outlined above are represented in two competing lines of authority. The first line may be seen in cases applying the principle in Mercantile Credits Ltd v Shell Co of Australia,143 while the second may be seen in cases such as Grgic v  Australia and New Zealand Banking Group Ltd and Chandra v Perpetual Trustees Victoria Ltd.144 The second approach has been applied more recently in a number of cases, several of which involve what are colloquially called ‘all moneys’ clauses. Accordingly, it is worth considering briefly how the question of indefeasibility applies in the context of all moneys clauses.145

141. Hilton v Gray [2007] QSC 401 at [1]. This case is discussed further in L Aitken, ‘Indefeasibility and the Forged Mortgage’ (2009) 32 Australian Bar Review 25. 142. S Grattan, ‘Recent Developments Regarding Forged Mortgages: The Inter-relationship Between Indefeasibility and the Personal Covenant to Pay’ (2009) 21 Bond Law Review 43. 143. Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326. See also Pyramid Building Society v Scorpion Hotels Pty Ltd [1998] 1 VR 188 at 196; Karacominakis v Big Country Developments Pty Ltd (2000) 10 BPR 18,235. 144. Grgic v Australia and New Zealand Banking Group Ltd (1994) 33 NSWLR 202; Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 24,675. 145. Cases involving all moneys clauses include: Perpetual Trustees Victoria v Tsai (2004) 1 BPR 22,811; Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 24,675; Yazgi v Permanent Custodians Ltd (2007) NSWCA 240; Provident Capital Pty Ltd v  Printy (2008) 13 BPR 25,199 (NSWCA); Vella v  Permanent Mortgages Pty Ltd (2008) 13 BPR 25,343. For jurisdictional comparisons on all moneys clauses, see PJ Lewis and SB Schroeder,‘Less Power to Them:A Note on the Mortgagee’s Diminishing Expectations of Indefeasibility’ (2011) 83 Australian Law Journal 655 at 658.

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All moneys clauses and indefeasibility 8.47  Traditional ‘old style’ mortgages secure a single amount that is stated in the mortgage instrument itself.146 Old style mortgages also record that the money has actually been lent. By contrast, an all moneys mortgage, which is a newer type of mortgage product, secures not just a mortgagor’s indebtedness to a lender under a specific loan, but also all money that is advanced to the mortgagor at various intervals in the future.147 All moneys mortgages have proved particularly popular in relation to building works where money may be advanced along the way, at different stages of construction. However, their use is not limited to those circumstances as the case law demonstrates.148 While traditional mortgages expressly stipulated how much and under what terms the debt had to be repaid, all moneys mortgages commonly do not include such terms. Instead all moneys mortgages, which permit later drawdowns, tend simply to secure the repayment of advances made from time to time under the loan agreement(s). That is, the all moneys mortgage itself does not contain all relevant and specific details. These are contained in an extrinsic instrument, usually in the form of a loan agreement. One question which arises in this context is: If the mortgage is registered, does indefeasibility attach to the collateral loan agreement as well as the mortgage, even though the loan agreement is not registered?149 PT Ltd v Maradona Pty Ltd150 suggests that even though the debt in an all moneys clause is not created by the mortgage (but rather by the loan agreement), the registered mortgagee’s title may still receive indefeasibility. The situation may be different when a mortgage containing an all moneys clause and a loan agreement are both void. Such a situation arises when a fraudster forges the mortgagor’s signature on both the all moneys mortgage and the loan agreement. In those circumstances, although there is registration of the mortgage and registration would usually be found to cure a void instrument, the relevant indebtedness may, in these circumstances, be contained in the loan agreement, not the mortgage. Hence, the registered mortgage may technically give rise to indefeasibility, but indefeasibility of what? The answer is, prima facie, indefeasibility of nothing because registration of the mortgage does not cure the relevant ‘voidness’ of the extrinsic, collateral loan agreement. The loan agreement itself remains unregistered,151 yet the loan agreement is where the mortgagor’s personal covenant as to his or her indebtedness is to be found.

146. S Schroeder and P Lewis, ‘Indefeasibility of  Title and Invalid All Moneys Mortgages: Determining Whether Invalid Personal Covenants to Pay Are Protected Under the Indefeasibility Umbrella’ (2010) 18 Australian Property Law Journal 185. 147. P Butt, ‘How Extensive Is an All Moneys Clause Mortgage?’ (2009) 83 (11) Australian Law Journal 11. 148. Yazgi v Permanent Custodians Ltd (2007) NSWCA 240; Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 24,675; Perpetual Trustees Victoria Ltd v English [2010] NSWCA 32; Van den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171. 149. See  J Stoljar, ‘Mortgagors, Indefeasibility and Personal Covenants to Pay’ (2008) 82 Australian Law Journal 28. 150. PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643. 151. A loan agreement is not a proprietary interest capable of being registered in itself.

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Torrens Title

8.49

8.48  This position prevails unless a link can be established between the loan and the mortgage, causing the void loan agreement to be incorporated into the forged but registered mortgage.152 Where there is no statement in the mortgage as to the amount lent in the mortgage, proof of indebtedness must be established ‘in some other way’.153 Incorporation of the loan agreement into the mortgage has the effect of proving that the mortgagor owed a debt to the mortgagee. Should the obligations under the loan be incorporated into the registered mortgage, then the mortgagee may enjoy the benefits of indefeasibility that attach to the personal covenant to repay.154 Put another way, if the loan agreement is incorporated into the registered mortgage, the loan (including the personal covenant as to indebtedness) receives indefeasibility; but if the loan agreement is not incorporated, the position remains as outlined above. Without incorporation of the void loan agreement, there is indefeasibility of the mortgage but it amounts to indefeasibility of nothing. In practical terms, the effect is that the registered mortgage does not secure any indebtedness. Such a result is cold comfort for the mortgagee but a happy outcome for the innocent mortgagor whose signature was forged. One reason behind the conclusion that there is indefeasibility of nothing (ie, just indefeasibility of an empty shell) is based on an interpretation of s 57(2)(a) of the Real Property Act that makes a mortgagee’s power of sale dependent on the existence of a ‘default’ on a covenant ‘in the mortgage’. If the loan agreement is not incorporated into the mortgage, the default clearly cannot be a default on a covenant ‘in the mortgage’. Whether a void but registered all moneys mortgage incorporates the loan agreement into the registered mortgage will depend on the construction of the mortgage itself.155 Hence, the mortgage needs words that effectively link the registered mortgage to the collateral loan agreement resulting in the agreement’s incorporation. However, even though it is theoretically possible to incorporate the loan agreement into the mortgage, case law suggests that, in practice, incorporation is rather difficult to achieve.156

All moneys clauses, indefeasibility and two mortgagors 8.49  Several of the cases dealing with the question of indefeasibility in the context of all moneys clauses are further complicated by an additional layer of complexity caused by there being two mortgagors, one being innocent and the other being a fraudster. In such 152. Bradbrook et al, Australian Real Property Law, note 113 above, p 218, n 235, suggest by reliance on Perpetual Trustees Australia v  Richards [2008] NSWSC 658 that it may be possible to show indebtedness 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’. 153. Beazley JA in Yazgi v Permanent Custodians Ltd [2007] NSWCA 240 at [24], referring to Perpetual Trustees Victoria Ltd v Tsai [2004] NSWSC 745 (Young CJ in Eq). 154. 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’, note 146 above. 155. Provident Capital Pty Ltd v Printy (2008) 13 BPR 25,199 (NSWCA). 156. Chandra v  Perpetual Trustees Victoria (2007) 13 BPR 24,675 at  [19]; Vella v  Permanent Mortgages Pty Ltd (2008) 13 BPR 25,343 at [262]–[263]. Compare Solak v Bank of Western Australia Ltd [2009] VSC 82.

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cases, the fraudster will sign an all moneys mortgage and loan agreement on his or her own behalf but will also forge the other (‘innocent’) mortgagor’s signature on both documents. This scenario often, but not necessarily, involves husbands and wives.157 Yazgi v Permanent Custodians Ltd158 is a case in point. 8.50 In Yazgi, Mrs Yazgi was jointly registered with her former husband as a proprietor of their home. Later, a mortgage that specified both Mr and Mrs Yazgi as joint mortgagors was registered in favour of Permanent Custodians Ltd. However, Mrs  Yazgi did not execute either the mortgage or the loan agreement. Instead, Mr Yazgi forged her signature on both. In this case, the loan agreement was described as a ‘Secured Agreement’ for the purpose of the mortgage. The key question was whether the void instruments, one of which was registered (the mortgage) and one of which was not (the loan agreement), secured Mrs Yazgi’s indebtedness to her interest in their joint property. The court found that Permanent Custodians’ indefeasible title created by registration of the mortgage was limited to securing Mr  Yazgi’s interest in the property. The mortgage did not charge Mrs Yazgi’s interest in the property. Hence, when the property was sold, Mrs Yazgi was entitled to her equity in the property.159 Yazgi confirmed the position taken in Perpetual Trustees of Victoria v Tsai; Chandra v Perpetual Trustees and Provident Capital Ltd v Printy.160 If the loan agreement is not incorporated, then the personal covenant to repay cannot be relied on by the mortgagee because that covenant is contained in the collateral loan agreement. Yazgi also confirmed that whether the mortgagee with an all moneys mortgage receives indefeasibility depends on the construction of the relevant instruments and whether those instruments secure the money that has been specified.161 8.51  Perpetual Trustees Victoria Ltd v  English162 also considered which aspects of the mortgage and collateral loan agreements gained the benefits of indefeasibility. In that case, a husband and wife had separated but not divorced, and they remained joint tenants of the relevant property. The husband forged his wife’s signature on a loan application with the mortgagee. The wording of the loan that the mortgagee offered proved very significant. 157. Arguably, husbands and wives are commonly involved because a level of trust exists between them and therefore the certificate of title is not necessarily guarded in the same way as it would be against strangers. Further, familiarity with each other’s signatures and patterns of behaviour may also contribute to the incidence of ‘marital’ forgeries. It is possible that the move to electronic conveyancing may make this scenario less likely, although one spouse may still represent that they have the authority of the other to lodge a dealing as part of the authorisation given to an ELNO subscriber to act on the parties’ behalf. 158. Yazgi v Permanent Custodians Ltd (2007) NSWCA 240. 159. On the facts, her equity was subject to liabilities under an earlier mortgage. 160. Perpetual Trustees of Victoria v Tsai [2004] NSWSC 754; Chandra v Perpetual Trustees of Victoria (2007) 13 BPR 24,675; Provident Capital Ltd v Printy [2008] NSWCA 131. 161. Yazgi v Permanent Custodians Ltd (2007) NSWCA 240. Note that cases such as Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 24,675 and Vella v Permanent Mortgages Pty Ltd (2008) 13 BPR 245,343 suggest that even if the loan agreement is incorporated into the mortgage, its language may be such that the mortgagee may not acquire indefeasibility, particularly where terms such as ‘I’ and ‘me’ pertain to someone whose signature was forged. 162. Perpetual Trustees Victoria Ltd v English [2009] NSWSC 478.

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It said that a loan was offered to ‘You’ and the word ‘You’, in this context, meant both the husband and the wife. The husband accepted the loan and then forged his wife’s signature on the loan acceptance. The solicitor purported to attest the wife’s signature. Additionally, the husband forged his wife’s signature on the mortgage — a mortgage that incorporated another memorandum but not one that specified the extent of the liability. (The quantum of the debt was not evident in the documentation.) Once again, the solicitor purported to attest the wife’s signature on the mortgage instrument. The mortgagee lent the money and, as is the usual tale in such cases, the fraudster (in this case, the husband) defaulted on the mortgage. 8.52  The Court of Appeal in English found that the wife was not liable for any moneys.163 In that respect, the court affirmed the first instance decision of Simpson J, who had found that to attract the benefits of indefeasibility a loan agreement specifying the debt will need to be incorporated into the mortgage or, alternatively, the debt must be specifically mentioned in the mortgage itself.164 Simpson J had also noted that ‘the debt’ arising from forged documents is no more a ‘debt’ just because it is contained in a mortgage than it is when it is contained only in loan documents; but, in such circumstances, s 42 of the Real Property Act creates ‘an irrebuttable fiction that it is a debt’.165 Her Honour in remarking on the unusual outcome of the case, stated that: It may seem odd that the fate of an innocent owner, entirely ignorant of a purported loan and mortgage in his/her name, can depend upon the fortuitous circumstance that the mortgagee has or has not included, with sufficient specificity in the mortgage documents, the debt the subject of the mortgage. Yet that appears to be the position. Printy provides a fine illustration.166

8.53 In English, it was also highly relevant that the loan offer required that both Mr and Mrs English sign the offer, and clearly they did not. Accordingly, the forgery of Mrs English’s signature on the loan agreement meant that no money was payable under the ‘Secured Agreement’ and, in turn, nothing was payable under the registered mortgage either. The construction of the contractual documents was crucial to the finding at both first instance and on appeal. Sackville JA, on appeal, observed that: … the irony is that as lenders draft ever-wider clauses they make themselves more vulnerable to the effects of forgery.This is because all moneys clauses may depend for their effectiveness on the validity of antecedent instruments that have not been, and indeed cannot be registered

163. Perpetual Trustees Victoria Ltd v English [2010] NSWCA 32 found that the mortgage did not provide security to Perpetual in respect of any ‘Secured Money’, but it did find that the mortgage that Mr English executed could take effect as an equitable mortgage: see [103]. 164. Perpetual Trustees Victoria Ltd v English [2009] NSWSC 478 at [123]–[127]. 165. Perpetual Trustees Victoria Ltd v English [2009] NSWSC 478 at [125]. For further discussion, see Aitken, ‘Indefeasibility and the Forged Mortgage’, note 141 above, at 254. 166. Perpetual Trustee v English [2009] NSWSC 478 at [126], referring to Provident Capital Proprietary Ltd v Printy [2008] NSWCA 131.

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under the Torrens system. Since forgery renders such instruments void under the general law, the indefeasibility provisions of the [Real Property] Act may not protect the mortgagee.167

8.54  The inclusion of a ‘joint and several liability’ clause in a mortgage over the whole property may also prove critical. Its inclusion may mean that the charge under the mortgage does secure the whole interest, even though the mortgage is forged and the loan agreement remains unincorporated in a collateral document. The forger’s own ‘real’ signature will be enough to secure the charge over the interest of the ‘innocent’ mortgagor as well as that of the forger, once the mortgage is registered.168 Again, the specific wording of the instrument will need to be considered to decide on the effect. 8.55  The case of Van den Heuvel v Perpetual Trustees Victoria Ltd169 also demonstrates the importance of the particular wording of the mortgage. In this case, a gambler husband forged his wife’s signature on a mortgage that was then registered. The money secured under the mortgage included, ‘any present or future agreement between me or us, or any one of us’.170 At first instance, Price J found in favour of the mortgagee. 8.56  The appellate court upheld the lower court’s decision. On appeal, the majority found that an agreement could include an implied agreement between the husband and the mortgagee and, on the facts of Van den Heuvel, an implied agreement gave effect to the intentions of the husband and mortgagee in the advancing and accepting of money ‘conformably’ with the terms of the agreement.171 Although Van den Heuvel picked up on some of Sackville JA’s reasoning in English,172 particularly in relation to implied agreements, the particular wording of the mortgage in Van den Heuvel distinguished it from English. In Van den Heuvel, there was not a requirement that both parties sign the loan offer. Hence, the loan agreement could work as intended. Notably, Van den Heuvel was not a unanimous decision of the Court of Appeal173 and the case has been the subject of criticism.174 It is a decision that will be popular with lenders but arguably is unnecessarily harsh on the defrauded party (the wife). It has been arrived at by reliance on an implied agreement and, as has been noted elsewhere, ‘one would think the burden should be squarely upon the lender to make out its own case on its own documentation, in the absence of which the defrauded wife should not be put to the emotional strain and cost of defending proceedings to protect the matrimonial home’.175 In his dissenting judgment, Basten JA noted that an alternative decision to that

167. Perpetual Trustees Victoria Ltd v English [2010] NSWCA 32 at [13]. 168. Van den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171. 169. Van den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171. 170. Van den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171 at [4]. 171. Van den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171 at [5]. 172. Perpetual Trustees Victoria Ltd v English [2010] NSWCA 32 at [100]. 173. Van den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171. Basten JA was in dissent. 174. L Aitken, ‘The Forged Mortgage: Further Developments in Van den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171’ (2010) Sept–Nov Commercial Law Quarterly 28 at 30. 175. Aitken, ‘The Forged Mortgage: Further Developments in Van den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171’, note 174 above.

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of the majority could have been arrived at without undermining the public interest and, specifically, without undermining the ‘conclusiveness of the register’.176 It is to be hoped that the amendments to the Real Property Act in the form of s 56C (discussed in Chapter 14), and the requirements for identity verification introduced by the electronic conveyancing regime, will reduce the number of cases involving fraud and, consequently, the number of cases involving the question of indefeasibility in the context of mortgage forgery and identity fraud.177

Void leases and indefeasibility 8.57  The issue of what actually gains indefeasibility on registration of a void instrument is not limited to cases of forgeries, and, in particular, forged mortgages. Karacominakis v Big Country Developments178 raised the issue of the indefeasibility of specific provisions in a registered but void lease. Among other issues, Karacominakis was concerned with, first, the effect of registration in conferring title on the leasehold estate; and, second, whether, and to what extent, registration gave validity to rent covenants that were made void at common law, not by forgery but rather by application of the rule in Pigot’s Case.179 Karacominakis posed a question similar to that which Mason JA dealt with, under different circumstances, in Travinto Nominees v Vlattas: Are the ordinary covenants in the lease enforceable by the parties, notwithstanding that the instrument, apart from the effect given to it by registration, is expressed to be void and illegal?180

In Karacominakis, Big Country, the respondent land developer, acquired property and planned a staged development. It entered into a lease with L, which was not registered before its subsequent assignment (to A1). A1 then assigned the lease to Karacominakis (A2), who registered the assignment and, in turn, assigned the lease to a third assignee (A3).The third assignment was not registered. When the third assignee defaulted in the payment of rent, the respondent claimed arrears in rent and damages for repudiation of the lease. The respondent sued L, A1, A2 and A3, all of whom sought indemnities.The original lessee and assignees under the lease sought to rely on the fact that a material and unauthorised alteration to the lease had been made at the outset (by the addition of a mortgage as a prior encumbrance), so rendering the lease void by application of the rule in Pigot’s Case; 176. Van den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171 at [78]–[80] per Basten JA. 177. Note that the Property Law Committee of the New South Wales Law Society recommended holding off on the introduction of s 56C because it anticipated even more stringent requirements would come into force under the National Electronic Conveyancing Scheme. See  ‘Wider Approaches Needed for New Regime on Confirmation of Identity’ (2010) 48(1) Law Society Journal 7. 178. Karacominakis v Big Country Developments (2000) 10 BPR 18,235. 179. The rule in Pigot’s Case (1614) 11 Coke 26b; 77  ER  1177 stated that if a deed or written contract were, after its execution, materially altered by the obligor without the consent of the obligee, it would become void. The Conveyancing Amendment (Rule in Pigot’s Case) Act 2001 (NSW) gave effect to the recommendations of the New  South  Wales Law Reform Commission (Report 97, January 2001) by abolishing that rule. 180. Travinto Nominees Pty Ltd v Vlattas [1972] 1 NSWLR 24 at 48.

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a case which held that at common law, if a deed were materially altered after execution, it would be rendered void. If void, it was argued that the rent covenant could not be enforced, despite registration.181 In coming to its decision, the court was forced to consider the status of the lease, and in so doing had to decide whether registration of the lease made the rent covenant in a lease purportedly void at common law, indefeasible. The court found that Big Country was entitled to enforce the rent covenant in the lease, even though at common law the lease was rendered void by the rule in Pigot’s Case. According to Giles JA, registration created entitlements beyond those recognised as being created by personal covenants.182 Registration gave validity to the rights under a lease made void by application of the rule in Pigot’s Case, at least in so far as they related to the payment of rent, an essential term of the lease. Hence, on registration the lease became indefeasible but only the covenants that were considered to be essential elements of the lease were found to be enforceable by assignees of the lessor and the tenant respectively. Giles JA reasoned in the following way: Payment of the agreed rent is an essential part of the transaction between the lessor and the lessee.The covenant to pay rent, to adopt the words of Blanchard J in Duncan v McDonald, is a condition upon which the leasehold interest is held and intimately related to the lessee’s title created upon registration; taking up concepts found in Travinto Nominees Pty Ltd v Vlattas and in Mercantile Credits Ltd v Shell Co of Australia Ltd, because of its connection with the continuance of the lessee’s interest in the land, it delimits or defines that interest. Hence, in my view, if the lease becomes void by the operation of the rule in Pigot’s case, on its registration the lessee’s covenant to pay rent became effective and Big Country was entitled to enforce payment of rent under the lease.183

8.58  The focus on the intimate relationship between rent and the lessee’s title gained on registration would appear quite critical to Giles JA’s reasoning. In that sense, Giles JA’s words seem to hark back to the first-instance judgment of Mason JA in Travinto. There, Mason JA stated that: I am prepared to assume that the indefeasibility of title which arises on registration is not something which exists in the abstract, independently of the provisions of the lease, but that it relates to the terms and conditions upon which the estate is held, certainly so far as they have a direct application to the term vested in the lessee by registration. Thus it may be that a consequence of registration is that within the limits which I have mentioned the covenants in the lease are enforceable between the parties. If so, in an action brought on

181. It was also argued that the last assignee under the lease, Chadlace, held by virtue of a tenancy at  will determinable on one month’s notice, pursuant to s 127 of the Conveyancing Act 1919 (NSW).  Accordingly, it was suggested that Big Country was not entitled either to rent under the lease or to damages for its repudiation. This argument was not accepted by the court, which found that registration made the lease indefeasible. See 11.16 for a discussion of tenancies at will. 182. For a discussion of the limited rights created by registration of a void mortgage, see Duncan v McDonald [1997] 3 NZLR 669. 183. Karacominakis v Big Country Developments (2000) 10 BPR 18,235 at [59]–[60].

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Torrens Title

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those covenants the defendant could not successfully plead the invalidity of the lease as a defence because to do so would be to deny the effect of registration.184

8.59  Mason JA’s words uphold the possibility of enforcing some covenants in a registered lease that is made void at common law, and not others. To that extent, Mason JA’s words are consistent with Giles JA’s view in Karacominakis. They support the view that if the covenant qualifies or is intimately connected with the lessee’s interest, then the covenant will be indefeasible once it is registered. If it does not so qualify the lessee’s interest, then it will not be indefeasible.185 However, anomalies still exist between a number of cases in this area of the law and there appear to be restrictions on the application of the principle outlined immediately above.186 Some of these were discussed at 8.37–8.43.

Exceptions to Indefeasibility 8.60  The Torrens system contains several exceptions to indefeasibility. Some are express, others are not. As noted earlier, s 42(1) of the Real Property Act 1900 (NSW) lists the following exceptions:187 • • • • • • •

fraud; other estates or interests recorded in the folio; prior folio recorded interests; omission or misdescription of easements; omission or misdescription of profits à prendre; wrong descriptions of parcels; and short-term tenancies.

As discussed below, indefeasibility of title may also be found not to apply by the operation of: • • • • • •

rights in personam; adverse possession; overriding statutes; grant reservations and conditions; the general power of the Registrar-General to correct the Register; and other provisions in the Real Property Act.

In some jurisdictions, immediate indefeasiblity will not operate in the case of volunteers.188 The express statutory exceptions to indefeasibility will be discussed first. 184. Travinto Nominees Pty Ltd v Vlattas [1972] 1 NSWLR 24 at 48. Note that, on appeal, the case confirmed the view that registration of the lease had not given the lessee an indefeasible right to renew. 185. J Stoljar, ‘Mortgages, Indefeasibility and Personal Covenants to Pay’ (2008) 82 Australian Law Journal 28 at 32. 186. See, for example, Travinto Nominees Pty Ltd v Vlattas [1972] 1 NSWLR 24. 187. See 8.25 for the full text of s 42(1). 188. This is a topic discussed further below at 8.123–8.127.

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Fraud 8.61  Fraud is identified as an exception to indefeasibility at various points in the Act; for example, in ss 42 and 43 of the Real Property Act. Section 42(1) states that: … [the] registered proprietor … of any estate or interest in land … shall, except in the case of fraud, hold the same, subject to such other estates … as are recorded … but free from all other estates and interests that are not so recorded.

Section 43(1) states that: … [e]xcept in the case of fraud no person … dealing with … the registered proprietor need inquire into the circumstances surrounding registration and nor does any person need to see  to the application of the purchase moneys or be affected by notice of a trust or unregistered interest.

It also adds, ‘the knowledge that any such trust or unregistered interest is in existence shall not of itself be imputed as fraud’.

Fraud by whom? 8.62  Under the fraud exception of s 42 of the Real Property Act, it is only the fraud that can be ‘brought home’189 to the registered proprietor that is relevant. That is, Torrens fraud requires fraudulent conduct by the current registered proprietor, or his or her agent. The High Court confirmed in Cassegrain v Gerard Cassegrain & Co Pty Ltd,190 however, s 118(1)(d)(ii) of the Act provides an exception to this principle: a volunteer registered proprietor’s title will be defeasible if the volunteer obtained title ‘through fraud’.191 Outside the limited operation of s 118(1)(d)(ii), however, the fraud exception to indefeasibility does not have a retrospective application. This means that, under s 42, fraud that is perpetrated in an earlier transaction, prior to that leading to the present registered proprietor’s interest, has no bearing on the question of the indefeasibility of that present registered interest. Thus, only fraud that the present registered proprietor has been involved in, or implicated in through an agent, has bearing.192 8.63  The High Court in Cassegrain also explored the concept of Torrens fraud being ‘brought home’ to the registered proprietor under s 42, and, in particular, the interaction between Torrens fraud principles and the law of agency and co-ownership. The facts of Cassegrain involved the transfer of ownership in a property called the ‘Dairy Farm’ from Cassegrain Pty Ltd to Felicity Cassegrain.That transfer occurred through two transactions: first, a transfer of the fee simple from the company to Claude and Felicity Cassegrain, as joint tenants; and, second, a transfer from Claude to Felicity of his interest in the ‘Dairy Farm’, for $1. The second transaction raised s 118(1)(d)(ii) issues, and is discussed further below (at 8.127).

189. Assets Co Ltd v Mere Roihi [1905] AC 176 at 210. 190. Cassegrain v Gerard Cassegrain & Co Pty Ltd (2015) 254 CLR 425; 316 ALR 111. 191. Section 118(1)(d)(ii) of the Real Property Act is discussed further at 8.127. 192. See Real Property Act 1900 (NSW) s 45(2).

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It was undisputed at trial that in the first transaction Claude Cassegrain had committed fraud within the meaning of s 42. At the time of the first transfer, he had been a director of Cassegrain Pty Ltd, and had induced the company to transfer the ‘Dairy Farm’ to him and his wife in purported payment of a debt. In fact, the company did not owe a debt. It was also undisputed that Felicity Cassegrain had not, by her own conduct, or omission, behaved in a manner that would constitute Torrens fraud.193 Rather, the question was whether the fraud could be ‘brought home’ to Felicity by virtue of the fact that Claude was acting as Felicity’s agent in the first transaction, or because the principles of joint tenancy meant that fraud by one joint tenant rendered the interests of both joint tenants defeasible. The High  Court answered both questions in the negative. On Torrens fraud and agency, the court confirmed the well-established principle that if fraud by an agent can be ‘brought home’ to the registered proprietor, the registered proprietor’s title will be defeasible. However, proof of agency in this context requires more than merely the fact that someone acted for the interests of another. In this case, Claude Cassegrain had been the driving force behind the transaction; in every way, he had facilitated the registration on her behalf. However, the court found that Claude was not Felicity’s agent. On joint tenancies and Torrens fraud, it was argued that as fraud could be proved against Claude, Felicity’s title was automatically defeasible to the company, because fraud of one joint tenant was sufficient to ‘bring home’ fraud to all joint tenants. However, the court found that joint tenancy did not have this effect; rather, fraud must be brought home to each joint tenant. As it could not be proved that fraud could be ‘brought home’ to Felicity, the interest in the ‘Dairy Farm’ that she obtained through the first transfer was indefeasible. In the next section, we consider what kinds of conduct must be ‘brought home’ to the registered proprietor.

What kind of fraud? 8.64  In considering how fraud operates as an exception to indefeasibility, it is useful to explore the kind of conduct that constitutes fraud in the Torrens system. The term commonly used to describe the fraud relevant to the Real Property Act is ‘statutory fraud’. It goes beyond common law fraud (which is limited to deceit or fraudulent misrepresentation), but does not go as far as embracing all manner of equitable fraud. As the term ‘fraud’ is not defined in the Act, its meaning must be distilled from the way it is used in various provisions of the Act and how it has been judicially interpreted. 8.65  Section 43 of the Real Property Act indicates that a narrow definition of ‘fraud’ is necessary. This conclusion is available because s  43 excludes actual and constructive notice from the definition of fraud. In this way the old system concept of equitable fraud, based on notice, which was seen by Robert Torrens to give rise to acute conveyancing complexities and search requirements, has been dispensed with. Accordingly, a registered purchaser of Torrens title land, outside of cases of fraud, defeats unregistered interests 193. The kinds of behaviour that would constitute Torrens fraud are discussed below at 8.64.

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of which he or she has actual or constructive notice. However, this does not mean that notice of unregistered interests has no consequences at all. If notice is accompanied by certain other conduct, fraud may be found to exist. For example, if, in order to be able to register his or her interest, a purchaser deliberately discouraged or frustrated the attempts of an earlier unregistered interest holder (of whom he or she had notice) to register, that conduct would amount to fraud.194 8.66  The classic definition of (statutory) fraud in s 42 is ‘actual fraud’,195 a definition that originally emerged from two key cases: Assets Co Ltd v Mere Roihi and Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd.196 In Assets Co, it was held that: … by fraud in [the New Zealand Act which was similar to the New South Wales provisions] is meant actual fraud, that is, dishonesty of some sort, not what is called constructive or equitable fraud.197

In Butler v Fairclough,198 the High Court indicated that Torrens fraud imports the concept of ‘personal dishonesty or moral turpitude’. 8.67  Loke Yew v Port Swettenham Rubber Co Ltd199 raises the fine line between: (a) mere notice of a prior interest (which would not amount to statutory fraud,200 but under old system title may have amounted to equitable fraud); and (b) actual fraud or dishonesty. In this case, 322 acres of land were granted to Eusope, who then registered the land. Loke Yew became the owner of 58 acres out of the 322, but he did not register the Malay instruments by which he acquired his interest. In the meantime, Port Swettenham Rubber negotiated for sale of the whole 322 acres of land from Eusope, who agreed to sell only if Loke Yew’s interest remained undisturbed. Port Swettenham Rubber agreed and signed a document to this effect. However, after the sale was complete, Port Swettenham Rubber registered the whole 322 acres and refused to recognise any rights in Loke Yew. In response, Loke Yew claimed that he was entitled to his 58 acres and that Port Swettenham Rubber’s conduct amounted to fraud. He argued that the title Port Swettenham Rubber gained from registration was defeasible by virtue of the fraud exception and that the Register should be rectified to reflect his interest. The court found that Port Swettenham Rubber had made statements for the purpose of inducing Eusope into executing the conveyance and that these statements were ‘false and fraudulently’ made.201 The court found that where assurances were given for the preservation of an acknowledged, unregistered interest, and that those assurances had served as an inducement but were dishonest from the outset, 194. Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd [1926] AC 101. 195. Assets Co Ltd v  Mere Roihi [1905] AC 176; Bahr v  Nicolay (No 2) (1988) 164 CLR 604 at  630; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 169 [192]. 196. Assets Co Ltd v Mere Roihi [1905] AC 175; Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd [1926] AC 101. 197. Assets Co Ltd v Mere Roihi [1905] AC 175 at 210. 198. Butler v Fairclough (1917) 23 CLR 78 at 90. 199. Loke Yew v Port Swettenham Rubber Co [1913] AC 491. 200. Mere notice of a prior interest would not amount to notice for the purpose of provisions such as s 43(1) of the Real Property Act and its equivalents. 201. Loke Yew v Port Swettenham Rubber Co [1913] AC 491 at 504 per Lord Moulton.

382



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they amounted to fraud. Accordingly, the court ordered a transfer of the 58 acres from Port Swettenham Rubber to Loke Yew. Hence, it was not merely having notice of Loke Yew’s prior unregistered interest that constituted the fraud. It was notice plus statements of inducement that had, according to Lord Moulton, been ‘falsely and fraudulently’ made. Accordingly, notice of itself is insufficient to constitute fraud but notice plus additional factors may lead the court to find statutory fraud. 8.68  Applying this reasoning, it is not fraud to purchase and register with notice of another party’s unregistered mortgage or lease, for example. Even though the purchaser may have had notice of the prior unregistered interest(s), on registration indefeasibility will attach to the purchaser’s interest and the effect will be that the prior unregistered interest is ‘defeated’. A purchaser may even go as far as shutting his or her eyes to the fact that an unregistered interest may exist.202 ‘Without more’ taking with notice of an unregistered interest is treated as ‘morally, and therefore, therefore, legally neutral’.203 However, the position is different if the purchaser goes one step further and, in addition to having notice of a prior unregistered interest, has given assurances that he or she would act so as to preserve that interest and then refuses to recognise that interest.204 Indeed, even if the undertaking to respect or preserve the interest is given to someone else and not the party who is the subject of the dispute, this may still amount to fraud.205

Fraud, wilful blindness and knowledge 8.69  The question of what may be caught by the net of statutory fraud (for the purposes of the Real Property Act) has been considered in a range of cases. Those cases raise a number of questions such as: Does statutory fraud simply cover cases of actual fraud? Is wilful blindness tantamount to actual fraud? Is constructive knowledge of conduct pursuant to which a person may have been deprived of an interest sufficient to amount to statutory fraud? The following discussion turns attention to these issues. 8.70  The Privy Council in Assets Co Ltd v Mere Roihi commented: … the mere fact that he [the purchaser] 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.206

The last sentence in this extract from Assets Co raises the relationship between fraud, aroused suspicions and the need to make further inquiries. It is a formulation that suggests 202. Munro v Stuart (1924) 41 SR (NSW) 203 at 206. 203. Todd v Jingalong Pty Ltd [2014] NSWSC 362 at [88]. 204. See  8.66. See also Todd v Jingalong Pty Ltd [2014] NSW 362, where the court found that the registered proprietor’s conduct displayed the requisite dishonesty or moral turpitude when it took the transfer of an entire parcel of land, knowing that it was not entitled to the full parcel, and had previously acknowledged the plaintiffs’ rights to the parcel. 205. Presbyterian Church (NSW) Property Trust v Scots Church Development Ltd (2007) 13 BPR 24,969 at [114]. 206. Assets Co Ltd v Mere Roihi [1905] AC 175 at 210.

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that having a suspicion of fraudulent activity on the part of one’s vendor, for example, and not following up on it for fear of what one might find may also be brought under the definition of statutory fraud. In other words, wilful blindness to the existence of fraud — for that is what this conduct is — amounts to statutory fraud. 8.71  Some years later, Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd207 approached the issue in a similar way. In Waimiha, Salmond J noted that the real issue was not simply knowing that an adverse claim existed, but whether the registered proprietor or his or her agent ‘knew enough to make it his duty as an honest man to hold his hand’ and yet still proceeded ‘without further enquiry’.208 If the registered proprietor did this, he or she would be ‘guilty of wilful blindness or voluntary ignorance’, both of which equate to actual knowledge and, therefore, constitute statutory fraud for the purposes of the Real Property Act.209 Wilful blindness may be seen as ‘a form of designed or calculated ignorance’.210 8.72  Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd211 also discussed the issue of wilful blindness.There, the mortgagor claimed that the mortgagee had been wilfully blind in not inquiring into whether the mortgage had been properly attested and authorised. Such wilful blindness, it was argued, amounted to statutory fraud. However, the Victorian court did not find that wilful blindness existed on the facts. The court affirmed that the relevant statutory fraud required actual dishonesty or moral turpitude, and because: (a) the mortgagee did not know that the attestation was not in order; (b) the mortgagee did not know that the mortgage authorisation may have been improper; and (c) the mortgagee’s suspicions were not aroused, leading it to resist further inquiry, no fraud existed for the purposes of the relevant Torrens statute. The court did chastise the mortgagee for not making further inquiries, but it did not go on to find that the mortgagee had failed to inquire because it was fearful of finding out information that it did not want to know. Thus, lack of diligence is not sufficient to be ‘personal dishonesty’, and therefore statutory fraud, by the registered proprietor.212 The advent of electronic conveyancing raises new scenarios in which questions of fraud and wilful blindness may arise. For instance, in the context of the requirements for verification of identity, questions may arise as to the extent that fraud or wilful blindness of subscribers (ie, the agent appointed to lodge dealings electronically) can be ‘brought home’ to a registered proprietor. The obligations on subscribers to verify the identity of the parties to a dealing are yet to be tested.213 207. Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1923] NZLR 1137. 208. Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1923] NZLR 1137 at 1175. 209. Young v Hoger (2002) Q ConvR 54-557 at [11]. 210. Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1923] NZLR 1137 at 1175. 211. Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188. 212. Similarly, in Macquarie Bank Ltd v  Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133, the court found that mere negligence is not sufficient to constitute fraud; rather, wilful blindness must exist if a failure to make relevant inquiries is to constitute statutory fraud. 213. A number of these issues are explored in much more detail in the discussion of the electronic conveyancing regime in S Hepburn, Australian Property Law: Cases, Materials and Analysis, LexisNexis, 5th ed, Sydney, 2020.

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Torrens Title

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Statutory fraud and equitable fraud 8.73  The boundaries between statutory fraud and equitable fraud are a little blurred in relation to the question of exceptions to indefeasibility. This is so despite a desire by the Privy Council to stem the flow of equity into statutory definitions and interpretations.214 The following discussion highlights the different positions on ‘fraud’, ‘statutory fraud’ and ‘equitable fraud’ that courts have taken. 8.74 In Stuart v Kingston215 the requisite level of fraud necessary to satisfy fraud under the Real Property Act was held to be ‘actual fraud’, with the court commenting that for the conduct to be regarded as fraud, it must involve some ‘consciously dishonest act’. Indeed, in that case the court went as far as to say: Fraud will no longer be imputed to a proprietor registered under the [Real Property] Act unless some consciously dishonest act can be brought home to him.The imputation of fraud based upon the refinements of the doctrine of notice has gone.216

8.75  This would seem to suggest that the doctrine of notice that may give rise to equitable fraud under the common law is not relevant to establishing statutory fraud. However, some dicta recognise the continuing relevance of equitable fraud in the Torrens system. Accordingly, in Bahr v  Nicolay,217 Mason CJ and Dawson J stated, in dissent on this issue, that ‘not … all species of equitable fraud stand outside the statutory concept of fraud’. If not all species stand outside statutory fraud, then presumably some stand inside statutory fraud. In that case, their Honours went on to allow the dishonest repudiation of a prior interest to constitute fraud, and, in so doing, also gave support to the view that fraud that occurs after (as well as before) registration may give rise to fraud amounting to an exception to indefeasibility. They asked: And granted that an exception is to be made for fraud, why should the exception not embrace fraudulent conduct arising from the dishonest repudiation of a prior interest which the registered proprietor has acknowledged or has agreed to recognise as a basis for obtaining title, as well as fraudulent conduct which enables him to obtain title or registration?218

8.76 The Bahr v Nicolay position seems to have received some indirect support from the later High Court case of Bank of South Australia Ltd v Ferguson.219 The court in that case observed that ‘[n]ot all species of fraud which attract equitable remedies will amount to 214. Assets Co Ltd v Mere Roihi [1905] AC 175 at 210–12; Haji Abdul Rahman v Mahomed Hassan [1917] AC 209 at 216; Abigail v Lapin [1934] AC 491 at 505; B Edgeworth, Butt’s Land Law note 115 above. 215. Stuart v Kingston (1923) 32 CLR 309 at 359 per Starke J. 216. Stuart v Kingston (1923) 32 CLR 309 at 359 per Starke J. 217. Bahr v Nicolay (No 2) (1988) 164 CLR 604; 78 ALR 1 at 6. 218. Bahr v  Nicolay (No 2) (1988) 164 CLR 604; 78 ALR 1 at  7. The facts of Bahr v  Nicolay are discussed below at 8.97. While Mason CJ and Dawson J held that the Thompsons’ post-registration repudiation of their undertaking constituted Torrens fraud, their view was in the minority on this point. In contrast, for example, Wilson and Toohey JJ observed that although the Thompsons ‘agreed to buy in the hope, even expectation, that the Bahrs would not be able to buy back the property’, this was not Torrens fraud, as it was not their intention to ensure to ensure that the Bahrs did not do so. Thus, the requisite intention was not dishonest at the relevant time, ie, at the time, or in the process of, obtaining their registered interest. 219. Bank of South Australia v Ferguson (1998) 192 CLR 248; 151 ALR 729.

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fraud in the statutory sense’,220 suggesting that some species of fraud that attract equitable remedies might, in fact, amount to statutory fraud.221 In New South Wales, Grgic v Australia and New Zealand Banking Group Ltd222 made it plain that if equitable fraud is to be treated as a subset of statutory fraud, dishonesty or moral turpitude must also be demonstrated. On the facts of that case, a false attestation was found not to constitute statutory fraud. 8.77 In Grgic, an officer of the bank attested the signature of a person purporting to be the registered proprietor, Mr Grgic senior. In fact, the man was not Mr Grgic, but a friend of his son. The words in the bank officer’s attestation stated ‘signed in my presence by the mortgagor who is personally known to me’ and were therefore untrue and, hence, falsely sworn. Powell JA, with whom Meagher and Handley JJA agreed, found that the bank officer had not been fraudulent. To establish fraud, it was necessary that the bank officer knew the impostor was not really Mr Grgic senior — or at least was recklessly indifferent to whether the person signing the document was Mr  Grgic senior. Merely being ‘less meticulous’ than one could have been does not amount to fraud.223 Thus, fraud under the Torrens system remains a much narrower concept than the equitable fraud of old system title.224 8.78  While we have considered cases dealing with the registered proprietor’s avoidance of finding out information that may disentitle his or her interest, there is another line of cases that deals with whether actual knowledge or reckless indifference by the registered proprietor that the instruments on which he or she relies to effectuate registration have been falsely attested or improperly executed. In the second group of cases, courts have found that fraud has existed on the part of the registering party if he or she has such knowledge. Australian Guarantee Corporation v  De Jager225 involved this scenario. There, employees of the mortgagee knew that a witness’s attestation was not contemporaneous with the mortgagee’s execution of the mortgage, although the documentation said it was. The court held that this constituted an attempt to defraud the Registrar-General, leading him or her to believe that a state of affairs was the case when clearly it was not. Ratcliffe v Watters226 involved similar facts, but in that case the party alleging fraud was unsuccessful.There, a husband and wife were the joint owners of property, and the husband forged his wife’s signature on a mortgage document. The mortgagee did not know of the forgery, but it was clear to the mortgagee’s employees that the purported signature of the wife had not been properly attested. The mortgage was then registered. The wife alleged 220. Bank of South Australia v Ferguson (1998) 192 CLR 248 at 255; 151 ALR 729 at 732. 221. B Edgeworth, Butt’s Land Law note 115 above, p 851, makes this point. 222. Grgic v Australia and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 at 221. 223. Grgic v Australia and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 at 514. 224. See also Russo v Bendigo Bank Ltd [1999] 3 VR 376. In regard to the agency issue, Owen J in Conlan v Registrar of Titles (2001) 24 WAR 299 found that the agent’s knowledge of fraud became the principal’s knowledge only if the agent’s knowledge could be imputed to the principal. Note that an example of a case which involved ‘equitable fraud’ and dishonesty is Latec Investments Pty Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265. 225. Australian Guarantee Corporation Ltd v De Jager [1984] VR 483. 226. Ratcliffe v Watters (1969) WN (NSW) (Pt 1) 497.

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fraud on the part of the registered mortgagee. Ultimately, she was unsuccessful in her claim. The result in this case depended in part on the role of the agent in perpetrating the fraud. In cases involving fraud by an agent, the fraud becomes the registered proprietor’s fraud only if the agent’s knowledge can be imputed to the principal.227 Meanwhile, Russo v Bendigo Bank Ltd228 also demonstrated that not every case involving a false attestation followed by registration will amount to fraud, which in turn operates as an exception to indefeasibility. This is because conscious dishonesty is required. In Russo, a young, inexperienced law clerk falsely attested the signature of the registered proprietor (Mrs Russo) on a mortgage. In fact, the registered proprietor’s son had forged his mother’s signature on the mortgage. The question was whether the bank’s registered mortgage was defeasible because the bank’s agent (the solicitor’s clerk) had committed fraud. In this regard, Ormiston J commented, ‘I believe [the clerk] knew what she had done was false but I do not believe that she has been shown to be dishonest’. He went on to say: In my view it would be a curious consequence that her behaviour should be characterised for this purpose as fraud, for the very essence of that concept is to relieve people from the consequences of indefeasibility only when their behaviour, or the behaviour of those for whom they are responsible, has that element of dishonesty, or conscious moral turpitude or wickedness such as would justify the intervention of a court to set aside the mortgage or other registered estate.229

In regard to the effect of fraud, cases such as Hickey v Powershift Tractors Pty Ltd230 are instructive.That case demonstrated that if the mortgagor’s signature has not been witnessed according to the terms of the attestation, but there is no forgery of the signature, then the registration will be found to be void but the underlying agreement will operate as an equitable mortgage. 8.79  Amendments to the Real Property Act now provide some relief to mortgagors in certain cases of mortgagee recklessness. Section  56C of the Act imposes a duty on mortgagees to take reasonable steps to confirm the identity of the mortgagor. (This provision is discussed further in Chapter  14.) Where the Registrar-General is satisfied that the mortgagee breached the duty in s 56C, the Registrar-General has the power to cancel the recording of the mortgage. In this way, the provision confers on the mortgagor the remedy sought in cases such as Grgic v Australia and New Zealand Banking Group Ltd,231 and imposes obligations on mortgagees that should limit the possibility of fraud occurring in Grgic-style situations in the future.

Other estates and interests in land 8.80  Section 42 of the Real Property Act states that the interest of a registered proprietor is ‘subject to such other estates and interests and such entries, if any, as are recorded on that 227. For a discussion of fraud by an agent, see Critchley v Collins [2004] SASC 10. 228. Russo v Bendigo Bank Ltd [1999] 3 VR 376. 229. Russo v Bendigo Bank Ltd [1999] 3 VR 376 at [42]. 230. Hickey v Powershift Tractors Pty Ltd (1999) NSW ConvR ¶55-889. 231. Grgic v Australia and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 at 221.

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folio’.This means the registered proprietor’s title is defeasible in favour of the ‘other estates and interests’ that are recorded in the Register as affecting it. The operation of this exception to indefeasibility raises the question of whether there should be an obligation to ‘go behind’ the Register in order to check the nature and extent of those other interests recorded on the folio of the Register. It is often argued that one of the main benefits of the Torrens system is that the Register is paramount and, as a result, the system does away with the cumbersome, time-consuming and expensive searches associated with old system title. However, in the context of the ‘other foliorecorded interests’ exception to indefeasibility, it seems that diligent searching behind the Register may still be necessary, particularly where details of those estates or interests are only cursorily recorded on the Register. 8.81  Bursill Enterprises Pty Ltd v  Berger Bros Trading Co Pty Ltd232 highlighted the importance of searching behind the Register in order to ascertain what estates and interests affect indefeasibility.The case involved interpreting an earlier version of s 42, under which the registered proprietor held subject to encumbrances, liens, estates or interests that were ‘notified in the folium of the register-book’.233 Bursill’s case concerned two adjoining blocks of land, where the certificate of title to each referred to a right of way. On Bursill’s certificate of title, the encumbrance was recorded in the following terms: Right of Way created and more fully set out in … Transfer No 7922 affecting parcels [X] and [Y].

The effect of Transfer No 7922 had been determined by the Registrar-General for the purposes of recording it in the Register, but the Registrar-General’s interpretation turned out to be at variance with what the High Court found to be the effect of the transfer.The High Court found that the transfer not only revealed notice of a right of way, but that the original grant also included a grant in fee simple of rights in the airspace above the right of way. Bursill had claimed that Berger held only the interests that were notified on the Register, and that, if Bursill’s certificate of title did not actually notify an interest in airspace, then Bursill’s title was not encumbered by that interest. The question, therefore, became whether the registered proprietor’s title was burdened by the additional rights the court found to exist, or only by the interpretation of those rights as recorded by the Registrar-General. To decide the issue, the court considered whether the additional rights were ‘notified upon the folium of the register-book’. The majority of the court found that they were, although further investigation of them needed to be undertaken in order to appreciate fully their nature and extent. Accordingly, the registered proprietor’s title was burdened by the additional rights. This case, therefore, serves to demonstrate the extent of inquiry one must undertake in order to be satisfied as 232. Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73. See also P Butt, ‘When is an Interest “Recorded” in the Torrens Title Register?’ (2013) 87 Australian Law Journal 230 and discussion in Deguisa v Lynn (2020) 268 CLR 638 confirming that a person dealing with the registered proprietor is not required to search beyond anything notified on the register. 233. Before the introduction of a computerised Register, records were kept in a register book. See 8.12.

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Torrens Title

8.82

to the nature of any estate or interest that may have been recorded and that will affect the indefeasibility of the registered proprietor’s title. It also demonstrates how the RegistrarGeneral’s interpretation of the nature and/or extent of rights cannot be taken at  face value. The court made it plain that the Register notified recordings of the actual rights which existed (even though, at times, it may be necessary to seek the court’s assistance to determine the nature of those rights). One cannot rely on the Registrar-General’s interpretation of rights and the label that he or she may accordingly give them. The Registrar-General’s function is administrative and his or her interpretation of rights will not prevail over a legal interpretation of rights. Hence, it is necessary to investigate fully all estates or interests or other entries that are recorded as affecting the registered interest. Under the amended wording of s 42, and in light of Bursill, to be an adequate record of an estate or interest on the folio of the Register, the registration number of the dealing creating the interest must be recorded234 and the recording must identify the interest, even if only broadly. 8.82  In cases where the interest is no longer current, there is no need to search the dealing. For example, if the Register records a discharge of mortgage, there is no need to investigate the mortgage itself.235 It should also be noted that Menzies J, in dissent in Bursill, thought that the test set in place by the majority judgments improperly extended the notion of indefeasibility. He favoured asking whether a transfer of the property interest was of itself notified by the reference to an instrument that created the interest, instead of asking whether a careful and prudent purchaser might be expected to inspect the instruments behind the transfer and, in so doing, discover that the notification was actually incomplete.236 It is perhaps convenient to think of abbreviated or inadequately explained recordings of other estates or interests in the folio of the Register as rather like footnotes in an essay. The recording, like a footnote, highlights that further explanation and details are available elsewhere and that it is the responsibility of the reader, or here the registered proprietor, to investigate the leads and references provided and then be bound by what they reveal. If, however, such footnotes or recordings need to be checked all the way back to the original Crown grant in order to ascertain that the Registrar-General’s understanding of the rights accord with the actual legal effect of those rights, it may be the case that the paramountcy of the Register is undermined.

234. Siemenski v Brooks Nominees Pty Ltd 1990 Tas R 236. It is necessary to give the dealing number because this allows a party to investigate properly and find out, for example, what terms are contained in an interest, such as a covenant referred to in a certificate of title. It is not enough for the recording merely to name the interest without providing a dealing number that can be followed up to reveal more about the interest or estate. 235. Toohey v Gunther (1928) 41 CLR 181 demonstrates that a purchaser does not have to examine a discharged mortgage for fear of being bound by notice of restrictive covenants. Again, this is an example of the ‘curtain principle’ at work. 236. Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73.

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Prior folio 8.83  This exception to indefeasibility applies when an earlier title has already been created for the same interest in land.237 In such a case, there is a competition between the interests under the prior folio and the interests under the later one.238 The prior folio will prevail and, although the later folio has been issued, the title it provides is defeasible in favour of the earlier folio.239 It will matter not that the later folio holder is a bona fide purchaser for value. The circumstances where this situation is likely to occur are where: • the prior and later folio relate to exactly the same parcel of land; or • the later folio relates to a subset of the land in the prior folio; or • the later folio relates to an adjoining strip of land in a prior folio. It is possible that, in some cases, this exception may interact with s 42(1)(c) of the Real Property Act.

Omission or misdescription of easements 8.84  Pursuant to s 42(1)(a1) of the Real Property Act, the omission or misdescription of easements (as an exception to indefeasibility) arises in two different contexts. One is where the easement subsisted immediately before the land was converted from old system title to Torrens title, while the other is where the easement was ‘validly created’ by the Real Property Act or ‘any other Act or Commonwealth Act’ at either the time of conversion or after that time.240 These issues are discussed in Chapter 12.

Omission or misdescription of profits à prendre 8.85  The 1995 amendments to the Real Property Act moved omissions and misdescriptions of easements out of s 42(1)(b) and into a paragraph of their own: s 42(1)(a1). That left s 42(1)(b) dealing only with profits à prendre. As a result, the law that dealt with this section when it applied both to easements and profits à prendre now guides us in relation to profits à prendre. James v Stevenson241 stands for the view that, if the profit à prendre had been properly created but was left off the Register in the conversion of land from old system to Torrens title, then it can be construed as an omission, irrespective of whether it was created by express grant or by prescription. 237. Real Property Act 1900 (NSW) s 42(1)(a). 238. P Carruthers and N Skead, ‘The Prior Certificate of Title and Wrongful Description of Land Exceptions to Indefeasibility: Resolving the Overlap’ (2009) 17 Australian Property Law Journal 240. 239. There is no evidence of this issue having been litigated in New South Wales. The issue has been litigated in the Victorian jurisdiction: see Hassett v Colonial Bank of Australasia (1881) 7 VLR 380; Stevens v Williams (1886) 12 VLR 152. See also RA Woodman, K Nettle, F Ticehurst, P Butt, L Hughes and J Stuckey-Clarke, Torrens System in New South Wales, loose-leaf, Lawbook Co, [42.180]. 240. See M McGuire, ‘A New South Wales Perspective on Implied and Prescriptive Easements and the Rights in personam Exception to Indefeasibility of Title’ (2006) 12(3) Australian Property Law Journal 228. For a discussion of whether an equitable Wheeldon v  Burrows easement (see  Wheeldon v  Burrows (1879) 12 Ch D 31, discussed at 12.26) survives transfer to the vendor’s successor in title and the effect of registration under the Real Property Act, see McGrath v Campbell (2006) NSW ConvR 56–159. 241. James v Stevenson [1893] AC 162. See also Dobbie v Davidson (1991) 23 NSWLR 625.

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8.87

If, however, the land was already under Torrens title when the profit à prendre was left off the Register, then it will not be construed as an omission, unless the parties have done everything that is required to create the profit à prendre in compliance with the Act. That includes executing the relevant instruments and lodging them for registration. 8.86  Profits à prendre by prescription are more problematic. If the profit à prendre has arisen by prescription (ie, long user), it would seem that it will be treated like an easement which arose by prescription.We know that the profit à prendre created by prescription, and therefore not registered, will be enforceable against the holder of the servient tenement only if the owner of that tenement remains the same (ie, if the registered proprietor remains the same.)242 The profit à prendre will not be enforceable against later owners.This situation may be different if, at the time the transferee takes the transfer, documentation that will bring about the recording of the profit à prendre has been executed and lodged with the Registrar-General.243 In such cases, the profit à prendre may survive despite a change in ownership of the burdened land. Whether the holder of a prescriptive profit à prendre is able to compel the owner of the burdened land to provide the documentation necessary for a recording to be made on the Register is a moot point. One would think that such compulsion would be possible but, on the basis of Williams v State Transit Authority,244 the answer is probably that it is not because the Torrens system does not recognise prescriptive profits à prendre. Whether this result is desirable remains another issue.

Wrong descriptions of parcels 8.87  Pursuant to s 42(1)(c) of the Real Property Act, a wrong description of a parcel or boundary of the land amounts to a misdescription. This exception to indefeasibility does not apply where the registered proprietor is a purchaser or someone deriving through the purchaser. The exception covers surveying mistakes that lead to land being included in the folio, which the parties did not intend to be included.245 A distinction needs to be drawn between: (a) land that the applicant intended to be included in the folio but which was wrongly described; and (b) land that the applicant correctly described but which was not land belonging to the applicant and should not rightly have been included in the application.246 The latter case will fall outside s 42(1)(c) because the land was correctly described rather than wrongly described. In the former case, the land will be covered by the exception and title to it will rest with the true owner.247 Section 42(1)(c) also covers

242. A ‘servient tenement’ is the name given to the land over which an easement is exercised. 243. Australian Hi-Fi Publications Pty Ltd v Gehl [1979] 2 NSWLR 618 at 623–4. 244. Williams v State Transit Authority of New South Wales (2004) 60 NSWLR 286. 245. See Hamilton v Iredale (1903) 3 SR (NSW) 535 at 550; Michael v Onisforou (1977) 1 BPR 9356; Gardener v Lewis [1998] 1 WLR 1535 at 1538. 246. See Wilson v Registrar-General of New South Wales (2004) 12 BPR 22,667. 247. Marsden v McAlister (1887) NSWLR (L) 300.

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the situation where the certificate of title actually describes, for example, ‘Whiteacre’ instead of ‘Blackacre’.248

Short-term tenancies 8.88  Section 42(1)(d) of the Real Property Act sets out what is commonly called the short-term tenancy exception to indefeasibility.249 In order to satisfy this exception: • the term of the lease must not be for more than three years; • the tenant must either be in possession or be entitled to immediate possession; • any option to renew must not be capable of extending the total period of the lease beyond three years; and • the purchaser (in this context, meaning any person taking for value) of the reversion must have taken his or her interest with the relevant notice of the tenant’s interest. 8.89  Although a short-term lease may be registered, there is no requirement to register it under the Torrens system.250 The term ‘tenancy’ used in this section  applies to legal tenancies and periodic tenancies,251 as well as equitable leases that arise as a result of agreements to lease.252 If the registered proprietor took without notice of the tenant’s interest under the lease, he or she will not be bound by that lease.253 In these circumstances, either actual or constructive notice will be sufficient to burden the title of the purchaser,254 with the effect that, in practical terms, there are few cases when the purchaser does not take with notice (although it remains possible, but unlikely, for a purchaser to take without notice of a tenant in possession). 8.90  Importantly, if a purchaser is to escape being bound by notice of a short-term tenancy, that purchaser must not have notice of the short-term tenancy at  the time of settlement.255 This is because ss 42(1)(d) and 43A(1) of the Real Property Act are interlinked (s 43A(1) being the provision that deals with the unregistered purchaser’s protection against notice, and discussed below).256 The position in regard to short-term tenancies, notice and indefeasibility may therefore be summarised as follows: 248. See  McGuinness v  Registrar-General (1998) 44 NSWLR 61 at  69. For discussion of this exception, see Carruthers and Skead, ‘The Prior Certificate of Title and Wrong Description of Land Exceptions to Indefeasibility: Resolving the Overlap’, note 238 above. 249. See 8.25 for the text of the provision. 250. See Real Property Act 1990 (NSW) s 53; Parkinson v Braham [1962] SR (NSW) 663. 251. Hammond v Farrow [1904] 2 KB 332; United Star Bowkett Co-operative Building Society (No 11) Ltd v Clyne (1967) 68 SR (NSW) 331 at 347. See also Chapter 11 for a discussion of these types of tenancies. 252. Alcova Holdings Pty Ltd v Pandarlo Pty Ltd (1988) 15 NSWLR 53 at 58–9. 253. Austin Construction Co (Australia) Ltd v Becketts Holdings Pty Ltd (1958) 75 WN (NSW) 444. 254. This includes notice pursuant to Hunt v Luck [1902] 1 Ch 428. If a purchaser has notice that someone other than the vendor is in possession, the purchaser is deemed to have constructive notice of the occupant’s rights. See Marsden v Campbell (1897) 18 LR (NSW) Eq 33; Clyne v Lowe (1968) 69 SR (NSW) 433 at 436. 255. The term ‘settlement’ means ‘completion’ in this context. 256. For an appreciation of this interconnectedness, see Taylor J’s judgment in IAC (Finance) v Courtenay (1963) 110 CLR 550. For discussion of s 43A of the Real Property Act, see 8.171–8.181.

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• If at settlement the tenant is in possession, then the purchaser of the fee simple is bound by actual or constructive notice of the tenant. The purchaser does not benefit from s 43A(1) because the purchaser has ‘notice against which he or she was not protected’ pursuant to s 42(1)(d). The purchaser’s interest will be burdened by that of the tenant both before and after registration. • If, up until settlement, the tenant is entitled to possession, but he or she is not in actual possession, the purchaser will be protected by s 43A(1) and will take free of the tenancy — unless he or she has received notice of the tenancy from some other source. • If, up until settlement, the tenant is not in possession, the purchaser will be protected before registration by virtue of s 43A(1) and, on registration, will be fully protected against any claim which might arise by virtue of s 42(1)(d) — unless the purchaser has notice from some other source.257

Options to renew and s 42(1)(d) 8.91  Traditional wisdom has favoured the view that if a lease and an option together extend beyond three years, protection under s  42(1)(d) of the Real Property Act is unavailable. In this instance, the total possible period of the lease would exceed the threeyear limit contained in the short-term lease exception; therefore, the lease itself is denied protection.258

Some Other Exceptions to Indefeasibility In personam exception 8.92 An in personam right arises by virtue of an obligation of conscience created by the registered proprietor.259 That obligation of conscience may arise out of the registered proprietor’s conduct, before or after registration,260 concerning either legal or equitable obligations. Accordingly, there may be a conflict between in personam rights created by

257. See R Stein and M Stone, Torrens Title, Butterworths, Sydney, 1991, p 108; Woodman et al, Torrens System in New South Wales, note 253 above, [42.350]. 258. This question was raised in Alcova Holdings Pty Ltd v Pandarlo Pty Ltd (1988) 15 NSWLR 53 at 63. Of course, the unregistered lease might be enforceable as an equitable interest, under other exceptions to indefeasibility. See 8.128. Note that Butt (and Edgeworth) raised the possibility (and benefits) of treating a lease for less than three years separately from an accompanying option where the option would cause the ‘joint package’ of lease and option to extend beyond three years. One justification for such a view is to permit alignment between s 42(1)(d) and s 53 of the Real Property Act. Section 53 requires that leases beyond three years be registered but s 53 does not require leases for less than three years to be registered. Hence, a lease for less than three years may be left unregistered but may not gain the protection of s 42(1)(d). See Butt, Land Law, note 25 above, p 817, and B Edgeworth, Butt’s Land Law 7th ed, note 115 above, p 872. 259. An in personam right may also arise out of the conduct of the registered proprietor’s agent or employee. However, for simplicity, the following discussion refers only to the registered proprietor’s conduct. 260. See Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537 at 563 for pre-registration conduct giving rise to a right in personam. See also Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 638; 78 ALR 1 at 24; Mercantile Mutual Life Insurance Co Ltd v  Gosper (1991) 25 NSWLR 32 at  42; Grgic v  Australia and New  Zealand Banking Group Ltd (1994) 33 NSWLR 202 at 222–3.

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the registered proprietor, and the interest that is actually recorded in the Register.261 Such personal claims form the basis of an exception to indefeasibility because the registered proprietor cannot avoid fulfilling the conscientious obligations that he or she has created by hiding behind the indefeasibility that his or her interest acquired on registration. In order to uphold the obligations arising from the rights enforceable in equity or at law, and created by the registered proprietor, it may be necessary to treat the registered proprietor’s title as defeasible. That the Torrens system is able to accommodate these rights that exist ‘off the Register’ was recognised in Frazer v Walker,262 when the Privy Council observed that registration: … in no way denies the right of a plaintiff to bring against a registered proprietor a claim in personam, founded in law or equity, for such relief as a court acting in personam may grant. 263

Although rights in personam are sometimes called ‘personal equities’,264 in personam rights do not arise only from equitable causes of action. For example, the non-fulfilment of legal obligations under a legal lease may give rise to a right in personam that may, in turn, be enforced against the registered proprietor. Further, although the term ‘in personam’ suggests that the right is one which is directed against a specific person (rather than a thing), an in personam right may also operate to create unregistered property rights; for example, by means of contracts for the sale of land and grants of leases. However, where the registered interest is found to be subject to an in personam interest, up until an order of the court is granted and the Register is altered pursuant to its terms, the Register remains intact. This ensures that upholding ‘proper conduct’ does not interfere with the ‘mirror principle’, one of the key tenets of the Torrens system. The varying approaches that courts have taken to delimiting the scope of in personam rights clearly have significant consequences for the operation of the Torrens system.265 The following section discusses important elements of the in personam exception.

261. For further discussion of the in personam exception, see L Moses and B Edgeworth, ‘Taking it Personally: Ebb and Flow in the Torrens Systems in Personam Exception to Indefeasibility’ (2013) 35 Sydney Law Review 107; K Low, ‘The Nature of Torrens Indefeasibility: Understanding the Limits of Personal Equities’, note 113 above; S Hepburn, ‘Concepts of Equity and Indefeasibility in the Torrens System of Land Registration’ (1993) 3(1) Australian Property Law Journal 44; L Aitken, ‘What is a Personal Equity and Can it Dislodge a Registered Proprietor?’ (1994) 7 Law Society Journal 36; S Robinson, ‘Claims In Personam in the Torrens System: Some General Principles’ (1993) 67 Australian Law Journal 355; L McCrimmon, ‘Protection of Equitable Interests Under the Torrens System: Polishing the Mirror of Title’ (1994) 20 Monash University Law Review 649. 262. Frazer v Walker [1967] 1 AC 569. 263. Frazer v Walker [1967] 1 AC 569 at 585. See also Barry v Heider (1914) 19 CLR 197 at 213. See also Phillips v Martin (1890) 11 LR (NSW) 153. 264. The term ‘personal equity’ is used in Breskvar v Wall (1971) 126 CLR 376 at 385. 265. Note that in some Australian jurisdictions, the exception has also been statutorily enshrined: see, for example Land Title Act 1994 (Qld) s 185(1)(a).

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Known causes of action 8.93  In considering whether an in personam right exists, it is important to be aware that an in personam right can only emerge if the registered proprietor’s conscience is affected as the result of a known cause of action which is enforceable against him or her.266 This issue is dealt with by later examples, but for present purposes it can be noted that mere events or incidents that do not give rise to a known cause of action cannot be said to play on the conscience of the registered proprietor such as to create a right in personam exception to indefeasibility.267 Accordingly, the mere existence of a dealing registered on the basis of forgery (a circumstance that does not give rise to a known cause of action) has been held not to be a basis for a right in personam.268 Further, if a registered proprietor is merely neglectful (a circumstance not giving rise to a known cause of action), mere neglect cannot form the basis of an in personam right.269 What emerges is that an in personam right is not simply a means by which any obligation of conscience may be enforced. Only a subset of obligations of conscience are potentially enforceable, and that subset consists of those obligations which give rise to known causes of action.270 Proper conduct and unconscionability 8.94  Although under the Torrens system certainty of title usually flows from registration, the in personam exception recognises that registration will not extinguish the personal obligations created by the registered proprietor. Cases such as Barry v Heider and Vassos v  State Bank of South  Australia271 assume that an in personam right will not arise unless the registered proprietor’s conscience is touched by the circumstances that gave rise to the legal or equitable cause of action.272 Such an approach requires a party seeking to demonstrate that he or she has an in personam right to establish two elements: (i) a legal or equitable cause of action; and (ii) that it is unconscionable for the registered proprietor to

266. As noted, the cause of action can be either legal or equitable: Barry v Heider (1914) 19 CLR 197 at 213; Vassos v  State Bank of South  Australia [1993] 2 VR 316. White v  Tomasel [2004] 2 Qd R 438 takes a different position on this point but that view is not well supported in other case law. For examples of unconscionability, see Tutt v Doyle (1997) 42 NSWLR 10 at 12; Minister for Education and Training v Canham [2004] NSWSC 274. 267. Grosvenor Mortgage Management Pty Ltd v  Younan (NSWSC, Young J, 23  August  1990, unreported, BC9002094); Horvath v  Commonwealth Bank of Australia [1999] 1 VR 643, where a minor executed a dealing, provides an example where there was no known cause of action to support the in personam exception. 268. Garofano v Reliance Finance Corp Pty Ltd (1992) NSW ConvR ¶55-640 at 59,661; Grgic v Australia and New  Zealand Banking Group Ltd (1994) 33 NSWLR 202; Story v  Advance Bank Australia Ltd (1993) 31 NSWLR 722; Vassos v State Bank of South Australia [1993] 2 VR 316. 269. Vassos v State Bank of South Australia [1993] 2 VR 316; Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133. 270. Grgic v Australia and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 at 222–3 per Powell JA. This view was reaffirmed in Ceedive Pty Ltd v May [2005] NSWSC 222 at [81]. 271. Barry v Heider (1914) 19 CLR 197; Vassos v State Bank of South Australia [1993] 2 VR 316. 272. Barry v Heider (1914) 19 CLR 197 at 213 per Isaacs J; Vassos v State Bank of South Australia [1993] 2 VR 316 at 333 per Hayne J. See also the discussion in McGrath v Campbell (2006) NSW ConvR 56-159.

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‘obtain or retain’ his or her registered interest.273 However, there is a contrary (and arguably more appealing) approach that confines unconscionability to the cause of action itself.274 The latter approach would seem more consistent with the view that in personam rights are grounded in obligations arising out of both equitable causes of action and legal causes of action, the latter not requiring an innate unconscionability element.275

Examples of rights in personam 8.95  The interplay between indefeasibility and in personam rights has the potential to create tensions. For example, assume that A, the vendor, is the registered proprietor of Torrens title land, and that A enters into a contract with B for sale of that land. A cannot rely on his or her indefeasibility of title to avoid the rights and obligations that he or she has created by entering into the contract with B. That is, A’s indefeasibility cannot be used in these circumstances to defeat B’s claim arising out of the contract. Instead, as A has created B’s interest by virtue of the contract of sale, a court would act to ensure that A upheld the obligations which he or she had created. Another example of where an in personam right may interact with indefeasibility may be demonstrated in the context of trusts. Assume A is the trustee of real property. As trustee, A  has rights and duties that must be fulfilled. These include a duty to hold the trust property on behalf of the beneficiaries B, C and D. A is not permitted to assert that as the registered proprietor he or she can rely on the indefeasibility of title arising from registration to ignore the obligations that he or she owes under the trust.276 8.96  Past examples of where rights in personam have arisen include where: • the registered proprietor, or someone for whom the registered proprietor was responsible, used the certificate of title in an unauthorised manner;277 • the registered proprietor breached statutory requirements that needed to be fulfilled before registration could take place;278 • the registered proprietor demonstrated conduct that led to the dealing being regarded as voidable or capable of being set aside for mistake;279 • the registered proprietor breached a fiduciary duty or the registered proprietor 273. White v Tomasel [2004] 2 Qd R 438 per Davies JA. See S Christensen and W Duncan, ‘Is Indefeasibility of Title a Bar to Restitution after Reversal of a Judgment on Appeal?’ (2005) 11 Australian Property Law Journal 81. 274. White v Tomasel [2004] 2 Qd R 438 per Williams JA and McMurdo J; Harris v Smith (2008) 14 BPR 26,223 at [67]. 275. On the merits of unconscionability as a superadded requirement for an in personam action, see further, L Moses and B Edgeworth, ‘Taking it Personally: Ebb and Flow in the Torrens Systems in Personam Exception to Indefeasibility’, note 261 above. 276. Oh Hiam v Tham Kong (1980) 2 BPR 9451. 277. Mercantile Mutual Life Insurance v Gosper (1991) 25 NSWLR 32 at 48. This case is discussed further below at 8.98. 278. Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537 where land was registered without having been resumed according to statutory requirements. 279. Lukacs v Wood (1978) 19 SASR 520; Majestic Homes Pty Ltd v Wise [1978] Qd R 225.

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breached a trust;280 • the registered proprietor became registered as a result of an estoppel that binds him or her to uphold the claimant’s interest;281 and • a dealing was registered as the result of the registered proprietor’s unconscionable or unconscientious conduct.282 8.97  Bahr v Nicolay283 is a leading authority on the in personam exception. In that case, the Bahrs did not have enough money to develop their own land, so they sold it to Nicolay on terms that they (the Bahrs) could lease it back, and later repurchase, should they wish. Nicolay, in turn, sold the land to the Thompsons. Clause 4 of the contract between Nicolay and the Thompsons contained an acknowledgment of the earlier Bahr–Nicolay agreement. Subsequent to the purchase from Nicolay, the Thompsons also acknowledged the Bahrs’ right to repurchase in correspondence. However, when the Bahrs sought to repurchase the land, the Thompsons refused to sell the land to them, relying on their status as registered proprietor and the indefeasible title that flowed from it. As discussed previously, the Bahrs were unsuccessful in convincing a majority of the High Court that the Thompsons’ conduct constituted Torrens fraud. However, the High  Court found unanimously that the Bahrs could establish an in personam exception to the Thompsons’ indefeasible title, on the basis that the Thompsons’ conduct gave rise to a trust in favour of the Bahrs. In speaking of the in personam exception, Brennan J observed: … the title of a purchaser who not only has notice of an antecedent unregistered interest but who purchases on terms that he will be bound by the unregistered interest is subject to that interest. Equity will compel him to perform his obligation.284

Thus, according to Brennan J, an in personam action is clearly different from the registered proprietor’s title being defeated by fraud pursuant to s 42 of the Real Property Act. It is also different from the protection from notice afforded by s  43 of the Real Property Act. In practice, it is often very difficult to establish a clear-cut difference between: (a) a purchaser who takes with (mere) knowledge of a prior interest; and (b) one who takes an interest agreeing to be bound by a prior interest.285 In Heggies Bulkhaul Ltd v Global Minerals Australia Pty Ltd,286 Austin J referred to the difference as ‘the additional ingredient’, that is, ‘some form of acknowledgement of the unregistered interest, or an agreement or undertaking to act in accordance with it, from which the registered proprietor later resiles’. The difficulty of establishing this ‘additional ingredient’ commonly arises in relation to 280. Tataurangi v Tairuakena v Maua Carr [1927] NZLR 688 at 702; Corozo Pty Ltd v Total Australia Ltd [1988] 2 Qd R 266. 281. Smilevska v Smilevska (No 2) [2016] NSWSC 397. 282. Spina v Conran Associates Pty Ltd (2008) 13 BPR 25,435. 283. Bahr v Nicolay (No 2) (1988) 164 CLR 604; 78 ALR 1. 284. Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 653; 78 ALR 1 at 35. 285. See Hinds v Uellendahl (No 2) (1992) 112 FLR 222. 286. Heggies Bulkhaul Ltd v Global Minerals Australia Pty Ltd (2003) 59 NSWLR 312 at [103]–[104] per Austin J. See also, Simmons v New South Wales Trustee and Guardian [2014] NSWCA 405 at [73] per Gleeson JA.

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leases. For example, it is sometimes not easy to determine if a purchaser’s awareness of a lessee in possession amounts to an undertaking to be bound by that state of affairs or whether it simply means that the purchaser will not require the vendor to hand over vacant possession.287 On the facts in Bahr v Nicolay, however, the High Court found that the Thompsons acquired their interest with more than mere notice; rather, their conduct constituted an undertaking to honour the Bahrs’ interest, which gave rise to a trust in the Bahrs’ favour. 288 8.98  Mercantile Mutual Life Insurance Co Ltd v  Gosper289 is another example of the in  personam exception in operation. However, the finding in this case has proved contentious because, on one interpretation, it enables the in personam exception to supplement the fraud exception.290 Mrs Gosper was the sole registered proprietor of land that she had used as security for a mortgage in 1982, for $205,000 — a mortgage for which she subsequently increased the amount owed by a further $60,000 by way of variation. Unknown to her, however, her husband fraudulently arranged for an additional loan of $285,000 from Mercantile Mutual Life. That company understood that security for Mr Gosper’s loan was to be provided by way of Mrs Gosper’s property. A variation of mortgage was prepared and lodged with the Registrar-General together with the certificate of title that had been held by the earlier mortgagee company in the Mercantile group, which had dealt with Mrs Gosper’s original mortgage. The variation (which was the product of both Mr Gosper’s fraud and forgery) was registered, and hence the Register recorded a mortgage over Mrs Gosper’s property that neither she, nor an agent duly acting on her behalf, had entered into. Mercantile Mutual Life sought to enforce its mortgage by arguing that, except in the case of fraud, registration made its interest indefeasible. It argued that as it had not been a party to fraud, it was not bound by Mrs Gosper’s interest. Mrs Gosper argued that she had a right in personam enforceable against the appellants (Mercantile Mutual Life). The result of the enforcement of this obligation, she argued, would allow her to be put back in the position she was in before registration of her husband’s fraudulently created mortgage. Mahoney JA found that Mercantile Mutual Life had only been able to register the variation of mortgage because the certificate of title was delivered to it from Mrs Gosper’s mortgagee company. However, as Mrs Gosper had not produced the certificate of title herself, nor had she given her mortgagee authority to hand it over on her behalf, a personal equity was created.The personal equity lay in a breach by the mortgagee of its contractual obligations to Mrs Gosper. Hence, Mahoney JA, with whom Kirby P agreed, held that the variation

287. See, for example, Wicks v Bennett (1921) 30 CLR 80; RM Hosking v Barnes [1971] SASA 100. Note that both cases were decided before Bahr v Nicolay (No 2) (1988) 164 CLR 604. 288. While the High Court was unanimous in finding a trust in favour of the Bahrs, which gave rise to an in personam action, the court was divided on the question of whether this constituted an express trust (Mason CJ and Dawson J in Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 618) or a constructive trust (Wilson and Toohey JJ at 638). 289. Mercantile Mutual Life Insurance Co Ltd v Gosper (1991) 25 NSWLR 32. 290. The decision was distinguished in Ginelle Finance Pty Ltd v Diakakis (2002) 12 BPR 22,137.

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of mortgage should be set aside. However, Meagher JA strongly dissented, referring to the arguments on which Mrs Gosper relied as resting on ‘something like a sleight of hand’. 291 The extension of the in personam exception in Gosper has been the subject of academic interest and critique.292 While the majority’s finding meant that Mrs Gosper’s interest was not burdened by a mortgage that she did not authorise, it also meant that the protection usually afforded to a mortgagee on registration was cut back. Had Mr  Gosper simply stolen Mrs  Gosper’s certificate of title, forged her signature and given the necessary documentation to Mercantile Mutual Life, that company could  have registered its mortgage and gained all the benefits of indefeasibility.293 Instead, Mercantile Mutual Life’s indefeasibility was attacked because another of the companies in the Mercantile group (the original mortgagee company) gave Mercantile Mutual Life the certificate of title, the delivery of which permitted registration. The majority’s decision in Gosper’s case seems to mean that the registered interest of the mortgagee may be defeated by conduct traditionally understood as equitable fraud, despite a broad definition of immediate indefeasibility and a narrow definition of fraud under s 42.294

Known causes of action revisited 8.99  Some of the controversy in Gosper’s case was generated by debate over whether the kind of personal equity relied on was based on a known cause of action. Accordingly, it is useful to explore further the circumstances in which the court will find a cause of action and, with this precondition established, be disposed to find the existence of an in personam right. A discussion of Vassos v State Bank of South Australia295 assists in that regard. While Gosper’s case may be seen as the high-water mark of the in personam exception, cases such as Vassos have cut it back a little. In Vassos, the court was not prepared to find a personal equity. Hayne J stated that: … it may well be that the [mortgagee] did not act without neglect but there is in my view no material which would show that the bank acted unconscionably. There was no misrepresentation by it, no misuse of power, no improper attempt to rely upon its legal rights, no knowledge of wrongdoing by any party. Even if by making reasonable inquiries

291. Mercantile Mutual Life Insurance Co Ltd v Gosper (1991) 25 NSWLR 32 at 52. 292. D Sonter, ‘Case Note’ (1992) 15 University of New  South  Wales Law Journal 546; S Robinson, ‘Claims In  Personam in the Torrens System: Some General Principles’ note 261 above; E Toomey, ‘Certainty of Title in the Torrens System’ (2000) 4 Flinders Journal of Law Reform 235; D Skapinker, ‘Equitable Interests, Mere Equities, “Personal” Equities and “Personal Equities” — Distinctions with a Difference’ (1994) 68 Australian Law Journal 593; L Griggs, ‘In Personam, Garcia v  NAB and the Torrens System — Are They Reconcilable?’, note 273 above. 293. P Butt, ‘Indefeasibility and Sleights of Hand’ (1992) 66 Australian Law Journal 596 at 597. 294. See Butt, ‘Indefeasibility and Sleights of Hand’, note 293 above; F Cooke and P O’Connor, ‘Purchaser Liability to Third Parties in the English Land Registration System: A Comparative Perspective’ (2004) 120 Law Quarterly Review 640 at 650. 295. Vassos v State Bank of South Australia [1993] 2 VR 316.

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the bank could have discovered the fact of forgery I do not consider that that fact alone renders its conduct unconscionable.296

8.100  The circumstances were clarified a little more when the court in Garofano v Reliance Finance Corp Pty Ltd297 examined what could be included in the content of a personal equity. Meagher J, with Priestley JA in agreement, stated: I cannot see what the expression [personal equity] is meant to cover except known legal causes of action (for example, deceit) and known equitable causes of action (for example, undue influence).298

However, in the following year, Mahoney JA suggested that the law on the in personam exception was still evolving, and that ‘the law is in the process of defining what interests are or are not personal equities’.299 8.101  Skapinker has pointed out that there is still great confusion about the definition and application of the in personam exception, and has illustrated that confusion by reference to Grove J’s decision in Lissa v Cianci.300 In Lissa v Cianci, Grove J stated that ‘as [one of the mortgagors] can rely upon non est factum he does not really need to demonstrate personal equity’.301 However, as Skapinker has convincingly argued, without fraud by the registered proprietor, a defence of non est factum will not be enough to cause the title to be defeasible.302 In such circumstances, the earlier registered proprietor would be dependent on the in personam exception in order to demonstrate defeasibility of title.303 Since Grove J’s words, Powell JA, with whom Meagher and Handley JJA agreed, stated in Grgic v Australia and New Zealand Banking Group Ltd that: … the expressions “personal equity” and “right in personam” encompass only known legal causes of action or equitable causes of action, albeit that the relevant conduct which may be relied upon to establish a “personal equity” or “right in personam” extends to include conduct not only of the registered proprietor but also of those for whose conduct he is responsible, which conduct might antedate or postdate the registration of the dealing which it is sought to have removed from the Register.304 296. Vassos v State Bank of South Australia [1993] 2 VR 316 at 333. 297. Garofano v Reliance Finance Corporation Pty Ltd (1992) NSW ConvR ¶55-640. 298. Garofano v Reliance Finance Corporation Pty Ltd (1992) NSW ConvR ¶55-640 at 59,659. 299. Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722 at 739. 300. Lissa v Cianci (1993) NSW ConvR ¶55-667. 301. Lissa v Cianci (1993) NSW ConvR ¶55-667 at 59,815. 302. D Skapinker,‘Equitable Interests, Mere Equities,“Personal” Equities and “Personal Equities” — Distinctions with a Difference’, note 292 above; Mr Justice PW Young, ‘Indefeasibility Affected by “Equities” — What is an Equity? Case Note: White v Tomasel’ (2005) 79(1) Australian Law Journal 30. 303. D Skapinker,‘Equitable Interests, Mere Equities,“Personal” Equities and “Personal Equities” — Distinctions with a Difference’ (1994), note 292 above. 304. Grgic v Australia and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 at 222–3.The following cases have relied on the in personam exception: Lukacs v Wood (1978) 19 SASR 520 (voidable or rectification for mistake); Lissa v Cianci (1993) NSW ConvR ¶55-667 (non est factum); Tataurangi Tairuakena v Mua Carr [1927] NZLR 688 (breach of fiduciary obligation); Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537 (breach of statutory requirements as a condition precedent to the acquisition of title); Bahr v Nicolay (No 2) (1988) 164 CLR 604; 78 ALR 1 (breach of an express or implied term to be bound by interest of

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Receipt of trust property 8.102  Another set of circumstances that was thought to give rise to an in personam exception was in the context of trusts and the limbs of Barnes v Addy.305 In particular, the relevant question before several state courts was: Does the application of the first limb of Barnes v Addy306 cause the registered proprietor’s interest to be defeasible? 8.103  Barnes v Addy has two limbs. The first limb states that if a person takes a transfer of property knowing that the transfer is in breach of trust, that person will hold the property subject to the trust. Put another way, the recipient of the property will become a constructive trustee of the property. The first limb of Barnes v Addy is sometimes referred to as the ‘knowing receipt’, or ‘recipient liability’ limb. The second limb of Barnes v Addy relates to circumstances where a party knowingly assists the trustee to breach the trust and misapply the trust property.307 The second limb is referred to as the ‘accessory liability’ limb. A registered proprietor who ‘knowingly assists’ in a breach of trust under the second limb of Barnes v Addy, will, by nature of that assistance, be participating in a ‘dishonest and fraudulent design’ sufficient to constitute fraud under s 42 of the Real Property Act. As such, conduct constituting ‘accessory liability’ will constitute an established exception to indefeasibility. Until 2007, however, Australian authority diverged on whether the first limb of Barnes v Addy constituted an exception to indefeasibility under the in personam exception. 8.104  Two conflicting lines of authority emerged on the question of the ‘knowing receipt’ limb of Barnes v Addy and the in personam exception. Tara Shire Council v Garner,308 a Queensland Court of Appeal decision, and Say-Dee Pty Ltd v  Farah Constructions Pty Ltd,309 a New South Wales Court of Appeal decision, both held that there was an arguable case for the existence of an in personam claim against the registered proprietor, where the registered proprietor knowingly took a transfer (a ‘receipt’) of trust property in breach of trust.310 In so doing, both cases took a different approach to the majority decision in the Victorian case of Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd311 and the Western Australian case of LHK Nominees Pty Ltd v  Kenworthy.312 The Victorian and Western

third party). By contrast, in Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722, the court found that there was no personal equity to deregister a dealing just because an irregular document had been registered. 305. Barnes v Addy (1873) LR 9 Ch App 244. For a detailed analysis of the rule, see J Dietrich and P Ridge, Accessories in Private Law, Cambridge University Press, Cambridge, UK, 2015, particularly Ch 8. 306. Barnes v Addy (1873) LR 9 Ch App 244. 307. Accessory liability triggers compensation. See  Koorootang Nominees Pty Ltd v  ANZ Banking Group Ltd [1998] 3 VR 16 at 101; Equiticorp Industries Group Ltd v R [1996] 3 NZLR 586 at 604. 308. Tara Shire Council v Garner [2003] 1 Qd R 556. Note that this case involved only interlocutory proceedings. 309. Say-Dee Pty Ltd v Farah Constructions Pty Ltd [2005] NSWCA 309. 310. See the following, discussing restitution and equity: B Strahorn, ‘The End of Knowing Receipt? A Riposte to Unjust Enrichment’ (2006) 80 Australian Law Journal 765. 311. Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 per Tadgell J. 312. LHK Nominees v Kenworthy (2002) 26 WAR 517. The different Torrens legislation in different states may account for some of the variation between decisions in this area.

401

8.104

Property Law in New South Wales

Australian decisions thus rejected the view that the ‘knowing receipt’ of Barnes v Addy could give rise to an in personam exception to indefeasibility. The 2007 High Court decision in Farah Constructions Ltd v Say-Dee Pty Ltd appeared to have resolved this question.313 In Farah Constructions, the High Court overturned the New South Wales Court of Appeal decision in Say-Dee Pty Ltd v Farah Constructions,314 and instead preferred the approach of the Victorian case of Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd.315 The High Court emphasised that title is created by registration under the Real Property Act, as cases such as Breskvar v Wall316 have long held. Title is not created by acts prior to registration. Therefore, a person acquiring property by operation of the Torrens statute cannot be characterised as having received trust property from the trustee. Rather, title comes from the very act of registration.317 The High Court also found that the indefeasibility provided by s 42 is sufficient to defeat any such pre-existing unregistered equitable claim under the rule in Barnes v Addy, except in circumstances where the fraud exception applies.318 8.105  The High  Court decision in Farah Constructions has since been followed in a number of cases319 including Jin v Yang,320 a case where the aged plaintiff (Mr Jin) argued that he held an equitable interest in an apartment registered in his partner’s name because he had contributed to its purchase price and also to the reduction of the mortgage. When the property was transferred by his partner to her son, the issue arose as to whether the son’s interest was indefeasible.The court found that there were no relevant dealings giving rise to a ‘personal equity’ that the plaintiff could have enforced against the son, and that, on the authority of Farah Constructions, ‘it would be insufficient for the plaintiff to show that [the son] acquired trust property with notice that the transfer was in breach of trust property’.321 In February 2022 the New South Wales Court of Appeal in Turner v O’Bryan-Turner reconsidered the High Court’s reasoning in Farah Construction as it pertains to the rule in 313. Farah Constructions Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89. 314. Say-Dee Pty Ltd v Farah Constructions Ltd [2005] NSWCA 309. 315. Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133. 316. Breskvar v Wall (1971) 126 CLR 376. 317. L Aitken,‘“Knowing Receipt” Following Farah Constructions Pty Ltd’ (2007) 29 Sydney Law Review 713; K Low, ‘The Nature of Torrens Indefeasibility: Understanding the Limits of Personal Equities’, note 113 above. 318. M Bryan, ‘Recipient Liability under the Torrens System: Some Category Errors’ (2006) University of Queensland Law Journal 83; L Griggs, ‘In Personam, Barnes v Addy and the High Court’s Deliberations in Farah Constructions Pty Ltd v Say-Dee Pty Ltd’ (2008) 15 Australian Property Law Journal 268. 319. See, for example, Super 1000 v Pacific General Securities [2008] NSWSC 1222; (2008) 221 FLR 427; Break Fast Investments Pty Ltd v Giannopoulos (also known as Giannopoulos) (No 5) [2011] NSWSC 1508; Sze Tu v Lowe [2014] NSWCA 462 (special leave to appeal to the High Court refused); Owners Corporation of Strata Plan 71623 v Waldorf Apartments Hotel,The Entrance Pty Ltd [2015] NSWSC 1658. 320. Jin v Yang [2008] NSWSC 754. Note that while the court did not find that a personal equity existed, it did ultimately find actual fraud on the part of the son due to his ‘collusive and mala fide’ conduct, bringing his conduct under the fraud exception in the Real Property Act. See  Jin v  Yang [2008] NSWSC 754 at [79]–[81]. 321. Jin v Yang [2008] NSWSC 754 at [59].

402



Torrens Title

8.107

Barnes v Addy.322 There, White JA, with Meagher and McCallum JAs agreeing, found that Farah Constructions should be properly understood as only concerned with the first limb of Barnes v Addy.323 In Turner, Wendy O’Bryan-Turner had transferred six properties owned by her husband Owen John Turner, in purported exercise of Wendy’s power as John’s attorney. Wendy transferred two of the properties to herself and the two sons she shared with her husband. John’s son (Nick), from a previous marriage, argued that Wendy acted in a dishonest and fraudulent design in order to exclude Nick from benefitting from John’s estate.The court was of the opinion that an in personam claim could have been made out if it were found that the registered proprietors had knowingly assisted in a fraudulent breach of fiduciary duty. On the facts of that case, however, the court found that although Wendy’s avowed intention was to defeat Nick’s claims, she did not have the requisite dishonest intent. This was because she had consulted with both a solicitor and a barrister who had not suggested that there was ‘anything wrong’ with the proposed course of action.324 It remains to be seen whether the High Court will accept an invitation to reconsider Farah in light of the court’s reasoning in Turner.

Adverse possession 8.106  A party possessing adversely to the registered proprietor (for the relevant time) is able to submit a possessory application to be recorded as the registered proprietor pursuant to Pt 6A (ss 45B–45G) of the Real Property Act. Hence, the title of the earlier registered proprietor is defeasible in favour of the adverse possessor who fulfils the relevant statutory requirements. See Chapter 5 for a fuller account of the interaction of possessory title with the Torrens scheme.

Overriding statutes 8.107  As Gibbs J observed in Travinto Nominees Pty Ltd v Vlattas, ‘[a]though the Real Property Act is of the greatest importance in relation to land titles it is not a fundamental or organic law to which other statutes are subordinate’.325 Accordingly, pursuant to the principle of parliamentary sovereignty, like other Acts, the Real Property Act may be overridden by later inconsistent statutes. Sometimes this involves express repeal, while at other times it is implicit. The statutory override may also be total or partial. In a Torrens context, the main area for concern is where the overriding statute authorises the creation of a property interest without registration of that interest.326 In such circumstances, it is very difficult for a purchaser to know what interests created by other statutes may affect the land which he or she is about to purchase.327 There are numerous 322. [2022] NSWCA 23. 323. [2022] NSWCA 23 at [109]. 324. [2022] NSWCA 23 at [134]. 325. Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1 at 35. 326. At other times, the authorisation of an interest, which is not proprietary in nature itself, but which still impacts on and affects a registered interest, may also be of concern. 327. For a discussion of overriding statutes, see, generally, D Pearce, Statutory Interpretation in Australia, 9th ed, LexisNexis Butterworths, Sydney, 2019, Ch 7. For specific discussion of the consequences of inconsistent

403

8.107

Property Law in New South Wales

statutes that have the capacity to create rights over land. These rights may range from rights of access or easements, on one hand, to the imposition of a charge, for example, on the other.328 As it is virtually impossible to keep abreast of all the legislation that may affect indefeasibility of title, registered proprietors, and those dealing with registered interests, are placed in an increasingly difficult position. They can rely on the Register less and less as interests under it are eroded by overriding statutes. The situation is exacerbated when the interests created by other statutes are incapable of being recorded or registered themselves,329 or where there is not a mechanism for recording them. Pratten v Warringah Shire Council330 illustrates these issues. 8.108 In Pratten, a drainage reserve was marked on a plan for land. Pratten was interested in purchasing the land, so he asked his solicitors to make inquiries of the council as to who owned the drainage reserve. The council replied saying, ‘the land is of no use to [us] for drainage purposes’.331 Not entirely satisfied by this, Pratten made further inquiries, including an official search of the Register. The search revealed that the vendor was the registered proprietor of the drainage reserve in question. Only then did Pratten enter into a contract. However, the registration process was held up. In the course of attempting to facilitate registration, Pratten offered to buy the drainage land from the council if the earlier information proved to be incorrect and it indeed owned the land. The council replied, stating that it had ‘no interest in the easement’.332 Registration of Pratten’s interest eventually took place and a new certificate of title was issued. At this point, the council decided to claim an interest in the drainage land. The council was ultimately successful pursuant to s  398 of the Local Government Act  1919 (NSW), which vested drainage reserve land ‘in the council in fee simple for drainage purposes’.333 8.109  Where possible, courts will try to read two statutes in such a way to prevent a direct conflict, and thereby avoid having one override the other.334 This may be achieved by a variety of methods, including by recognising that a statute on a specific subject

legislation in the Torrens context, see P O’Connor,‘Public Rights and Overriding Statutes as Exceptions to Indefeasibility of Title’ (1994) 19 Melbourne University Law Journal 649; S Hepburn, ‘Interpretive Strategies in the Overriding Legislation Exception to Indefeasibility’ (2009) 21 Bond Law Review 86. 328. See, for example, South-Eastern Drainage Board (SA) v Savings Bank of South Australia (1939) 62 CLR 603, where the High Court held that a statute containing the term ‘first charge’ meant exactly that — first — so that the charge could not be defeated by registration of a charge pursuant to the Real Property Act 1886 (SA). The 23 Acts listed in the Real Property and Conveyancing Amendment Act 2009 (NSW) Sch 3 provide other illustrations. 329. Miller v Minister of Mines [1963] AC 484. 330. Pratten v Warringah Shire Council (1969) 90 WN (Pt 1) (NSW) 134. 331. Pratten v Warringah Shire Council (1969) 90 WN (Pt 1) (NSW) 134 at 134. 332. Pratten v Warringah Shire Council (1969) 90 WN (Pt 1) (NSW) 134 at 135. 333. Pratten v  Warringah Shire Council (1969) 90 WN (Pt 1) (NSW) 134 at  135. See  further discussion in P O’Connor, ‘Public Rights and Overriding Statutes as Exceptions to Indefeasibility of Title’, note 327 above. For another illustration of inconsistency, see Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1, where Gibbs J (with Menzies J agreeing on this point), found that s 88B of the Industrial Arbitration Act (1940) (NSW), which rendered a lease void, overrode the Real Property Act. 334. Kogarah Municipal Council v Golden Paradise Corp [2005] NSWCA 230.

404



Torrens Title

8.111

matter will prevail over a statute on a general subject matter.335 Other methods include recognising that two statutes operate sequentially rather than simultaneously,336 or that a statute creating private rights will not prevail over a statute creating public rights.337 8.110  City of Canada Bay Council v Bonaccorso Pty Ltd338 utilised sequential application as a method of reconciling two statutes. There, the council purchased land designated as a reserve but later sold the land to a private company, Omaya Holdings Pty Ltd. Omaya Holdings registered the transfer and sought to claim the benefits of indefeasibility, but another resident objected to the sale of council land on the basis that s  45(1) of the Local Government Act 1993 (NSW) prevented the council from selling or disposing of ‘community land’.The objector sought to have the council reinstated to the Register, while Omaya Holdings asserted its indefeasible title. One issue raised in the case was whether the Local Government Act, being a later statute, prevailed over the indefeasibility provisions of the Real Property Act 1900 (NSW). Although the Court of Appeal found that the reserve was community land, it also found that the two statutes were not inconsistent. It came to this conclusion by finding that up until registration, the transfer to Omaya Holdings was void, but after registration Omaya Holdings gained indefeasible title by virtue of the Real Property Act.339 8.111  The High Court in Hillpalm Pty Ltd v Heaven’s Door Pty Ltd340 also considered the issue of overriding statutes and the Real Property Act, eventually coming to the conclusion that there was no actual inconsistency in that case.The Hillpalm litigation involved land that was subdivided.The subdivision plan (later the deposited plan) lodged with the RegistrarGeneral bore on it a diagram showing what was described as a ‘proposed right of way 10 wide’ [sic]. There was no more specificity than this. Many years after the subdivision was approved, the appellant bought land that adjoined the respondent’s land within the subdivision. The respondent argued that it was entitled to a declaration that the appellant was in breach of the condition in the original subdivision plan. The respondent also sought that the appellant create a 10-metre wide carriageway on its land by registering an easement on the appellant’s title, as well as constructing a track (of at least 2.5 metres in width) within the carriageway.

335. Miller v Minister for Mines [1963] AC 484. 336. See, for example, City of Canada Bay v Bonaccorso Pty Ltd (2007) 71 NSWLR 424. See further discussion in B Edgeworth, ‘“Very High Bar to Clear”: Implied Repeal of Torrens Legislation after City of Canada Bay Council v Bonaccorso Pty Ltd’ (2008) 82 Australian Law Journal 436. 337. Hillpalm Pty Ltd v Heaven’s Door Pty Ltd (2004) 220 CLR 472 at [100] per Kirby J (although noting that that principle was not of assistance in that case because of the two conflicting public interests at stake). 338. City of Canada Bay v Bonaccorso Pty Ltd (2007) 71 NSWLR 424. 339. For discussion, see  B 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 Environmental and Planning Law Journal 82. 340. Hillpalm Pty Ltd v Heaven’s Door Pty Ltd (2004) 220 CLR 472. See further, P Radan, ‘Indefeasibility and Overriding Statutes’ (2003) 41(6) Law Society Journal 66; P Butt, ‘Indefeasibility and Council Consent Conditions’ (2005) 79(3) Australian Law Journal 143.

405

8.111

Property Law in New South Wales

At both first instance and then on appeal to the New South Wales Court of Appeal, the Local Government Act 1919 (NSW), which permitted a party to enforce conditions in subdivisions, was found to prevail over the Real Property Act 1900 (NSW). This was because the Local Government Act was the later statute and its provisions were seen as inconsistent with indefeasibility under the Real Property Act. As a consequence, the registered proprietor’s title was defeasible. However, a majority in the High  Court (comprising McHugh ACJ, Hayne and Heydon  JJ) found that in sealing the subdivision plan, the council had abandoned any insistence on compliance with the conditions in the subdivision.341 As a result, the question of inconsistency did not arise. All the plan did was indicate that the original developer began with an intention to create an easement some time in the future.That intention was not binding on the respondent and, as a result, when the respondent registered its interest it obtained an indefeasible title free from any encumbrance of the nature that appellant sought to establish. Further, the majority held that even if there were a condition that had to be fulfilled, it was only enforceable against the party who originally benefited from the subdivision consent. The condition could not be enforced against a subsequent owner because he or she could not be said to ‘carry out’ the development simply by occupying and using the land. ‘Carrying out’ the development, as required by the Local Government Act, meant implementing the development and, in this case, that translated into subdividing the land. As a result, any breach of the conditions in the consent were not enforceable against later owners such as Hillpalm.342 8.112  The case of Kogarah Municipal Council v Golden Paradise Corp343 applied Hillpalm. However, Basten JA voiced some concern over whether the indefeasibility attaching to registration should have prevailed. He stated: In the present case, s  45 of the Local Government Act speaks in unequivocal terms. It renders a council powerless to sell, exchange or otherwise dispose of  ‘community land’. If, by providing a transfer in registrable form to a third party, the Council was able to effect a disposal of community land, which the Parliament has stated in the clearest terms it has not power to do, there would be a wholesale abrogation of the statutory provision. It is, at the very least arguable, that in such circumstances the Local Government Act has, by necessary implication, amended s 42 (or possibly other provisions) of the Real Property Act, to the extent that that provision would not give effect to a transfer of such land upon registration.344

341. Kirby and Callinan JJ dissented. They held that the council had imposed the condition and that the title of the appellant was defeasible in favour of the condition: Hillpalm Pty Ltd v Heaven’s Door Pty Ltd (2004) 220 CLR 472 at 502 and 514–5 respectively. 342. However, the majority noted that there would have been a ‘real and lively question’ about inconsistency and implied repeal had the condition been imposed as a continuing condition on the use of the land: see Hillpalm Pty Ltd v Heaven’s Door Pty Ltd (2004) 220 CLR 472 at 491. 343. Kogarah Municipal Council v  Golden Paradise Corp [2005] NSWCA 230. See  S Hepburn, ‘Interpretative Strategies in the Over-riding Legislation Exception to Indefeasibility’ (2009) 21 Bond Law Review 86 at 91 for commentary on how this case applied Hillpalm. 344. Kogarah Municipal Council v Golden Paradise Corp [2005] NSWCA 230 at [99].

406



Torrens Title

8.114

If indefeasibility does not prevail, the outcome seen in Quach v Marrickville Municipal Council345 would be more likely. That case held that a ‘drainage reserve four feet wide’ marked on a deposited plan vested a fee simple estate in the council and so affected the indefeasibility of the interest recorded on the Register. 8.113  Amendments to the Real Property Act effective from 13 May 2009 by the Real Property and Conveyancing Amendment Act 2009 (NSW) attempt to resolve issues of inconsistency between s  42 of the Real Property Act and later statutes that impact on registered proprietors’ rights. Section 42(3) provides that ‘[t]his 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.’346 At the same time that s 42(3) was inserted into the Real Property Act, 23 other Acts were amended to include provisions expressly overriding s 42.347 8.114  As a consequence, s  42(3) has resolved many issues of inconsistent legislation. Under ordinary principles of statutory construction, s  42(3) now prevails where the inconsistent provision was enacted prior to 13 May 2009.348 This is because s 42(3) is the later provision and so prevails to the extent of the inconsistency.The 2015 case Re Sundara Pty Ltd349 provides an illustration of how s 42(3) may arise. In that case, it was argued that sections of the Farm Debt Mediation Act 1994 (NSW) (FDMA), which restricted action that could be taken under a farm mortgage against a farmer, were inconsistent with the indefeasibility of a registered mortgage. However, the relevant provisions of the FDMA were enacted prior to s 42(3), and did not contain an express override of s 42. Although not necessary to decide in that case, Black J noted that s 42(3) created ‘formidable obstacles’ to an argument that the FDMA would affect the registered proprietor’s indefeasible title.350 However, s 42(3) cannot prevail over inconsistent legislation enacted after 13 May 2009, and so the principles of statutory construction discussed above will apply. Indeed, a similar provision to s 42(3) was considered by the High Court in South Eastern Drainage Board (SA) v Savings Bank of South Australia,351 and the High Court found in that case that the South Australian provision was ineffective in its attempt to entrench indefeasibility.

345. Quach v Marrickville Municipal Council (1990) 22 NSWLR 55. 346. The provision has been criticised, see, for example, B Edgeworth ‘Indefeasibility and Overriding Statutes: An Attempted Solution’ (2009) 83 Australian Law Journal 655. 347. See Real Property and Conveyancing Amendment Act 2009 (NSW) Sch 3. 348. Section 42(3) was referred to briefly as one of three reasons for dismissing the appeal in Ta Lee Investment Pty Ltd v Antonios [2019] NSWCA 24. 349. Re Sundara Pty Ltd [2015] NSWSC 1694. 350. Re Sundara Pty Ltd [2015] NSWSC 1694 at [59]. Black J also found that the relevant provisions could be given successive effect with the Real Property Act and so no inconsistency would arise. 351. South-Eastern Drainage Board (SA) v Savings Bank of South Australia (1939) 62 CLR 603. Section 6 of the Real Property Act 1886 (SA) provided that ‘[n]o law, so far as inconsistent with this Act, shall apply to land subject to the provisions of this Act, nor shall any future law, so far as inconsistent with this Act, so apply unless it shall be expressly enacted that it shall so apply notwithstanding the provisions of The Real Property Act 1886’.

407

8.115

Property Law in New South Wales

Registrar-General’s general power to correct 8.115  The fact that the Registrar-General has the power to correct the Register at all arguably undermines the concept of indefeasibility and the paramountcy of the Register. If the Register is altered after entries have been made, it may become an unstable record for those relying on it. However, any potential attack on, or diminution of, the indefeasibility that registration provides, needs to be weighed up against the importance of having an accurate Register that values and reflects ‘truth’. 8.116  Section 12(1)(d) of the Real Property Act gives the Registrar-General a general power to ‘correct errors and omissions in the Register’.352 What constitutes an error has been the subject of judicial consideration.353 It has been found that an ‘error’ exists if there is a difference between what is recorded on the Register and what is contained in the instrument lodged with the Registrar for registration.354 Traditionally, this fairly narrow interpretation of ‘error’ has been applied so as to cover minor alterations to the Register, commonly described as ‘slips’ or clerical or administrative errors, many of which pertain to information that has been inadvertently left off the Register by the Registrar-General’s staff.355 In this context, for example, it was held that the Registrar could not correct an error involving a mistaken statement in a registered discharge of mortgage asserting that all moneys under the mortgage have been repaid, for example.356 However, the Court of Appeal in Sahab Holdings Pty Ltd v Registrar-General held that ‘errors and omissions’ within the meaning of s 12(1)(d) were not confined to those that may be described as merely ‘departmental errors and omissions’.357 8.117  However, even when seemingly minor corrections of this nature are made, the Registrar-General must ensure that the original entry is not completely erased.358 The genealogy of the correction needs to be retained because a party who relies on the earlier, incorrect entry may still have rights on the basis of that earlier entry. Perhaps in anticipation of such scenarios, the Real Property Act includes a provision that deems a correction not to have force or effect if it would prejudice or affect a right accrued on the basis of the earlier uncorrected entry.359 352. The operation of s 12(1)(d) was considered in the context of correcting lot numbers (in a strata plan) in Kirkland v Quinross Pty Ltd [2008] NSWSC 286. That case found that s 12(1)(d) could not be used to correct lot numbers without ‘having regard to whether the proprietors and mortgagees of the affected lots consented to the change’. 353. For example, Registrar of Titles (WA) v Franzon (1975) 132 CLR 611; Sahade v Owners Corporation SP 62022 [2013] NSWSC 1791. 354. Registrar of Titles (WA) v Franzon (1975) 132 CLR 611. 355. See further, discussion in N Skead and P Carruthers, ‘The Registrar’s Powers of Correction: “Alive and Well”,Though Perhaps “Unwelcome”? Part I:The Slip provision’ (2010) 18 Australian Property Law Journal 32; ‘Part II: The Substantive Provision’ (2010) 18 Australian Property Law Journal 132. 356. State Bank of New South Wales v Berowra Waters Holdings Pty Ltd (1986) 4 NSWLR 398. 357. Sahab Holdings Pty Ltd v Registrar-General [2011] NSWCA 395 at 183.While the Court of Appeal decision was reversed in the High Court, it was not reversed on this point: see Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (2013) 247 CLR 149. 358. Real Property Act 1900 (NSW) s 12(3)(d). 359. Real Property Act 1900 (NSW) s 12(3)(b).

408



Torrens Title

8.121

8.118  In relation to when the Registrar-General’s power of correction may be exercised, it was once thought that if a bona fide purchaser or mortgagee had registered, having acquired his or her interest on the faith of an uncorrected Register, then the Register could not be corrected at  a later time.360 This now appears not to be the case. It now appears that corrections may also be made after registration has been effected by a party who acquired rights on the faith of an uncorrected Register.361 However, the situation is complicated by the inclusion of an additional requirement (mentioned above) that the Registrar-General cannot correct if to do so would prejudice rights emanating from interests recorded prior to the correction.362 8.119  Another provision, s 138(1) of the Real Property Act, may provide for a wider range of corrections to the Register. It operates not by investing the Registrar-General with a power of correction himself or herself but rather by giving the court a method by which the Register may be altered. This provision specifically relates to where there are proceedings for the recovery of any land or interest from the registered proprietor and it permits a court to make one or more of the following ancillary orders: (a) cancel or amend a folio of the Register, (b) cancel, or amend or make a recording in a folio of the Register, (c) create a new folio of the Register, (c1) create a new edition of a computer folio.363

8.120  Mogo Local Aboriginal Land Council v Eurobodalla Shire Council364 is an example of a case that relied on s 138(1). In that case, s 138(1) was used to restore registration of a proprietor’s interest after the Registrar-General had erroneously cancelled a folio on the Register on the mistaken assumption that the land had vested in the Crown. 8.121  Sections  136 and 137 of the Real Property Act operate in conjunction with s 138. Section 136, for example, permits the Registrar-General to summon and recall any relevant document so that it may be cancelled or corrected where the Registrar-General is satisfied that a certificate of title or a recording has been wrongfully or fraudulently obtained or retained. Hence, these sections operate so as to provide for rectification of the Register.

360. See Frazer v Walker [1967] 1 AC 569 at 585–6. 361. Real Property Act 1900 (NSW) s 12(3). 362. James v  Registrar-General (1967) 69 SR (NSW) 361 per Walsh J. For a discussion of how a mistaken measurement on a registered plan did not lead to an augmentation of the registered proprietor’s indefeasible title in the Queensland context, see Beames v Queensland [2002] QSC 83. 363. Real Property Act 1900 (NSW) s 138(3). See Abate, in the matter of Chang Rajii v Chang Rajii (No 3) [2019] FCA 577 on the extension of the provision to orders by the Federal Court of Australia following an amendment by the Real Property and Conveyancing Legislation Amendment Act 1999 No 58 (NSW). 364. Mogo Local Aboriginal Land Council v Eurobodalla Shire Council [2002] NSWCA 12.

409

8.122

Property Law in New South Wales

Other provisions in the Real Property Act 8.122  Section 56C of the Real Property Act is an example of a provision that affects indefeasibility. It arguably makes defeasible the title of a mortgagee who does not take reasonable care in checking the identity of the mortgagor, because the Registrar-General is able to cancel the mortgagee’s title.365

Volunteers General principles 8.123  One of the key issues in the context of volunteers is whether a volunteer should receive the benefits of indefeasibility.366 A volunteer under old system title could never stand in a better position than his or her predecessor in title. This was a result of the application of the maxim that ‘equity will not assist a volunteer’ (see 8.126 below). In regard to Torrens land, the Real Property Act has no specific provision dealing with volunteers, although there are scattered references in the Act to purchasers for value.367 8.124  In Victoria, this matter was confronted in King v  Smail,368 where Adam J held that these scattered references to purchasers for value clearly suggested that the Act meant to treat volunteers differently. Accordingly, volunteers did not receive the benefits of indefeasibility. Had they received indefeasibility, the volunteer’s interest would have been able to defeat the unregistered interests that affected the title of the volunteer’s donor. King found that the interests of the trustee in bankruptcy took priority over the registered title of the (volunteer) donee.369 By contrast, the New South Wales Court of Appeal case of Bogdanovic v Koteff,370 found that volunteers were able to gain indefeasibility on registration in the same way as purchasers for value. In that case, the interest of the testator’s son (a volunteer) prevailed because the son, on registration, obtained an indefeasible title that defeated the interest of the earlier unregistered life-estate holder. The court in Bogdanovic held that Frazer v Walker371 and Breskvar v Wall372 had weakened the basis on which King has been decided. Rather, the court reasoned that the unambiguous endorsement of immediate indefeasibility in both Frazer and Breskvar implied that no distinction could be drawn between registered purchasers and volunteers. 365. See further, 14.28. 366. R Atherton, ‘Donees, Devisees and Torrens Title: The Problem of Volunteers under the Real Property Act’ (1998) 4(2) Australian Journal of Legal History 121; P Radan, ‘Volunteers and Indefeasibility’ (1999) 7 Australian Property Law Journal 197. Note that a volunteer is someone who takes with no or minimal consideration. 367. See, for example, Real Property Act 1900 (NSW) ss 42(1)(b), 135. 368. King v Smail [1958] VR 273. 369. See also the Victorian cases of Rasmussen v Rasmussen [1995] 1 VR 613 and Valoutin Pty Ltd v Furst (1998) 154 ALR 119, which took the same approach. 370. Bogdanovic v Koteff (1988) 12 NSWLR 472. See Croucher, ‘Inspired Reform or Quick Fix? Or, “Well Mr Torrens, What Do You Reckon Now?” A Reflection on Voluntary Transactions and Forgeries in the Torrens System’, note 153 above; Atherton, ‘Donees, Devisees and Torrens Title: The Problem of the Volunteer under the Real Property Act’, note 366 above. 371. Frazer v Walker [1967] 1 AC 569. 372. Breskvar v Wall (1971) 126 CLR 376.

410



Torrens Title

8.126

Bogdanovic raises a number of problems.373 First, Priestley JA made reference to the possibility that notice on the part of the testator’s son might have had a bearing on whether the life interest was enforceable against him. It is difficult to see how notice can be relevant in the light of s  43 of the Real Property Act. If, as was found in Frazer and Breskvar, s 43 must be read as subject to s 42, then notice must be irrelevant to the indefeasibility acquired on registration. In the case of Arambasic v  Veza (No 4)374 Sackville JA held, applying Bogdanovic, that notice by the registered volunteer did not preclude the volunteer gaining immediately indefeasible title. In that case, Mr Arambasic had constructive notice of Ms Veza’s interest, by virtue of her possession of the property. However, Sackville JA conceded that ‘there is much to be said for the Victorian view’375 regarding volunteers and indefeasibility. Second, Frazer arguably had nothing to say about a further aspect of Adam J’s reasoning: that the Act draws a distinction between the protection of purchasers for value and others in various provisions, and that this suggests that s 42 must be interpreted accordingly.376 8.125  Nevertheless, in New  South  Wales volunteers are not a general exception to indefeasibility.377 Whether they should be, as indeed they are in states such as Victoria, raises some important policy issues. Coldrey J in Rasmussen v Rasmussen378 discussed some of these issues when he chose to follow King v Smail, stating that the indefeasibility provisions needed to be considered by reference to ‘an overriding principle of fairness’. However, an application for special leave to appeal that could have enabled the High  Court to reconsider Bogdanovic v Koteff379 was refused in 2015.380

When does a volunteer receive an interest? 8.126  The above discussion raises the question of when a volunteer can be said to have taken a gift. For a gift of Torrens title land to be effective at  law, the interest must be registered. If the gift is not registered, it is still possible that the donor has passed an interest to the donee in equity. The test as to whether the gift has been effective to pass an interest in equity is whether the donor has done all that is necessary to be done, by the donor 373. Bogdanovic v Koteff (1988) 12 NSWLR 472 was applied in Milutinovic v Milutinovic [2004] NSWSC 1110. 374. Arambasic v  Veza (No 4) [2014] NSWSC 1109. See  further discussion in P Butt, ‘Volunteer Gets Indefeasibility’ (2015) 89 Australian Law Journal 81. 375. Arambasic v Veza (No 4) [2014] NSWSC 1109 at [164]. 376. See discussion at 8.202. 377. The specific application of Real Property Act 1900 (NSW) s 118(1)(d)(ii) and its impact on volunteers’ indefeasible title is discussed at 8.127. Note that in the High Court case of Farah Constructions v Say-Dee Ltd (2007) 230 CLR 89, the High Court noted the volunteers issue but simply proceeded on the basis that volunteers, once registered, gained indefeasibility pursuant to s 42 of the Real Property Act in the way that Breskvar v Wall (1971) 126 CLR 376 had enunciated: at [188], [189]. 378. Rasmussen v Rasmussen [1995] 1 VR 613 at 634. 379. Bogdanovic v Koteff (1988) 12 NSWLR 472. 380. Lowe v Sze Tu [2015] HCATrans 179. This case concerned an attempt to reopen Farah Constructions Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89, in a situation where a registered volunteer had knowing receipt of trust property. In this regard, that case did not raise the ‘typical’ volunteer scenario of Bogdanovic v Koteff (1988) 12 NSWLR 472 or King v Smail [1958] VR 273.

411

8.126

Property Law in New South Wales

alone, to transfer the legal title according to the selected mode of dealing.381 The high level of ‘doing’ required of the donor is necessary because of the maxim that ‘equity will not assist a volunteer’. In practical terms, this means that the donor must give the donee a registrable instrument, and that the donor must have either provided or orchestrated the provision of, all relevant documents so that the donee can proceed with registration.382 The donor’s acts must be irrevocable, so that he or she puts the transfer beyond recall.383 In these circumstances, the equitable maxim that ‘equity regards as done that which ought to be done’ defeats the competing equitable maxim that ‘equity will not assist a volunteer’. Hence, the donee is said to receive an equitable interest in land.384 In New South Wales, the donatio mortis causa doctrine (which permits gifts of interests in personalty without writing, in contemplation of death) is not applicable to land.385 However, the rule in Strong v Bird386 has been held to apply to gifts of land so that a donee of a purported (but unsuccessful) gift, who is also appointed as executor of the donor/ testator’s will, may be able to take the property if he or she can show that up until the donor’s death, the donor regarded the property as already transferred.387

Volunteers and fraud 8.127  Section  118(1)(d)(ii) of the Real Property Act modifies the protection conferred on registered volunteers, by providing an exception to indefeasibility when persons ‘other than transferees bona fide for valuable consideration’ receive their interest ‘from or through a person registered as proprietor of the land through fraud’. This provision was examined by the High  Court in Cassegrain v  Gerard Cassegrain & Co Pty Ltd,388 and discussed above (at 8.62–8.63) in the context of the meaning of s 42 fraud. In Cassegrain, the High Court concluded that s  42 fraud could not be ‘brought home’ against Felicity Cassegrain, and so the first transfer of a joint interest in the ‘Dairy Farm’ to her was indefeasible. However, the subsequent transfer of Claude’s interest to Felicity was defeasible by virtue of s 118(1)(d)(ii). 381. This test was first expounded in Milroy v  Lord (1862) 4 De GF & J 264, but not refined and settled in Australia until Corin v  Patton (1990) 169 CLR 540; 92 ALR 1 was decided. See  also T Choithram International SA v Pagarani [2001] 1 WLR 1 (PC). 382. Corin v  Patton (1990) 169 CLR 540; 92 ALR 1. See  also Stefanovic v  Petrovic (NSWCA, Gleeson CJ, Meagher JA, Hope AJA, 30  October  1989, unreported, BC8901527). Compare Costin v  Costin (1997) ANZ ConvR 401. On the application of Corin v Patton principles in the era of electronic conveyancing, see further discussion in S Thomas ‘Electronic Conveyancing and Incomplete Gifts of Torrens Land’ (2018) 27 Australian Property Law Journal 87. Thomas raises the particular question of when the gift will be considered ‘beyond the recall’ of the donor, an important element of the Corin rule, and how this will function under platform rules that permit subscribers the ability to unsign a document at any time prior to settlement. 383. Costin v Costin (1997) ANZ ConvR 401. 384. Corin v Patton (1990) 169 CLR 540 at 557, 583 per Mason CJ and McHugh J. Compare Brennan J at 568 and Toohey J at 593. See also Costin v Costin (1997) ANZ ConvR 401. 385. Watts v Public Trustee (1949) 50 SR (NSW) 130; Bayliss v Public Trustee (1988) 12 NSWLR 214. 386. Strong v Bird (1874) LR 18 Eq 315. 387. Cope v Keen (1968) 118 CLR 1 at 8; IJ Hardingham, MA Neave and HAJ Ford, Wills and Intestacy in Australia and New Zealand, 2nd ed, Law Book Co, Sydney, 1989, p 508. 388. Cassegrain v Gerard Cassegrain & Co Pty Ltd (2015) 254 CLR 425.

412



Torrens Title

8.129

There was no question, on the facts, that Claude’s interest had been obtained by ‘fraud’ (he was in breach of his director’s duties in effecting the transfer), nor that Felicity had not paid ‘valuable consideration’ for the interest (she had only paid $1 for her interest under the second transfer). Thus, the court concluded that the second transfer to Felicity was therefore defeasible under s 118(1)(d)(ii), for she had received her interest through Claude’s fraud. In this way, s 118(1)(d)(ii) preserves a limited operation for deferred indefeasibility in circumstances where a volunteer obtains an interest that had previously been acquired by fraud.

Unregistered Interests under the Torrens system 8.128  Although s 41(1) of the Real Property Act 1900 (NSW) states clearly that ‘[n]o dealing, until registered … shall be effectual to pass any estate or interest in any land’, this provision has not been interpreted to mean that unregistered interests have no place in the Torrens scheme.389 In fact, several other provisions in the Act give implicit recognition to the existence and status of unregistered interests. For example, s 74F(1) provides for the lodgment of a caveat to protect an interest that has arisen by way of ‘any unregistered dealing or by devolution of law or otherwise’; and s 82 prevents the registration of trusts but allows a caveat to be lodged over an instrument that creates a trust.390 The basis on which the clear wording of s 41(1) may be read down seems to be grounded in the distinction between the effect of an instrument before registration and the rights that arise out of a transaction.391 Hence, an unregistered dealing cannot create any interest in land, but the agreement between the parties which lies behind the dealing may create an equitable interest in the land. On this analysis, ‘no violence is done to the statutory command’.392 Accordingly, the agreement behind the dealing is recognisable by a court exercising its equitable jurisdiction but the instrument itself has no force until registered. 8.129  As noted in 8.107, some unregistered interests will receive protection as exceptions to indefeasibility, such as an unregistered interest created by virtue of an overriding statute. Most unregistered interests, however, will not fall into this category, and hence are dependent on the caveat provisions for protection.393 Left unprotected, an unregistered interest will be defeated by a registered interest in the absence of fraud or in personam rights. Where an unregistered interest is defeated it cannot be revived.394 In the case of a competition between two unregistered interests, the outcome will usually 389. For consideration of the role of equity as it affects the Torrens system in another jurisdiction, see  YC Mei, ‘The Role of English Equity in the Peninsular Malaysian Torrens System of Land Law: A Review of  Salient Statutory Provisions’ (Pt 1) [2005] 1 Modern Law Journal lxvii;  YC Mei, ‘The Role of English Equity in the Peninsular Malaysian Torrens System of Land Law: A Review of Salient Statutory Provisions’ (Pt 2) [2005] 2 Modern Law Journal cvii. 390. See discussion at 8.19. 391. Barry v Heider (1914) 19 CLR 197 at 219; Brunker v Perpetual Trustee Co Ltd (1937) 57 CLR 555 at 580 and 581. 392. Cresdon v Chan Pty Ltd (1989) 64 ALJR 111 at 117. 393. The ways that the priority notice provisions provide a level of protection for unregistered interests are discussed below at 8.157–8.160. 394. Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407.

413

8.129

Property Law in New South Wales

be determined on the basis of the equitable principles.395 The latter position is so because the unregistered interests are regarded as similar to equitable interests.396 However, not all unregistered interests are automatically equivalent to equitable interests. We know this because s 74F(1) of the Real Property Act refers to a person holding ‘a legal or equitable estate or interest in land’ being able to lodge a caveat to prohibit the recording of any dealing affecting his or her estate. If all unregistered interests were equitable, there would be no need to include the word ‘legal’. Further, the word ‘legal’ cannot be referring to a registered interest, because there is no need to caveat a registered interest — it already has the maximum protection available. Examples of a legal interest under the Torrens system would include an unregistered oral lease that complies with s 23D(2) of the Conveyancing Act 1919 (NSW), an easement implied under the Wheeldon v Burrows doctrine, or an implied tenancy at will under s 127 of the Conveyancing Act. Examples of unregistered interests that are not legal would include an equitable lease or a vendor’s lien. The following discussion will examine in detail how the caveat provisions enable unregistered interests to be protected. 8.130  One of the practical issues arising in relation to unregistered interests is this: How should priority disputes between an unregistered interest and a registered interest, or between two unregistered interests, be resolved? The starting point is that in a competition between a registered interest an unregistered interest, the registered interest will prevail by virtue of the principle of indefeasibility of title. But in a competition between two competing unregistered interests, the old system priority rule applicable to two competing equitable interests will generally resolve the issue.397 However, in the competition between two unregistered interests, certain complexities emerge as to whether time should be used as the preliminary determinant, or whether having the better equity should be used. Further, in deciding what constitutes the ‘better equity’ a range of factors may need to be considered, including the effect of lodging a caveat. Accordingly, we shall discuss caveats below and return later to the question of priorities.

Caveats 8.131  A caveat is similar to a statutory injunction.398 It obstructs dealings with the registered interest by preventing the Register from being altered.399 Put another way, it acts:

395. S Robinson, ‘Caveatable Interests — Their Nature and Priority’ (1970) 44 Australian Law Journal 351 criticises this approach. For application of the ‘first in time’ rule in relation to two competing unregistered interests, see Pelenoy Pty Ltd v Donovan Oates Hannaford Mortgage Corp [2004] NSWSC 4. 396. Barry v Heider (1914) 19 CLR 197 at 219. 397. See Chapter 7 for a discussion of old system priorities. 398. See Re Hitchcock (1900) 17 WN (NSW) 62 at 63; Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222 399. L Aitken, ‘“Many Shabby Manoeuvres” — The Use and Abuse of Caveats in Theory and Practice’ (2005) 26 Australian Bar Review 205. For a discussion on caveats and indefeasibility in the context of mining legislation, see A Gardner and M Jorek, ‘Dealings with Mining Titles Under the Mining Act 1978 (WA): Part 2 — The Effect of Registration and Caveats’ (2006) 25 Australian Resources and Energy Law Journal 41.

414



Torrens Title

8.132

… as an injunction against the registration of an inconsistent dealing otherwise than in accordance with the caveat so as to enable, in the ultimate analysis, a determination of the conflicting claims.400

A caveat may be said to place a freeze on the registration of dealings. It was suggested in Butler v Fairclough401 that recognition of equitable estates in land was ‘the foundation of the scheme of caveats which enable such rights to be temporarily protected in anticipation of legal proceedings’.The effect and operation of a caveat was spelled out in Abigail v Lapin,402 where the Privy Council stated that: … no instrument will be registered while the caveat is in force affecting the land, estate or interest until after a certain notice to the person lodging the caveat. Thus, though the legal interest is in general determined by the registered transfer, and is in law subject only to registered mortgages or other charges, the Register may bear on its face a notice of equitable claims, so as to warn persons dealing in respect of the land and to enable the equitable claimant to protect his claim by enabling him to bring an action if his claim be disputed.

Since 1986, the caveat provisions have been consolidated in Pt 7A of the Real Property Act. The Registrar-General continues to be able to lodge his or her own caveats, but the remaining caveats fall into two main categories: 1. caveats against primary applications; and 2. caveats that pertain to land that has already been brought under the Torrens system. The following discussion briefly examines caveats lodged by the Registrar-General and primary application caveats, but then focuses on s 74F(1) caveats, or ‘caveats against dealings’ as they are commonly known.403

Caveats lodged by the Registrar-General 8.132  Section 12(1)(e) of the Real Property Act provides for a number of situations where caveats may be lodged by the Registrar-General. These include situations where the Registrar-General acts on behalf of Her Majesty or where a person is under some disability. The Registrar-General may also lodge a caveat where an instrument has declared a trust. The effect of such a caveat is to prohibit any registration of dealings not in compliance with the trust. If, pursuant to s 82 of the Act, an instrument declaring a trust has been lodged, then the Registrar-General must, according to s 82(3), record a caveat preventing the registration of an interest that conflicts with the terms of the trust.

400. Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407 at 422 per Mason CJ, McHugh and Dawson JJ. 401. Butler v Fairclough (1917) 23 CLR 78 at 91. Note that, although the word ‘temporary’ is used here, the court refers to ‘permanent protection’ (at 85). The position is this: until the caveat lapses as a result of the proprietor’s application, the caveator is at liberty to think of the caveat as remaining in force indefinitely. 402. Abigail v Lapin [1934] AC 491 at 500. 403. Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd (2007) 35 WAR 27 at [42]–[45] discusses the distinction between different types of caveats.

415

8.133

Property Law in New South Wales

8.133  The Registrar-General may also lodge a caveat where, on a primary application (discussed below), a mortgagee is recorded as proprietor on the Register. Further, the Registrar-General may lodge a caveat to protect a mortgagee when a qualified folio of the Register has been issued in the name of the mortgagee. Indeed, s 12(1)(f) of the Real Property Act provides for protection in a wide range of circumstances when it refers to ‘the protection of any person interested in’ Torrens title land.

Caveats preventing registration under primary applications 8.134  Caveats that are designed to prevent land being brought under the Torrens scheme may be lodged pursuant to s  74B of the Real Property Act. Pursuant to s  74C, these caveats have a shelf life of three months from the date of lodgment, unless the caveator has commenced proceedings to establish his or her title or, alternatively, unless he or she has been granted an injunction which prevents the Registrar-General from registering the land under the Torrens scheme. These caveats are known as ‘primary’ caveats. If a primary caveat has been lodged, the Registrar-General must examine the primary applicant’s title, bearing in mind that the primary applicant can succeed only on the strength of his or her title.404 Caveats preventing dealings in land 8.135  Caveats preventing dealings in land are governed by a bundle of provisions.405 The High Court has stated: … the Act contains a complete code for the lodgment, recording, maintenance, removal, renewal and lapsing of caveats.They mesh neatly with the system of registration of titles and dealings generally. In doing so, they also give effect to the purposes of the Act and the means by which it gives priority to instruments according to their time of lodgment.406

8.136  These kinds of caveats are used by parties seeking to protect unregistered interests in land. Sometimes they are called ‘private’ caveats. Section 74F of the Real Property Act, read in conjunction with s 74A(1) and (2)(b), also provides that a caveator may lodge a caveat if plans (including, but not limited to, delimitation plans) might affect his or her alleged interest.407 These provisions come into play in circumstances where, for example, subdivision plans detrimentally affect purchasers who have not yet registered. Although s 74F(5) requires a caveat to be in an ‘approved form’,408 s 74L requires the court to disregard a caveator’s lack of compliance with the requirements of Pt 7A of 404. This form of caveat is rarely used today. 405. Real Property Act 1900 (NSW) ss 74F, 74G, 74I, 74K, 74MA, 74O, 74P, 74Q and 74R. 406. Black v Garnock (2007) 230 CLR 438 at 469 [78] per Callinan J. 407. Jessica Holdings Pty Ltd v Anglican Property Trust Diocese of Sydney (1992) 27 NSWLR 140; Locke v Yogoat Pty Ltd (1992) 5 BPR 11,687. 408. Section 74F(5) of the Real Property Act sets out the necessary formal requirements. A caveat must specify ‘the prescribed particulars’ so that the registered proprietor can respond to the caveat. These include the name and address of the caveator, usually the name and address of the registered proprietor, and the prescribed particulars of the legal or equitable estate or interest. The caveat must also be verified by a statutory declaration. Bellissimo v JCL Investments Pty Ltd [2009] NSWSC 1260 stated that whether the

416



Torrens Title

8.137

the Real Property Act. At first blush, this section represents a more liberal approach to the form of caveats than that contained in earlier legislation;409 however, it has been noted elsewhere that the caveat regulations under the Real Property Act are quite rigorous despite the more relaxed approach taken by the Act itself in relation to compliance with formal requirements.410 Jones v Baker attempts to find a balance between these two competing positions by assessing whether the formal requirement is ‘so far removed that the court cannot disregard the noncompliance’ and accordingly must treat the caveat as being invalid.411 When the caveator lodges a s 74F caveat (or a caveat against possessory applications, plans and applications for cancellation of easements or extinguishment of restrictive covenants), the Registrar-General will note the caveat on the Register.412 The RegistrarGeneral is then obliged to notify the registered proprietor that a caveat has been lodged.413 Once lodged, the caveat will stay in place until it is removed by way of: (a) a lapsing notice following lodgment of a dealing;414 (b) a lapsing notice without lodgment of a dealing;415 or (c) pursuant to a court order.416 One purpose of a caveat is, after all, to protect the caveator’s interest until the caveator is able to prove the substantive nature of the asserted interest.417 8.137  There are, however, restrictions on who can lodge caveats. Only a party who has a caveatable interest is able to lodge a caveat. In practice, the most common circumstances where caveats have been used are in regard to mortgagee sales. If the mortgagor believes the mortgagee is improperly exercising the power of sale, it is prudent for the mortgagor to protect his or her interest by the lodgment of a caveat. It is customary for the caveator to provide an undertaking as to damages before the Registrar-General will permit the caveat to remain in force, but the court does have a discretion in this regard.418 A caveat interest is adequately described is ‘to be decided from the point of view of a person examining the caveat, who need not necessarily be the registered proprietor’: at  [7] per White J, citing Hanson Construction Materials Pty Ltd v Vimwise Civil Engineering Pty Ltd [2005] NSWSC 880. 409. B Edgeworth, Butt’s Land Law, note 115 above, p 896 argues that the relevant regulations have the effect of imposing detailed requirements ‘that reflect the substance of the earlier judicial gloss’. Hence, a more liberal approach is not, in reality, encouraged. 410. B Edgeworth, Butt’s Land Law, note 115 above, p 895–96. 411. Jones v Baker (2002) 10 BPR 19,115 at [31]–[34]. 412. Note that, until s 97(1A) was passed in 1979, the Registrar-General was under no duty to record caveats in the Register. He or she did not even have to disclose them in official searches. Section 97(1A) has now been replaced by s 74G, which requires the Registrar-General to record the caveat in the Register if he or she is satisfied that the caveator has complied with the Act. It is, however, not necessary for the Registrar-General to establish as a question of law whether or not an interest in land exists. Section 74Q merely requires that it complies ‘on its face’. Although a Queensland case, McMurdo P in Allen’s Asphalt Pty Ltd v SPM Group Pty Ltd [2010] 1 Qd R 202; [2009] QCA 134 summarised the steps of the legislative template for caveats, which is fairly uniform across jurisdictions. 413. Real Property Act 1900 (NSW) s 74F(6). 414. Real Property Act 1900 (NSW) s 74I(1). 415. Real Property Act 1900 (NSW) s 74J(1). 416. Real Property Act 1900 (NSW) s 74MA. 417. The practical effect of a caveat may also be to give notice of the caveator’s interest. 418. Australian Security Estates Pty Ltd v Bluecrest Holdings Pty Ltd (1999) 9 BPR 17,533.

417

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Property Law in New South Wales

becomes operative as soon as it is lodged and is given a distinctive reference number.419 While historically a new certificate of title was issued when a dealing was recorded, the lodgment and noting of a caveat did not lead to the issuance of a new certificate of title. Instead, the Register simply noted the caveat.420

Purpose of a caveat 8.138  As noted in 8.131, the effect of a caveat is to freeze the Register in relation to the registered interest. As a result, a caveat provides protection to the caveator. There has been some discussion as to whether the purpose of the caveat is more than protective. For instance, Griffith CJ in Butler v  Fairclough observed that once lodged, a caveat has the effect of giving ‘notice to all the world that the registered proprietor’s title is subject to the equitable interest alleged in the caveat’.421 In contrast, Barwick  CJ in J & H Just (Holdings) Pty Ltd v Bank of New South Wales422 emphasised that ‘the caveat is protective: it is not to give notice’. In in the case of Black v Garnock423 these contrasting perspectives on the role and purpose of the caveat again manifested, informed in part by differences in conveyancing practices across Australia. In Black, the appellants (the judgment creditors) obtained a judgment for a sum of money against the judgment debtor who was the registered proprietor of land. After the judgment had been issued, but before a writ of execution, the judgment debtor agreed to sell the relevant land to the purchasers, the Garnocks. The contract of sale was completed and the judgment debtor (vendor) gave the purchasers the relevant documentation in registrable form. At 9.00 am on the day of settlement, the purchasers’ solicitor undertook a title search, which was clear. About half an hour after the search was made, the solicitor for the judgment creditor notified the purchasers’ solicitor of a number of things, including that the judgment creditors had an unsatisfied debt. At around 11:53 am on the very same day (ie, about two hours before settlement), a writ of execution (issued the day before at the instance of the judgment creditors) was recorded on the Torrens Register. There was nothing unconscientious in either the seeking or registering of the writ. However, the judgment creditor’s writ prevented the purchasers from registering their interest. The purchasers sought an interlocutory injunction restraining the exercise of the writ. The High Court held that the purchasers were unable to restrain the sale of the property by way of an injunction. Callinan J in a particularly forceful judgment, emphasised that had the purchasers lodged a caveat it may have prevented the registration of a transfer by the Sheriff in execution of the writ. His reasoning also included a reflection on prudent conveyancing practice, informed by his experiences in Queensland: 419. See Real Property Act 1900 (NSW) s 36(1B); Ginger Development Enterprises Pty Ltd v Crown Developments Australia Pty Ltd [2003] NSWCA 296 at [35]. 420. Barry v Heider (1914) 19 CLR 197 at 219. 421. Butler v Fairclough (1917) 23 CLR 78 at 91 per Griffith CJ. See also Abigail v Lapin (1934) AC 491 at 502 per Lord Wright. 422. J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546 at 556. The word ‘caveat’ is Latin for ‘let a person beware’. 423. Black v Garnock (2007) 230 CLR 438.

418



Torrens Title

8.139

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.424

Callinan J commented that caveats were included in the Torrens legislation: … not just to forbid registration of dealings not yet the subject of an instrument lodged with the Registrar, but also to serve as a notice to anybody interested in the land, and troubling to search the Register, that there was some other dealing or transaction on foot of which any interested person should be aware.425

This understanding of the role of caveats was in contrast to that of the minority judges, who endorsed Barwick CJ’s reasoning in Just Holdings. The reasoning of the majority in Black stimulated a discussion amongst conveyancers in New South Wales about the need to lodge a caveat following the exchange of contracts and the creation of an equitable interest in the hands of the purchaser. However, it does not seem to have dramatically increased the practice in the state. In the future, the lodgment of a priority notice, particularly in light of its lower fee for lodgment, is likely to take over as what Callinan J described as the ‘practice of careful conveyancers’. 8.139  There are three exceptions in the Real Property Act to the statement that a caveat freezes the Register. They are: 1. Pursuant to s 74H(1)(b), a caveat prohibits the recording of dealings only to the extent to which they impact on the caveatable interest. Hence, recording of dealings which lie outside the ambit of the caveat will not be frozen. 2. Pursuant to s  74H(5), certain dealings and entries are still permitted despite the existence of a caveat. These include, but are not limited to, applications by executors, administrators, trustees or surviving joint tenants to record dealings or entries following the death of a registered proprietor, as well as applications made under s 12 of the Trustee Act 1925 (NSW), resumptions and writs. 3. Pursuant to s 74H(4), a caveat will not block the registration of a dealing in registrable form if the dealing was lodged before the caveat itself was lodged.426

424. Black v Garnock (2007) 230 CLR 438 at 463 [52]–[53]. 425. Black v Garnock (2007) 230 CLR 438 at 463 [76]. 426. In cases such as these, the would-be caveator should seek an injunction but an injunction will be granted only if it can be shown that the would-be caveator’s interest had priority over the person who was seeking to deal with the registered interest.

419

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8.140  There is no obligation on a person holding an unregistered interest either to register his or her interest or lodge a caveat. (Indeed, some unregistered interests cannot be registered.) However, a wise, unregistered interest holder would lodge a caveat where possible because a failure to do so may lead to extinguishment of his or her unregistered interest by the registration of another interest.427 8.141  Accordingly, a failure to lodge a caveat could have unfortunate consequences in a priority dispute concerning unregistered interests: it may mean that the unregistered interest holder’s interest is postponed. This issue is explored below.428 Lodging (or seeking to lodge) a caveat will not prevent a party from also seeking an injunction in the attempt to protect an interest in land.429

What is a caveatable interest? 8.142  A caveatable interest is one that amounts to an interest or an estate in land.430 Hence, a caveator needs a proprietary interest in order to lodge a caveat. Further, an interest that usually would not be regarded as an estate or interest in land, but that statute defines as caveatable, will also be sufficient to support a caveat.431 Yet a statutorily based right that does not give rise to a proprietary right (and is not defined as being caveatable) will not be caveatable. Nor will it be possible to lodge a caveat over a mere contractual right,432 a mere equity,433 or a mere claim to a cause of action, such as a claim ‘to an estate or interest under the Family Law Act [1975 (Cth)]’434 or under the Property (Relationships) Act 1984 (NSW).435

427. Oertel v Hordern (1902) 2 SR (NSW) Eq 37 at 38. However, a failure to lodge a caveat is not necessarily fatal. See later discussion under the heading of ‘Arming Conduct’ at 8.163; but for the present, see Capital Finance Australia v  Struthers (2008) 14 BPR 98,328 at  [12]; [2008] NSWSC  440 per Hamilton J. For excellent discussion of the law of caveats, see L Aitken, ‘Current Issues with Caveats: A Pan-Australian Conspectus’ (2010) 84 Australian Law Journal 22 and Elderly Citizens Homes of SA Inc v Balnaves (1998) 72 SASR 210 per Debelle J. 428. See 8.164. 429. Real Property Act 1900 (NSW) s 74R. 430. Real Property Act 1900 (NSW) s 74F. For a discussion of whether a registered proprietor has a caveatable interest in the Victorian jurisdiction, and a comparison with New  South  Wales and the operation of s 74F(2), see D Wright, ‘Does a Registered Proprietor Have a Caveatable Interest?’ (1995) 69(12) Australian Law Journal 935. 431. For example, an interest in a second mortgage is not an interest in land, but was held to be caveatable under the Transfer of Land Act 1958 (Vic): see Re Victorian Farmers’ Loan and Agency Co Ltd (1897) 22  VLR 629. 432. However, if a contract expressly (or impliedly) grants a proprietary interest, that proprietary interest can be caveated, for example, a mortgage over a guarantor’s land where the mortgage is created to secure the guarantor’s obligations under the guarantee. See Capital Finance Australia Ltd v Karabassis (2003) 11 BPR 21,123. See also Betlehem v Keytown Constructions Pty Ltd [2007] WASC 38, which affirms the accepted rule that a contractually binding agreement by a person possessing a caveatable interest not to lodge a caveat does not deprive that person of the statutory right to lodge, although doing so will involve a breach of contract. 433. Re Piles Caveats [1981] Qd R 81. 434. Bethian Pty Ltd v Green (1977) 3 Fam LR 11,579. 435. Ryan v Kalocsay [2009] NSWSC 1009.

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8.143  Despite this guidance, it is sometimes difficult to establish if the interest in question is caveatable.436 A narrow and traditional view was that if a caveatable interest is to exist, that interest must be capable of being recorded in the Register.437 That approach was taken in Classic Heights Pty Ltd v  Black Hole Enterprises,438 where, in order for an interest to be caveatable, it was necessary for either the caveator to be able to force the registered proprietor to execute a registrable dealing, or for a registrable dealing to be already executed. However, that view appears not to have gained wide currency in the Australian context. Cases such as Clark v Raymor (Brisbane) Pty Ltd (No 2),439 which involved an equitable charge, Avco Financial Services,440 King v  AGC (Advances) Ltd441 and Bunning Building Supplies Pty Ltd v Sgro442 all lend support to the view that the existence of an instrument in registrable form is not required in order to lodge a caveat.443 The Victorian case Schmidt v 28 Myola Street Pty Ltd444 found that the production of a registrable instrument was not necessarily required and that an establishment of an equitable interest recognised under the Torrens system would suffice. 8.144  At times, it may be difficult to tell if a caveatable interest is created or evidenced by an instrument. Nguyen v Kaha and Perpetual Nominees Ltd v Springfield Retail Pty Ltd445 both indicate that it is necessary to examine the instrument as a whole in order to determine whether the parties have demonstrated a clear intention to create a caveatable interest. 8.145  Examples of interests that have been found to amount to caveatable interests include:

436. Tierney v Loxton (1891) 12 LR (NSW) 308 at 314–15; P O’Connor,‘Happy Partners or Strange Bedfellows: The Blending of Remedial and Institutional Features in the Evolving Constructive Trust’ (1996) 20 Melbourne University Law Review 735 at 750–53; J Levine, ‘Does Equity Treat as Done that Which Ought to be Done? The Consequences Flowing from the Timing of the Imposition of a Constructive Trust’ (1997) 5(1) Australian Property Law Journal 74. 437. See J Robinson, ‘The Nature of Cautionable Interests’ (1971) 35 Conv (NS) 21 at 24; Miller v Minister of Mines [1963] AC 484; Bacon v O’Dea (1989) 88 ALR 486. 438. Classic Heights Pty Ltd v Black Hole Enterprises (1994) V Conv R ¶54-506. For a brief discussion of this case and of the way in which changes in unregistered interests constitute a caveatable interest, see P Butt, ‘Caveats: No More Black Holes’ (1996) 70(9) Australian Law Journal 683. 439. Clark v Raymor (Brisbane) Pty Ltd (No 2) [1982] Qd R 790. 440. Avco Financial Services v White [1977] VR 561. 441. King v AGC (Advances) Ltd [1983] 2 Qd R 75. 442. Bunning Building Supplies v Sgro (1995) V Conv R ¶54-535. 443. See also Troncone v Aliperti (1994) 6 BPR 13,291; Composite Buyers Ltd v Soong (1995) 38 NSWLR 286. These examples are taken from Woodman et al, Torrens System in New  South  Wales, note 257 above, [74F.100], which draws heavily on J Baalman, The Torrens System in New  South  Wales, Law Book Co, Sydney, 1951. Note also the following articles: P Wikrama, ‘Do Caveats Need Supporting by Registrable Instruments?’ [1995] Law Institute Journal 101; M Redfern, ‘Caveats and Unregistrable Leases Under the Victorian Transfer of Land Act’ (1995) 3(1) Australian Property Law Journal 83; P Butt, ‘Bootstrap Caveats’ (1994) 68 Australian Law Journal 752. 444. Schmidt v 28 Myola Street Pty Ltd (2006) 14 VR 447. 445. Nguyen v  Kaha [2008] NSWCA 794; Perpetual Nominees Pty Ltd v  Springfield Retail Pty Ltd [2009] NSWSC 188.

421

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• • • • • • • •

an easement;446 the interest of a purchaser under an agreement for the sale of land;447 a mortgage by deeds;448 the interest of a lessor in a lessee’s covenant not to assign;449 a claim that an absolute transfer was intended to operate only as a mortgage;450 an interest of a transferee under an unregistered transfer;451 a vendor’s lien;452 the right of a person to set aside a transaction procured through fraud and misrepresentation;453 • the interest of a partner in partnership assets;454 • the interest of a lessee under a lease or an agreement for a lease;455 and • a call option to purchase land.456 8.146  Examples of interests that have been found not amount to caveatable interests include: • • • •

a licence to occupy land;457 a restrictive covenant not running with the land;458 the right to the net profits of a sale of land;459 and a right of first refusal to purchase.460

Removal of caveats 8.147  As explained above (at 8.136), a caveat may be removed by virtue of a lapsing notice pursuant to s 74I(1) of the Real Property Act. Under this provision, the registered proprietor (or another person claiming an interest) is able to require the Registrar-General 446. Re Paul (1902) 19 WN (NSW) 114. 447. Fernandes v Houstein (1963) 4 FLR 355. 448. Re Elliot (1886) 7 LR (NSW) 271. 449. Re Martin [1900] SASR 69. 450. Elwin v Monash (1879) 2 SCR (NSW) Eq 57. 451. Re a Caveat by Wadham (1879) 13 SALR 70. 452. Mihalic v Mihalic (1987) 73 ALR 304. 453. Re McKean’s Caveat [1988] 1 Qd R 524. 454. Connell v Bond Corp Pty Ltd (1992) 8 WAR 352. 455. Coles Supermarkets Australia Pty Ltd v Stateland Developments Pty Ltd [2008] NSWSC 1425 at [10]; Antar v Fairchild Developments Pty Ltd [2008] NSWSC 638. 456. Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57; 4 ALR 482. If the call option is subject to conditions that are not fulfilled, that may prevent a caveat from being lodged. It is probably the case that a ‘put’ option (forcing the holder of the option to purchase) is also caveatable: see Allam Homes Pty Ltd v Vocata [2003] NSWSC 628. 457. La Martina v Penney [1968] SASR 411. 458. Woodbury v Gilbert (1907) 3 Tas LR 7. 459. Shepherd v Houston [1927] SASR 144. 460. Eudunda Farmers’ Co-operative Society Ltd v  Mattiske [1920] SASR 309. Further examples are  listed in Woodman et al, Torrens System in New South Wales, note 257 above, [74F.120], from which these are taken.

422



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8.149

to serve a lapsing notice, which informs the caveator that a dealing has been lodged, but that it cannot be registered because the caveat is in place. The notice also informs the caveator that he or she has a 21-day period in which to seek an order from the Supreme Court extending the caveat. If this is not done, the caveat lapses to the extent that it prevents another interest from being recorded.461 The Registrar-General records the lapsing in the Register.The caveat will continue to remain in place should the party lodging the dealing withdraw the dealing before the 21-day period has expired.462 There are two other ways to remove a caveat. First, a caveat may also be removed by way of a lapsing notice that is not dependent on a dealing being lodged. Under this method, the registered proprietor of the land that is mentioned in the caveat may simply require that the Registrar-General serves a lapsing notice on the caveator.463 Once the lapsing notice is served, the caveator is given 21 days to obtain a court order extending the caveat.464 If no order is obtained from the court, the caveat will lapse and the lapsing is recorded in the Register pursuant to s 74J(4) of the Real Property Act. Lapsing via this method is more complete than under s 74I where lapsing is only to the extent that the caveat would prevent a dealing being recorded. 8.148  The third method of removing a caveat is pursuant to s 74MA of the Real Property Act. This method is often seen as attractive because it does not involve the serving of a lapsing notice and is, therefore, speedier than using s 74I(1) or s 74J(1). Section 74MA(1) allows any person claiming an interest in the land described in the caveat to apply for an order that the caveat be withdrawn. The order is sought from the Supreme Court.465 The caveator may also remove the caveat himself or herself at any time. 8.149  If an instrument is awaiting registration and there is a caveat in place, the court will remove the caveat should it be demonstrated that the caveator has no interest enforceable against the holder of the instrument to be registered. A caveator should not be able to do more through use of a caveat than he or she would achieve if he or she actually invoked the assistance of the court. Hence, a subsequent equitable interest holder, such as a later mortgagee, would have no right to prevent a proper exercise of the power of sale by the use of a caveat, because, were he or she to seek the assistance of the court in order to achieve the same end, it would not be forthcoming.466 However, the court will not remove the caveat until the litigation is complete if, on the balance of convenience, it is convinced that the caveat should remain until the matter has been fully heard.467

461. Real Property Act (NSW) 1900 s 74I(5). 462. Butler v Fairclough (1917) 23 CLR 78 at 85. 463. Real Property Act (NSW) 1900 s 74J(1). 464. Real Property Act (NSW) 1900 s 74J(1). 465. Caveat removal pursuant to s 74MA(1) of the Real Property Act is particularly attractive where the caveat has been lodged vexatiously or frivolously. See, for example, Hastie v National Australia Bank Ltd (1994) 7 BPR 15,116; Guirgis v JEA Developments Pty Ltd [2019] NSWSC 164. 466. Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222 at 228. 467. McMahon v McMahon [1979] VR 239.

423

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Property Law in New South Wales

Extending caveats 8.150  The provisions that allow a court to decide if a caveat should be removed or withdrawn also permit it to extend or retain the caveat.468 Where a lapsing notice has  been served under ss  74I or 74J of the Real Property Act, the court may, under s 74K(2) of the Act, extend a caveat. However, the court will first need to be satisfied that the caveator’s claim ‘has or may have substance’. 8.151  In deciding if the caveat should be extended (under s 74K(2)),469 the court will have regard to whether there is an arguable case for final relief or, put another way, if there is a serious question to be tried.470 If that is established, the court will go on to consider whether, on the balance of convenience, the caveat should be retained.471 The onus lies on the caveator to demonstrate that his or her interest raises a serious question to be tried. Bryson J observed that the ‘serious question’ test is not ‘very demanding’.472 Re Jorss’ Caveat473 considered in what circumstances a caveat will be extended or removed474 and, in doing so, referred to Eng Mee Yong v  Letchumanan475 where the Privy Council pointed out that it was appropriate to liken a caveat to an interlocutory injunction. In deciding whether it should extend or remove the caveat, the court will consider, among other issues, whether the caveator’s interest would still be protected if the caveat were removed.476 The court will also consider if there are other means by which the caveator’s interest could be protected. Other means could include the registered proprietor depositing funds into court as security.477 The caveator bears the onus of establishing that, on the balance of convenience, it is better that the caveat remains in place until a hearing decides the substantive matter itself. Accordingly, it is up to the court to decide if it is ‘just and convenient’478 to keep the caveat in place. In practice, courts commonly do find so and 468. See Real Property Act 1900 (NSW) ss 74K(2) and 74MA. 469. Or if it should remain as opposed to being withdrawn (Real Property Act 1900 (NSW) s 74MA). 470. This is the same test as that used for interlocutory injunctions. See Re Jorss’ Caveat [1982] Qd R 458; Re Burman’s Caveat [1994] 1 Qd R 123. A caveat can also be extended pursuant to s 74; for an example of a case on this issue, see  Queanbeyan Leagues Club v  Poldune Pty Ltd (1996) 7  BPR 15,078. For a discussion of various judicial approaches to removing caveats, see W Caldwell, ‘Caveat Caveator’ (1990) 15 Australian Property Law Bulletin 25; P Butt, ‘Removing Caveats’ (1994) 68(7) Australian Law Journal 524. Section 74MA(2) of the Real Property Act states that the court ‘may’ order withdrawal of a caveat. This leaves open the possibility that it ‘may not’ and, hence, the caveat would be extended. 471. Eng Mee Yong v Letchumanan [1980] AC 331. 472. Dowdle v Inverell Shire Council (1998) 9 BPR 17,349 at 17,350. 473. Re Jorss’ Caveat [1982] Qd R 458. 474. Re Jorss’ Caveat [1982] Qd R 458 at 465. Because the caveat (being described as a statutory injunction) is similar to an interlocutory injunction, the court examined what is necessary to succeed in an application for an interlocutory injunction. In that regard, it discussed the discretionary nature of the remedy, the ‘just and convenient’ test and the ‘balance of convenience’ as guiding principles. It also referred to the fact that it is unnecessary to demonstrate a ‘prima facie case’, but that the court will not tolerate a frivolous or vexatious claim. 475. Eng Mee Yong v Letchumanan [1980] AC 331 at 335. 476. Kerrabee Park v Daley [1978] 2 NSWLR 222. 477. Gibson v Co-ordinated Building Services Pty Ltd (1989) 4 BPR 9630 at 9631. 478. Eng Mee Yong v Letchumanan [1980] AC 331 at 337–8.

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maintain caveats until the matter has been decided.479 Maintaining the caveat is effectively a case of preserving the status quo until such time as a substantive trial determines the dispute between the conflicting interests.480 Aitken, in commenting on the significance of the balance of convenience requirement, and by reliance on Chong v Chanell (No 2),481 noted that there is a key difference between an interlocutory injunction and a caveat.482 The difference is that if a caveatable interest is demonstrated, that may be decisive in and of itself, rendering any question of the ‘balance of convenience’ unnecessary. However, as he also noted, Tadrous v Tadrous commented that: … where there is a seriously arguable or even indisputable caveatable interest, the Court retains a discretion, based on the balance of convenience, as to whether it will maintain the caveat or require its withdrawal. Thus the circumstance that a caveator has a caveatable interest is not so conclusive that the caveat will not be removed, and the Court may order the withdrawal of an indisputably valid caveat where the balance of convenience favours that course.483

8.152  Even if there is a caveatable interest, the balance of convenience may dictate ordering withdrawal of the caveat in favour of a holder of superior security who wishes to exercise its power of sale on terms, for example.484 It is usual practice in New South Wales for courts to require that the caveator give an undertaking as to damages in order for the caveat to remain.485 This is normally given by the caveator personally. If the caveat is lodged without reasonable cause, pursuant to s 74P of the Real Property Act, compensation will be payable should pecuniary loss be suffered that is attributable to circumstances referred to in s  74P(1)(a), (b) or (c). Section  74P was amended on 1 February 1997 to remove the word ‘wrongfully’. For caveats lodged after this date, this means the law returns to that contained in Bedford Properties Pty Ltd v Surgo Pty Ltd,486 where the term ‘reasonable cause’ seems to have been interpreted as an honest belief based on reasonable grounds that a caveatable interest exists. Further, undue delay or laches may lead to compensation being withheld.487

479. Pua Hor Ong v Wu You Yang Pty Ltd (2008) 103 SASR 9 at [66]. 480. Note that some commentators argue that this should not be seen as the only purpose of a caveat. See Aitken, ‘Many “Shabby Manoeuvres” — The Use and Abuse of Caveats in Theory and Practice’,  note 399 above,  at 213. 481. Chong v Chanell (No 2) [2009] NSWSC 1066. 482. L Aitken, ‘Current Issues with Caveats: A Pan-Australian Conspectus’, note 437 above, citing Chong v Chanell (No 2) [2009] NSWSC 1066 at [4] per Brereton J. 483. Tadrous v Tadrous [2009] NSWSC 407 at [6] per Brereton J. 484. Ross Cook & Brett Cook Pty Ltd v Bli Bli 1 Pty Ltd [2009] QSC 300. 485. Martyn v Glennan [1979] 2 NSWLR 234; Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459. 486. Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106 at 108. See also Boensch v Pascoe (2019) 375 ALR 15. 487. Nelson v  Kimberley Homes Pty Ltd (1988) NSW ConvR ¶55-394; National Australia Bank Ltd v  Bridge Wholesale Acceptance Corp (Aust) Ltd (1990) 21 NSWLR 96.

425

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Property Law in New South Wales

Judicial consideration of these provisions has emphasised the key role of conveyancers in lodging caveats in appropriate circumstances. In Guirgis v JEA Developments Pty Limited [2019] NSWSC 164, for example, Kunc J commenced his judgments with the following powerful statement: Lodging a caveat is not a trivial act to be undertaken lightly. It has immediate legal effect and can have significant commercial and financial consequences. Legal practitioners and licensed conveyancers who advise on, prepare and certify caveats that are lodged electronically have an important role to ensure that obviously unmeritorious caveats are not lodged.488

Kunc J then concluded: As New South Wales’ conveyancing system moves to a completely electronic platform, the role of conveyancers, solicitors and others as persons qualified to prepare and lodge caveats becomes all the more important. Ordinary members of the public are, in practical terms, no longer able to lodge caveats without the intervention of a ‘Subscriber’, who in many cases will be a solicitor or licensed conveyancer. The requirement to give the requisite representations and certifications operates to confer on them the role of a guardian at the gate.489

In that case Kunc J found that the defendant did not have a caveatable interest, and furthermore that the licensed conveyancer in that case had acted either with a reckless disregard for her obligations, or had failed to meet the requisite standard of care of a reasonably competent conveyancer in failing to take reasonable steps to ascertain whether her client had a good and valid claim to the estate or interest claimed in the caveat. Under the electronic conveyancing system, the obligation on the subscriber (be their solicitor, conveyancer or other authorised agent) to satisfy the verification of identity requirements will also be a vital part of the integrity of the system. As explained above (at 8.136), caveats are usually used to prevent dealings in land, but s 74F of the Real Property Act refers to other circumstances where caveats might also be lodged. These include caveats against possessory applications (s 74F(3)) and delimitation plans (s 74F(4)).

Other circumstances where caveats may be used 8.153  As explained above (at 8.136), caveats are usually used to prevent dealings in land, but s 74F of the Real Property Act refers to other circumstances where caveats might also be lodged.These include caveats against possessory applications (s 74F(3)) and delimitation plans (s 74F(4)).

Possessory applications 8.154  An adverse possessor may lodge a possessory application pursuant to s  45D(1) of the Real Property Act. If the Registrar-General grants the application, the adverse possessor will be recorded as the registered proprietor.490 However, before this occurs another party who claims a legal or equitable interest in the same land may lodge a caveat 488. Guirgis v JEA Developments Pty Ltd [2019] NSWSC 164 at [1]. 489. At [39]. 490. See Chapter 5.

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8.157

pursuant to s 74F(3) to prevent the granting of the possessory application. The general caveat provisions, discussed above, also apply to caveats against possessory applications.

Delimitation plans 8.155  As noted earlier, where the boundaries of land are insufficiently defined, the Registrar-General cannot create an ordinary folio. However, he or she can create a limited folio, pursuant to ss 28T and 3(1) of the Real Property Act.491 In short, the RegistrarGeneral records a ‘limitation’ in the folio that acknowledges that he or she has not investigated the description of the land. It is possible to lift the ‘limitation’ when a plan that properly defines the boundaries is lodged and registered. The plan of survey is known as a ‘delimitation’ plan. Sometimes a party may claim an interest in land that is the subject of a delimitation plan and may seek to prevent the limitation being lifted and an ordinary folio being created. In these circumstances, a caveat may be lodged pursuant to s 74F(4). While the caveat is in force, the Registrar-General cannot register the delimitation plan, pursuant to s 74H(3). Caveats relating to delimitation provisions are subject to the general caveat provisions contained elsewhere in the statute and in other subsections of s 74F itself.

Native title 8.156  Native title is not specifically mentioned in s 74F of the Real Property Act or elsewhere as a circumstance in which it would be possible to lodge a caveat. However, where native title is characterised as an interest in property, it would seem the protection of a caveat would be possible. For example, if a native title holder wished to protect his or her interest from extinguishment brought about by later dealings with the land, it would seem that a caveat would be a useful tool, as long as the land in question had already been brought under the Torrens system and the native title itself had not been previously extinguished by virtue of a grant or surrender, for example.

Priority notices 8.157  The Real Property Amendment (Electronic Conveyancing) Act 2015 (NSW)492 inserted a new Pt 7B into the Real Property Act to establish a priority notice regime. Similar provisions commenced in South Australia and Victoria in 2015.493 Tasmania has had a priority notice regime since 1980.494 The Tasmanian regime is very similar to that in New South Wales, except that the Tasmanian Act’s definition of ‘dealing’ appears to extend

491. See also Real Property Act 1900 (NSW) Pt 3 and ss 28C–28EA. 492. The Real Property Amendment (Electronic Conveyancing) Act  2015 (NSW) commenced on 1 October 2016. 493. Transfer of Land Act 1958 (Vic) Pt V Div 1B; Real Property Act 1886 (SA) Pt 13A. 494. Land Titles Act 1980 (Tas) s 52.

427

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Property Law in New South Wales

the operation of notices in that state. Queensland had a system of settlement notices that operated in a similar manner to priority notices, before adopting priority notices in 2017.495

Purpose 8.158  A priority notice operates as a mechanism to reserve the priority of a party’s dealing. It is intended to give potential purchasers, and other parties, confidence that no other dealing will be able to be registered with priority over the party who has lodged the notice.496 This is particularly important given the abolition of paper certificates of title in New South Wales, as previously the possession of the paper certificate of title had generally prevented the registration of any other dealing. As the priority notice is recorded on the Register, it will also give notice of the lodging party’s interest, which, as discussed below, may be effective in preventing any later unregistered interest gaining priority.497 Effect 8.159  A priority notice prevents the Registrar-General registering a dealing on the relevant land in priority to the dealing described in the notice, other than the exceptions listed in s  74W(2) of the Real Property Act.498 The details of the priority notice are entered on the Register, giving any person searching the Register notice of the intended dealing.499 A priority notice is effective for 60 days from the date of its lodgment,500 or with a one-off extension of up to 90 days,501 at which point it may be removed by the Registrar-General502 and cannot be further extended. The entitlement to lodge a priority notice is expressed in s 74T of the Real Property Act as extending to parties who ‘intend to lodge a dealing’. A ‘dealing’ is defined in the Act as a transaction that is ‘registrable or capable of being made registrable’.503 The definition of ‘dealing’ expressly excludes a caveat, or priority notice, and so the lodging of a priority notice does not preclude another party lodging a conflicting priority notice, or another (or the same) party lodging a caveat. The requirement that the dealing be ‘registrable or capable of being made registrable’ means that the entitlement to 495. See  Land Act  1994 (Qld) Sch 4. Part 7A was repealed and replaced by Land and Other Legislation Amendment Act 2017 (Qld). 496. New South Wales, Parliamentary Debates, Legislative Assembly, 6 August 2015, p 2169 (D Perrottet, Minister for Finance, Services and Property); Land and Property Information, Land and Property Information, Conveyancing Reform — Concurrent Electronic and Paper Conveyancing, note 70 above, p 16. Similar statements have been made concerning the operation of priority notices in Victoria (Department of Transport, Planning and Local Infrastructure, Aligning Paper and Electronic Conveyancing Requirements, Introductory Paper, October 2013, p 7). 497. See 8.159. 498. Real Property Act 1900 (NSW) s 74W(1). 499. Real Property Act 1900 (NSW) s 74U. 500. Real Property Act 1900 (NSW) s 74V(1)(a). 501. Real Property Act 1900 (NSW) s 74V(1)(b), (3) and (4). 502. Real Property Act 1900 (NSW) s 74X(2)(a). 503. Real Property Act 1900 (NSW) s 74T(1) and s 3 definition of ‘dealing’. See also, in the context of s 43A, 8.173–8.174.

428



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lodge a priority notice may arise at the exchange of contracts. The Registrar-General’s Guidelines504 refer to ‘proposed dealings intended to be lodged’. The effect of ‘capable of being registerable’ would seem to suggest, however, that the intention must be able to be given almost immediate effect, and not at some point in the future. Therefore, the entitlement to lodge a priority notice is unlikely to arise at the point of an offer being made. The exclusion of a caveat from the definition of ‘dealing’ in s 3(1) means that the practice of using a priority notice to secure priority for a party’s caveat, which would appear to have been adopted in Tasmania,505 is not available in New South Wales. The requirement for priority notices to be presented by a person who intends to ‘lodge a dealing’ also means that a caveat remains the most appropriate method of a current registered proprietor protecting their interests (eg, in the case of a registered mortgagor seeking to prevent the improper exercise of the power of sale by a mortgagee).

Lapsing, withdrawal and removal of priority notices 8.160  A priority notice may be withdrawn by the party lodging it,506 or may be removed by the Registrar-General once the dealing protected by the notice has been lodged.507 The Registrar-General may also remove the notice if it has been lodged over the wrong land508 or the party who has lodged the notice fails to provide any further information under s 74T(5) of the Real Property Act.509 The notice may also be removed once 60 days (or 90 in the case of an extension) has elapsed since lodgment, or if the Registrar-General considers that the dealing protected by the priority notice will not be lodged before that time.510 However, there is no discussion in the amendments, or any of the associated material, about how the Registrar-General will determine whether a dealing is unlikely to be lodged. An order that the notice be withdrawn may also be sought before the Supreme Court.511 Although the section reflects the same provision which operates for proceedings to remove a caveat, the same detailed requirements for service have not been replicated or applied in relation to Pt 7B of the Real Property Act.512 However, given the similar nature

504. Land and Property Information, Registrar General’s Guidelines, Priority Notice (Electronic), New South Wales Government, available at  (accessed 9 December 2021). 505. See Land Titles Act 1980 (Tas) s 3(1) definition of ‘dealing’; Four Oaks Enterprises Pty Ltd v Clark [2002] ANZ ConvR 440; Damdounis v Recorder of Titles (Tas) 2002 11 Tas R 185. 506. Real Property Act  1990 (NSW) s  74X(1). The notice may also be withdrawn by an Australian legal practitioner or a licensed conveyancer representing that party. 507. Real Property Act 1900 (NSW) ss 74V(2)(b), 74W(3). 508. Real Property Act 1900 (NSW) s 74X(2)(b). 509. Real Property Act 1900 (NSW) s 74X(2)(d). 510. Real Property Act 1900 (NSW) s 74V(2)(a), (c). 511. Real Property Act 1900 (NSW) s 74Y. 512. See Real Property Act 1900 (NSW) s 74N concerning service of notice of proceedings under Pt 7A.

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of the proceedings, and the consequences of removal of a priority notice, it would seem be prudent to follow the same requirements for service as in Pt 7A. A party lodging a priority notice, or refusing to withdraw it, ‘without reasonable cause’ may be liable to pay compensation to any other person who has suffered loss as a result of the lodgment or refusal.513 The provision mirrors s 74P of the Act, which is applicable to caveats. While the use of the same formulation may suggest that the same approach taken in Bedford Properties Pty Ltd v Surgo Pty Ltd514 should apply, the operation of priority notices and caveats is very different. Because of the narrower application of priority notices, the party lodging may instead need to be able to demonstrate an ‘honest belief based on reasonable grounds’515 that their dealing is registrable or capable of being registrable, rather than simply a caveatable interest.

Competition between unregistered interests Which unregistered interest should prevail? 8.161  As we observed above, under the Torrens system some unregistered interests may be legal interests (such as a lease under s 23D(2) of the Conveyancing Act 1919 (NSW)), while others are more loosely referred to as equitable interests. However, as the recognition of unregistered interests under the Torrens system flows from an entitlement in equity of the holder of an unregistered interest to enforce that interest, traditionally all unregistered interests have been described as ‘equitable’ interests.516 Accordingly, the established method of resolving priority disputes has been to treat the competition as though it were one involving two competing equitable interests, and so applying the maxim qui prior est tempore potior est jure: if the equities are equal, the first time in time prevails. The burden under the test, therefore, lies on the holder of the later interest to demonstrate that the first in time interest should be postponed in favour of the later interest. 8.162  As discussed previously in Chapter  7, in applying the ‘first in time’ rule, the primary emphasis placed on temporal sequence has come to be regarded as a little crude, and there has been a shift in favour of considering the merits (or ‘better equity) of the two competing interests.517 This does not mean that the court’s task is to search for ‘mere unfairness’518 in the outcome. Rather, the inquiry is directed towards a consideration of whether unfairness results from an act or omission of the earlier interest holder that might have had the effect of inducing the later interest holder to act to his or her prejudice.519 The consideration of all the circumstances of the case also means a better equity may also be established by demonstrating that the competing party has a worse equity. To establish

513. Real Property Act 1900 (NSW) s 74Z. 514. Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106. 515. Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106 at 108 per Wootten J. 516. See Barry v Heider (1914) 19 CLR 197 at 208 and 216. 517. See further, 7.26–7.29. 518. Circuit Finance Australia Limited (in liq) v Panella [2011] NSWSC 311 at [13] per Pembroke J. 519. Butler v Fairclough (1917) 23 CLR 78 at 91 per Griffith CJ.

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this, it is proper to consider both meritorious conduct and disentitling conduct of both parties.520 In the following sections, we will consider some of the factors that may ‘tip the balance’ in the contest to prove a better equity as between two competing unregistered interests.521

Arming conduct 8.163  As discussed in Chapter 7, one well established instance of postponing conduct is a vendor arming a third party with the means of creating the later interest.With the abolition of certificates of title in NSW from October 2021, some past examples of arming conduct will no longer arise. In Abigail v Lapin522 or Heid v Reliance Finance Corp Pty Ltd,523 for example, the registered proprietors had been found to have engaged in arming conduct by giving signed memoranda of transfer and certificates of title to lenders or purchasers. That scenario is no longer possible since the memorandum is lodged electronically by a vendor, and there is no certificate of title. However, it should be noted that Heid v Reliance Finance Corp Pty Ltd still constitutes authority for the proposition that it is not arming conduct for a client to entrust his [or her] solicitor to deal with the documents and instruments of authority to conduct the transfer524 To find otherwise, Mason and Deane JJ concluded, would ‘entail delay and complexity in the completion of conveyancing transactions [and s]eemingly the vendor would always need to be present’.525 This means that where a client provides their solicitor a signed authorisation consenting to the lodgment of the dealing handing over such authority will not constitute arming conduct sufficient to lose priority. Other illustrations of arming conduct include: giving another party the means to deal with the estate as though that party were the legal and equitable owner;526 giving a receipt but not collecting the purchase price.527 Establishing arming conduct is, therefore, a means of demonstrating that one unregistered interest holder has a better equity than the other.

Failure to caveat 8.164  Another method of discriminating between two competing unregistered interests for the purposes of a priority dispute is to consider the impact of a failure to caveat. For example, imagine a situation in which a vendor enters into a contract for the sale of land 520. See, for example, Taleb v  National Australia Bank Ltd (2011) 82 NSWLR 489. This case is discussed in L  Aitken ‘Priority in Equity: Failure to Caveat and “Postponing Conduct”?’ (2012) 86 Australian Law Journal 291. See also AG(CQ) Pty Ltd as Trustee for AG(CQ) Family Trust v A & T Promotions Pty Ltd as Trustee for Toowoomba Unit Trust [2011] 1 Qd R 306; [2010] QCA 083; Allen’s Asphalt Pty Ltd v SPM Group Pty Ltd [2010] 1 Qd R 202; [2009] QCA 134. 521. In the rest of the discussion in this section, reference to two competing unregistered interests means unregistered non-legal interests. 522. Abigail v Lapin [1934] AC 491; (1934) 51 CLR 58. 523. Heid v Reliance Finance Corp Pty Ltd (1983) 154 CLR 326. 524. Heid v Reliance Finance Corp Pty Ltd (1983) 154 CLR 326 at 344. 525. Heid v Reliance Finance Corp Pty Ltd (1983) 154 CLR 326 at 344. 526. Abigail v Lapin [1934] AC 491; (1934) 51 CLR 58. 527. Lloyds Bank Ltd v Bullock [1896] 2 Ch 192.

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with ‘Purchaser 1’ and then, before Purchaser 1 has registered his or her interest, the vendor enters into another contract with ‘Purchaser 2’ for the sale of the same land. A search of the Register by Purchaser 2 would not alert him or her to the antecedent interest of Purchaser 1, unless Purchaser 1 has lodged a caveat. By failing to lodge a caveat at the time that his or her interest was created, Purchaser 1 may be said to have put the registered proprietor in the position to be able to go out into the world and create another interest in favour of Purchaser 2. Hence, New South Wales courts tend to favour Purchaser 2 over Purchaser 1 in such a scenario.528 It is interesting that this approach prevails even though, in New South Wales, caveats are not routinely lodged as soon as the purchaser acquires an interest in property. Instead, caveats tend to be lodged when circumstances appear to suggest that it would be prudent to do so, for example, when: the purchaser has reason to mistrust the vendor; there is a longer than usual settlement period; or the deposit is released. 8.165  There is no duty to caveat, and a ‘mere failure’529 to caveat does not automatically involve the loss of priority.530 However, in certain circumstances a failure by the prior interest holder to caveat, or to fail to caveat in a timely manner, may cause the prior interest holder to lose priority. In Butler v Fairclough,531 for example, the dispute was between a purchaser (prior to registration) and a party who had a charge over the land. Both interests were unregistered.The purchaser searched the Register and found no record of any caveat. However, a few days later, the mortgagee/encumbrancer (party with charge) lodged a caveat to protect his interest.The High Court held in that case that, because the mortgagee had failed to caveat his interest before the purchaser had paid the purchase money and received the transfer, the caveat did not protect the mortgagee/encumbrancer’s interest as against the purchaser’s interest. The mortgagee/encumbrancer’s interest was postponed.532 8.166  The possibility that a failure to caveat will cause postponement is also explored in Abigail v Lapin.533 In that case, the Lapins executed a transfer to Heavener. Although on 528. See, for example, Person-to-Person Financial Services Pty Ltd v Sharari [1984] 1 NSWLR 745; Double Bay Newspapers Pty Ltd v A W Holdings Pty Ltd (1996) 42 NSWLR 409. 529. For a discussion of the divergent state authorities on the ‘mere failure to caveat’, see TD Castle, ‘Caveats and Priorities’ (1994) 68(2) Australian Law Journal 143. 530. See further, J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546. 531. Butler v Fairclough (1917) 23 CLR 78. 532. Person-to-Person Finances Pty Ltd v Sharari [1984] 1 NSWLR 745 demonstrates how a party, although earlier in time, might still lose his or her priority by engaging in an act or omission which had or might have the effect of inducing a later, unregistered interest holder to act to his or her detriment. For an example of a case where failure to lodge a caveat did not have an influence on a competitor’s conduct or affect its claim for priority, see Double Bay Newspapers Pty Ltd v A W Holdings Pty Ltd (1996) 42 NSWLR 409. 533. Abigail v Lapin [1934] AC 491; (1934) 51 CLR 58. See also Taleb v National Australia Bank Ltd (2011) 82 NSWLR 489 where the court found that although both parties acted imprudently, the second caveator (NAB) had the better equity. This was because the first caveator failed to lodge a caveat at the relevant time (ie, before the second caveator checked the Register). This led the second caveator to acquire its interest on the basis that the earlier interest did not exist. This, together with evidence that it was always the intention of the second caveator to become the first registered mortgagee, led the court to find that the second caveator had the better equity. For further discussion of Taleb, see Aitken, ‘Priority in Equity: Failure to Caveat and “Postponing Conduct”?’, note 520 above.

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its face an absolute transfer of the Lapins’ interest, this instrument was only ever meant to be as security for a loan, and hence it was supposed to be redeemable on repayment of the loan. Instead, Heavener treated the transfer as though she was genuinely the title holder and mortgaged the land to Abigail, who was not aware of the Lapins’ interest, since the Lapins had not lodged a caveat. The mortgage between Heavener and Abigail was not registered; so, when the Lapins sought to claim priority, the dispute was characterised as one between two competing unregistered interests. The court held that Abigail’s interest should prevail because, not only had the Lapins armed Heavener with the indicia of title, but they had also failed to lodge a caveat to protect their equity of redemption. While there was never a suggestion by the court that it is compulsory to lodge a caveat, it was nevertheless the case that lodging a caveat would have had the effect of alerting Abigail to the Lapins’ interest and this was relevant to determining which party had the better equity. 8.167 In J & H Just (Holdings) Pty Ltd v Bank of New South Wales,534 the bank did not register the mortgage it took, but instead took the certificate of title into custody. When another unregistered interest came into existence and a subsequent priority dispute arose, the court held that the bank’s interest would not be postponed, although it had failed to lodge a caveat. The court considered what would be prudent conduct on the part of a person acquiring a later interest, and held that any prudent later purchaser would demand to see the certificate of title. When told that it was at the bank, a prudent purchaser would approach the bank in order to see it because of the possibility of a competing interest.535 The court in J & H Just was aware that its decision did not square easily with Griffith CJ’s words in Butler (which referred to the consequences of failing to caveat), and hence it confined Griffith CJ’s words to circumstances where the later unregistered interest holder could not be put on guard.536 Further, the court in J & H Just revisited the reasoning offered for the decision in Abigail v Lapin and found that Abigail had not been decided on the basis of the effect of the failure to caveat, but rather on the basis of the Lapins’ arming conduct. This same reasoning was applied in Breskvar v Wall.537 8.168  In New South Wales, the law is therefore that a failure to caveat will not, of itself, cause a party to lose priority, but that a failure to caveat will be one of the issues taken into consideration in deciding which party (according to the Rice v Rice test) has the better equity.538 If it can be demonstrated that a failure to caveat led the later interest holder to 534. J & H Just (Holdings) Pty Ltd v Bank of New South (1969) 90 WN (Pt 1) (NSW) 571. Note that the findings at first instance were confirmed on appeal in J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546. 535. This case also serves to highlight that mechanisms other than caveats (such as, in the paper-based conveyancing regime, taking in the title documents) may serve to provide alternative forms of protection. See further, discussion at 8.168 below. 536. J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546 per Barwick CJ; Butler v Fairclough (1917) 23 CLR 78. 537. Breskvar v Wall (1971) 126 CLR 376. 538. Rice v Rice (1853) 2 Drew 73; 61 ER 646; Butler v Fairclough (1917) 23 CLR 78; J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1970) 92 WN (NSW) 803; Australian Guarantee Corp (NZ) Ltd v CFF Commercial Finance Ltd [1995] 1 NZLR 129.

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assume mistakenly that no prior interest existed, postponement will occur.539 Postponement will also occur if an already-lodged caveat is withdrawn and the government department responsible for administering land title has no internal procedural mechanism in place to reveal the withdrawal of that caveat.540 Yet, if the earlier unregistered interest holder engaged in some other protective strategy to ensure that persons dealing later with the registered proprietor would be likely to discover the earlier interest, he or she will retain priority.541 Such action may include, for example, remaining in possession of the property. For example, in Perpetual Trustee Co Ltd v Smith542 retirees entered into reverse mortgages of their homes, under which they sold their houses to Money for Living Australia Property Holdings Pty Ltd in consideration for a lump sum payment and a lease for life in their former homes. Moore and Stone JJ held that failure to caveat was not priority-losing conduct in that case. This was because the retirees’ continued occupation of the properties, in addition to the name of the company that held the fee simple interest, was sufficient means to alert any future purchaser or mortgagee of the retirees’ interest in the property. Equally, if it can be demonstrated that the later interest holder failed to search the register, failure by the first interest holder to lodge a caveat will not be postponing conduct. This is because the failure to caveat will have had no bearing on the acquisition of the later interests in a mistaken belief of the non-existence of the earlier interest.543

Failure to lodge a priority notice 8.169  While a priority notice has the same practical effect as a caveat in terms of preventing dealings with land, there has yet to be judicial discussion as to the effect of failing to lodge a priority notice in a priority dispute. However, the expectation that lodgment of a priority notice is, or will become, common conveyancing practice has been discussed in both New South Wales and other jurisdictions. For example, in Queensland where there was a similar settlement notice regime in place, ‘[i]t is accepted as prudent conveyancing practice that a settlement notice should be lodged in all cases before settlement’.544 Given the relatively recent introduction of priority notices in South  Australia and Victoria, there are few statements on practice. On the introduction of the amendments 539. Lapin v Abigail (1930) 44 CLR 166. See also Heid v Reliance Finance Corp Pty Ltd (1983) 154 CLR 326; FAI Insurance Ltd v Pioneer Concrete Services Ltd (1987) 15 NSWLR 552; Taleb v National Australia Bank [2011] NSWSC 1562; LTDC Pty Ltd v Cashflow Finance Australia Pty Ltd [2019] NSW 150. Note that some of these cases invoke a reasonable foreseeability component. For example, if it is reasonably foreseeable that a later interest will be created and the later interest holder will not be aware of the earlier interest, then a failure to caveat will result in postponement. 540. See Perpetual Trustee Co Ltd (original plaintiff); Performance Capital Mortgage Pty Ltd v Motive Finance & Leasing Pty Ltd [2010] NSWSC 429 at [35] per Windeyer AJ, referring to Elderly Citizens Home of SA Inc v Balnaves (1998) 72 SASR 210. 541. See Taddeo v Catalano (1975) 11 SASR 492; Kerabee Park v Daley [1978] 2 NSWLR 222; Osmanoski v Rose [1974] VR 523; Jacobs v Platt Nominees Pty Ltd [1990] VR 146. 542. Perpetual Trustee Co Ltd v Smith (2010) 273 ALR 469. 543. See, for example, Champion Homes Sales Pty Ltd v JKAM Investments Pty Ltd [2014] NSWSC 952 at [98]. 544. S Christensen et al, Land Contracts in Queensland, The Federation Press, Sydney, 2016, p 336.

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in Victoria, the Attorney-General noted in 2014 that priority notices are ‘expected to become a standard part of prudent conveyancing practice in Victoria’.545 No similar statement was made on the introduction of the amendments in South Australia, although the Legal Commission of South Australia noted in 2015 that lodging a priority notice ‘may become a matter of good conveyancing practice’.546 In New South Wales, the Minister for Services and Property made a similar statement to the Victorian Attorney-General, noting that: While the lodgment of a priority notice will be optional, it is expected that parties buying a property will seek to protect their interests to the full extent possible by lodging a priority notice. Therefore the use of priority notices will become an integral consideration in prudent conveyancing practice.547

In light of these statements, should priority notices become a standard feature in conveyancing practice, it would seem likely that the effect of failure to lodge a priority notice will be treated according to similar principles that apply with respect to failure to caveat.

Notice of the existence of a prior interest and priority disputes 8.170  Another of the factors to be considered in determining priority between competing unregistered interests is whether the later interest holder had notice of the prior interest at the time he or she acquired his or her equitable interest.548 Normally, a later unregistered interest holder who has actual notice of a prior unregistered interest will not succeed in demonstrating a better equity because the later unregistered interest holder’s conscience is bound by the notice he or she has received. Moffett v  Dillon549 illustrates this proposition.550 In Perpetual Trustee Co Ltd v Smith,551 Moore and Stone JJ concluded that, on the facts of that case, it ‘beggar[ed] belief ’ that the later interest did not, ‘at the very least’ have constructive notice of the earlier interest, and so they drew the ‘inescapable inference’ that Perpetual did have notice.552 However, it appears that their Honours did not treat something short of actual notice as operating as a clear and automatic factor that would deprive the later interest of priority. In that case, their Honours also discussed at length the 545. Victoria, Parliamentary Debates, Legislative Assembly, 6 August 2014, p 2561 (R Clark, Attorney-General). 546. Legal Services Commission of South Australia, Priority Notices, available at  (accessed 31 May 2017). 547. New  South  Wales, Parliamentary Debates, Legislative Assembly,  6  August  2015, p 2171 (D  Perrottet, Minister for Services and Property). 548. In Midland Brick Co Pty Ltd v Welsh [2006] WASC 122, the court observed how a caveat could have been used to give notice of a restrictive covenant. 549. Moffett v Dillon (1999) 2 VR 480. 550. Note that earlier (at 8.130 and 8.162), we discussed better equities. Notice (at the time of acquiring the interest) then goes towards establishing that the later equitable interest holder does not have the better equity. 551. Perpetual Trustee Co Ltd v Smith (2010) 273 ALR 469. 552. Perpetual Trustee Co Ltd v Smith (2010) 273 ALR 469 at 489 [72] per Moore and Stone JJ.

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principles regarding failure to caveat, and concluded that, in light of the retirees’ possession, the absence of an obligation to caveat under current New South Wales principles, and Perpetual’s constructive notice of the retirees’ interest, the prior interest of the retirees would prevail.

Section 43A of the Real Property Act 8.171  The general position is that before registration takes place, a contest between competing unregistered interests is resolved by reliance on old system priorities rules.553 In the period before registration, we have seen that the balance of equities that exist between two unregistered interests may be altered, for example, by arming or postponing conduct, the lodgment of a caveat, the lodgment of a priority notice, or notice. However, the resolution of priorities between two competing unregistered interests in the period between settlement and registration is more complex because of intervention of s 43A of the Real Property Act. Under the Torrens system, when a purchaser enters into a contract for the sale of land and completes the purchase, but before the purchaser’s interest is registered, that purchaser holds an equitable interest. But for s 43A, a priority dispute between this pre-registration interest and another competing equitable interest would be resolved according to the tests in Rice v Rice and Heid v Reliance Finance Corp Pty Ltd, as discussed above. However, under old system title it is the deed of conveyance that transfers the title. Hence, under old system title, if a priority dispute arises after a purchase is completed, the dispute is characterised as one between an earlier equitable interest and a later legal interest. In those circumstances, the later legal interest prevails if the purchaser is a bona fide purchaser who takes for value without notice of the earlier equitable interest.554 8.172  The purpose of s  43A is to align the position of the purchaser on settlement under Torrens title with the purchaser in the same position under old system title. In John Alexander’s Clubs v White City Tennis Club, the High Court observed, however, that ‘[t]he text of s 43A is so drawn as to have given rise to notorious difficulties in construction’.555 The section states: (1) 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.

Thus, according to s 43A, the importation of old system principles is relevant only for the period between settlement and registration, and only so far as the question of notice is concerned. That s 43A is meant to apply during this gap is evident from the court’s 553. Qui prior est tempore potior est jure (‘the first in time prevails’); Rice v Rice (1853) 2 Drew 73; 61 ER 646; Heid v Reliance Finance Corp Pty Ltd (1983) 154 CLR 326 (a Torrens case). 554. Pilcher v Rawlins (1872) LR 7 Ch App 259. See further discussion 7.9–7.25. 555. John Alexander’s Clubs v White City Tennis Club (2010) 241 CLR 1 at 42 [114].

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words in Courtenay v Austin,556 where it stated that the section affords protection against unregistered estates or interests of which no notice was acquired before settlement but of which notice was or might be received after settlement and before registration of the particular dealing.557 Section 43A protection is significant, because the so-called ‘notice’ provision of the Real Property Act, s 43, has been interpreted so as to apply to provide protection against notice only on registration.558 Section  43A therefore provides the purchaser with protection against notice, if its terms are met. That is, for protection to apply, the purchaser must have a ‘dealing registrable’. These requirements are discussed below. It is important to note, however, that with the advent of electronic conveyancing, and the capacity for the instant registration of documents lodged online, absent a breakdown in the electronic platform,559 the role of s 43A in the future is likely to diminish. 8.173  Section 43A requires that protection is provided only to a person who takes a ‘dealing registrable’. In New South Wales, this means that the dealing must be registrable straight away without further steps having to be taken.560 The cases tend to suggest that the court will try to find the dealing registrable wherever possible, and so minor errors of form that may be overlooked by the Registrar-General constitute a breach of the ‘registrable dealing’ requirement. For example, in Zisti v Ryde Joinery Pty Ltd,561 Young J (in obiter) stated that a dealing which was written in red ink (and hence contravened the regulations requiring that it be written in black or blue ink) would still constitute a ‘dealing registrable’ for the purposes of s 43A. 8.174  If the dealing is void, the issue of whether s 43A protection is available arises. Jonray (Sydney) v  Partridge Bros562 suggested that if the purchaser does not have notice of a forged dealing (eg, the purchaser does not have notice of the forgery until after completion) the dealing is still to be regarded as registrable — although the court points out that the true proprietor could ‘probably prevent’ registration. In a decision dealing with a similar situation, Street J in Mayer v Coe563 stated that if the registered proprietor 556. Courtenay v Austin (1961) 78 WN (NSW) 1082 at 1093. Section 43A applies to actual and constructive notice. See Drulroad Pty Ltd v Gibson (1992) NSW ConvR ¶55-637. 557. See also Black v Garnock (2007) 230 CLR 438 at 450 [33]. 558. Templeton (Registrar of Titles (Vic)) v Leviathan Pty Ltd (1921) 30 CLR 34 at 55. 559. On the issue of computer glitches and electronic conveyancing, see  A Henderson and H Roberts, ‘Electronic Conveyancing:What happens when the computer says “No”? (2022) 96 Australian Law Journal 83. 560. IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550. Prior to the abolition of certificates of title the ‘dealing registrable’ requirement meant that the certificate of title would have also been required to have accompanied the registrable dealing. 561. Zisti v  Ryde Joinery Pty Ltd (1996) 7 BPR 15,217. See  also Taleb v  National Australia Bank Ltd (2011) 82 NSWLR 489 where a dealing was found not to be in registrable form because the plaintiff ’s caveat prevented its registration. In addition, the dealing was not registrable until it had been stamped pursuant to the relevant stamp duty legislation. Taleb is discussed further at Aitken, ‘Priority in Equity: Failure to Caveat and “Postponing Conduct”?’, note 520 above. 562. Jonray (Sydney) v Partridge Bros (1969) 89 WN (Pt 1) (NSW) 568 at 574. 563. Mayer v Coe (1968) 88 WN (Pt 1) (NSW) 549 at 558.

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had had notice of a forged mortgage in the hiatus after settlement, but before registration, there ‘may well have been’ personal equities on which she could have relied to prevent registration. Presumably the same reasoning would apply if the instrument were void for reasons other than forgery.564 8.175  Further, the ‘dealing registrable’ must be taken directly from the registered proprietor. Therefore, if a person is in the process of buying property and immediately on-selling an interest in it before his or her interest has been registered (eg, granting a mortgage to an incoming mortgagee, or on-selling to a second purchaser) anyone dealing with that unregistered purchaser will not directly receive the benefits of s 43A protection. The incoming mortgagee, or second purchaser, would not be dealing directly with the registered proprietor of the fee simple estate. For example: if a registered proprietor, R, were selling to P, a purchaser, who had completed but not yet registered, P would be protected from notice of a prior equitable interest in the gap between completion and registration. If, however, P on-sold to N (the next or second purchaser) in that gap period, N could not obtain the benefits of s 43A because N’s interest would not be registrable until P had registered the interest he or she took from R. 8.176  Jonray Pty Ltd v  Partridge Bros Pty Ltd565 discussed how the court may offer protection to a purchaser in N’s position. Jonray’s case was, however, not one that involved on-selling but rather one that involved a prior mortgage followed by a sale. In that case, the purchaser took an interest that was encumbered by a registered mortgage. That mortgage was to be discharged on completion of the purchase. This is not an unfamiliar fact situation, given that most vendors do not own their properties free from encumbrances. In Jonray’s case, the court held that a purchaser could be entitled to protection from defects in the mortgage discharge if an equity or equitable interest were held to have arisen. However, in order to receive protection, the mortgagor/vendor must not have notice of the defect when he or she takes the discharge of mortgage as a registrable instrument. If the mortgagor has no notice of the defect, the court will hold that the protection normally afforded to the mortgagor can be extended to a person claiming under the mortgage, such as the purchaser. 8.177  The application of s 43A in Jonray’s case has been referred to as the ‘successive effect’ doctrine.566 It means that if the mortgagor or first purchaser, who has completed (but not registered) an interest taken from the holder of the registered fee simple, has the benefit of the doctrine that protects a bona fide purchaser for value without notice, then someone who claims under him or her, such as the next or second purchaser (N in our earlier example), will also receive the benefit of that protection. The successive effect doctrine is an application of the principle in Wilkes v Spooner,567 a principle that allows 564. This reasoning is also that of Kitto J in IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550 and is consistent with old system title and the legal estate. 565. Jonray (Sydney) v Partridge Bros Pty Ltd (1969) 89 WN (Pt 1) (NSW) 568. 566. The term was used in Jonray (Sydney) Pty Ltd v Partridge Bros Pty Ltd (1969) 89 WN (Pt 1) (NSW) 568 at 477. See Barlin Investments Pty Ltd v Westpac Banking Corporation (2012) 16 BPR 30,671 at [39]–[41]. 567. Wilkes v Spooner [1911] 2 KB 473.

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the second purchaser (N) to shelter under the protection already afforded to the party from whom he or she is taking an interest, even though N has notice of a prior equitable interest.568 If, however, the first purchaser or mortgagor is not entitled to the benefit of s 43A protection, there is no protection under which the second purchaser can shelter and, hence, the Wilkes v Spooner doctrine will not apply. 8.178  There is some contention as to how the term ‘legal estate’ should be interpreted in relation to s 43A.The issue was discussed in IAC (Finance) Pty Ltd v Courtenay,569 where a transfer in favour of the Courtenays, the first equitable interest holders, was lodged for registration, but was withdrawn by the mortgagee’s solicitor before it was registered. In the meantime, a second equitable interest was created, and its holder sought to register. While the second equitable interest holder was awaiting registration, the Courtenays lodged a caveat over their interest, which prevented registration of the second equitable interest.The key dispute over the definition of ‘legal estate’ lies in the difference of opinion between Kitto and Taylor JJ. 8.179  Kitto J’s interpretation of ‘legal estate’ in s 43A in Courtenay was that: The estate or interest ‘taken’ under an unregistered interest must therefore mean the estate or interest which the instrument on its true construction purports to confer, and upon its being registered will confer. That estate or interest is given by s 43A the same immunity from the effect of notice as s 43 provides for registered estates or interests in virtue of their being legal estates or interests.570

On this construction, the unregistered interest is still to be treated as an unregistered interest, but one that, before registration, will receive the type of protection that is afforded by s 43.Thus, if the purchaser received notice of an unregistered interest before settlement but had not yet registered the dealing, under Kitto J’s view s 43A provides the purchaser with s 43-style protection and that would allow him or her to block the registration of an unregistered interest.571 8.180  On the other hand, according to Taylor J in Courtenay, ‘legal estate’ means an old system legal estate. This interpretation would allow the invocation of the ‘bona fide purchaser for value without notice’ doctrine. Hence, the Torrens purchaser who has completed but not registered his or her interest could defeat an earlier equitable interest holder if he or she were a bona fide purchaser for value without notice at the date of completion.572 However, if a purchaser received notice of an unregistered interest before 568. For example, Barlin Investments Pty Ltd v Westpac Banking Corporation (2012) 16 BPR 30,671 at [39]–[41]. In this case, the subsequent purchaser, and their mortgagee, had notice of the earlier unregistered interest. However, they could claim the successive effect of s 43A as they derived their interests through a purchaser who was a ‘bona fide purchaser for value of the legal interest without notice’. See further, P Butt,‘Statutory Provision Turns Priorities on their Head’ (2013) 87 Australian Law Journal 87. 569. IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550. 570. IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550 at 573. 571. For a more detailed explanation of the operation of s  43A, see  Woodman et al, Torrens System in New South Wales, note 257 above, [43A.80]. The issue of an unregistered transfer of land is taken up in Motor Auction Pty Ltd v John Joyce Wholesale Cars Pty Ltd (1997) 8 BPR 15,565. 572. IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550 at 584 per Taylor J.

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settlement (ie, completion) the priority would be worked out pursuant to the rule in Rice v Rice,573 because the competition would be between two equitable interests.574 8.181  Notice under Taylor J’s approach in Courtenay is ‘general law notice’, that is, actual, constructive or imputed notice of the interest.The question of constructive notice was discussed in Stone Leaf Capital v Daley.575 There, the holder of the earlier unregistered interest had caveated their interest, but subsequently withdrew the caveat prior to the creation of the second unregistered interest. The court reasoned that: There was no evidence that the usual practice of conveyancers in such circumstances would be to make inquiries of the caveators to investigate why they had withdrawn the caveats, or to investigate whether the claimed debts had been repaid, or to ask whether the caveators still maintained an interest in the land, notwithstanding the withdrawal of the caveats. Such inquiries would not be reasonable. It would defeat a central tenet of the Torrens system if a purchaser were required to go to such lengths to obtain the protection of s 43A, that tenet being that parties are entitled to rely on the state of the register.576

Accordingly, the purchaser in Stone Leaf could not be said to be fixed with constructive notice of the earlier interest. In Westpac Banking Corporation v  Ollis,577 the court also confirmed that ‘purchaser’ in this context means purchaser for value. In New South Wales, cases decided after Courtenay have followed Taylor J’s construction of s 43A.578 This would seem appropriate, as to do otherwise has the effect of devaluing registration and its accompanying benefits, and unnecessarily extends the ambit of protection from unregistered interests.

Priority notices and s 43A 8.182  Priority notices would appear to provide an additional, optional layer of protection to that provided by s 43A of the Real Property Act. Lodging a priority notice provides a practical means of giving effect to the protection provided to unregistered interest holders. At the same time, s 43A will still operate in the event that a party is slow to lodge a priority notice. The introduction of electronic conveyancing may require some reconsideration of what ‘registrable’ means for the purposes of s 43A. Previous approaches have emphasised the 573. Rice v Rice (1853) 2 Drew 73; 61 ER 646. 574. IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550 at 585. 575. Stone Leaf Capital v Daley [2014] NSWSC 477. 576. Stone Leaf Capital v Daley [2014] NSWSC 477 at [38]–[39]. 577. Westpac Banking Corporation v Ollis [2008] NSWSC 824. In that case, the court found that the claimant had not proven that it had paid anything to the vendor. Thus, it was unable to demonstrate that it was a ‘purchaser for value’ and so did not gain the protection of s 43A. 578. See Drulroad Pty Ltd v Gibson (1992) 5 BPR 11,878 at 11,882; Finlay v R & I Bank of Western Australia Ltd (1993) NSW ConvR ¶55-686; Jonray (Sydney) v  Partridge Bros (1969) 89 WN (Pt 1) (NSW) 568; United Star-Bowkett Co-operative Building Society (No 11) Ltd v Clyne (1967) 68 SR (NSW) 331; J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546; Meriton Apartments Pty Ltd v McLaurin & Tait (1976) 133 CLR 671; 50 ALJR 743; Weller v Williams [2010] NSWSC 716; Barlin Investments Pty Ltd v Westpac Banking Corporation (2012) 16 BPR 30; Stone Leaf Capital v Daley [2014] NSWSC 477.

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requirement for a certificate of title and the transferor’s signature. However, to the extent that the requirement is for the dealing to be ‘registrable’, it is arguable that the subscriber (ie, the agent lodging the dealing) must hold a signed authorisation from the purchaser consenting to the lodgment of the dealing579 and verify the identity of the purchaser who has provided the authorisation.580

Torrens Assurance Fund — Pt 14 of the Real Property Act 1900 (NSW). 8.183  According to the key author of the Torrens system, Sir Robert Torrens, the purpose of the Torrens compensation scheme was to complement the indefeasibility of title principle.581 This was considered necessary because, while the scheme assured registered proprietors of good title, sometimes proprietors were deprived of their interests when land was transferred from old system title to Torrens title. Where deprivation occurred, the compensation scheme was supposed to redress loss. Indeed, according to a submission of the then Land Titles Office to the New South Wales Law Reform Commission, ‘the indefeasibility and compensation provisions of the Real Property Act 1900 have a logical and inseparable connection’.582 However, it has also been suggested that an alternative reason for the introduction of the compensation scheme was to redress opposition from early detractors of the Torrens scheme and, hence, provide for the ‘smooth and economic flow of business’.583 There is some merit in this latter view, given that access to the Torrens Assurance Fund was historically quite restricted. The view that the fund was never seriously designed to offer redress remains open, but figures on more recent pay-outs from the fund suggest that this view is increasingly problematic in relation to the fund’s operation today.584 8.184  An assurance fund has been part of New  South  Wales land law since the introduction of the Torrens system. However, the circumstances in which it has been or is likely to be used have changed somewhat over time. Whereas, initially, it was perhaps 579. See Real Property Act (NSW) s 12E, Office of the Registrar General, Conveyancing Rules (11 October 2021, Version 6) r 4; and Office of the Registrar General, Participation Rules (12 April 2021,Version 6) r 6.2. 580. See  Real Property Act (NSW) s  12E and Office of the Registrar General, Conveyancing Rules (11 October 2021,Version 6) r 4. 581. RR Torrens, The South  Australian System of Conveyancing by Registration of Title, Register and Observer General Printing Offices, Adelaide, 1859, p 9. 582. New  South  Wales Law Reform Commission, Torrens Title: Compensation for Loss, Report No 76, June 1996, p 6. 583. New South Wales Law Reform Commission, Torrens Title: Compensation for Loss, note 582 above, p 6. 584. This issue is discussed in L McCrimmon, ‘Compensation Provisions in Torrens Statutes: The Existing Structure and Proposals for Change’ (1993) 67(12) Australian Law Journal 904.There has been some debate around whether the amendments brought about by the Real Property Amendment (Compensation) Act 2000 (NSW) have assisted in increasing access to the fund. The Auditor-General’s Report to Parliament 2006, Vol 5, p 225, stated that ‘the Registrar-General paid a total of $164,000 during the [2005–2006 Financial] Year from the [Assurance] Fund in claims’. The report also states that the balance of the Torrens Assurance Fund as at 30 June 2006 totalled $14.8 million. In 2011, one single successful claim against the Torrens Assurance Fund amounted to $3.8 million: see Pedulla v Panetta [2011] NSWSC 1386 at [68a(i)].

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envisaged that the Torrens Assurance Fund would largely be accessed by those parties who would not have suffered loss had their land been held under old system title,585 such types of claims are unusual today. These days more claims are brought in other circumstances: … the Torrens Assurance Fund provides monetary compensation … to a person who is deprived of land by the operation of the Torrens System [and] also [provides compensation] to a person who suffers loss through a mistake in the Land Titles Office or through an error, omission or misdescription in the register of titles.586

8.185  That losses will rather than could be suffered as a result of the errors and inadvertent acts of the public officers administering the Torrens system is perhaps evident in the choice of name for the compensatory scheme. It is an ‘assurance’ fund not an ‘insurance’ fund, because ‘assurance’ applies to events that will certainly happen, in contrast to ‘insurance’, which is reserved for events that may or may not happen.587 8.186  The general purpose of the Torrens Assurance Fund has been said to be ‘compensat[ing] persons who, without any fault of their own, may have been deprived of property’.588 Yet, in practice, many losses occur to people who are not responsible for them, while those losses remain non-compensable. For example, although a person may suffer loss (a) because an overriding statute has caused his or her interest to be defeasible, or (b) because of the operation of the Real Property Act, recompense may not necessarily be available through the fund.589 8.187  Over the years, different assurance funds have existed, although much of the literature and the Real Property Act itself tends to speak as though the Torrens Assurance Fund has been in continuous existence since the Torrens system was introduced into New South Wales. In reality, that is not so. Indeed, the original assurance fund was closed in 1906 and the moneys transferred to the Closer Settlement Fund.590 Later, this fund was also re-named. As for the moneys in the fund, they too have transferred between being held directly by the fund and being part of consolidated revenue. In 1987, fund moneys were transferred to consolidated revenue, but since 1992, the compensation scheme has once again relied on money held in a separate assurance fund (known as the Torrens Assurance Fund), as distinct from consolidated revenue.591

585. See Finucane v Registrar of Titles [1902] St R Qd 75 at 94. 586. Challenger Managed Investments Ltd v Direct Money Corp Pty Ltd (2003) 59 NSWLR 452 at [65]. 587. See Challenger Managed Investments Ltd v Direct Money Corp Pty Ltd (2003) 59 NSWLR 452 at [67]. 588. Williams v Papworth [1900] AC 563 at 568. 589. Trieste Investments Pty Ltd v Watson (1963) 64 SR (NSW) 98. 590. Closer Settlement and Public Reserve Funds Act 1906 (NSW). 591. Note that while the Torrens Assurance Fund has gained and continues to gain revenue from a levy imposed on each registration since 1992 (set at $4 since 2004: see Real Property Act 1900 (NSW) s 134), for a brief period the State Revenue Legislation Amendment Act 2010 (NSW) introduced an additional ad valorem levy on properties where the purchase price was $500,000.This levy applied from 1 July 2010 until 1 July 2011, when the Real Property Amendment (Torrens Assurance Levy Repeal) Bill 2011 (NSW) came into effect, abolishing it. That abolition was part of a state government election promise.

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However, irrespective of where money has been held, one of the main problems with the pre-2000 legislation covering the assurance scheme was the difficulty of gaining access to the money at all.592 Under the old provisions, an applicant had to embark on costly and ultimately fruitless litigation to prove that one section of the Act was inapplicable to his or her circumstances before he or she could change course and commence proceedings against the Registrar-General for damages. In a sense, the applicant was forced into a dead-end before a better course of action became available. Bryson J in Challenger Managed Investments Ltd v Direct Money Corp Pty Ltd commented that: … the workings of the previous legislative scheme encountered considerable practical difficulties in the course of public administration with complex and technical litigation in which the assurance fund was zealously defended and appeals were common, so that recourse to the assurance fund, where workings of the Torrens System imposed losses, was not yet readily available.593

Key sections of the Real Property Act — ss 120 and 129 Part 14 s 120 8.188  Section 120(2) of the Real Property Act, which is part of the suite of reforms introduced in 2000594 and operates in conjunction with s  120(1), now states that proceedings may be initiated in the Supreme Court ‘against the person whose acts or omissions have given rise to the loss or damage’ or directly against the Registrar-General.595 Section 120(1) spells out the circumstances in which a person may commence proceedings for compensation. These circumstances are where there is: (a) (b) (c) (d)

fraud, or any error, misdescription or omission in the Register, or the land being brought under the provisions of this Act, or the registration (otherwise than under section  45E) of some other person as proprietor of the land, estate or interest …

Importantly, this section requires that loss be suffered ‘as a result of ’ the operation of the Real Property Act. Section 120 takes away the former initial compulsory dead-end approach, but it has become doubtful whether the section acts as it was intended to; that is, by liberating the applicant from unnecessarily complicated and technical requirements that served to both obstruct justice and act as a disincentive in the pursuit of claims. In practice, it seems that the provision may be proving to be redundant because it does not give rise to a cause

592. The reforms were introduced by the Real Property Amendment (Compensation) Act  2000 (NSW). See further, 8.188–8.191. 593. Challenger Managed Investments Ltd v Direct Money Corp Pty Ltd (2003) 59 NSWLR 452 at [64]. 594. See Real Property Amendment (Compensation) Act 2000 (NSW). 595. Real Property Act 1900 (NSW) s 120(2)(a), (b).The drafting history and context of the 2000 amendments was discussed extensively by Kunc J in Lincu v Registrar-General [2019] NSWSC 568.

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of action itself.596 According to Challenger Managed Investments Ltd v  Direct Money Corp Pty Ltd,597 s 120 simply authorises proceedings that, if successful, will result in damages. Given that a claim for damages may be brought under the general law, the role of s 120 is therefore somewhat unclear.

Part 14 s 129 8.189  Section  129 of the Real Property Act provides a remedy against the Torrens Assurance Fund by way of an action against the Registrar-General. A claim under s 129 does not preclude a claimant also bringing a claim directly against third parties for the same loss. There also no requirement to pursue a claim under s 129 before suing third parties (ie, there is no requirement to demonstrate a ‘dead end’). Like s 120 of the Real Property Act, the loss pursuant to s  129 must also be loss or damage in respect of an interest in land, suffered as result of the operation of the Act. For the loss to be applicable under s 129 it must, according to s 129(1), arise from: (a) any act or omission of the Registrar-General in the execution or performance of his or her functions or duties under this Act in relation to the land, or (b) the registration (otherwise than under section  45E) of some other person as proprietor of the land, or of any estate or interest in the land, or (c) any error, misdescription or omission in the Register in relation to the land, or (d) the land having been brought under the provisions of this Act, or (e) the person having been deprived of the land, or of any estate or interest in the land, as a consequence of fraud, or (f) an error or omission in an official search in relation to the land, or (g) any error of the Registrar-General in recording details supplied in the notice referred to in section 39(1B).

8.190  It is notable that an award of costs under s 129(1) is not discretionary.598 8.191  Sections  120 and 129 require a connection between the Act’s operation and the loss suffered. What is the requisite causal connection?599 It would seem from Kirkland v  Quinross Pty Ltd600 that it is sufficient to demonstrate that the ‘operation of this Act’ materially contributes to the loss or damage. It would not appear necessary to establish that the Act is the dominant cause of the loss or damage. From a practical perspective,

596. For a discussion of early comparative elements between the old and new Acts, see A Mitchell, ‘Torrens Title Compensation for Loss — The Real Property Amendment (Compensation) Act  2000 (NSW)’ (2001) 9 Australian Property Law Journal 40. 597. Challenger Managed Investments Ltd v Direct Money Corp Pty Ltd (2003) 59 NSWLR 452 at [69]. 598. Chandra v Perpetual Trustees Victoria Ltd [2008] NSWSC 178; applied in Perpetual Trustees Victoria Ltd v Cipri [2009] NSWSC 335. 599. The case law on ‘causal connection’ is summarised in Chandra v  Perpetual Trustees Victoria Ltd [2008] NSWSC 78 per Bryson J and further discussed in Lincu v Registrar-General [2019] NSWSC 568. 600. Kirkland v Quinross Pty Ltd [2008] NSWSC 286 at [71]. See also the discussion in B Edgeworth, Butt’s Land Law, note 115 above pp 934-35; Elfar v Registrar General of New South Wales [2010] NSWSC 539 at [260].

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loss by way of the operation of the Act is commonly loss suffered by the registration of another, later interest under the Act.601 Although s 129 is more broadly drafted than a similar section prior to the 2000 reforms, there remains an extensive list of circumstances in which compensation is not payable. Those circumstances are recorded in s 129(2). They are loss or damage suffered by any person: (a) to the extent to which the loss or damage is a consequence of any act or omission by that person, or (b) to the extent to which the loss or damage: (i) is a consequence of any fraudulent, wilful or negligent act or omission by any solicitor, licensed conveyancer, real estate agent or information broker, and (ii) is compensable under an indemnity given by a professional indemnity insurer, or (c) to the extent to which that person has failed to mitigate the loss or damage, or (d) to the extent to which the loss or damage has been offset by some other benefit to that person that has arisen from substantially the same circumstances as those from which the loss or damage has arisen, or (e) where the loss or damage arises because of an error or miscalculation in the measurement of land, or (f) where the loss or damage arises from: (i) the breach by a registered proprietor of any trust (whether express, implied or constructive), or (ii) the inclusion of the same land in two or more grants, or (g) where the loss or damage arises from the recording, or the omitting to record, in the Register of an approved determination of native title or other matter relating to native title rights and interests, or (h) where the loss or damage arises from circumstances in respect of which this Act provides that proceedings against the Registrar-General do not lie, or (i) where the loss or damage arises from an error contained in a plan lodged in accordance with Division 3C of Part 2 of the Conveyancing Act 1919, or (j) where the loss or damage arises from the person’s failure, as mortgagee or transferee of a mortgage, to comply with section 56C or from the cancellation of a recording with respect to a mortgage in accordance with section 56C(6), or (k) where the loss or damage arises from the recording of a Registrar-General’s caveat in the Register under section 12(1)(e) or (f) or the removal of such a caveat by the Registrar-General, or

601. However, it is worth noting that the Torrens Assurance Fund would not appear to be available to compensate parties for loss arising from the electronic registry being unavailable for an extended period; see  A Henderson and H Roberts, ‘Electronic Conveyancing: What happens when the computer says “No”?’ (2022) note 559 above.

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(l) where the loss or damage arises from the execution of an instrument by an attorney (under a power of attorney) acting contrary to, or outside of, the authority conferred on him or her by the power of attorney, or (m) where the loss or damage is the result of an easement not being recorded in the Register (except where the easement is not recorded in the Register due to an error of the Registrar-General), or (n) where the loss or damage arises from the improper exercise of a power of sale, or (o) where the loss or damage arises from the operation of section 129 of the Corporations Act 2001 of the Commonwealth, or (p) where the loss or damage arises from the provision by the Registrar-General of information supplied in the notice referred to in section  39(1B) (subject to subsection (1)(g)).

Fraud and the Torrens Assurance Fund 8.192  As fraud is retained as one of the bases for compensation, the amendments may also preserve the relevant case law on fraud.The extent to which this is so will emerge over time, as the amending provisions are judicially interpreted. 8.193  Pedulla v Panetta602 provides an example of a case where the court found fraud relevant for the purposes of s  129. The plaintiff, Ms Pedulla, resided in cloisters with an order of nuns, in Italy. While she was in cloisters, her brother, Mr Panetta, with the assistance of his solicitor, fraudulently transferred the title of her property to himself. A series of mortgages were then executed by the brother, using the property as security. The brother then travelled to Italy where the plaintiff was nursing their dying father. The brother’s wife, Mrs Panetta, who had become a joint registered proprietor along with her husband, Mr Panetta, stayed in Sydney and arranged for the sale of the property, for $3.8 million. Contracts were exchanged. Pembroke J found that ‘the plaintiff knew none of this’.603 Three days later, however, her brother revealed to her that she no longer owned her home. Shortly after this, the position became irretrievable when the transfer to the new owners was registered. Ultimately, the plaintiff brought a claim against the Torrens Assurance Fund. His Honour found that there were three relevant limitations in relation to her s 129(1) claim for loss suffered as a result of the operation of the Act ‘in circumstances where, among other things, the loss arises from her “having been deprived of the land … as a consequence of fraud”’.604 The relevant limitations were that: (i) the compensation was limited to the market value of the property; (ii) her loss was not occasioned by her own acts or omissions (a limitation that the court chose not to read literally by invoking the

602. Pedulla v Panetta [2011] NSWSC 1386. For a continuation of this dispute (with the Registrar-General attempting to recover moneys from the fraudulent solicitor following this case), see Registrar-General of New South Wales v LawCover [2013] NSWSC 1471. 603. Pedulla v Panetta [2011] NSWSC 1386 at [9]. 604. Pedulla v Panetta [2011] NSWSC 1386 at [15].

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analysis in Chandra v  Perpetual Trustees Victoria Ltd);605 and (iii) the compensation is not payable in relation to any loss or damage that is compensable under an indemnity given by a professional indemnity insurer.606 On the facts, Pembroke J established the fraud and found that the plaintiff did not fall foul of the relevant restrictions contained in s 129(2). Accordingly, the plaintiff ’s claim for $3.8 million against the Torrens Assurance Fund was successful.607

Interest in land 8.194  As s 129(1)(e) of the Real Property Act maintains the requirement of a deprivation of an estate or interest in land from the earlier provisions, Robinson v Registrar-General608 would appear to remain relevant. It found that an unregistered interest, such as that of a purchaser under a contract for sale, would be sufficient to satisfy the requirement of ‘an interest in land’. In coming to his conclusion in Armour v Penrith Projects,609 Needham J commented that the Real Property Act ‘lacks an essential protection to persons who are defrauded in their interests in registered land being taken from them by forgery’. Fortunately, these concerns were somewhat redressed in New South Wales by the decision in Saade v Registrar-General that, among other things, distinguished Franzon’s interpretation of ‘erroneous registration’ and effectively broadened the group to whom compensation was payable.610

Damages 8.195  A successful claimant is entitled to be put back into the position he or she would have been in had loss not been suffered.611 Accordingly, if a claimant lost the whole of his or her land, he or she would be entitled to damages for the whole of the land.612 If an applicant succeeds in reducing loss by acquiring benefit in regard to the claim, this will be used to offset compensation should it ultimately be found payable. Hence, if a claimant lost the whole of his or her land but recovered it later, damages will only be payable to cover lost rents and profits during the period when the claimant was deprived of his or her land.613

605. Chandra v Perpetual Trustees Victoria Ltd [2008] NSWSC 178 at [11]. 606. Chandra v  Perpetual Trustees Victoria Ltd [2008] NSWSC 178 at  [16]–[18]. See  also discussion in Elfar v Registrar General of New South Wales [2010] NSWSC 539 at [228]–[235]. 607. For further discussion on this case, see, L Griggs and R 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 Australian Property Law Journal 17. 608. Robinson v Registrar-General (1983) NSW ConvR ¶55-138. 609. Armour v Penrith Projects Pty Ltd [1979] 1 NSWLR 98 at 102. 610. Saade v  Registrar-General (1993) 179 CLR 58. Saade has thus affirmed important policy considerations relating to the purpose of compensation. Indeed, the court stated that a failure to interpret the section liberally would result in ‘a lack of essential protection to persons who are defrauded’: Saade at 68. 611. Registrar of Titles (WA) v Spencer (1909) 9 CLR 641. 612. Registrar of Titles (WA) v Spencer (1909) 9 CLR 641. 613. Parker v Registrar-General [1977] 1 NSWLR 22.

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Section  129(2)(a) of the Real Property Act introduced the concept of contributory negligence into the award of damages, as the provision does not permit compensation under the Act where the loss or damage has been occasioned by an act or omission of the plaintiff.614 That the applicant in addition must do all that is possible to reduce loss and mitigate damages is also encapsulated in s 129(2)(c), a paragraph that precludes compensation in circumstances where this is not done. Further, if a claimant only suffers the possibility that he or she will be deprived of land, his or her claim will fall outside the Act and no cause of action, and consequently no damages, will arise.615

Interrelationship with other sections 8.196  Section  129(2)(h) of the Real Property Act has the effect of confirming that many former exclusions still operate.616 This section operates by way of linkage back to other sections in the Act. For example, it is tied to s 28O, which states: Notwithstanding the provisions of Parts 13 and 14, no proceedings shall be brought, and no action shall lie, against the Registrar-General for any refusal to create a qualified folio of the Register or to cancel a caution.

8.197  Importantly, the operation of s 56C of the Real Property Act also has the effect of closing off access to the Torrens Assurance Fund for mortgagees who carelessly end up with an indefeasible mortgage that secures nothing (as was the case in Yazgi v Permanent Custodians Ltd617). Under these provisions, mortgagees who fail to comply with the identity checks required under s 56C will have no recourse against either the registered proprietor or the Torrens Assurance Fund.618

Proceedings for recovery 8.198  Some of the key changes to Pt 14 of the Real Property Act brought about by the 2000 amendments reflect recommendations in the Law Reform Commission report.619 For example, s  131 of the Act incorporates the recommendation that claims be made initially and directly against the Registrar-General. Section  131 sets out ‘Administrative procedures for the recovery of compensation’, while s 132 sets out ‘Court proceedings for the recovery of compensation’ where administrative procedures do not result in a settlement. These provisions effectively encourage settlement by requiring an

614. See the discussion in Pedulla v Panetta [2011] NSWSC 1386. 615. Registrar-General v Cleaver (1996) 41 NSWLR 713. 616. Section 12A of the Real Property Act provides an example of another exception to liability. 617. Yazgi v Permanent Custodians Ltd (2007) NSWCA 240. 618. P Lane, ‘Indefeasibility for What? Interpretative Choices in the Torrens System’ in L Bennett Moses, B Edgeworth and C Sherry (eds), Property and Security — Selected Essays, Thomson Reuters, Sydney, 2010. Lane notes (in fn 89) that ‘the removal of [the words] “to the extent to which” and the substitution of “where” in paragraphs (e)–(i) of s 129(2)’, has the effect of ‘removing the possibility of a partial recovery from the fund’. 619. New  South  Wales Law Reform Commission, Torrens Title: Compensation for Loss, Report No 76, June 1996. See Real Property Amendment (Compensation) Act 2000 (NSW).

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attempt to settle administratively before a litigious path is embarked on. As such, these sections differentiate(d) the operation of the fund from similar funds in other states. Specifically, s  132(2)(a) and (b) generally prevent court proceedings from being commenced unless ‘administrative proceedings have been commenced and determined in relation to the compensable loss’. Section 132(2A) also acts to place a limitation on commencement of proceedings by requiring that proceedings must be commenced within three months of the date on which the administrative proceedings have been determined. It is possible, however, for the Registrar-General, by way of consent, or the court, by way of leave, to permit a person to initiate proceedings without making an administrative claim. In any court proceedings, the Registrar-General is the nominal defendant, pursuant to s 132(1). 8.199  Section 131(2) sets a limitation period during which administrative proceedings are to be brought. This is set at six years from the date at which the act or omission gave rise to the loss, or six years from the date on which the compensable loss arose. Clearly, this provision takes account of the fact that the loss might not arise at the time when the act or omission is done or made. The Act also includes provisions designed to allow the Registrar-General an extensive understanding of the claimant’s position. So that the claim can be adequately investigated and compensable loss assessed, it is necessary for the claimant to co-operate fully with the Registrar-General: s 131(6). Further, pursuant to s 131(7)(a), the claimant must also supply the Registrar-General with specified information. This is designed to speed up the process and lead to an early settlement.620 If no determination has been made within the 12-month limit for processing pursuant to s 131(9) or, if at the expiration of the 12 months, the claimant has not provided the necessary information to the Registrar-General pursuant to s 131(6), (7) and (7A), the claim is said to have been refused. It is then open to the claimant to seek redress via litigation and the commencement of proceedings according to s 131(10). 8.200  Another positive feature of the provisions is that they provide for the inclusion of alternative dispute resolution strategies (mediation or neutral evaluation) in order to resolve issues and keep matters out of the court.621 This reflects trends that are seen elsewhere within the legal system. In regard to subrogation, s 133(2)(a) of the Act states that the Registrar-General is subrogated to the claimant in respect to the claimant’s right to the loss against any other person against whom the claimant has a cause of action and against any professional indemnity insurer.

620. According to Land and Property Information (formerly Land Information Services), New South Wales, inclusion of this section is invaluable in allowing it to assess the situation quickly and effectively: personal communication from Greg Channel, Deputy Manager — Litigation, Land and Property Information, New South Wales, to Janice Gray 15 August 2001. 621. Real Property Act 1900 (NSW) s 135(2).

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Reform Overriding statutes and the Real Property Act 1900 (NSW) 8.201  One of the greatest weaknesses of the Torrens system in its present form is the prevalence of overriding statutes. As was evident in the discussion of Pratten v Warringah Shire Council,622 where a statutory authority relies on an overriding statute, one of the cardinal objectives of the system — the mirror principle — is undermined. Purchasers, vendors and even those who acquire interests under overriding statutes have great difficulty knowing when a registered title is vulnerable to an interest created in an overriding statute. Therefore, it is still possible for the effects of overriding statutes to take others by surprise and, as more and more statutes are passed, this situation will impact on the reliability of the Register to a greater and greater extent, unless appropriate reform is undertaken.623 In practice, this exception to indefeasibility has meant that purchasers must search not only the Torrens Register, but also each of the registers of interests of those statutory bodies that have the benefit of overriding legislation, such as the register of the NSW Department of Education or the State Transit Authority.This process has added to the cost and complexity of conveyancing. Moreover, the various reforms that have attempted to address this issue, by way of the imposition of a statutory duty on public bodies to register notices of resumption, and a duty on the Registrar-General to register such resumptions of which he or she has notice,624 do not tackle the central problem: the purchaser cannot rely on the Register to get a good title.625 Breach of these respective duties by the NSW Department of Education, for example, or Registrar-General does not give the innocent purchaser a good title.626 Although the insertion of s 42(3) of the Real Property Act 1900 (NSW) attempted to resolve the very serious issue of inconsistent legislation and the Real Property Act, the new provision cannot fully achieve its purpose, for two reasons. First, the Real Property Act is not entrenched; s 42(3) cannot bind future parliaments. Until entrenchment occurs, the question of inconsistency remains. Second, when s 42(3) was enacted a range of other Acts, such as Acts that declare ownership of assets on land, were also amended to contain provisions that state explicitly that the provisions of those other Acts prevail over s 42 of the Real Property Act. A specific form of words was used to achieve this outcome, namely that the provisions (in the other Act) are ‘to have effect despite anything contained in s 42 622. Pratten v Warringah Shire Council (1969) 90 WN (Pt 1) NSW 134. See 8.107–8.108. 623. See Law Reform Commission of Victoria, The Torrens Register Book, Discussion Paper No 3, October 1986, pp 8–9; Law Reform Commission of Victoria, The Torrens Register Book, Report No 12, November 1987, pp 3–7 and 12–15. See also B McEniery, ‘Could the Land Title Act 1994 (Qld) Be Further Amended to Better Protect Unregistered Interests?’ (2006) 26(5) Queensland Lawyer 240. 624. See Real Property Act 1900 (NSW) s 33A. 625. This is not to say that an absolutist approach should be taken to the Register. In some circumstances, recognition of unrecorded interests will be important to provide justice and fairness, but the everincreasing volume of statutes containing provisions that potentially override interests recorded on the Register is cause for concern. 626. See the discussion and recommendations in New South Wales Law Reform Commission, Torrens Title: Compensation for Loss, Report No 76, June 1996.

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of the Real Property Act 1900’. Examples of Acts that contain this formulation include Sch 4 of the Catchment Management Authorities Act 2003 (NSW); s 37(4) of the Sydney Water Act 1994 (NSW); s 5(4) of the Coal Acquisition Act 1981 (NSW); s 64(2) of the Water Industry Competition Act 2006 (NSW); and s 173(3) of the Water Management Act 2000 (NSW). The following question then arises: How are we to treat Acts that were formerly thought to contain provisions that overrode s 42 of the Real Property Act, if those Acts were not amended to specifically include this form of words (eg, s 89 of the Conveyancing Act 1919 (NSW))?627 It is suggested that perhaps timely legislative clarification of these concerns, and an annual re-enactment of s  42(3) (and the express override of any further statutes), may be more appropriate than waiting to see how the common law interprets the effects of s 42(3).

Which is preferable — deferred or immediate indefeasibility? 8.202  Case law demonstrates that there has been a tussle over whether the doctrine of deferred or immediate indefeasibility should gain supremacy. Since Frazer v Walker628 and Breskvar v Wall,629 the doctrine of immediate indefeasibility has been triumphant, but there is a striking scarcity of reference to policy reasons in the leading cases on deferred and immediate indefeasibility. Indeed, Hayne J in Vassos v State Bank of South Australia630 claimed that the terms ‘deferred’ and ‘immediate’ indefeasibility are: … no more than convenient shorthand expressions generally describing the effect of the provisions of Torrens Title legislation; they are not in any relevant sense principles from which conclusions can be drawn about the proper construction of the legislation.

However, Mahoney JA in Story v Advance Bank Australia Ltd631 came closest to identifying the dilemma when he suggested that: If a choice is to be made between an innocent registered proprietor who has become such by a forged instrument prepared by a third party, my inclination would be to preserve the rights of the old registered proprietor.

8.203  A number of reasons have been advanced to support immediate indefeasibility. One is that it is the most effective way to encourage reliance on the Register, which is a fundamental principle of the system. Yet it is hard to imagine that those who devised the system envisaged that purchasers should be allowed to be indifferent to the identity of the vendor.632 In other words, it seems unlikely that the Register was intended to be seen as a complete reflection of rights over land, absolving anyone proposing to deal with a registered proprietor from any obligation to verify his or her identity. A further reason 627. B Edgeworth, ‘Indefeasibility and Overriding Statutes: An  Attempted Solution’ (2009) Australian Law Journal 655. 628. Frazer v Walker [1967] 1 AC 569. 629. Breskvar v Wall (1971) 126 CLR 376. 630. Vassos v State Bank of South Australia [1993] 2 VR 316 at 322. 631. Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722 at 740. 632. On obligations on mortgagees to confirm the identity of mortgagors under s 56C, see further, 14.28.

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to support immediate indefeasibility is provided by Hayne J in Vassos v  State Bank of South Australia,633 where, referring to the phrase ‘except in the case of fraud’ in s 43 of the Transfer of Land Act 1958 (Vic), he said: … it is to the position of a party dealing on the faith of the Register that the section is directed both in giving protection by restricting the application of doctrines of notice and providing for an exception to that protection.

Implicit in what Hayne J says is that it is the purchaser who is in most need of protection here. By comparison, registered proprietors can keep their certificates of title in safe custody. Of course, this is a problem in cases of joint ownership, where most frauds of this nature occur. In Westpac Banking Corporation v Sansom,634 Rolfe J modified this rule. An officer of the bank witnessed the fraudulent signing of a transfer. His Honour held that the bank had a legal mortgage over the forger’s half interest, but not over the interest of the innocent party. In circumstances where banks certify that they are witnessing signatures, all registered proprietors must be present. Since s 129(1) of the Real Property Act (with the exception of para (e)) permits persons who have suffered loss or damage ‘in respect of any land’ to take proceedings, rather than requiring all claimants to have been deprived of ‘land or any estate, or interest in land’, there is not the same argument available to promote immediate indefeasibility.635 The argument formerly available was grounded in the interplay between the indefeasibility provisions and the compensation provisions.  That interplay revealed crucial differences in the way in which losses were distributed under the immediate and deferred indefeasibility regimes. For example, the defrauded party under the deferred indefeasibility regime was deprived of compensation from the fund because he or she had not been deprived of an interest in land; the void instrument could not be the source of property rights, and the registration of such an instrument did not change this. This gave rise to an argument in favour of immediate indefeasibility. That argument is no longer valid because s  129(1) (with the exception of para (e)) does not require deprivation of an interest in land as a necessary precondition for bringing a claim. Such deprivation is only one of a number of alternative ways that loss may have been suffered. 8.204  Commentators have long disagreed about which doctrine is the most desirable.636 For some, a thoroughgoing immediate indefeasibility doctrine fosters public confidence in the system,637 whereas others see it as having exactly the opposite result.638 The latter 633. Vassos v State Bank of South Australia [1993] 2 VR 316 at 326–7. 634. Westpac Banking Corporation v Sansom (1995) NSW ConvR ¶55-733. 635. See further, 8.189. 636. For further discussion, see J Schultz, ‘Judicial Acceptance of Immediate Indefeasibility in Victoria’ (1993) 19(2) Monash University Law Review 326; PN Wikrama-Nayake, ‘Immediate and Deferred Indefeasibility: The Story Continues’ (1993) 8 Law Institute Journal 733; P O’Connor,‘Registration of Invalid Dispositions: Who Gets the Property?’ in E Cooke  (ed), Modern Studies in Property Law, Hart Publishing, Oxford, 2005,  Vol 3, p 45. 637. See, for example, Butt, ‘Indefeasibility and Sleights of Hand’, note 293 above. 638. E Toomey, ‘Fraud and Forgery in the 1990s: Can Our Adherence to Frazer v Walker Survive the Strain?’ (1994) Canterbury Law Journal 424 at 427 (and see particularly the comments of Warrington-Taylor of the Victorian Law Reform Commission at 436).

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view has seen a revival in more recent times.639 Toomey’s argument is notable in this area in that she attempts to make use of empirical evidence to support her claims. In the 1990s, she argued, an increase in the number of forgeries put increasing strain on immediate indefeasibility and, in consequence, the Torrens Assurance Fund finances. Whether her conclusions are correct and relevant today remains open.640 How difficult real estate fraud is to engineer has been the subject of continued interest.641 The facts of Challenger Managed Investments Ltd v Direct Money Corp Pty Ltd,642 and Pedulla v Panetta643 suggest that rogues are becoming ever more creative.644 Accordingly, the theses of Toomey and others may deserve further attention. 8.205  A further reason given in favour of deferred indefeasibility is that it is more appropriate to compensate the transferee for the loss than the original proprietor, as the original proprietor may have an emotional attachment to the land. This is particularly so in the case of mortgagees.645 Moreover, forgeries are not immediately cured in other areas of law; for example, in the case of cheques and bills of exchange. Immediate indefeasibility is, therefore, at  odds with the general legal principle that forgeries are ineffectual.646 Furthermore, today it may be more difficult to argue that there is anything special about land that would justify its being the subject of a separate rule. As noted above, its special characteristics point more decisively in the other direction. The Victorian Law Commission recommended the adoption of deferred indefeasibility where a forged instrument is involved, on the basis that it would be more appropriate for the old proprietor to get the land back and the innocent third party to be compensated.647 If the application of this principle were to result in undue hardship, the court should be able to reverse this. The concept of ‘discretionary indefeasibility’ has been explored in Canada, again as a way of avoiding what is seen as the undesirable inflexibility of

639. See 8.26 on immediate and deferred indefeasibility. 640. R Stein in ‘The “Principles, Aims and Hopes” of Title by Registration’ (1983) 9 Adel LR 267 at 274. For some older Victorian figures, see Law Reform Commission of Victoria, The Torrens Register Book, Report No 12, November 1987, p 12. 641. See newspaper coverage, for example, L Lamont, ‘Hot Property and Dirty Deeds’, Sydney Morning Herald, 3 April 2006. (This article deals with Challenger Managed Investments Ltd v Direct Money Corp Pty Ltd (2003) 59 NSWLR 452.) 642. Challenger Managed Investments Ltd v Direct Money Corp Pty Ltd (2003) 59 NSWLR 452. 643. Pedulla v Panetta [2011] NSWSC 1386. 644. In Challenger, several individuals and the companies with which they were associated defrauded Kevin Friel and others by fraudulently applying for replacement certificates of title (on the basis that the certificates were lost). The fraudsters then used those certificates of title as security to raise $14 million from investors. Note that the facts of this case spawned criminal proceedings in the form of Alcorn v R [2006] NSWCCA 209. 645. R Edwards, ‘Immediate Indefeasibility and Forgery; Is it Really What We Want?’ (1993) 67 Law Institute Journal 730; S Robinson, ‘Claims In Personam in the Torrens System: Some General Principles’, note 261 above. 646. Edwards, ‘Immediate Indefeasibility and Forgery; Is it Really What We Want?’ note 645 above, points to s 29 of the Bills of Exchange Act 1909 (Cth), and s 32 of the Cheques and Payment Orders Act 1986 (Cth). 647. Law Reform Commission of Victoria, The Torrens Register Book, Report No 12, November 1987.

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the doctrine.648 Fears about the difficulties facing purchasers in protecting themselves are perhaps exaggerated;649 they could arrange for the vendors to be present when the transfer is signed, or could insist on an affidavit made by a solicitor verifying the validity of the signatures.650 As Stein and Stone suggest, such limited examination of title is considerably less onerous than that required for any search of old system title.651 Yet, the powerful rationale for immediate indefeasibility lies in the aspiration underpinning the Torrens system that ‘no purchaser of Torrens system land should be required to investigate the history of the vendor’s title or make inquiries that are burdensome or difficult’.652 As Mahoney JA noted in Story v Advance Bank Australia Ltd,653 it ‘is not inconsistent with a duty to take proper steps to ensure that the dealing tendered as executed by the registered proprietor has in fact been executed by it’. The introduction of s 56C of the Real Property Act may therefore represent a further step to strengthen the integrity of the processes surrounding registration (of mortgages), consistent with the preference for immediate indefeasibility.

Volunteers 8.206  There would seem to be compelling policy reasons for the interpretation that favours denying priority to a volunteer. In New  South  Wales, a volunteer is able to defeat the equities of a party who gave valuable consideration. Why should a donor defeat equities created for value by means of a voluntary transfer to a third party? This question becomes particularly important where the intention behind the transfer is to defeat creditors, as was the case in King v Smail.654 These sorts of considerations lie behind the equitable rules that distinguish between volunteers and others. It would not unduly undermine the registration system to have this same principle incorporated into the Torrens system in New South Wales, as it is in Victoria, whereby volunteers are an exception to indefeasibility.655 This would also bring the actions in personam exception into line with s  118(1)(d)(ii), which carves out an exception for indefeasibly where volunteers have obtained their title through the fraud of the donor.

648. See E Toomey,‘Fraud and Forgery in the 1990s: Can Our Adherence to Frazer v Walker Survive the Strain?’ (1994) Canterbury Law Journal 424 at 437. 649. Gim Teh, for example, suggests that ‘it would make transactions precarious’ and be ‘likely to cause transferees to be more hesitant in parting with their money in exchange for a transfer that may turn out to be a forgery or other fraud’: G Teh, ‘Deferred Indefeasibility in Victoria?’ (1991) 17 Monash University Law Review 81 at 82. 650. Edwards, ‘Immediate Indefeasibility and Forgery’, note 645 above, at 730; C Croft, ‘The Torrens System — Deferred Indefeasibility’ (1990) 4 Law Institute Journal 238. 651. Stein and Stone, Torrens Title, note 271 above, p 88. 652. Stein, ‘The “Principles, Aims and Hopes” of Title by Registration’, note 640 above, at 273. 653. Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722 at 741. 654. King v Smail [1958] VR 273. 655. See Rasmussen v Rasmussen [1995] 1 VR 613.

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Torrens Assurance Fund 8.207  Following the amendments introduced by the Real Property Amendment (Compensation) Act  2000 (NSW), s  129(2)(g) of the Real Property Act  1900 (NSW) expressly excludes any loss or damage suffered by any person: … to the extent to which the loss or damage arises from the recording, or the omitting to record, in the Register of an approved determination of native title or other matter relating to native title rights and interests …

Section 129(3)(a) of the Real Property Act extends s 129(2)(g) to either a holder of native title or a claimant for native title. Given that native title is a title that may impact significantly on the use and enjoyment of Torrens title land, it would seem inappropriate not to provide compensation for loss arising from a recording or failure to record an approved determination of native title. However, s 12C of the Real Property Act permits, but does not impose, a duty on the Registrar-General to record native title determinations. It would be unfair to find the Registrar-General liable and require compensation to flow absent such a duty. If the Registrar-General were automatically notified by the body that approved a determination of native title, and the Registrar-General were obliged to record this, the position regarding compensation could legitimately be otherwise. As it currently stands, there is little incentive for a holder of Torrens title property to have recorded that it is burdened by incidents of native title. There is also a lack of familiarity with the Torrens system on the part of many native title claimants, which may deter those claimants from notifying the Registrar-General of their successful determinations. Given the computerisation of the courts, and of government departments in New South Wales, it would seem that automatic notification by the relevant bodies may be a realistic alternative to overcome some of these problems. This would need to be followed up so that a failure by the Registrar-General to act on the notice would become actionable.

Electronic Conveyancing and the Torrens System — new risks and burdens 8.208  It is inevitable that cases will come before the courts in coming years that explore both the new and creative means to achieve fraudulent schemes that arise in an electronic conveyancing system and the unforeseen inconsistencies or errors in the implementation of that system. The larger question regarding electronic conveyancing is whether it is consistent with the underlining purpose and aims of the Torrens system. On the one hand, the electronic conveyancing reforms, and the abolition of the certificate of title, clearly supports the goals of speed and efficiency in land transactions. The original insertion of s  43A into the Act reflected the drafters’ anxiety to protect purchasers during the registration gap between settlement and registration. When operating efficiently, the electronic conveyancing system will strengthen that protection for purchasers. Considerable advantages in speed and cost also flow from the removal of paper-based transactions, and the capacity for transactions to be carried out quickly when parties are at a physical distance. The COVID-19 pandemic provides one illustration of 455

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the need for transactions to move towards a contactless arrangement, and the electronic conveyancing reforms provide one such mechanism. On the other hand, the electronic conveyancing system limits the transparency and openness of the conveyancing regime. One of the motivations for Torrens’ reforms was to move away from the private nature of the old system conveyance. While the Torrens registration system ultimately ensures that dealings in land are registered on public register, an individual will no longer conduct a conveyance in person at settlement room in the Law Society. In addition, the regulatory hurdles required to become a subscriber to an Electronic Lodgment Network (ELN) are no doubt necessary to ensure the integrity of that system. However, those rules also limit an individual’s ability to conduct important transactions themselves, and so shift power and responsibility into the hands of the registered ‘subscribers’. The allocation of risk is also yet to be fully determined.Andrew Henderson and Heather Roberts have argued that the current New South Wales regime may not provide adequate protection for parties who suffer loss in one species of electronic conveyance, where the ELN system suffers a fault.656 Currently, the threshold insurance required for an ELN is $20 million, and Henderson and Roberts argue that this may not be sufficient, given the high number of dealings that occur daily in the system. Should a system failure occur outside of an ELN the current drafting of the Torrens Assurance Fund provisions (s 129) appears to place the burden on the individual participant to prove who was responsible for the failure.This presents significant evidentiary problems, and also appears inconsistent with the fundamental principles upon which the Assurance Fund, and the Torrens system, was created. The question of risk is one illustration of the need for legislatures and law societies to consider the flow-on effects of a systemic change in conveyancing practice, such as has occurred in the transition from paper-based to electronic conveyancing, and how this will operate within the Torrens regime.

656. A Henderson and H Roberts note 559 above.

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Chapter 9

Common Property Introduction 9.1  Previous chapters have examined the different types of interests that a person may hold over property.This chapter explores some of the many ways that interests in land and, to a lesser degree, chattels and other personal property may be held in common with other owners. As in other areas of property law, the prototype of common ownership can be seen in the common law rules governing ‘co-ownership’ or ‘concurrent ownership’.These rules, with their fundamental concepts of joint tenancy and tenancy in common, continue to be of central importance in this area of property law. An examination of these concepts forms the first of the two distinct sections into which this chapter is divided. In the latter half of the 20th century, patterns of communal living developed for which the common law rules proved unsuitable. For instance, the proliferation of multiple-unit developments in the 1950s induced lawyers to resort to corporations law to formulate and regulate the rights and duties of owners. As we will see later, this ‘company title’ model was also too unwieldy to address satisfactorily all the individual and collective needs of unit-holders. In consequence, the strata titles regime was introduced.1 This area of law will be the focus of the second part of the chapter.

Co-ownership General 9.2  At common law, there were two principal ways to own property in common with other owners: joint tenancy and tenancy in common.2 Use of the term ‘tenancy’ in this context has nothing to do with leases; it embraces all forms of proprietary rights. It is, 1. 2.

For an overview of the historical context of the emergence of strata titles legislation, see A Kondos, ‘The Hidden Faces of Power: A Sociological Analysis of Housing Legislation in Australia’ in Legislation and Society in Australia, R Tomasic (ed), Allen & Unwin, Sydney, 1980, Ch 15. Two other forms of co-ownership, coparcenary and tenancy by entireties, are now obsolete. See, generally, A Moore, S  Grattan and L Griggs, Australian Real Property Law, 7th ed, Lawbook Co, Sydney, 2020, [12.15]–[12.20]. See the helpful overview of the law of co-ownership in the judgment of Murphy JA in Singh v Kaur Bal (No 2) [2014] WASCA 88 at [30]–[44].

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therefore, possible to be a joint tenant of a fee simple, a lease or an easement in the case of land, as well as being a joint tenant of personal property. Where owners are entitled to possess separate parts of the whole there is no genuine co-ownership at all, for the reason that co-ownership entitles each co-owner, in the absence of agreement, to possess the whole of the property. Despite this common feature of joint tenancy and tenancy in common, they exhibit different sets of rights, so it is necessary to examine them separately.

Joint tenancy 9.3  The central feature of joint tenancy is that each joint tenant owns the entire interest, subject only to the rights of all other joint tenants. (By way of example, it is fairly common for a married couple to be ‘joint tenants’ of the matrimonial home.) A joint tenant is not considered to own any distinct share in the property. This is reflected in the common law rule that a tenant who wished to transfer his or her entitlement to a co-tenant should do so, not by means of a conveyance, but by means of a ‘release’; that is, the joint tenant would release the other joint tenants from the rights which he or she might otherwise exercise.3 The ambiguous nature of the joint tenancy is captured in the idea that a joint tenant holds nothing on his or her own part, but rather holds the whole interest jointly. This level of intimacy of co-ownership is reflected in two distinct features of the joint tenancy: (i) the four unities; and (ii) the right of survivorship, or jus accrescendi.4

Four unities 9.4  Unity of possession  For a joint tenancy to exist, each joint tenant must be entitled to unity of possession. ‘Unity of possession’ refers to the right of each tenant to enjoy possession of the entire interest. Indeed, unity of possession is a requirement for all co-ownership.Thus, it is the only requirement that of necessity is shared with tenancies in common. If one co-owner occupies the entire property, the other cannot sue in trespass in the absence of ‘ouster’.5 No co-owner can lawfully exclude the other co-owner or co-owners from occupation of the entire property. 9.5  Unity of interest  A joint tenancy cannot exist unless all joint tenants hold the same interest in the property. For example, if A is given the fee simple of Top Paddock and B is given a life estate over the same land, there can be no joint tenancy. A and B will hold a tenancy in common while B is alive. It is possible, however, for two joint tenants to be given a joint leasehold even if one is also entitled to the reversion on the expiry of the lease. For example, a grant ‘to A and B as joint lessees for 10 years, thereafter in fee simple to B’ will result in a joint tenancy of the lease for 10 years, because there is unity of interest in respect of the particular interest they share. 9.6  Unity of title  Each joint tenant must acquire his or her right to possess and his or her unity of interest by virtue of the same instrument or act of adverse possession. If, after 3. Wright v Gibbons (1949) 78 CLR 313. 4. See support for this analysis in the comments of Kirby and Crennan JJ in Director of Public Prosecutions for Victoria v Le (2007) 232 CLR 562 at [99]. 5. For ‘ouster’, see 9.54.

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9.9

the joint tenancy has arisen, one of two joint tenants purports to transfer his or her rights as a joint tenant to a third party, a tenancy in common in respect of that share will arise, because unity of title has been fractured. In this instance, the transaction will amount to a severance of the joint tenancy.6 9.7  Unity of time  This requirement specifies that even where the co-owners receive their interests at the same time and in the same instrument, if the time of vesting of the respective interests is different, a tenancy in common, not a joint tenancy, will result. Thus, a transfer ‘to A and B in fee simple when they reach 18’ will result in a tenancy in common if A and B do not share the same date of birth.7

Right of survivorship 9.8  The right of survivorship, or the jus accrescendi, is the right of all joint tenants to have their rights enlarged on the death of a co-joint tenant simply by being freed from the rights of the deceased.8 One consequence of the right of survivorship is that it prevents the deceased co-owner leaving his or her interest by will, as the interest of a joint tenant is extinguished on death, and hence does not survive for the benefit of the estate.9 Apart from this limitation, a joint tenant has an unrestricted freedom to dispose of an interest inter vivos (ie, while alive) by severance.10 Where there is doubt as to the time of death of joint tenants — for example, in the case of a car crash in which both joint tenants were killed, apparently simultaneously — the younger joint tenant is presumed to have survived the older, so that the right of survivorship works to the advantage of the younger’s estate.11 Where, however, the court is otherwise able to come to a view on the balance of probabilities as to the actual order of death, it is not obliged to apply the statutory presumption.12 9.9  One decision, at first, seems to raise some difficulties for the view that the interests of a joint tenant immediately cease on death. In Re Franklin13 a brother and sister were joint tenants, although for more than 15  years the sister had not had anything to do with the property. On the brother’s death, his son claimed that his father had effectively 6. 7.

For severance, see 9.25–9.53. P Butt, Land Law, 6th ed, Thomson Reuters/Lawbook Co, Sydney, 2010, p 226, suggests that the effect of s 44(2) of the Conveyancing Act 1919 (NSW) may be that the unity of time requirement no longer applies in NSW. However, there seems to be no authority on the point so far. 8. The rights of the joint tenant were graphically described as the ‘gamble of the tontine’ by Deane J in Corin v Patton (1990) 169 CLR 540 at 573; cited in Trustees of the Property of John Daniel Cummins (a bankrupt) v Cummins (2006) 224 ALR 280 at [60]. 9. Gould v Kemp (1834) 2 My & K 304 at 309–10; 39 ER 959 at 962. 10. As to severance, see 9.25–9.53. 11. Conveyancing Act 1919 (NSW) s 35.This provision was originally found in UK legislation, the operation of which is discussed (and criticised) in J Brown and M Pawlowski,‘Joint Tenancies and English Commorientes: A Question of Survivorship or Severance?’ (2011) 1 Property Law Review 122–34. 12. See NSW Trustee and Guardian v State of New South Wales [2015] NSWSC 1121. See also Re Kumar [2017] VSC 81 at [59]–[61], applying a similar Victorian provision; and Re Tucker; Nunan v Aylward [2019] VSC 210, where the order of death was uncertain as husband and wife had both been murdered in the same incident. 13. Re Franklin [2009] VSC 496.

459

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dispossessed his aunt, and hence that he, rather than his aunt, should be able to inherit the property. Kaye J in the Supreme Court of Victoria agreed.The decision involves a number of complexities, including how one joint tenant can dispossess another when the other always retains an equal right to possession.14 Here, Kaye J acknowledged that there was no property right flowing from the deceased’s joint tenancy once he had died, but concluded that the rights arising from the actual possession still existed and could be bequeathed to an heir.15 A specific Victorian statutory provision, s 14(4) of the Limitation of Actions Act 1958 (Vic), also supported this result.16

Tenancy in common 9.10  A tenancy in common requires only one of the four unities above — unity of possession.Two separate grants of Top Paddock to A and B that give A a one-quarter share and B a three-quarter share would confer on each a right to occupy the whole property. As we have seen above, in the absence of this particular shared right there is no co-ownership of any sort. Tenancies in common may have more of the unities, or indeed all of them. Even when all the unities are present, however, there is no right of survivorship in the case of a tenancy in common: the size of each tenant’s share is fixed from the time of creation of the interest or by subsequent dealings.17 It follows that, on the death of a tenant in common, his or her share passes by will or, if there is no valid will, by intestacy. A measure of the lesser degree of intimacy of holding by tenants in common is that they are said to hold in ‘undivided shares’; that is, they each hold an identifiable fraction of the interest which has not yet been formally divided up between them.

Creation of co-ownership — joint tenancy or tenancy in common? General 9.11  One consequence of the operation of trusts on proprietary interests is that the legal interest may be held separately from the equitable interest.18 This principle applies equally to joint tenancies and tenancies in common, so that joint tenancies and tenancies in common can exist at law or in equity.The simplest case of co-ownership is where A and B are the legal co-owners of property and are entitled to it beneficially in the same way. The equitable interest and the legal interest in the property may, however, be held in different ways. Thus, A and B might hold the legal interest as joint tenants on trust for C and D as tenants in common; or they might hold the legal interest as joint tenants on trust for 14. See 9.62 below, where adverse possession by one co-owner against another is discussed. 15. For discussion of adverse possession, see Chapter 5. 16. For further comment, see N Skead, ‘Giveth with One Hand, Taketh Away with Possession?’ (2010) 19 Australian Property Law Journal 103. It is worth noting that the aunt, who may have claimed the property, played no part in the litigation, and hence no real opposition was presented to the plaintiff ’s application to be registered. 17. That is, a tenancy in common may exist even if all ‘four unities’ are present. In addition to the four unities, a joint tenancy will only come into existence when it has actually been created, by, for example, a disposition using the appropriate terminology. 18. See, generally, Chapter 6.

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Common Property

9.13

themselves as tenants in common.19 Equally, A might hold the legal interest on trust for B and C as joint tenants or tenants in common.Trusts in relation to co-owned property will commonly be created expressly; but they may also be implied in certain circumstances in the form of ‘resulting trusts’ or ‘constructive trusts’. Before examining how tenancies in common and joint tenancies arise in equity, it is necessary to look at how they come into effect at law. Then the statutory amendment of these rules will be considered.

At law 9.12  A joint tenancy or a tenancy in common can be created at  common law by special, express words. In order to create a joint tenancy expressly, words such as ‘to A and B jointly’ or ‘to A and B as joint tenants’ could be used. However, in the absence of words demonstrating an express intention to create either a joint tenancy or a tenancy in common, the common law presumed a joint tenancy. The joint tenancy was, therefore, the default position. There are two reasons frequently advanced to explain this historical preference. First, the joint tenancy was more compatible with the efficient collection of feudal revenues: on the death of a joint tenant, services would simply be due from the survivors, rather than from the survivors in addition to the deceased’s (possibly many) heirs. Second, conveyancing was made simpler by the joint tenancy: a transfer of co-owned land could be effected by survivors, rather than the potentially much larger number of survivors and heirs. 9.13  There were three situations under the common law in which creation of co-ownership would create a tenancy in common at law: 1. where one of the four unities was not present;20 2. by using ‘words of severance’; or 3. by otherwise evincing an intention to create a tenancy in common. Words of severance are express words that indicate that each co-owner is to take a distinct share in the property, as opposed to owning the entire interest jointly. Expressions such as ‘to A and B in equal shares’,21 ‘to share and share alike’,22 ‘to be divided between’23 and ‘equally’24 have all been held to be words of severance. Also, even if no words of severance are used, a consideration of the gift as a whole might indicate that a tenancy in common was intended. In Surtees v Surtees,25 a testator left property to his sons for life and provided that, on their separate deaths, any rents to which they were entitled should pass

19. An example of such a situation would be where there has been a severance of the joint tenancy that would be recognised by principles of equity, but the severance has not yet been formalised through a procedure required to create a legal severance, such as registration. 20. See 9.4–9.7. 21. Payne v Webb (1874) LR 19 Eq 26. 22. Heathe v Heathe (1740) 2 Atk 121. 23. Peat v Chapman (1750) 1 Ves Sen 542. 24. Lewen v Dodd (1595) Cro Eli 443. 25. Surtees v Surtees (1871) LR 12 Eq 400.

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to their respective male heirs. The court held that the general intention was that the sons should take as tenants in common.

In equity 9.14  Equity took a different approach to that taken by the common law. It leant in favour of a tenancy in common. In particular, equity would presume a tenancy in common in three situations. 9.15  Where co-owners contribute different amounts to the purchase price  If co-owners have contributed different amounts to the purchase price of a property, they will usually hold shares as tenants in common in equity in proportion to their respective contributions. For instance, if land is conveyed to A and B ‘as joint tenants’, they take at law as joint tenants; but if their respective contributions are one-quarter and three-quarters of the purchase price, equity will presume that they hold the legal estate on trust for themselves beneficially as tenants in common, with A entitled to one-quarter and B to three-quarters.26 This principle applies regardless of how the legal estate is held, so that if B’s name was not on the conveyance or certificate of title and, therefore, A was the sole proprietor of the legal estate, A would still hold on trust for them both in proportion to their respective contributions. By contrast, if they contributed equal amounts, equity would follow the law. They would be presumed to be joint tenants in equity.27 In each of these cases, a resulting trust is imposed by equity.28 9.16  The presumptions outlined above are rebuttable. For example, if it is clear that the parties who made different contributions wished to hold beneficially as joint tenants, as in a conveyance to A and B ‘as joint tenants both in law and in equity’, no presumption will arise.This was the situation in Pink v Lawrence,29 where the fact that one transferee had paid nothing towards the purchase price, and had her name on the contract merely to satisfy the mortgagee, did not activate the equitable presumption because the contract contained an express declaration of trust. 9.17 In Trustees of the Property of John Daniel Cummins (a  bankrupt) v  Cummins,30 the High Court held that where the parties to a marriage contribute different shares to the purchase of the matrimonial home, but are expressed to take as joint tenants, it can usually be assumed that they intend to take equal shares, rather than the proportionate shares that would be required between other parties. There is no occasion for equity to fasten upon the registered interest held by the joint tenants a trust obligation representing differently proportionate interests as tenants in common.

26. Bull v Bull [1955] 1 QB 234. 27. Jackson v Jackson (1804) 9 Ves Jun 591. But see now s 26 of the Conveyancing Act and 9.20. 28. Delehunt v Carmody (1986) 161 CLR 464. See, generally, Chapter 6. It should be noted that the presumption of advancement will apply in cases of property put in the name of a wife, fiancée or child, except where this presumption is clearly rebutted. See 6.30. 29. Pink v Lawrence (1978) 36 P & CR 98. 30. Trustees of the Property of John Daniel Cummins (a bankrupt) v Cummins (2006) 224 ALR 280.

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9.19

The subsistence of the matrimonial relationship, as Mason and Brennan JJ emphasised in Calverley v Green,31 supports the choice of joint tenancy with the prospect of survivorship.32

(Of course, whatever the shares in matrimonial property that married parties hold, those shares may be adjusted by virtue of an order of a court exercising jurisdiction under the Family Law Act 1975 (Cth) in proceedings under that Act.) 9.18  Where co-owners advance money on mortgage  Equity will presume a tenancy in common where two or more co-owners advance money on mortgage, whether in equal or unequal shares. The reason for the presumption is that, in normal circumstances, co-owners in such an arrangement would wish to get back their own investment.33 This presumption is also rebuttable. By ss 96A and 99 of the Conveyancing Act 1919 (NSW), a joint account clause is implied in mortgages. These provisions have the effect of making mortgagees joint tenants for the purposes of repayment of the loan by the mortgagor. Accordingly, a receipt from one mortgagee will bind all of them, thereby obviating a practical problem facing the mortgagor on the death of a mortgagee: if the mortgagees hold as tenants in common, the personal representative of the deceased mortgagee has to sign the discharge. However, the mortgagees remain tenants in common as between themselves, so there is no right of survivorship. 9.19  Partnership assets Property acquired by a partnership, or as part of a joint business venture, is deemed to be held in equity under a tenancy in common.34 Again, this presumption is based on the normal expectation of parties engaged in a commercial enterprise that the right of survivorship should not apply. In Roda v Roda,35 a gift of a commercial property had been made by Mr Roda senior to his wife and their son as ‘joint tenants’. Later, after a marriage breakup, it was argued by the son that in fact this amounted to an equitable tenancy in common. The Family Court Full Court accepted that the arrangement, while not a formal ‘partnership’ between mother and son, was in effect a commercial arrangement, and hence analogous to the old partnership cases where a deemed tenancy in common would be created.36 Equity would also presume a tenancy in common where circumstances indicate a general intention to hold as tenants in common. So, where holders of a joint tenancy at law agreed to occupy separate, differently sized parts of business premises, and agreed to be separately invoiced for rent, they were deemed to be tenants in common in equity in shares proportionate to their respective interests.37 It follows that the above three categories Calverley v Green (1984) 155 CLR 242 at 259. Trustees of the Property of John Daniel Cummins (a bankrupt) v Cummins (2006) 224 ALR 280 at [72]. Morley v Bird (1798) 3 Ves 628. Lake v  Craddock (1732) P Wms 158. But while accepting this principle, see  Bassett v  Cameron [2021] NSWSC 207, [740]–]761] where the interest of a husband and wife who were partners with others, was held as between them to be an equitable joint tenancy. 35. Roda v Roda [2013] FamCAFC 27. 36. Roda v Roda [2013] FamCAFC 27 at [65]–[66]. 37. Malayan Credit v Jack Chia-MPH Ltd [1986] 1 WLR 590. Affirmed by the High Court in Trustees of the Property of John Daniel Cummins (a bankrupt) v Cummins (2006) 224 ALR 280 at [61]–[62]. 31. 32. 33. 34.

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(unequal contributions, mortgagees and partnership assets) are not ‘rigidly circumscribed’ for the purposes of the equitable presumption.38

Statutory reform 9.20  A set of presumptions that may have seemed appropriate under feudalism has more recently come to look quite inappropriate. Accordingly, by s 26(1) of the Conveyancing Act, a statutory presumption in favour of a tenancy in common has replaced the common law’s preference for joint tenancies. Section 26(1) provides: 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.

It follows that, since the enactment of this amendment, if an instrument fails to provide expressly for a joint tenancy, a tenancy in common will be presumed. The Act preserves the policy of fostering conveyancing efficiency by creating an exception in favour of executors, administrators, trustees or mortgagees, as well as providing for the creation of express joint tenancies.39 Where a person holds an interest both in the capacity of executor of a will and also as a beneficiary under the will, the statutory presumption of a joint tenancy will apply to the legal estate, and the statutory presumption of a tenancy in common will apply to the beneficial interest.40 9.21  Section 26(2) provides that the default rule provided by s 26(1) does not apply where the instrument creating co-ownership ‘expressly provides that persons are to take as joint tenants’. In Minter v Minter,41 the question arose whether this meant that an express provision for ‘joint tenancy’ would override the established rules that had developed as to where equity would deem that a tenancy in common had been created. Santow J ruled that it did not; where a document described the parties as ‘joint tenants’ but they took unequal shares (and hence one of the four unities was not present), equity would still deem them to be tenants in common.42 Three further questions arise in relation to the operation of s 26. First, does it apply to legal and equitable interests, given that primary emphasis is given to ‘a disposition of the beneficial interest’ in the section? Second, does it extend to Torrens title land? And third, is the term ‘any property’ broad enough to cover chattels as well as land?

38. Malayan Credit v Jack Chia-MPH Ltd [1986] 1 WLR 590 at 596 per Lord Brightman. 39. Conveyancing Act 1919 (NSW) s 26(2). For a case where the exception in relation to mortgagees operated, see Equititrust Ltd v Franks (2009) 258 ALR 388 at [55] and [85]. 40. Mitchell v  Arblaster [1964–65] NSWR 119. See  Valverde v  Inch [2018] NSWSC 366 for a similar fact situation, where a brother and sister held on the face of the documents as ‘joint tenants’ as executors of an estate, though were also equal beneficiaries.Their interests as beneficiaries were held as tenants in common pursuant to s 26 — see [99]. 41. Minter v Minter (2000) 10 BPR 18,133. 42. Minter v Minter (2000) 10 BPR 18,133 at [59].

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Common Property

9.23

9.22  Legal and equitable interests  In Delehunt v Carmody,43 s 26(1) was held to apply to legal and equitable interests, so that a disposition in favour of A and B will give rise to a tenancy in common at law and in equity. Further, the High Court held that the provision was broad enough, in light of the legislative preference for tenancies in common, to cover a disposition to A alone where A and B contributed equally to the purchase price, so that they hold beneficially as tenants in common. Even though the section  is expressed to apply only to ‘a disposition … to or for two or more persons …’ (emphasis added) and is, therefore, not directly applicable to this fact situation, it operates indirectly. By overturning the general common law presumption in favour of joint tenancies, it affects the equitable presumption that, when parties contribute equal sums to the purchase price of property, they hold as joint tenants. The reason for such an interpretation is that ‘If equity follows the law, it will follow the rules of law in their present state’;44 that is, their state under the Conveyancing Act. 9.23  Torrens title land  Section 100(1) of the Real Property Act 1900 (NSW) provides: Two or more persons who may be registered as joint proprietors of an estate or interest in land … shall be deemed to be entitled to the same as joint tenants. [Emphasis added]

One reading of this provision suggests that under the Torrens system, the old common law presumption overrides the statutory presumption of a tenancy in common from s 26 of the Conveyancing Act. In Hircock v Windsor Homes (Development No 3) Pty Ltd,45 the Court of Appeal had to decide whether s 26 applied to leases of Torrens title land. Also relevant to this question was how s 26 related to s 100(1) of the Real Property Act.The court resolved the difficulty by referring to an implausible consequence of this interpretation: the parties would be deemed to hold as tenants in common prior to registration, and joint tenants afterwards. Instead, the court concluded that the term ‘joint proprietor’ was used as ‘a new statutory expression’ to import the law relating to joint tenancies into the Torrens system. It followed that parties registered as ‘joint proprietors’, or joint tenants, would have the same rights as joint tenants at common law.46 It follows that s 100(1) does not mean that all registered co-owners would be deemed to be joint tenants. So it would not apply where no express provision was present in the registered instrument. In these circumstances, s  26(1) of the Conveyancing Act would operate to imply a tenancy in common. In Hircock, the court went on to hold that s 26(1) provides a rebuttable presumption in favour of a tenancy in common; where the intention of the parties was otherwise, a joint tenancy would arise. Where two elderly tenants were 43. Delehunt v Carmody (1986) 161 CLR 464 at 472–3 per Gibbs CJ. 44. Delehunt v Carmody (1986) 161 CLR 464 at 473 per Gibbs CJ. For a more recent case holding that parties who contributed equally to a property when de facto partners held as tenants in common, not joint tenants, due to the impact of s 26 of the Conveyancing Act, see Falloon v Madden; Madden v Madden [2012] NSWSC 652 at [161]. 45. Hircock v Windsor Homes (Development No 3) Pty Ltd [1979] 1 NSWLR 501 at 506 per Hutley JA. 46. Hircock v Windsor Homes (Development No 3) Pty Ltd [1979] 1 NSWLR 501 at 506 per Hutley JA.

465

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Property Law in New South Wales

granted a lease with an option to renew, but which would expire on the death of the survivor, though it was not described as a joint tenancy, the circumstances indicated a clear intention to create one in relation to the lease and option.47 This intention rebutted the presumption within s 26(1) so as to allow the survivor alone to exercise the option.48 Note that the High Court, in its decision in Cassegrain v Gerard Cassegrain & Co Pty Ltd,49 has stressed that not all features of the common law of joint tenancy will necessarily be reflected in property held as ‘joint proprietors’ under the Real Property Act. In particular, while at  common law it was arguable that one joint tenant, to some extent, may have had their title ‘infected’ by fraud committed by their other co-owner,50 such a result did not necessarily follow where a Torrens transfer was made to a husband and wife as joint proprietors. In that case, while the husband was guilty of fraud, the wife’s title was not affected.51 9.24  Application to chattels  Section 26 of the Conveyancing Act also applies to chattels.52 However, as the New South Wales Court of Appeal noted in De Lorenzo v De Lorenzo,53 there is some doubt as to whether shares in a company (which are ‘choses in action’) can be held at common law by tenants in common, and s 26 does not seem to resolve the issue. (It was accepted that a tenancy in common of shares in equity was possible.)

Severance of joint tenancy 9.25  A joint tenant has complete freedom to dispose of his or her interest inter vivos (ie, to another living person). This form of transfer is referred to as ‘severance’ because it has the effect of fracturing the joint tenancy once and for all in relation to the share that is sundered from the other interests.54 Because there is still co-ownership, the severed share 47. See Hircock v Windsor Homes (Development No 3) Pty Ltd [1979] 1 NSWLR 501 at 503 where Hope JA notes that ‘express’ as used in s 26(2) of the Conveyancing Act does not require the use of any particular form of words. 48. In practice, as Butt notes, the requirement to state in the registrable instrument whether parties hold either as joint tenants or tenants in common renders the meaning of ‘joint proprietors’ something of an irrelevance: Butt, Land Law, note 7 above, p 223. 49. Cassegrain v Gerard Cassegrain & Co Pty Ltd (2015) 254 CLR 495. 50. See Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572 at 579–80 at [17]. 51. See  Cassegrain v  Gerard Cassegrain & Co Pty Ltd (2015) 254 CLR 495 at  [44]–[55] per the majority (French CJ, Hayne, Bell and Gageler JJ); compare Keane J, dissenting, at [111]–[117]. For comment on the decision, see R Acland, ‘Joint Tenancy, Fraud, Agency and Volunteers under the Torrens System: Cassegrain v Gerard Cassegrain & Co Pty Ltd’ (2015) 4 Property Law Review 186–96. 52. Registrar-General of New South Wales v Wood (1926) 39 CLR 46. 53. De Lorenzo v De Lorenzo [2020] NSWCA 351. 54. Although, as Kevin Gray and Susan Gray point out, there is a ‘logical difficulty’ with the idea of severance, for the reason that the joint tenant does not have a pre-existing ‘share’ to sever. Consequently, ‘[i]n some curious dislocation of time and causation, the completed act of transfer brings into being the very “interest” which purported to be subject matter of the transfer in the first place’: K Gray and S Gray, Elements of Land Law, 5th ed, Oxford University Press, Oxford, 2009, p 946. However, in Peldan v Anderson (2006) 229 ALR 432 at [19], the court referred to the comments of Dixon J in Wright v Gibbons (1949) 78 CLR 313 at 333 that, in fact, the law had always been prepared to recognise ‘the aliquot share of each [joint tenant] … as a distinct and ascertained proprietary interest’ for the purposes of alienation. Hence, while slightly misleading, the language of ‘share’ will continue to be used here.

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9.28

is held in common with the other co-owners. So, where A, B and C are joint tenants, and C transfers her share to D, A and B remain joint tenants — there is nothing that C can do unilaterally to change their relationship — but D will hold a one-third undivided share as tenant in common. In a mathematical vein, Deane J in Corin v Patton55 described this process as follows: where the number of joint tenants is n, in the event of the severance by one of them, the non-severing n − 1 co-owners each hold (n − 1)/n of the original interest as joint tenants. The effect of the transaction in this example is that C will have deprived A and B of their right of survivorship to her share, and she will have lost her right to succeed to the shared interest held by A and B.56 It is for this reason that the common law freely allowed severance: the severing joint tenant confers exactly the same rights on the other joint tenants as he or she gains by that act. No unfairness or hardship can flow from the right of survivorship if it can be readily avoided by severance.57 9.26  To change the above example, suppose C sells her interest to B, rather than D. At common law the appropriate mechanism would be a ‘release’ of her interest by C to B, rather than a ‘transfer’, as both parties already hold an undivided interest in the property.58 B will then hold two different interests. First, B will remain a joint tenant with A as to the remaining unsevered part of the property. Second, B will also hold C’s one-third share with A as tenant in common. It follows that, on B’s death, A would become entitled to a two-thirds share by survivorship, and would hold C’s former share as tenant in common with B’s estate. 9.27  Severance of a joint tenancy can be effected in six ways: 1. 2. 3. 4. 5. 6.

by a unilateral act by a joint tenant acting on his or her own share; by a mutual agreement among the joint tenants; by a course of dealing among the joint tenants;59 by court order; in cases of unlawful killing; and on bankruptcy.60

Unilateral act by one joint tenant 9.28  Consistent with the freedom of alienation that each joint tenant has, a unilateral act by one joint tenant acting on his or her own share will sever the joint tenancy. A joint tenant may effect a severance in the following three separate ways by unilateral action: 55. Corin v Patton (1990) 169 CLR 540 at 575. 56. Wright v Gibbons (1949) 78 CLR 313. 57. Cray v Willis (1729) 2 P Wms 528. See also Singh v Kaur Bal (No 2) [2014] WASCA 88 at [37], quoting Professor Butt: ‘Severability is the “escape hatch” available to each joint tenant’. 58. See Wright v Gibbons, note 56 above, at 331 per Dixon J. 59. Williams v Hensman (1861) 1 J & H 546 at 557–8 per Page-Wood VC describes each of the first three elements of this list. 60. For a helpful overview of the law relating to the severance of joint tenancies, see Mischel Holdings Pty Ltd (in liq) v Mischel [2013] VSCA 375 at [56]–[72].

467

9.28

Property Law in New South Wales

1. alienation to a third party — which may involve either the alienation of the joint tenant’s entire interest, or the alienation of only a part of the joint tenant’s interest; 2. alienation to self; and 3. declaration of trust. Severance may operate at law or in equity.61 9.29  Alienation to a third party An alienation of the joint tenant’s entire interest will be effective at law where the legal estate is transferred. In the case of old system title land, this will be achieved where a deed has been used to transfer the legal estate.62 If A, B and C are joint tenants at law, and A executes a deed in favour of D, D will become a tenant in common with B and C. Alternatively, as noted above,63 if A transfers (releases) his or her share to B, B will have two different interests: a one-third share as tenant in common with C; and a joint tenancy in respect of the unsevered two-thirds share with C.64 In the case of Torrens title land, the legal estate will pass on registration of the transfer.65 9.30  In equity, a severance will occur where a joint tenant has entered into a specifically enforceable contract to transfer his or her share to a third party, because this transaction will give the purchaser an equitable interest in the joint tenant’s share.66 The severance in equity will not affect the legal estate; it will remain a joint tenancy, but held on trust for the purchaser as a tenant in common. 9.31  A more difficult question arises in the case of severance by means of a gift in equity. In accordance with the maxim that ‘equity will not perfect an imperfect gift’, mere execution of an instrument in favour of the donee will not be enough to confer an equitable interest.67 The maxim does not, however, mean that equity will never recognise an effective gift. To be effective in equity, the donor must have done all that is necessary to be done on his or her part to put the donee in a position to acquire the legal title. For Torrens title land, this requires the donor not only to execute validly a transfer in favour of the donee, but also to hand over the certificate of title, or give irrevocable authority for its production if it is held by someone else. In Corin v Patton,68 the terminally ill joint tenant of Torrens title land purported to sever the joint tenancy by making a gift of her interest in the land in favour of her brother, who was to hold the land on trust. She executed a 61. For a general overview of the area around various Commonwealth jurisdictions, see H Conway, ‘“Leaving Nothing to Chance?”: Joint Tenancies, The “Right” of Survivorship, and Unilateral Severance’ (2008) 8 Oxford Uni Commonwealth L Jnl 45. 62. Conveyancing Act 1919 (NSW) s 23B(1). 63. See 9.25. 64. Wright v Gibbons (1949) 78 CLR 313. 65. Real Property Act 1900 (NSW) s 42. See, generally, Chapter 8. 66. Lysaght v Edwards (1876) 2 Ch D 499. 67. Australian courts have never adopted the view put forward by Lord Denning MR in Burgess v Rawnsley [1975] Ch 429 at 439, that an effective severance of a joint tenancy occurs when there is proof of a mere intention to sever. In Hulme v Schaecken [1999] NSWSC 1291, for example, it was held that even the filing of an application to sever the tenancy did not of itself sever the tenancy unless and until some order was made. See Re Wilson [2019] VSC 211 at [41] confirming the rejection of the Burgess approach. 68. Corin v Patton (1990) 169 CLR 540.

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Common Property

9.33

memorandum of transfer and an instrument of trust, but failed to give him the certificate of title, or arrange for its production for the purposes of registration (it remained in the custody of the mortgagee of the land). She died before either of these steps was taken. As there was no registration, there could be no severance at law. The High Court held that there was no severance in equity either, because she had not done everything that it was necessary for her to do to put the vesting of the legal estate within the control of her brother, and beyond the recall of herself. The gift was therefore imperfect. 9.32  Equally, where a joint tenant executed a transfer, and gave written and signed authority to the solicitor who had custody of the certificate of title to produce it for the purposes of registration, but died before this happened, the gift was held not to be severed in equity where the solicitor declined to do so on the grounds that the other joint tenant had not consented to its production.The donor had not done all that was necessary to arm or equip the donee with the means of securing registration of the transfer by himself.69 The refusal to produce the certificate by the person who has custody of it (the bailee), whether in the capacity of co-joint tenant, mortgagee or solicitor, will prevent perfection of the gift in equity.70 9.33  This difficulty has been partly remedied by an amendment to s  97 of the Real Property Act. It is now possible for a joint tenant to register a transfer to himself or herself in order to sever the joint tenancy without the need for production of the certificate of title. The section  provides that the Registrar-General may require, before recording the instrument executed by the joint tenant, the names and addresses of the other joint tenants, and a statement that the severing joint tenant is not aware of any limitation on his or her capacity to sever, for instance, ‘from the capacity in which the person holds an estate or interest in the land concerned or from a private agreement’.71 The Registrar-General must then notify the other joint tenants.72 The purpose of this obligation is to give the non-severing joint tenants the opportunity to raise any legal objection they might have to the severance. Such a notice is governed by s 12A(2) and (3) of the Real Property Act, which provides that the Registrar-General may refuse to register the dealing until the expiration of the notice period for the severance. Once the notice period has expired, the person who receives notice has no remedies against the Registrar-General in respect of registration of the dealing which severs the joint tenancy.73

69. Costin v Costin (1997) NSW ConvR ¶55-811 (CA). It is perhaps worth asking what more the donor could have done in these circumstances. But the case illustrates the firm principle that a gift is not complete until custody of the certificate of title has been transferred. 70. For another example of a case where a severance did not succeed because the certificate of title could not be produced, see Craigie & Harley v Kemp [2016] WASC 243. 71. Real Property Act 1900 (NSW) s 97(2)(b). 72. Real Property Act 1900 (NSW) s 97(5). 73. For criticism of this reform, see 9.131.

469

9.33

Property Law in New South Wales

In preliminary proceedings in McCoy v Estate of Peter Anthony Caelli,74 the deceased son (who was a joint tenant with his mother) had signed a registrable transfer to himself, but it had not been registered under s 97 before his death.The court held that, as the transfer had not been lodged before death, the joint tenancy remained on foot, and ordered that the Registrar-General not register the severance document.75 In final proceedings in McCoy v Caelli,76 White J confirmed that the mother succeeded to the whole of the property by survivorship. His Honour held that the question in cases of unilateral severance was different to those situations where there was a purported severance by gift or transfer to a third party. In cases involving attempted use of s 97, the severance is not achieved (even if the registered proprietor has done all that they can do) until actual registration.77 In Anderson v Anderson,78 the daughter of one joint tenant served a s 97 notice severing the joint tenancy between her father and his former wife. Her father was at  the time incapable of acting for himself.While Hallen J ruled that in the circumstances the daughter did not have proper authority under a power of attorney to file the application, once the document had been registered and the joint tenancy severed by operation of registration, it was held that the doctrine of indefeasibility under the Torrens system cured the defects of the document, and the tenancy had been validly severed.79 9.34  In the case of both Torrens title and old system title land, a gift will be perfect in equity where the donor has executed a document that satisfies s  23C(1)(a) of the Conveyancing Act 1919 (NSW); that is, a signed document in writing. At this point, the donor will hold his or her legal or equitable interest on trust for the donee. The question arises whether an agreement among joint tenants that none of them will sever the joint tenancy is effective to prevent such severance. In Anderson v O’Donnell,80 a mother and daughter held a home unit as joint tenants. The mother filed a document under s  97 of the Real Property Act severing the joint tenancy. The daughter tried to resist the severance on the basis that there was an implied agreement that the tenancy not be severed, but Windeyer J ruled that on the evidence there was no such agreement. His Honour seemed to assume, however, that if there had been such an agreement it might have prevented the severance.81

74. McCoy v Estate of Peter Anthony Caelli [2008] NSWSC 986. 75. For comment on the case, see H Conway, ‘When is a Severance Not Actually a Severance?’ (2009) 16 Australian Property Law Journal 278–88 (though note that the case citation used in the article is in error). 76. McCoy v Caelli [2010] NSWSC 1233. 77. See the discussion in [2010] NSWSC 1233 at [45]–[50]. 78. Anderson v Anderson [2016] NSWSC 1204. 79. See the lengthy discussion in Anderson v Anderson [2016] NSWSC 1204 at [356]–[400], which concluded that while the daughter had been careless, she had not committed ‘fraud’ and, hence, that this exception to indefeasibility had not been established. For discussion of ‘fraud’ as an exception to indefeasibility under the Torrens system see  8.61ff. The trial judge’s decision was affirmed on appeal in Anderson v Anderson [2017] NSWCA 131. 80. Anderson v O’Donnell (2000) 10 BPR 18,501. 81. Anderson v O’Donnell (2000) 10 BPR 18,501 at [10].

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Common Property

9.37

9.35  The issue arose for direct consideration in Goyal v Chandra.82 Brereton J held that an agreement by one joint tenant with another not to sever would be enforceable. His Honour also held that a course of conduct by one joint tenant that led to the creation of an assumption by the other that no severance would take place (relied on by the other to their detriment) may create by estoppel an equitable right not to have the joint tenancy severed. His Honour said that this would not amount to a ‘restraint on alienation’,83 simply being a personal obligation as to how the land would be dealt with, analogous to that which arises whenever a landowner agrees for consideration to dispose of an interest in his or her land to another, such as by way of selling it.84 In a later application for an interlocutory injunction against severance, Barham v Barham,85 the court assumed that such an injunction may have been possible, but ruled that the ‘balance of convenience’ in the situation lay with the defendant, and declined to continue the operation of an interim injunction against severance.86 In Anderson v Anderson87 (noted at 9.33 above), the court examined the question of whether there had been a prior agreement between the joint tenants not to sever, and concluded that there was insufficient evidence to make out such an agreement.88 9.36  A joint tenant is also free to alienate part of his or her interest, rather than the entire interest.89 In order to see what effect, if any, such transactions have on the joint tenancy, it will be necessary to look at different transactions, such as a mortgage and lease. Mortgage

9.37  As we will see in Chapter 14, there is an essential difference between mortgages of old system title land and those involving Torrens title land. A mortgage of old system title land involves a conveyance of the legal title to the mortgagee.The mortgagor retains a right to reconveyance on repayment of the loan (known as the equity of redemption). It follows that, at the moment of execution of a mortgage of land held by joint tenants, by one of the tenants, unity of title as between the mortgagors is broken, and there is a severance at law. The mortgagee becomes tenant in common at law, so that, if the mortgagor defaults, the 82. Goyal v Chandra [2006] NSWSC 239. 83. Goyal v Chandra [2006] NSWSC 239 at [23]. 84. In so holding, his Honour in Goyal v Chandra [2006] NSWSC 239 at [27]–[28] cited, but respectfully disagreed with, the view expressed in Butt, Land Law, note 7 above, p 238, [1461], that such an agreement might create an obligation to pay damages for breach of contract, but would not prevent severance. 85. Barham v Barham [2010] NSWSC 503. 86. Ball J held that there was some doubt on the facts as to whether the plaintiff daughter could establish a firm commitment by the defendant mother not to sever, as she claimed. If the injunction were granted and the mother happened to pass away before the matter came to trial, the mother’s desire to transfer part of the land to another child would have been totally defeated by default. However, if on a final trial the plaintiff could make out her case, then a constructive trust over the estate in her favour would resolve the matter. For comment on the decision, see N Zerial, ‘Restraining Severance of Joint Tenancy’ (2010) 84(11) Australian Law Journal 743. 87. Anderson v Anderson [2016] NSWSC 1204, at [251]–[276]. 88. See also Morgan v Morgan [2017] NSWSC 725, where again there was no formal agreement not to sever, and no course of conduct leading to an estoppel. 89. See 9.25.

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Property Law in New South Wales

mortgagee can exercise the power of sale and other available remedies. On reconveyance after the loan has been repaid, the mortgagor steps into the mortgagee’s shoes to become tenant in common. 9.38  The position under Torrens title is different. A mortgage operates as a charge over the mortgagor’s land, not a transfer.90 Accordingly, the four unities of the joint tenancy remain intact, so that the joint tenancy is undisturbed on the execution of a Torrens title mortgage. If the joint tenant mortgagor dies before the mortgage is discharged, the right of survivorship will take precedence over the mortgagee’s right and the property will cease to be encumbered by the mortgage.91 In this instance, the mortgagee, like all joint tenants, has taken on the gamble of survivorship.92 The same measure of vulnerability attaches to an easement granted by a joint tenant.93 Lease

9.39  A lease granted by a joint tenant does not sever the joint tenancy.94 The grant of the lease confers on the tenant a right to possession of the whole premises for the duration of the lease. It has been held, however, that this grant does not so much sever the joint tenancy as suspend it.95 The grant of a lease does not fracture any of the four unities. The effect of the suspension is to defer the right of survivorship to the time the lease terminates if the joint tenant landlord dies during the currency of the lease. The right to enforce the covenants under the lease, including the rental covenant, for the balance of the term will pass to the joint tenant’s heirs.96 Presumably, if another joint tenant dies, not being a landlord, his or her right to possession will pass to his or her estate until the lease comes to an end. If a joint tenant landlord survives the tenancy, the joint tenancy revives. Where the co-owned property is a lease, the grant of a sublease by one co-owner will sever the joint tenancy for the entire lease.97 9.40  Alienation to self  By ss  24 and 44(2) of the Conveyancing Act, a person may transfer or ‘assure’ land to himself or herself. A transfer of his or her interest in the joint tenancy by the joint tenant in this way will sever it, because unity of title will be broken, with the result that he or she will become a tenant in common of that share. By contrast with alienation to others, it is not possible for an alienation to oneself to be effective in equity for the reason that it is impossible to hold on trust for oneself.98 Accordingly, a

90. Re Forrest Trust;Trustees, Executors and Agency Co Ltd v Anson [1953] VLR 246 at 250. 91. Lyons v Lyons [1967] VR 169. Affirmed in Van den Heuvel v Perpetual Trustees Victoria Ltd; Registrar General of NSW v Van den Heuvel [2010] NSWCA 171 at [150]. 92. For this reason, a mortgagee will not usually take a mortgage from one joint tenant alone, without the other or others also being party to the mortgage. See also Butt, Land Law, note 7 above, p 241. 93. Mansfield v Mansfield (1890) 16 VLR 569. 94. Frieze v Unger [1960] VR 230. 95. Frieze v Unger [1960] VR 230. 96. Frieze v Unger [1960] VR 230 at 242–3. 97. Frieze v Unger [1960] VR 230 at 243. 98. DKLR Holding Co (No 2) Pty Ltd v Comr of Stamp Duties (NSW) (1982) 149 CLR 431.

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Common Property

9.42

transfer will be effective at law or not at all. In the case of old system land, a transfer of this nature is effective only once a deed is validly executed.99 9.41  One consequence of such a transaction is that the severing joint tenant might secretly sever by retaining the deed. The new tenancy in common would then devolve by will to the beneficiary of his or her choice, in the event the severing joint tenant predeceases the other co-owners. If the other co-owners died first, however, the deed could be disposed of, and the right of survivorship be retained. In consequence, the mutuality that is at the root of a joint tenancy would be seriously compromised.To obviate this difficulty, it was held in Re Sammon100 that the general requirement at common law that a deed be delivered meant that the party executing the deed must show an intention to be presently bound by it. Execution of the deed before an attesting witness gives rise to a rebuttable presumption of being presently bound. If there is evidence to suggest that the party executing the deed did not intend to be presently bound, however, the deed will be ineffective to transfer the legal estate. In Re Sammon, the transferor executed the deed, it was witnessed and duly attested. On delivery to his solicitor, however, he requested that it not be registered until his death. The court held that the facts suggested that he did not wish to be presently bound by the instrument but, rather, would have recalled the deed if his wife predeceased him. Accordingly, it was not deemed to be delivered, and was therefore ineffective.101 In the case of Torrens title land, the transfer is effective only on registration.102 This rule would appear to be unaffected by the right to lodge a transfer to oneself under s 97 as noted above. 9.42  Declaration of trust  By s 23C(1)(b) of the Conveyancing Act, a person entitled to an interest in land may by writing signed by him or her make a declaration of trust of any interest in that land. This provision applies to both old system and Torrens title land. A declaration of trust may have been an effective way to surmount the practical obstacles confronted by Mrs Patton in Corin v Patton, noted above.103 If she had declared a trust of her interest in favour of her brother (or other intended beneficiaries) in writing signed by her, the joint tenancy would have been effectively severed in equity.104

99. Conveyancing Act 1919 (NSW) ss 23B(1), 38. 100. Re Sammon (1979) 94 DLR (3d) 594. The formal requirements for deeds are examined at 6.5. 101. For a discussion of this issue, see New South Wales Law Reform Commission, Unilateral Severance of Joint Tenancies, Report No 73, 1994. 102. Freed v Taffel [1984] 2 NSWLR 322. 103. Corin v Patton (1990) 169 CLR 540. See 9.31. 104. It may be that this option was not adopted because the intention was to allow her share to be passed in accordance with her will, and not to actually transfer it beneficially to her brother. The documents signed included a declaration that Mr  Corin held his interest on trust for Mrs  Patton. See  the discussion by Deane J in Corin v Patton (1990) 169 CLR 540 at 577.

473

9.43

Property Law in New South Wales

Mutual agreement among the joint tenants 9.43  A joint tenancy will be severed if all the joint tenants mutually agree to hold as tenants in common. Once this occurs, the joint tenancy is severed in equity.105 The co-owners will continue to hold the legal estate as a joint tenancy on trust for themselves as tenants in common. On one view, such an agreement must meet the general requirement of s  54A of the Conveyancing Act, which requires contracts for the sale of land to be in writing and signed by the party to be charged, or supported by sufficient acts of part performance.106 On another view, all that is necessary is that the parties are unanimously agreed that the joint tenancy is at an end from the time of the agreement.107 For instance, even an oral agreement without acts of part performance will suffice.108 Severance, once effected, is irrevocable, even if the agreement is subsequently repudiated. In Re Wilson109 a husband, acting under a power of attorney given by his wife, prepared transfers from he and his wife as joint tenants, to he and his wife as tenants in common, with the obvious intention of severing the joint tenancy. Even though he did not then proceed to register the transfers, it was held that the joint tenancy had in effect been severed by mutual agreement.110 9.44  In a case where parties agreed to sell the matrimonial home, but deferred distribution of the proceeds of sale until they agreed on (or, in default, the Family Court ordered) how they were to be divided, the joint tenancy was held to have been severed once the agreement to sell was concluded. It followed that the right of survivorship did not arise on the death of one joint tenant prior to the final determination of shares of the proceeds.111 However, if the effect of the parties’ agreement is to make the order of the Family Court the sole mechanism for effecting severance, the right of survivorship will be available until the order is made.112 For other cases illustrating the need to determine whether the parties have reached agreement, see Sprott v Harper113 and Lennon v Bell.114 An agreement to make mutual wills will sever a joint tenancy.115 In Gambacorta v Di Giovanni,116 Robb J noted the conceptual difficulties caused where a husband and 105. Lysaght v Edwards (1876) 2 Ch D 499. 106. Lyons v Lyons [1967] VR 169. 107. Burgess v Rawnsley [1975] Ch 429. 108. Calabrese v Miuccio (No 2) [1985] 1 Qd R 17. 109. Re Wilson [2019] VSC 211. 110. See above note 109, at [65]: ‘where the relevant transactions take place between the registered proprietors themselves, and no third parties are involved, equity favours a tenancy in common if intention of severance of joint tenancy can be shown’. 111. Abela v Public Trustee [1983] 1 NSWLR 308. 112. Slater v Slater (1987) 12 Fam LR 1. 113. Sprott v Harper [2000] QCA 391, where a husband and wife had signed a document agreeing to a division of marital assets, this was regarded as a sufficient statement of ‘mutual agreement’ under criterion (ii) from Williams v Hensman (1861) 1 J & H 546. 114. Lennon v Bell [2005] QSC 286. Negotiations between husband and wife had not proceeded beyond the preliminary stages, and hence the course of dealing was not sufficient to sever the joint tenancy before the wife’s death. 115. Re Wilford’s Estate;Taylor v Taylor [1934] VLR 129. 116. Gambacorta v Di Giovanni [2021] NSWSC 61, at [135].

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Common Property

9.46

wife were joint tenants in a bank account, but made wills assuming that they could each separately dispose of their half amounts. However, he concluded that in the circumstances the joint tenancy had been severed in equity by the time of the death of one of the parties, so that the bequests could take effect as indicated in the will.117

Course of dealing among the joint tenants 9.45  If there is a course of dealing among all of the joint tenants ‘sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common’ a severance will occur.118 The course of dealing need not amount to an implied contract, but all must participate.119 Some indication as to what will constitute a course of dealing sufficient to meet this test can be gained from Magill v Magill.120 In that case, correspondence between two brothers exploring ways of severing their joint tenancy, including the offer to purchase one share by the other joint tenant, was held not to sever in the absence of any consensus about the sale. In Hycenko v Hrycenko,121 a verbal promise by a father that a house he held as joint tenant with his wife would be left to two of his sons, was perfectly consistent with the joint tenancy remaining on foot, and did not amount to severance. In On v On,122 however, two brothers who had previously been joint tenants of some land effectively severed the joint tenancy by a ‘course of action’ following the resolution of a dispute between them, when they agreed to take separate shares in the land. In Scott v Scott,123 the treatment of joint assets by a husband and wife as if they were separate assets was held to amount to a course of conduct severing a joint tenancy.124 9.46  Mere physical subdivision of the property so that each joint tenant can occupy different parts will not sever the joint tenancy.125 Payment of the proceeds of sale of a joint tenancy into separate bank accounts is, however, conduct sufficient to indicate mutual treatment of the interest as a tenancy in common.126 In Roda v Roda,127 the Family Court held that where a co-owning mother and son had executed an agreement that started by acknowledging that they held ‘equal shares’ in a property as joint tenants, and then specified what would happen should either desire to

117. Gambacorta v Di Giovanni [2021] NSWSC 61, at [138]. 118. Williams v Hensman (1861) 1 J & H 546 at 557–8 per Page-Wood VC. 119. The authorities are not at one on this point. For the various positions, see Butt, Land Law, note 7 above, p 248. 120. Magill v Magill (1997) NSW ConvR ¶55-795. 121. Hycenko v Hrycenko [2016] VSC 247 at [54]. 122. On v On [2002] NTSC 18. 123. Scott v Scott [2009] NSWSC 567. 124. See also Perpetual Trustees Company Ltd; Application of Chen [2010] NSWSC 808 at [36]: ‘Each of the parties, by conduct, treated himself and herself as if he and she were separate owners of their interests’. 125. Greenfield v Greenfield (1979) 38 P & CR 570. 126. Abela v Public Trustee [1983] 1 NSWLR 308. 127. Roda v Roda [2013] FamCAFC 27.

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sell, this was, in the circumstances, a sufficient ‘course of conduct’ to amount to a severance of the joint tenancy.128 The course of dealing need not be evidenced in writing, and so does not need to conform with the general requirement imposed by s 54A of the Conveyancing Act that contracts for the sale of land must be in writing.

Court order 9.47  An order of the court may bring about a severance. Thus, under the Family Law Act 1975 (Cth), the court has power to make orders in relation to property. These orders may include an order for the severance of a joint tenancy. A mere application to the Family Court for a division of property under s  79 of the Family Law Act does not, of itself, bring about a severance, for the reason that an applicant may withdraw it at any time.129 If, however, a court orders the transfer of one joint tenant’s interest to another under ss 79 or 87 (to give effect to a maintenance agreement), or orders a sale of the property, severance will occur, even if one joint tenant dies before the sale is completed. In Public Trustee v Grivas,130 the former joint tenant had remarried but died before the ordered sale was completed. The court held that the joint tenancy had been severed and that his share of the property had passed to his estate. Cases of unlawful killing 9.48  Where a joint tenant would otherwise unconscionably benefit from the right of survivorship, equity will impose a constructive trust to prevent this. Where A unlawfully kills a co-joint tenant, B, A will hold the legal estate by survivorship on trust for himself or herself and B’s estate as tenants in common in equal shares. In Rasmanis v Jurewitsch,131 A, B and C were joint tenants. A was convicted of the manslaughter of B. By survivorship, he and the other joint tenant C became jointly entitled to the property at law. It was held, however, that in equity there would be a constructive trust imposed on public policy grounds to prevent A from holding the benefit that would otherwise flow to him because of the crime. Thus, A and C held B’s one-third share on trust for C as tenant in common. As between themselves, A and C remained joint tenants of a two-thirds share; so that if C predeceased A, A would hold as tenant in common with C’s estate in the proportion of two-thirds to one-third.132

128. In Roda v Roda [2013] FamCAFC 27 at [79], the court cited the comments of Chesterman J in Saleeba v Wilkie (2007) ANZ ConvR 664 at [19] in support of this approach. 129. In the Marriage of Pertsoulis (1980) 6 Fam LR 39. 130. Public Trustee v Grivas [1974] 2 NSWLR 316. 131. Rasmanis v  Jurewitsch (1969) 70 SR (NSW) 407. On one analysis, this form of equitable intervention demonstrates the essential role that principles, as opposed to rules, play in law: R Dworkin, Taking Rights Seriously, Duckworth, London, 1978. 132. The result is that A, the felon, was in the same situation that he would have been in if he had not killed B. Prior to B’s death, he had a one in three chance of getting the full estate after the natural death of the others; after B’s death, he had a one in two chance of getting two-thirds of the estate.

476



Common Property

9.51

The principle, known as the ‘forfeiture rule’, applies to all cases where the joint tenant dies as a result of the felonious acts of a co-joint tenant. Technically, the unlawful killing does not effect a severance. Rather, a severance arises indirectly as a result of the imposition of a constructive trust. 9.49 In Troja v Troja,133 a majority of the Court of Appeal held that the forfeiture rule covered the case of a wife who killed her husband, but was convicted of manslaughter on grounds of diminished responsibility. This case overturned the earlier authority of Public Trustee v  Evans,134 which decided that the rule did not apply to homicide where self-defence or provocation was established. In rejecting this line of authority, Meagher JA concluded: ‘There is something a trifle comic in the spectacle of Equity judges sorting felonious killings into conscionable and unconscionable piles’.135 9.50  At common law, however, the forfeiture rule did not apply where the person who killed another was found not guilty by reason of mental illness.136 9.51  Statute has modified the forfeiture rule as stated by the Court of Appeal in Troja. By ss 4 and 5 of the Forfeiture Act 1995 (NSW), in cases of unlawful killings, with the exception of murder, the Supreme Court is given power to vary the forfeiture rule if ‘it is satisfied that justice requires the effect of the rule to be modified’.137 To do justice, the court is given a wide discretion by the requirement to consider the conduct of the offender, the conduct of the deceased, the consequences of the application of the forfeiture rule on the offender or any other person, and any other matter the court considers material.138 A more recent amendment to the legislation provides that, even where a person has been found not guilty of murder by reason of mental illness, the court may in its discretion apply the forfeiture rule if justice requires it.139 The court applied these provisions in Public Trustee (NSW) v Fitter.140 See also Guler v NSW Trustee and Guardian,141 Hill v Hill,142 and Re Estate of Novosadek.143 In Re Settree Estates; Robinson v Settree,144 the judge ruled that there was power to apply the forfeiture rule to a case of killing where the perpetrator had 133. Troja v Troja (1994) 33 NSWLR 269. 134. Public Trustee v Evans (1985) 2 NSWLR 188. 135. Public Trustee v Evans (1985) 2 NSWLR 188 at 299. 136. Re Plaister, Perpetual Trustee Co v Crawshaw (1934) 34 SR (NSW) 547. Affirmed in Batey v Potts (2004) 61 NSWLR 274 at [14] per Gzell J. In Batey, the defendant had been found guilty of manslaughter but, while there was some evidence of mental illness, the evidence did not establish that he was suffering under such a ‘defect of reason’ that he should be acquitted: see [16]. 137. Forfeiture Act 1995 (NSW) s 5(2). 138. Forfeiture Act 1995 (NSW) s 5(3). 139. Part 3 (ss 10–14) of the Forfeiture Act was added with effect from 28 October 2005 by the Confiscation of Proceeds of Crime Amendment Act 2005 (NSW). 140. Public Trustee (NSW) v Fitter [2005] NSWSC 1188. Indeed, it was noted in the judgment (at [53]) that the applicant in those proceedings, Ms Robb, sister of the deceased, had apparently been one of the ‘driving forces’ behind the amendments being made to allow such actions. 141. Guler v NSW Trustee and Guardian [2012] NSWSC 1369. 142. Hill v Hill (2013) 11 ASTLR 121. 143. Re Estate of Novosadek [2016] NSWSC 554. 144. [2018] NSWSC 1413.

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been found not guilty due to mental illness, but on condition that some of the money from the estate be applied to provide rehabilitation for the perpetrator when released.

Bankruptcy 9.52  Bankruptcy of a joint tenant entails the vesting of his or her property in the trustee in bankruptcy.145 This process is known as involuntary alienation. Its effect is to sever the joint tenancy in favour of the trustee. Under s 58(2) of the Bankruptcy Act 1966 (Cth), the property does not vest in the trustee until the statutory registration requirements have been met. However, severance occurs in equity from the moment the joint tenant is declared bankrupt.146 In the case of Torrens system land, if a bankrupt dies before registration of the bankruptcy, and the surviving joint tenant becomes registered as sole proprietor of the property, he or she will take subject to the equity.147 Even though the survivor did not create the equitable interest, he or she will be subject to it because of the in personam exception to indefeasibility: on declaration of bankruptcy, all joint tenants hold the legal estate on trust for the trustee in bankruptcy as tenant in common. This equitable interest cannot be defeated by registration because of the fiduciary duty owed to the trustee in bankruptcy. 9.53  The law of bankruptcy includes provisions designed to prevent a person who is about to become bankrupt from depriving potential creditors of assets by transferring his or her property with such an aim.148 If a potential bankrupt who is a joint tenant of property severs the joint tenancy with the aim of defeating creditors,149 is such a transaction a ‘transfer’ and, hence, caught by s 121(1) of the Bankruptcy Act? As noted previously, at common law, mere severance of a joint tenancy does not amount to ‘transfer’, as all co-owners already have the right to exclusive possession of the whole property. Section 121(9)(b), however, deems a ‘transfer’ to have taken place where a person ‘does something that results in another person becoming the owner of property that did not previously exist’, and it could be said that the rights of the other joint tenant as tenant in common would fall into that category.150 Despite this, in Peldan v  Anderson,151 the

145. Bankruptcy Act 1966 (Cth) s 58(1). 146. Re Holland; Ex parte Official Trustee in Bankruptcy (1985) 5 FCR 165. 147. Sistrom v Urh (1993) 117 ALR 528. 148. See, especially, Bankruptcy Act 1966 (Cth) s 121. 149. Note that the ‘defeat’ of creditors would only take place following severance of the joint tenancy in circumstances where the other former joint tenant then dies before the bankruptcy. In those circumstances, it could be said that but for the prior severance the value of the whole property would have vested in the bankrupt and, hence, been available for distribution to creditors. Where there has been no severance and the other party has not died before the bankruptcy then, by reason of the provisions noted above at 9.52, there will be a statutory severance, the non-bankrupt joint tenant will become a tenant in common, and his or her share will not be subject to distribution in the bankruptcy. See the comment on this point in Peldan v Anderson (2006) 229 ALR 432 at [48]. 150. See also Trustees of the Property of John Daniel Cummins (a bankrupt) v Cummins (2006) 224 ALR 280 at [24] note 19, where it was assumed that transfer by one joint tenant of their interest to the other was caught by s 121. 151. Peldan v Anderson (2006) 229 ALR 432.

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High  Court held that the statutory provisions, while obscure,152 operated only where property that did not previously exist was ‘carved out’ of the property of the person who later becomes bankrupt (such as, for example, by the granting of a lease).153 But they did not operate in a situation where, as in that case, one joint tenant had severed the joint tenancy. In that situation, it could not be said that the bankrupt’s undivided interest as joint tenant ‘would probably have become’ available to creditors, since if bankruptcy had occurred while the joint tenancy was on foot then the bankruptcy itself, as noted previously, would have worked a severance of the joint tenancy.154

Rights and obligations of co-owners Right to possession 9.54  The unity of possession that all co-owners enjoy entitles each of them to occupy the whole of the property.155 This right can be freely transferred to a third party, but the transferee cannot be given a right that the co-owner does not have, such as a right to exclude other co-owners.156 For instance, a co-owner may grant a lease, but the lessee, though he or she may have a general right of exclusive possession, cannot prevent the other co-owners from entering the premises; nor can they prevent the lessee from enjoying the unity of possession for the duration of the lease.157 Equally, an easement granted by one co-owner (such as the right to use a toilet as a normal right of an owner) is enforceable by the transferee, but only to the extent that it does not cause interference with the rights of those co-owners who were not party to the grant.158 A co-owner who has been excluded from possession, or ‘ousted’, may sue the ousting co-owner in trespass. This right extends to acts of destruction of the property, as where one co-owner removed large amounts of soil and turf from the land without the consent of the other co-owners.159 The excluded co-owner will be entitled to an ‘occupation fee’, which is in the nature of mesne profits.160 Where one co-owner leaves the property in consequence of domestic violence from another co-owner, this will amount to ouster;161 but obtaining an apprehended violence order that prevents a co-owner going near the 152. See Peldan v Anderson (2006) 229 ALR 432 at [24]. In fact, the relevant paragraphs were described as ‘in conceptual and linguistic contrariety’: at [35]. 153. Peldan v Anderson (2006) 229 ALR 432 at [26], where other examples are given. Even in such cases, the court recognises that the wording of the provisions as they stand is not workable (at [37]), but the proposed addition by the court of other words (at [45]–[47]) at least allows the provisions to operate in relation to the ‘carved out’ situations. For an application of Peldan, see Pekar v Holden (Trustee) [2017] FCA 596. 154. See the conclusion of the court in Peldan v Anderson (2006) 229 ALR 432 at [48]. This conclusion must be taken to assume that what was ‘probable’ did not involve what actually occurred, which was the unexpected death of the other former joint tenant prior to the bankruptcy. 155. Thrift v Thrift (1975) 10 ALR 332. 156. Frieze v Unger [1960] VR 230. 157. Frieze v Unger [1960] VR 230. 158. Hedley v Roberts [1977] VR 282. 159. Wilkinson v Haygarth (1847) 12 QB 837; 116 ER 1085. 160. Biviano v Natoli (1998) 43 NSWLR 695. For mesne profits, see 2.34. 161. Dennis v McDonald [1982] 1 All ER 590.

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property will not be an ouster for the reason that obtaining such an order is not a legal wrong and, therefore, gives no right to sue in ejectment.162 Mere failure to respond to a non-occupier’s request to sell the premises is not ouster; however, the subsequent denial of the legitimate title of the non-occupying co-owner in legal proceedings is.163 There is no ouster where one co-owner upgrades and slightly enlarges a common access strip causing disturbance during construction work.164 In Paroz v Paroz,165 it was held that one co-owner of a rural property had effectively ousted the others by grazing his own cattle so as to exclude any use of the land for grazing by the others, by slashing an area of land without permission of the others, and generally in behaving aggressively towards the others when they attempted to come onto the land.166 In Fourniotis v Vallianatos,167 Croft J noted that at common law mere receipt of an excessive share of rent from a co-owned property by one owner was not sufficient to amount to an ouster.168

Improvements and repairs 9.55  A co-owner who improves the property has no right at common law to a contribution to the costs of improvement in the absence of agreement.169 In equity, by contrast, the improving co-owner would, in certain circumstances, have a right of contribution from co-owners who would otherwise unfairly benefit from the improvements.170 This includes circumstances where there is a suit for termination of the co-ownership, such as a suit for partition or sale, or a suit for administration of proceeds of sale of the property. This means that the claim is a defensive or passive equity.171 The claim can be enforced against successors in title, since it is in the nature of an equitable charge on the land, so that a co-owner who built houses on land, significantly increasing its value, could claim against successors in title of the non-improving co-owners.172 9.56  There are limits to what the improving co-owner can claim. In Boulter v Boulter,173 it was held that a co-owner is entitled to either the actual amount spent on improvements or the increase in value of the land, whichever is the less. So, where a co-owner spent 162. Biviano v Natoli (1998) 43 NSWLR 695 at 703. 163. Biviano v Natoli (1998) 43 NSWLR 695 at 703. 164. Ferguson v Miller [1978] 1 NZLR 819. 165. Paroz v Paroz [2010] QSC 203. 166. See comment on the case in K McCrossin, ‘What Conduct Constitutes an Infringement of a Co-Owner’s Rights?’ (2010) 84 Australian Law Journal 473. Other litigation involving the same parties dealt with issues arising from the partnership arrangements rather than the ouster point. See Paroz v Paroz [2010] QCA 362; special leave to appeal refused in Paroz v Paroz [2011] HCATrans 205. 167. Fourniotis v Vallianatos [2018] VSC 369. 168. Fourniotis v Vallianatos [2018] VSC 369 at [80], citing Doe v Bird (1809) 11 East 49; 103 ER 922, [49]–[51]. But in that decision, a ‘deeming’ provision under Victorian law was applied to hold that receipt of excess rent did amount to an ouster of the co-owner, and since this had gone on for more than 15 years the excluded co-owner had lost his or her interest in the land due to adverse possession. 169. Leigh v Dickeson (1884) 15 QBD 60. 170. Leigh v Dickeson (1884) 15 QBD 60. 171. Brickwood v Young (1905) 2 CLR 387. 172. Brickwood v Young (1905) 2 CLR 387. 173. Boulter v Boulter (1898) 19 LR (NSW) Eq 135.

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$100,000 on improvements, but the property increased in value only by $15,000, he was only entitled to $15,000.174 9.57  Improvements are more than mere repairs and maintenance.175 So, costs of general maintenance of the property, such as pest control or insurance premiums, will not qualify.176 In addition to any physical improvement to the property, mortgage repayments will qualify as improvements,177 as will payment of water and council rates.178

Right to an occupation fee 9.58  As each co-owner is entitled to possession of the whole premises, it is not permissible for one to charge another an occupation fee or rent. If one co-owner chooses not to exercise his or her rights to possession, the corresponding benefit conferred on the remaining co-owners does not give rise to an obligation to pay a fee or rent to the non-resident co-owner; occupation of the whole property is merely an exercise of every co-owner’s rights.179 Historically, there were three exceptions to this general rule:180 1. Where one co-owner ousts another. As we have seen above, ouster of one co-owner by another gives rise to an action in trespass for an occupation fee for the duration of the ouster.181 2. Where there is an agreement to pay an occupation rent. Co-owners may vary rights by agreement, so as to give rise to an occupation rent, as where one vacates to allow the other exclusive occupation in consideration for rent.182 3. Where the occupying co-owner is claiming an allowance for improvements to the property. If the occupying co-owner has carried out improvements to the property, and they have increased its value, equity would allow him or her to claim some contribution because it would be otherwise unjust for the non-occupying co-owner to benefit.183 In accordance with the principle that ‘he who seeks equity must do equity’, however, the improving co-owner is under a duty to pay an occupation fee.184

174. Squire v Rogers (1979) 39 FLR 106. 175. Leigh v Dickeson (1884) 15 QBD 60. 176. Forgeard v Shanahan (1994) 35 NSWLR 206. 177. Re Gorman [1990] 1 All ER 717; Ryan v Dries (2002) 10 BPR 19,497 at [6] per Sheller JA; at [71] per Hodgson JA, Giles JA dissenting on this point at [15]. In Loibner v Owens [2006] NSWSC 410 at [31], Young CJ in Eq regarded himself as bound by the majority judgment on ‘the mortgage point’. The alternative view, presented by Giles JA in Ryan, is that mortgage payments are not to be considered ‘improvements’ to the property, as they simply represent the discharge of a debt already owed by both parties. In Foundas v Arambatzis [2020] NSWCA 47 at [94], the authority of the majority view in Ryan on this point seems to have been accepted. 178. Forgeard v Shanahan (1994) 35 NSWLR 206. 179. Forgeard v Shanahan (1994) 35 NSWLR 206. 180. Luke v Luke (1936) 36 SR (NSW) 310. 181. Dennis v McDonald [1982] 1 All ER 590. 182. Leigh v Dickeson (1884) 15 QBD 60. 183. See 9.55. 184. Teasdale v Sanderson (1864) 33 Beav 534; 55 ER 476; Ryan v Dries (2002) 10 BPR 19,497.

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  More recently, however, it has been established that there is a fourth category of cases where an occupation fee is appropriate between co-owners: 4. Where the co-owners have been in a domestic relationship and, the relationship having broken down, it is no longer reasonable for them to live in the same premises. This additional category is clearly established by the decision of the New South Wales Court of Appeal in Callow v Rupchev.185 The court commented there that it was no longer appropriate to treat these cases as involving a fictional ‘ouster’. In Callow, the party who had left the premises after the breakdown was entitled to charge an occupation rent to the party who remained in occupation, although not in relation to one period of time where the premises remained vacant.186 It has been suggested that some UK authority supports a broad equitable discretion to award occupation rent whenever it is ‘just’ to do so.187 But a recent decision of the Hong Kong Court of Final Appeal, Cheung v  Cheung188 examines the authorities closely and concludes that this suggested ‘modern approach’ should not be adopted. Whether this decision will be followed by New South Wales courts is not yet known, though the fact that former High Court of Australia Justice Gummow co-authored the decision makes it highly persuasive.189

Quantum of occupation fee 9.59  The amount of the occupation fee is calculated by reference to the proportionate increase in enjoyment of the property by the resident co-owner, so that one of two equal co-owners will have to pay an occupation fee equivalent to half the market rent.190 In Biviano v Natoli,191 the New South Wales Court of Appeal held that it was inequitable for an excluded co-owner to claim the full rental value for the premises where another co-owner remained in occupation. The quantum of the fee is computed by reference to a 185. Callow v Rupchev (2009) 14 BPR 27,533, especially at [46]. 186. Callow has been accepted as the current state of the law in the later decision of Ducker v Smith [2011] NSWCA 212 at [63], noting that the UK decision of French v Barcham [2009] 1 All ER 145 takes a similar view (as to which see the comment by P Butt, ‘Ouster of Co-Owner: A Sequel’ (2010) 84 Australian Law Journal 14). See also D v W [2011] SADC 151 at [95]. For comment on Callow, see K Galloway, ‘Liability for Occupation Rent: “No Fault Ouster” of a Co-tenant’ (2010) 19 Australian Property Law Journal 23. Callow was also applied in applied in Payne v Rowe [2012] NSWSC 685; Murtagh v Murtagh [2013] NSWSC 926 at [201]. However, in W v D (2012) 115 SASR 61, Kourakis CJ seemed to express some doubts as to whether ‘relationship breakdown’ should be adopted as a separate category giving rise to a right to an occupation fee: at  [70]. For comment, see  A Nobis, ‘Controversies of Land Co-ownership: The Common Law Rules Applied in the Division of Interests in Land Following Breakdown of a Domestic Relationship’ (2013) 27/5 Australian Property Law Bulletin 88–91. See Groch v Knights [2018] NSWSC 1365 at [53] accepting this category. 187. See Re Pavlou (A Bankrupt) [1993] 1 WLR 1046 at 1050D. 188. Cheung v Cheung [2021] HKCFA 19 (27 May 2021), especially the main judgment of Mr Justice Ribeiro PJ and Mr Justice Gummow NPJ. 189. The Hong Kong Court of Final Appeal has a panel of ‘non-permanent judges’, which includes eminent judges from other common law jurisdictions. Former High Court of Australia Justice Gummow is one of these judges and sits occasionally on appeals in Hong Kong. 190. Re Gorman [1990] 1 All ER 717. 191. Biviano v Natoli (1998) 43 NSWLR 695 at 704.

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reduced market rent in light of the other co-owner’s continuing occupation. In this case, the court allowed the ousted co-owner 50% of the market rent for the whole property as an occupation fee from the time of ouster. The onus of proof in establishing the quantum of the occupation fee lies with the party claiming it. To the extent that a right to an occupation fee in the case of a claim for improvements is a set-off, the amount allowable cannot exceed the sum allowed for improvements.192

Rents and profits 9.60  The enactment of s 8 of the Imperial Acts Application Act 1969 (NSW) has had the effect of removing the former availability of an account for rent or profits received by one co-owner from a third party in occupation of the property.193 It follows that neither rents and profits received by one co-owner while out of possession (as where the premises are rented to a third party), nor profits and income earned by one co-owner working the property, can be the subject of an account.194

Termination of co-ownership 9.61  Co-ownership can be brought to an end in two ways: 1. by action of the parties; or 2. by an order of sale or partition by the court.

By action of the parties 9.62  Co-ownership will come to an end in the case of a tenancy in common when one of the co-owners acquires the shares of all the other co-owners or, in the case of a sole survivor in a joint tenancy, when one of the co-owners succeeds to the shares of the others. Co-ownership will also come to an end when all co-owners jointly transfer their several interests to a third party. Co-ownership may also terminate by acts of adverse possession by one co-owner against another.195 Finally, co-ownership may come to an end when the co-owners partition the property to reflect their respective shares, each becoming entitled to sole proprietorship of a fraction of the original property. By order of sale or partition by the court 9.63  Land  Any one or more co-owners of property may apply to the court to appoint trustees to hold the property on a statutory trust for sale or partition.196 The court has a

192. Forgeard v Shanahan (1994) 35 NSWLR 206. 193. Forgeard v Shanahan (1994) 35 NSWLR 206 at 222 per Meagher JA, Mahoney JA concurring generally at 219. 194. See generally, on this point, Butt, Land Law, note 7 above, p 242, for the position in New South Wales; Moore, Scott and Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, note 2 above, [12.255]–[12.260], for the position in other jurisdictions. 195. Limitation Act 1969 (NSW) s 38(5). 196. Conveyancing Act 1919 (NSW) s 66G(1).

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discretion whether to order sale or partition.197 Partition is physical subdivision of the land.198 Factors that may induce the court not to exercise its discretion are where the parties have agreed to accept a gift subject to another’s continuing right of residence;199 whether they are under a contractual obligation to deal with the property in a particular way;200 and whether the parties have agreed not to apply to the court before offering other co-owners a right of pre-emption.201 However, the court does not have a general discretion to consider questions of hardship caused to the parties by sale or partition.202 9.64  A sale is the primary remedy under s 66G of the Conveyancing Act, and partition is allowed only in special circumstances.203 If a co-owner satisfies the court that partition of the property would be more beneficial than a sale for co-owners who own more than one-half of the property, the court may appoint trustees for partition rather than sale.204 An order under s 66G does not sever a joint tenancy, which continues to apply to the proceeds of sale.205 As noted above, in a suit for partition and sale, the court has power to direct an account of improvements and occupation fees.206 In Segal v Barel207 a number of issues arose from an application for partition. In particular, the Court of Appeal there noted that the question as to whether it would be ‘more beneficial’ to physically divide the land, rather than order a sale, had to be decided based on financial, rather than emotional or social, criteria.208 The court also ruled that an order for partition could not be made that led to the land being subdivided under strata title legislation, as the partition provisions assumed the whole land was disposed of to the former co-owners, and any strata title scheme would involve ‘common property’ not held solely by any one of those former co-owners.209 9.65  Chattels  By s  36A of the Conveyancing Act, the court has power to order a division of chattels belonging to persons jointly or in undivided shares on the application 197. Forgeard v Shanahan (1994) 35 NSWLR 206. 198. Such subdivision is tightly regulated these days by local government planning procedures. See  the Environmental Planning and Assessment Act 1979 (NSW), the effect of which is that ‘development’ of land must receive prior approval. Section 1.5(1)(b) includes ‘subdivision of land’ within the definition of ‘development’, and s 6.2(1)(a) defines ‘subdivision’ to include a division effected by ‘partition’. It may be possible, however, to seek an order for partition that is expressed to be subject to the relevant approvals subsequently being obtained. See  De Campo Holdings Pty Ltd v  Cianciullo [1977] WAR 56 and Francis v Francis [2009] SASC 363, noted in Moore, Scott and Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, note 2 above, [12.440]. 199. Williams v Legg (1993) 29 NSWLR 687. 200. Re Buchanan-Wollaston’s Conveyance [1939] Ch 738. 201. Nullagine Investments Pty Ltd v Western Australia Club Inc (1993) 67 ALJR 739. 202. Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068. 203. Re Cordingley (1948) 48 SR (NSW) 248. 204. Conveyancing Act 1919 (NSW) s 66G(4). 205. Re Debney (1959) 60 SR (NSW) 471. 206. Leigh v Dickeson (1884) 15 QBD 60. See 9.54–9.59. 207. Segal v Barel (2013) 84 NSWLR 193. 208. Segal v Barel (2013) 84 NSWLR 193 at [68]. 209. See Segal v Barel (2013) 84 NSWLR 193 at [89]. For the ownership of common property under strata title by an owners’ corporation, see below at 9.76.

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of ‘persons interested to the extent of a moiety [half] or upwards’. Even though some chattels, such as cars, cannot be physically divided, the section  has been held to apply to them.210 The court also has power to order the property to be sold.211 In Naziridis v Rimis,212 it was held that registration of ownership of a car in joint names is only one factor in establishing an interest to the extent of a moiety or upwards. Where the plaintiff was unable to prove that he had made any significant loan repayments, but the defendant had repaid the bulk of them and the loan was in her name, he was not entitled to an order under s  36A. In Neilan v  Neilan [2019] NSWSC 66, s  36A was used to authorise sale and division of proceeds from shares owned by the plaintiff and defendant as tenants in common. The shares were those in a company giving rights to occupy a flat. (The court did not discuss in these undefended proceedings whether shares, being ‘choses in action’, were able to be described as ‘chattels’ for the purposes of s 36A. That may be an issue that would need to be considered further in future.)213

Strata Schemes Introduction 9.66  The common law of co-ownership is too blunt an instrument to deal effectively with the complexities of high-rise, multi-occupancy living. Certainly, by the use of easements and ‘horizontal’ subdivision into designated cubic airspace, such forms of ownership and fragmentation of rights are possible.214 As noted above,215 however, in the absence of agreement, rights to contributions for repairs, improvements and sole occupancy are generally only possible on termination of co-ownership. This framework of rights is quite inadequate in the context of clusters of units with large areas of common property. Further, the co-owner’s right of possession, which embraces the entire interest, is quite inappropriate where individual unit-holders want exclusive ownership rights over a designated part of the development. To meet these and many other objections, a system of ‘company title’ was deployed in the 1950s.216 9.67  The general framework of company title is that a property company is the legal owner of a multi-unit building. Ownership of shares in the company entitles owners to a right of permanent occupation; and the articles of association specify the precise rights and obligations which attach to shareholders.Yet this, too, was beset with weaknesses. Lenders 210. Tillack v Tillack [1941] VLR 151. 211. Ferrari v Beccaris [1979] 2 NSWLR 181. See Blundell v Curvers [2002] NSWSC 436, where the provision was used to allow the division and sale of a collection of artworks; Big Top Hereford Pty Ltd v Thomas (2006) 12 BPR 23,843, where it was used to divide a herd of cattle. 212. Naziridis v Rimis (1999) 9 BPR 16,201. 213. See McNamee v Martin as Financial Manager for John Boden McNamee [2021] NSWSC 568 at [72]: ‘there is a legitimate debate in my view as to whether a chose in action, here a debt, conforms with the notion of chattel for the purposes of s 36A’. See also De Lorenzo v De Lorenzo [2020] NSWCA 351, where some doubts are expressed as to whether shares can be co-owned under a ‘tenancy in common’. 214. See Bursill Enterprises Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73. 215. See 9.54–9.58. 216. For a general discussion, see Butt, Land Law, note 7 above, pp 856–7.

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tended to be no less reluctant to lend on the security of these interests than the interests of individual co-owners, so that it proved to be difficult for purchasers to buy with the assistance of a mortgage. One reason for this — a general problem with company title — is that freedom of alienation was made more cumbersome because of the rights of the directors to consent to the sale or lease of a unit. 9.68  Accordingly, in 1961 strata title legislation appeared in New South Wales for the first time.217 It used a number of traditional legal forms in a unique way to attempt to resolve the above problems. Its key elements included: • absolute ownership rights were given to the holders of units in a strata scheme; • an owners corporation, constituted by all the owners of units, owned the public areas of the scheme under a separate title; • statutory obligations to contribute to the upkeep of the property were imposed on the owners; and • a set of by-laws, which could be changed generally by special resolution of the owners corporation, regulated the internal affairs of the scheme.218 9.69  This novel system worked satisfactorily, but was encumbered by the requirement that disputes, often minor, could be dealt with only by the ordinary courts. The Act was overhauled by the Strata Titles Act 1973 (NSW). The major innovation of this Act was a system of informal dispute resolution mechanisms: the Strata Titles Commissioner and the Strata Schemes Board. The Strata Schemes Management Act 1996 (NSW) introduced a more streamlined process of dispute resolution. Later, the Strata Titles Act 1973 (NSW) was renamed the Strata Schemes (Freehold Development) Act 1973 (NSW), and other legislation introduced to deal with strata schemes established over leasehold land. Most recently, after a substantial review of the legislation, there are now two new Acts that govern the area, both of which mostly commenced on 1 November 2016: • the Strata Schemes Development Act 2015 (NSW) (SSDA); and • the Strata Schemes Management Act 2015 (NSW) (SSMA).219 Comments here will refer both to the current and to the former law, which will, of course, continue to be referred to by the courts in interpreting the new legislation.

217. For a critical analysis of the emergence of this legislation, see Kondos, ‘The Hidden Faces of Power: A Sociological Analysis of Housing Legislation in Australia’, note 1 above, Ch 15. For an overview of strata title in other Australian jurisdictions, see K Everton-Moore, A Ardill, C Guilding and J Warnken, ‘The Law of Strata Title in Australia: A Jurisdictional Stocktake’ (2006) 13 Australian Property Law Journal 1. 218. For a concise and helpful overview of the nature of strata title, see Segal v Barel (2013) 84 NSWLR 193 at [77]–[79]. While the court refers to the previous legislation, the broad outlines of the scheme are still accurate. 219. Part 11 of the SSMA, which provides for a new scheme to identify and deal with defective building work involving strata schemes, commenced on 1 July 2017. However, as the Act only applies to work carried out after its commencement, it may be some time before the effectiveness of its operation becomes clear. See 9.86 for a brief overview of these provisions.

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Common Property

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9.70  The legislation surveyed here represents only a part of the wave of statutory reforms in relation to common ownership of land. Other current or former statutes not covered here include the following: the former Strata Schemes (Leasehold Development) Act 1986 (NSW) (which dealt with leasehold strata schemes); amendments to the legislation allowing ‘part strata’ schemes that apply to part only of a building and facilitate ‘staged development’ of strata schemes;220 the former Community Land Development Act 1989 (NSW) (which provided for staged strata development in conjunction with conventional subdivision of land),221 now replaced by the Community Land Development Act 2021 (NSW);222 the retirement villages legislation. (Note that the SSDA now incorporates provisions relating to: leasehold strata schemes in Pt 3; staged development in Pt 5; and part strata parcels in Pt 6.) Nevertheless, all these developments are important in that they may shift the burden for paying for various types of infrastructure (eg, common areas for playgrounds, swimming pools, or even, in some cases, road maintenance) from the public purse to the private owners, and full disclosure of the possible costs is important when these arrangements are entered into.

Basic structure of strata schemes Key elements223 9.71  A strata scheme is defined in the SSDA as having three components. First, a scheme is marked by the manner of division of a parcel into lots, or lots and common property. Second, it deals with the allocation of unit entitlements among the lots. Third, a scheme is made up of the rights and obligations of proprietors, occupiers, the body corporate and other interest holders among themselves as provided by the Act.224 A ‘lot’ is one or more cubic spaces bounded by the inner surface of the wall, or the upper surface of any floor and the lower surface of any ceiling of a unit in the scheme. ‘Surface’ has been held to mean the internal skin of the wall, ceiling or floor.225 It follows that the owner of the lot is responsible for the internal painting and wallpapering of the party walls of the lot, as well as floor coverings such as carpets and tiles. Light fittings and curtains are also included in the lot owner’s responsibility. By contrast, floor boards and bathroom floor tiles are not.226 220. See  Strata Titles (Part Strata) Amendment Act  1992 (NSW); Strata Titles (Staged Development) Amendment Act 1993 (NSW). 221. A detailed discussion of the legislation can be found in A Ilkin, NSW Strata and Community Schemes Management and the Law, 4th ed, Lawbook Co, Sydney, 2007. 222. This Act commenced operation on 1 December 2021, as did its companion legislation the Community Land Management Act 2021. 223. For a general overview of the New South Wales legislation on strata schemes, see the summary provided by French CJ in the High Court decision of Brookfield Multiplex Ltd v Owners — Strata Plan No 61288 (2014) 254 CLR 185 at [9]–[11]. 224. SSDA s  4(1), definition of ‘strata scheme’, paras (a), (b) and (c). See  former Strata Schemes (Freehold Development) Act 1973 (NSW) s 5(1). 225. The Proprietors — Strata Plan No 6522 v Furney [1976] 1 NSWLR 412. See SSDA s 6. 226. See  generally, Ilkin, NSW Strata and Community Schemes Management and the Law, note 221 above, pp 46–51. In The Owners SP 35042 v Seiwa Australia Pty Ltd (2007) 13 BPR 24,789, the Court of Appeal ruled that, where floor tiles had been laid before the relevant plan was registered, the inner boundary of the lot included the upper surface of tiles on the floor, but did not extend below those tiles to the

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The effect of the legislation (which requires that material in the ‘cubic space’ occupied by the lot is part of the lot) is that where a fixture is attached to a boundary wall (the inner substance of which, as noted, is part of common property) the fixture is nevertheless part of the lot.227 9.72  A lot does not include ‘common infrastructure’ (formerly called ‘structural cubic space’) — that is, features such as support columns and pillars for the building as a whole; nor does it include pipes, wires, cables and ducts and their casings, unless they are for the exclusive use of a lot.228 These features will form part of the common property of the scheme.229 9.73  Strata schemes legislation applies only to land held under the Torrens system.230 It follows that the nature of strata schemes is reflected in the number of special registration requirements imposed by the legislation for it to come into existence. In the first place, a strata scheme must be expressed in a strata plan. A strata plan is made up of three instruments: a location plan, a floor plan and an administration sheet231 (formerly, the ‘schedule of unit entitlement’ was the third component232 — this is still required but now forms part of the wider ‘administration sheet’.) The location plan depicts the border of the land on which the strata scheme is located, and the location of any building on the land.233 The floor plan must depict the base of the vertical boundary of each lot, and show the floor area of each part of the lot and the total of all the composite floor areas.234 If an area that is open, such as a balcony, is to be included in the lot, a mark (called a ‘vinculum’) is usually used on the floor plan to indicate this. Responsibility for maintenance of this area will then rest with the lot proprietor, not the owners corporation. A schedule of unit entitlement is a document that, in general terms, shows as whole numbers the aggregate unit entitlement of all lots and the proposed unit entitlement of each lot.235 The term ‘unit entitlement’ refers to the proportionate entitlements and liabilities of each owner in relation to the scheme as a whole.The entitlements include the concrete underneath. This meant that a defective membrane between the concrete and the tiles was part of common property and, hence, the responsibility of the owners corporation to repair. 227. Le v Williams [2004] NSWSC 645 at [55] per Campbell J: ‘It is unusual, in real property law, for a fixture to be owned by someone different to the owner of the real estate to which it is affixed, but that unusual consequence follows, so far as owners’ fixtures are concerned, from the structure of the Strata Schemes (Freehold Development) Act 1973’. 228. SSDA s 4(1) definition of ‘common infrastructure’. See former Strata Schemes (Freehold Development) Act 1973 (NSW) s 5(1). 229. For common property, see 9.76. 230. SSDA s 9(4). See former Strata Schemes (Freehold Development) Act 1973 (NSW) s 7. 231. SSDA s 10(1)(a). 232. Strata Schemes (Freehold Development) Act 1978 (NSW) s 8(1). 233. SSDA s 4(1) definition of ‘location plan’. See former Strata Schemes (Freehold Development) Act 1973 (NSW) s 8(1)(a); s 5(1) definition of ‘location plan’. 234. SSDA s  4(1) definition of ‘floor plan’. See  former Strata Schemes (Freehold Development) Act  1973 (NSW) s 8(1); s 5(1) definition of ‘floor plan’ para (a). 235. SSDA Sch 2 cl 2 now contains detailed requirements for what the ‘schedule of unit entitlements’ must contain for different types of lots. See former Strata Schemes (Freehold Development) Act 1973 (NSW) s 8(4).

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owner’s voting rights on a poll at an annual general meeting (AGM), and a proportionate beneficial interest in the common property.This interest is held as a tenancy in common.236 The liabilities include the proportional share in the total contributions payable to the administrative and capital works funds.237 In addition to registration of the above documents, SSDA s 10(1)(b) requires a plan that is intended to be registered as a strata plan to be accompanied by a copy of the proposed by-laws for the strata scheme. The by-laws are the internal rules of the scheme, which regulate the behaviour of occupiers of lots and the use of the common property.238

Initial period 9.74  When many strata schemes commence, individual lots, or units, are sold piecemeal. Therefore, it is possible that the original owner of the entire property or, later, the owners corporation,239 when composed of only a fraction of the number of total possible members, might take action (such as modifying the common property or passing by-laws) to the disadvantage of later owners. To prevent this problem arising, the SSMA limits the powers of owners in what is called the ‘initial period’. The initial period is defined as the period between registration of the strata plan and the time when there are persons, other than the original owner, whose unit entitlements amount in total to at least one-third of the aggregate unit entitlement for the scheme.240 Among these restrictions are the following: • The owners corporation has no power to make, amend or repeal a by-law affecting one or more lots, or one or more owners, unless all the lots or all the owners are equally affected.241 This restriction does not, however, affect the right of the original owner when the strata plan is registered, to register a by-law that confers unequal benefits on different lots.242 • The owners corporation cannot alter common property or erect any structure on the common property, incur a debt for an amount that exceeds the amount available for repayment in the scheme’s administrative or capital fund, or borrow money and give securities.243 A contract entered into in contravention of these prohibitions, however, 236. SSDA s 28. See former Strata Schemes (Freehold Development) Act 1973 (NSW) s 20. 237. SSMA s 83(2). See former Strata Schemes Management Act 1973 (NSW) s 78(2). The capital works fund was sometimes formerly called the ‘sinking’ fund. 238. For by-laws, see 9.104–9.110. 239. The title used for this entity in the former Strata Schemes (Freehold Development) Act was ‘body corporate’, but in the current legislation (the SSDA and SSMA) it is called the ‘owners corporation’. 240. SSMA s 4(1) definition of ‘initial period’; formerly, Strata Schemes Management Act 1973 (NSW) s 6 and Dictionary. 241. SSMA s 140(1); formerly, Strata Schemes Management Act 1973 (NSW) s 50. 242. See former Strata Schemes (Freehold Development) Act 1973 (NSW) s 8(4B). Indeed, the presence of the restriction in the former s 50 of the Strata Schemes Management Act applying to the ‘initial period’ led to the court in White v Betalli [2006] NSWSC 537 concluding that after this period it must be possible for a by-law to be passed allowing the use of one lot by another lot proprietor: at [48]. This decision was later affirmed on appeal in White v Betalli (2007) 71 NSWLR 381. 243. SSMA s 26. See former Strata Schemes Management Act 1973 (NSW) s 113(1). For administrative and capital funds, see 9.87.

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may still be valid (under the general principle that not every breach of the law will invalidate a contract the result of such breach).244 9.75  The SSMA allows the owners corporation and individual proprietors to challenge decisions made during the initial period by conferring a right to sue for any loss caused by breach of these statutory duties.245 Furthermore, the SSDA prohibits: subdivisions of lots or common property in the initial period involving the original owner; conversion of lots into common property involving the original owner; and certain dealings with the common property, unless additional specific requirements are met.246 The owners corporation may not in the initial period enter into a contract with a strata managing agent, or a building manager (previously called a ‘caretaker’), the term of which extends beyond the initial period.247

Common property 9.76  Common property is so much of a strata scheme as is not comprised in any lot.248 Once the strata plan is registered, the common property is vested in the owners corporation.249 On registration, the Registrar-General must create a separate certificate of title in favour of the owners corporation in relation to the common property in the strata plan.250 The common property is held by the owners corporation as agent of the proprietors in the strata scheme.251 The common property is held ‘as agent for the owners as tenants in common in shares proportional to the unit entitlement of the owners’ lots’.252 The owners corporation has power to acquire additional property (by means of transfer or lease), as long as it is not a lot within the scheme and (if being transferred) is contiguous 244. Bondlake Pty Ltd v Owners — Strata Plan No 60285 (2005) 62 NSWLR 158, discussed in D Skapinker, ‘Restrictions on Owners Corporations During Initial Period’ (2005) 43(7) LSJ 32. 245. SSMA ss 26, 140. See former Strata Schemes Management Act 1973 (NSW) ss 50(2) and (3), 113(2) and (3). Note that in light of the interpretation of the similar entitlement to ‘damages for breach of statutory duty’ in s 106, as discussed in Vickery v The Owners Strata Plan No 80412 [2020] NSWCA 284, it seems likely that an order for damages under ss 26 and 140 may be sought by application to New South Wales Civil and Administrative Tribunal (NCAT) and does not need to made in a common law court. See the discussion of this case below at 9.84. 246. SSDA ss 13(4), 17(3) and 36(2). See former Strata Schemes (Freehold Development) Act 1973 (NSW) ss 9(3A), 13(3A) and 28(4). 247. SSMA s 26. See former Strata Schemes Management Act 1996 (NSW) s 113(1)(c). Section 26 limits the powers of the owners corporation, and s 68(1) (formerly, s 40B(2)(a)) goes further by specifically providing that a contract with a building manager made in the initial period comes to an end at the first AGM. This provision avoids the problem that arose in the Bondlake case, noted at note 244 above. 248. SSDA s  4(1) definition of ‘common property’. See  former Strata Schemes (Freehold Development) Act 1973 (NSW) s 5. 249. SSDA s 24(2)(a). See former Strata Schemes (Freehold Development) Act 1973 (NSW) s 18(1). 250. SSDA s 24(3). See former Strata Schemes (Freehold Development) Act 1973 (NSW) s 18(2). 251. SSDA s  28(1). See  former Strata Schemes (Freehold Development) Act  1973 (NSW) s  20. For a case in an unusual context where the nature of this tenancy in common was relevant, see New South Wales v Koumdjiev (2005) 63 NSWLR 353. 252. SSDA s 28(1). See former Strata Schemes (Freehold Development) Act 1973 (NSW) s 20(b). The fact that the owners corporation is agent for the lot proprietors does not prevent it from suing in its own right in relation to damage to the common property: see Vero Insurance Ltd v Owners of Strata Plan No 69352 (2011) 81 NSWLR 227.

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to the scheme.253 The owners corporation is prohibited from dealing with the common property except as provided for in the Act.254 Even where the procedures provided for under the Act are followed, however, an owners corporation will not be permitted to use those procedures to commit a ‘fraud on the minority’ by selling common property below market value to only some of the lot proprietors.255 9.77  Section  33 SSDA authorises the owners corporation to sell or lease common property, but only pursuant to a special resolution.256 Under recent amendments the owners corporation may pass a ‘sustainability infrastructure resolution’ to use part of the common property for purposes to do with waste reduction, recycling or sustainable energy consumption.257 This resolution may pass with only a 50% vote in favour, in contrast to other resolutions concerning use of common property that require a 75% majority.258 The owners corporation may also create easements and restrictive covenants that confer benefits or burdens over the common property.259 9.78  The owners corporation is under a duty to maintain the common property and any personal property vested in the owners corporation, and keep it ‘in a state of good and serviceable repair’.260 In The Proprietors — Strata Plan No 6522 v Furney,261 the word ‘repair’ was held to include replacement and renewal. On the facts of the case, this duty required the owners corporation to add necessary fittings to the buildings, such as door draught-resistors and waterproof flashing, where these items were missing as a result of poor workmanship when the buildings were originally constructed. In The Owners — Strata Plan 21702 v Krimbogiannis,262 the maintenance obligation extended to replacing a panel of the common property that had been removed. An exception to this duty is where an exclusive use or special privilege by-law has been registered, which may shift the duty on to the owners concerned.263 The owners corporation may be absolved from the duty if it determines by special resolution that, first, it is inappropriate to maintain, renew, replace or repair a particular item of property; and, second, its decision will not affect the safety, or detract from the appearance of any property in the strata scheme.264 It cannot under the general power to repair make substantial additions to common property, such as installing a swimming pool, in the exercise of this duty.265 However, s 108 of the SSMA allows the 253. SSDA s 25. See former Strata Schemes (Freehold Development) Act 1973 (NSW) s 19. 254. SSDA s 23. See former Strata Schemes (Freehold Development) Act 1973 (NSW) s 21. 255. Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46. 256. A special resolution is defined as one against which no more than one-quarter of the votes have been cast. See the definition of ‘special resolution’ in SSMA s 5(1). 257. See SSMA s 132B, added by the Strata Schemes Management Amendment (Sustainability Infrastructure) Act 2021. 258. See now SSMA s 5(1)(b)(ii) for this special rule governing sustainability infrastructure resolutions. 259. SSDA s 34. See former Strata Schemes (Freehold Development) Act 1973 (NSW) s 26. 260. SSMA s 106. See former Strata Schemes Management Act 1973 (NSW) ss 61(2)(a), 62(1). 261. The Proprietors — Strata Plan No 6522 v Furney [1976] 1 NSWLR 412. 262. The Owners — Strata Plan 21702 v Krimbogiannis [2014] NSWCA 411. 263. SSMA s 108. See former Strata Schemes Management Act1973 (NSW) s 54. 264. SSMA s 106(3). See former Strata Schemes Management Act 1973 (NSW) s 62(3). 265. Travis v Proprietors — Strata Plan No 3740 (1969) 90 WN (Pt 1) (NSW) 711.

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owners corporation by special resolution to add to, alter, or erect a new structure on, the common property.266 The duty to repair has been held not to extend to replacing a faulty air conditioner.267 A dealing or caveat relating to an owner’s lot affects the owner’s interest in the common property  even if the  common property  is not expressly referred to in the dealing or caveat.268

Owners corporation 9.79  The owners corporation is constituted by all the owners of lots from time to time in the strata scheme.269 Even though other parties may hold proprietary interests in the scheme (eg, lessees or mortgagees), they are not members of the owners corporation. In addition to being the legal owner of the common property, the owners corporation has the principal responsibility for the management of the scheme.270 It may employ such persons as it sees fit to assist in the exercise of any of its functions.271 The owners corporation must appoint a strata committee (formerly called an ‘executive committee’) at the first AGM of the corporation, at the latest. If a strata committee is not appointed, the strata scheme must be administered by the owners corporation as a whole.272 At its first meeting, the strata committee must appoint a chairperson, secretary and treasurer, who are also to act as chairperson, secretary and treasurer of the owners corporation.273 A decision of the strata committee is taken to be the decision of the owners corporation, unless the Act requires the decision to be made by unanimous or special resolution, or in general meeting.274 Though a strata committee holds office, an owners corporation may exercise all of its functions in general meeting.275 In the event of a disagreement between the owners corporation and the strata committee, the decision of the owners corporation prevails.276 9.80  The owners corporation may appoint a strata managing agent by an instrument in writing authorised by a resolution at  a general meeting. The managing agent must hold a strata managing agent’s licence under the Property and Stock Agents Act 2002

266. See former Strata Schemes Management Act 1973 (NSW) s 65A. For a decision in which that provision was referred to, see  Grime v  Owners Corporation SP 52011 (Strata & Community Schemes) [2005] NSWCTTT 202. 267. Proprietors Strata Plan No 30234 v Margiz Pty Ltd (1993) 32 NSWLR 294. 268. SSDA s 28. For a similar provision, see former Strata Schemes (Freehold Development) Act 1973 (NSW) s 24. 269. SSMA s 8. See former Strata Schemes Management Act 1996 (NSW) s 11. 270. SSMA s  9. See  former Strata Schemes Management Act  1996 (NSW) s  8(2). On common property, see 9.76. 271. SSMA s 13. See former Strata Schemes Management Act 1996 (NSW) s 13. 272. SSMA s 29. See former Strata Schemes Management Act 1996 (NSW) s 16(4). 273. SSMA s 41. See former Strata Schemes Management Act 1996 (NSW) s 18. 274. SSMA s 36. See former Strata Schemes Management Act 1996 (NSW) s 21(1), (2). 275. SSMA s 36(4). See former Strata Schemes Management Act 1996 (NSW) s 21(3). 276. SSMA s 36(2). See former Strata Schemes Management Act 1996 (NSW) s 21(4).

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(NSW).277 All or some of the corporation’s functions can be delegated to the managing agent, except: • its power of delegation; • a decision on a matter that is required to be decided by the owners corporation; or • a determination relating to the levying or payment of contributions.278 Any valid resolution or decision of the strata committee or the managing agent becomes a decision of the owners corporation.279 9.81  The Act also provides specifically for the appointment by the owners corporation of a building manager (previously called a ‘caretaker’).280 9.82  The owners corporation has a general power to borrow money and secure the repayment of principal and interest in any manner agreed on by the owners corporation and the lender; but it has no power to use the common property as security.281 Also, the owners corporation may enter into an agreement with an owner or occupier of a lot for the provision of amenities and services by it to the lot, or to the owner or occupier of a lot.282

Management 9.83  Responsibility for the management of a strata scheme lies with the owners corporation.The SSMA covers these key areas: Pt 5 deals with financial management; Pt 6 with property management; Pt 9 with insurance; and Pt 10 with records. Part 11 provides a new scheme introduced in 2015 for dealing with building defects.283

Maintenance and repair of the common property 9.84  As noted above, s 106 of the SSMA requires the owners corporation to maintain the common property and keep it ‘in a state of good and serviceable repair’.284 The Act confers further rights to allow the corporation to fulfil this duty more effectively. Thus, an owners corporation may itself carry out work that a public authority has required an owner of a lot to carry out, or that a by-law or order requires; and in these cases the owners corporation 277. SSMA s 49. See former Strata Schemes Management Act 1996 (NSW) ss 26, 27. 278. SSMA s 52. See former Strata Schemes Management Act 1996 (NSW) s 28(3). 279. SSMA ss 36(2), 53(3). See former Strata Schemes Management Act 1996 (NSW) s 28(7). 280. SSMA s 66. See former Strata Schemes Management Act 1996 (NSW) Ch 2 Pt 4A. 281. SSMA s 100. See former Strata Schemes Management Act 1996 (NSW) s 110. 282. SSMA s 117. See former Strata Schemes Management Act 1996 (NSW) s 111. 283. For comment on the Pt 11 scheme see A Benson, ‘NSW Strata Reforms: How the Changes Will Affect You’ (2016) (27) LSJ: Law Society of NSW Journal 84–85.The general issues are explored in N Johnston and S Reid, ‘An Examination of Building Defects in Residential Multi-owned Properties’ (2019) at .The question of building defects in high rise residential blocks has become highly topical since the terrible Grenfell fire in the United Kingdom: for comment on issues in that jurisdiction see S Bright and D Maxwell, ‘Human Rights and State Accountability for Fire Safety in Blocks of Flats’ (2019) 5/2 Queen Mary Human Rights Review at  . 284. See 9.78.

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may recover the cost from the owner, or any person who becomes the owner after the work has been carried out.285 The owners corporation may also carry out work at its own expense (ie, where the cost of the work cannot be recovered from some other person), if a structural defect in a lot affects or could affect the support or shelter of any other lot or common property.286 A feature of s 106 of the SSMA, which now appears on the face of the legislation in s 106(5), is that it creates a civil liability that may be enforced through an action for ‘breach of statutory duty’ by an owner suffering ‘reasonably foreseeable loss’ as a result of a breach of the provision by the owners corporation. Section  62 of the previous Strata Schemes Management Act 1996 had been interpreted to create a private action by a series of first instance decisions.287 However, the later decision of the Court of Appeal in The Owners Strata Plan 50276 v Thoo288 overruled this earlier line of decisions and held that the former s 62 did not create a right of private civil action. So now SSMA s 106(5) should be seen as restoring this civil action previously thought to exist, although conditioned (unlike the previous obligation) by ‘foreseeability’. There was initially some difference of opinion as to whether this obligation could only be enforced as a tort action in the common law courts, or could instead be brought to the tribunal given jurisdiction under the SSMA to resolve other disputes under the Act (NCAT). This uncertainty has now been resolved by the majority decision in Vickery v The Owners Strata Plan No 80412, holding that an action for damages under s 106(5) can be brought before NCAT.289 In Wu v The Owners Strata Plan No 80611, the jurisdiction to make an order was accepted, but the order was declined as s 106 only gives the lot owner the ability to apply, and the application had not been made by the owner.290 9.85  Section 120 of the SSMA confers a power on the owners corporation to enter any part of the parcel, which includes individual lots, to carry out work that the owners corporation is required to do by the Act, by a public authority or by an order made under the Act. The owners corporation may also enter any part of a parcel for the purpose of ascertaining whether work needs to be done to fulfil its duties under the Act.291 An owners corporation can enter a lot at any time in an emergency, or with the consent of

285. SSMA s 120. See former Strata Schemes Management Act 1996 (NSW) s 63. 286. SSMA s 119. See former Strata Schemes Management Act 1996 (NSW) s 64. 287. See Lubrano v Proprietors of Strata Plan No 4038 (1993) 6 BPR 13,308; Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157, affirmed in The Owners SP 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272; Trevallyn-Jones v  Owners Strata Plan No 50358 [2009] NSWSC 694 at  [128]–[155]. For detailed discussion of the common law action for breach of statutory duty, see N Foster, ‘The Merits of the Civil Action for Breach of Statutory Duty’ (2011) 33 Syd LR 67. 288. The Owners Strata Plan 50276 v  Thoo (2013) 17 BPR 33,789. In an application for special leave the High Court declined to grant leave, but relied on a separate issue in the case, stating that it was not to be taken to be expressing a view about the breach of statutory duty issue. See Thoo v Owners — Strata Plan No 50276 [2014] HCASL 79 at [9]. 289. Vickery v The Owners Strata Plan No 80412 [2020] NSWCA 284, per Basten JA, White JA agreeing; the dissent by Leeming JA, with respect, is very persuasive, but the majority decision was clearly in favour of NCAT’s jurisdiction. 290. Wu v The Owners Strata Plan No 80611 [2021] NSWCATCD 109 at [15]. 291. SSMA s 122(2). See former Strata Schemes Management Act 1996 (NSW) s 65(2).

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the occupier.292 If a person obstructs or hinders an owners corporation in the exercise of any of its functions of entering to repair or determine whether repair work is required, he or she will be liable to a maximum penalty of five penalty units.293

Building defects bond scheme 9.86  Part 11 of the SSMA sets up a ‘building defects bond scheme’. The aim of these provisions is to provide a means of dealing with the perennial issue of latent defects in buildings subject to strata schemes, which may not emerge until a year or so after the building is first occupied. In summary, the scheme requires developers who construct buildings to be the subject of strata schemes to appoint an independent building inspector, who is to prepare an interim report identifying any defective building work present in the development within a period of 15–18 months after completion of the building.294 A final report is then to be provided within 21–24 months of completion of the building work.295 The owners corporation may then require defects be rectified, and, in doing so, they will be able to draw on a ‘bond’ that was paid by the developer, set at 2% of the contract price.296 Part 11 of the SSMA commenced on 1 July 2017. Its provisions only apply to building work for which a contract was entered into after that date, or where actual work commenced after that date.297 Division 3A of Pt 11 provides for investigation and enforcement powers of ‘authorised officers’ to deal with the need to check compliance with the Act.298

Managing the finances of the strata scheme 9.87  Administrative and capital works funds  The owners corporation is under a duty to establish two funds. These funds are designed to meet two different types of expenditure: expenses of a recurrent nature, and expenses of a capital nature. The two funds are known as the ‘administrative fund’ and ‘capital works fund’ (under the former legislation, a ‘sinking fund’) respectively. The administrative fund is to be made up of the following amounts: • contributions levied from owners; • proceeds of disposal of any personal property of the owners corporation; • fees paid to the owners corporation, such as fees for inspection of its records;

292. SSMA s 122(3). See former Strata Schemes Management Act 1996 (NSW) s 65(3). 293. SSMA s  122(5). See  former Strata Schemes Management Act  1996 (NSW) s  65(5). Section  17 of the Crimes (Sentencing Procedure) Act 1999 (NSW) defines penalty unit.The current value of a penalty unit is $110. 294. SSMA s 199. 295. SSMA s 201. 296. SSMA s 207. See s 209 of the SSMA, which authorises the bond to be used to defray the costs of repairs. 297. SSMA Sch 3 cl 16. 298. Inserted by the Strata Schemes Management Amendment (Building Defects Scheme) Act 2018 No 49.

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• any monetary penalty paid to the owners corporation; and • the proceeds of any investment of the fund.299 9.88  The money in the administrative fund can be paid out, for instance: to meet estimates of expenditure to maintain in good condition the common property and any personal property vested in the owners corporation; to meet other recurrent expenses; where there is a distribution of a surplus in the fund; or to meet obligations under the Act or the by-laws.300 9.89  Section 74(1) of the SSMA requires the establishment of a capital works fund for strata schemes. There is one exception to this requirement. If a strata scheme comprises two lots, all the buildings in the scheme are within one or other of the two lots, and all the buildings in one lot are physically detached from buildings in the other lot, the owners corporation may by unanimous agreement not establish a sinking fund.301 Apart from that rare situation, the capital works fund is to be made up of: • amounts levied on owners; • amounts paid to the owners corporation ‘by way of discharge of insurance claims’, unless they have already been paid into the administrative fund; • amounts paid to the owners corporation under Pt 11 of the SSMA (dealing with building defects); • any amount received by the owners corporation ‘not required or permitted to be paid into the administrative fund’; and • ‘proceeds of any investment of the fund’.302 9.90  Money can be paid out of the capital works fund for three major purposes: first, for major repairs, such as repair and renewal of fixtures, repainting the common property, and acquisition or replacement of personal property; second, as a distribution of surplus; and third, any amount payable under Pt 11 dealing with major building repairs.303 A surplus may be distributed pursuant to a unanimous resolution of the owners corporation if it is of the opinion that it is not required for the purposes of either fund. The amount paid to each owner must be in proportion to his or her unit entitlement.304 9.91  There is a requirement for all owners corporations to have a 10-year capital works fund plan, designed to ensure forward planning in relation to the condition of the premises.305 299. SSMA s 73. See former Strata Schemes Management Act 1996 (NSW) ss 66, 67. 300. SSMA s 74(4). See former Strata Schemes Management Act 1996 (NSW) ss 68(1)(a), 75(1). 301. SSMA s 74(5). See former Strata Schemes Management Act 1996 (NSW) s 69(2). 302. SSMA s 74(2). See former Strata Schemes Management Act 1996 (NSW) s 70. 303. SSMA s 74(4). See former Strata Schemes Management Act 1996 (NSW) s 71. 304. SSMA s 77. See former Strata Schemes Management Act 1996 (NSW) s 72(1), (2). 305. SSMA s 80. See former Strata Schemes Management Act 1996 (NSW) s 75A(1). Comment on the former provisions, and other amendments made at  the same time in 2005, can be found in C Gabriel, ‘Brave New World of Large Strata Schemes’ (2005) 43(3) Law Society Journal 60; F Andreone, I McKnight and G Newton, Strata Title Update 2005, Legalwise Seminars, 2005.

496



Common Property

9.93

9.92  Levy of contributions The SSMA provides mechanisms to ensure that owners’ lots contribute a fair share towards the maintenance of the strata scheme. By s 79 of the SSMA, the owners corporation must prepare estimates of how much money it will need to credit to its administrative and capital funds. The estimates must be prepared within 14 days of the constitution of the owners corporation, and for each AGM thereafter. At the same meeting that the estimates are determined, the owners corporation must determine the amounts to be levied as a contribution to the funds.306 In cases of a shortfall of funds to cover expenses, the owners corporation may determine an additional levy at a general meeting.307 The owners corporation levies contributions required to be paid by serving a written notice on the owners of the lots.308 Contributions are payable by each lot in shares proportionate to the owner’s unit entitlement.309 On transfer of a lot, if the transferor is liable in respect of a contribution then the transferor and the transferee are jointly and severally liable for it.310 Interest is payable on unpaid contributions at an annual rate of 10% per annum, unless the owners corporation by special resolution decides otherwise.311 It is, therefore, vital for a prospective purchaser of a lot in a strata scheme to verify if all contributions have been paid by the vendor.The owners corporation can recover as a debt any unpaid contributions one month after they become due, any interest payable, and any expenses incurred in the recovery.312

Insurance for the strata scheme 9.93  The owners corporation is subject to stringent requirements to insure buildings in a strata scheme. By s 160 of the SSMA the owners corporation of a strata scheme for the whole of a building must insure the building, and keep it insured, under a damage policy with an approved insurer. Sections 161(3) and (4) of the SSMA delimit which parts of the building are to be covered, and which are not to be covered. A ‘damage policy’ is a contract of insurance that, in the event of the building being destroyed or damaged by fire, lightning, explosion or any other occurrence specified in the policy, provides for the following: • rebuilding or replacement of a building in the event of its destruction, so as to be in a condition no worse than before; • repair of damage or restoration of a damaged portion so as to be in a condition no worse than before; • reimbursement for the payment of removal of debris; and • remuneration of those employed to carry out the replacement or repair.313

306. SSMA s 81. See former Strata Schemes Management Act 1996 (NSW) s 76(1), (2). 307. SSMA s 81(4). See former Strata Schemes Management Act 1996 (NSW) s 76(4). 308. SSMA s 83(1). See former Strata Schemes Management Act 1996 (NSW) s 78(1). 309. SSMA s 83(2). See former Strata Schemes Management Act 1996 (NSW) s 78(2). 310. SSMA s 84(1). See former Strata Schemes Management Act 1996 (NSW) s 78(3). 311. SSMA s 85. See former Strata Schemes Management Act 1996 (NSW) s 79(2), (3). 312. SSMA s 86. See former Strata Schemes Management Act 1996 (NSW) s 80. 313. SSMA s 161(1). See former Strata Schemes Management Act 1996 (NSW) s 82.

497

9.93

Property Law in New South Wales

There is an exemption from this requirement for two-lot strata schemes if they meet the same conditions as those set for an exemption from the requirement to establish a capital works fund.314 9.94  The previous requirement that, for the purposes of insurance, the building must be valued at  least once every five years by the owners corporation,315 seems not to be applicable under the current SSMA. 9.95  Other forms of insurance that the owners corporation must take out include workers’ compensation insurance and insurance in respect of potential liability on the part of the owners corporation for damage to property, death and personal injury.316 In the case of liability for damage to property, death and personal injury, insurance must be taken out with an approved insurer and must be for a cover of not less than $10 million for each claimable event.317 The former provision of a list of approved insurers318 is not replicated under the current SSMA, which provides a general definition of the term in s 4(1). The duties imposed on the owners corporation to insure do not limit the right of any owner to take out insurance.319

Keeping records and accounts for the strata scheme 9.96  The owners corporation must keep certain records and accounts for the strata scheme, and must allow certain persons to inspect those records. By s 177 of the SSMA (see s 96 of the former Act), the owners corporation must keep a strata roll. It must be kept in a form that contains entries for each lot and entries for the common property and strata scheme as a whole.320 The strata roll contains some of the most important information about the strata scheme. In relation to each lot, it must include: • the owner’s name and Australian postal address for the service of notices, or the same details for any agent of the owner; • any information provided in a ‘strata interest notice’ given under s 22 (see s 118 of the former Act) (a notice given to the owners corporation of a right to cast a vote at a meeting) or obtained from the Register; and • information given in a ‘tenancy notice’ given under s 258 (see s 119 of the former Act) (a notice of the grant of a lease, sublease or assignment of lease).321 9.97  In the case of the common property, the strata roll should include the following information: • the strata plan number and address of the strata scheme building; 314. SSMA s 160(4). See 9.89. 315. See former Strata Schemes Management Act 1996 (NSW) s 85. 316. SSMA s 164. See former Strata Schemes Management Act 1996 (NSW) s 87(1)(a), (b). 317. SSMA s 164(2). See former Strata Schemes Management Act 1996 (NSW) s 87(2). 318. See former Strata Schemes Management Act 1996 (NSW) s 95(2). 319. SSMA s 167. See former Strata Schemes Management Act 1996 (NSW) s 89(1). 320. SSMA s 178. See former Strata Schemes Management Act 1996 (NSW) s 97(1). 321. For details of these obligations, see 9.103.

498



Common Property

9.100

• the name of the original owner, and of any strata managing agent of the owners corporation, together with their Australian addresses for service of notices; • the total unit entitlement and the unit entitlement of each lot; • details of the insurance taken out; • by-laws in force for the time being; and • if the scheme was registered before the commencement of Pt 10 of the Strata Schemes Development Act 2015 (NSW) (SSDA), dealing with ‘strata renewal schemes’, whether that Part applies to the scheme or not.322 9.98  Additional records that the owners corporation must keep are: • particulars of notices served on it;323 • minutes of meetings and particulars of motions;324 and • financial statements on an annual basis relating to income and expenditure for the administrative and capital works funds.325 9.99  Each of these records and accounts must be available for inspection by owners and mortgagees or covenant chargees of a lot, or by a person authorised to inspect the records on their behalf. The owners corporation must allow an inspection if it is presented with a written request and the prescribed fee.326

Additional requirements to be observed by the owners corporation of a ‘large strata scheme’ 9.100  Additional obligations are imposed on the owners corporation of a ‘large strata scheme’.These are defined as schemes with over 100 lots (excluding parking or other utility lots).327 Some of these additional requirements include more stringent auditing of accounts;328 specific estimates of major items of expenditure to be completed in the next year, which

322. SSMA s 178(2). See former Strata Schemes Management Act 1996 (NSW) s 98(2). The reference in the current Act to the application of Pt 10 of the SSDA is important: see 9.129 below for discussion on Pt 10, which, in effect, allows sale and demolition of a strata-titled building in certain circumstances without the consent of all of the lot owners.  While it is not apparent from Pt 10 itself, the transitional provisions in Sch 8 to the SSDA, at  item 8, provide that ‘Part 10 applies to a freehold strata scheme in existence immediately before the commencement of that Part only if the owners corporation has, by resolution, decided the Part applies to the scheme’. This presumably is designed to protect the interests of those who went into a strata scheme relying on the fact that their property would not be destroyed without their consent. 323. SSMA s 179. See former Strata Schemes Management Act 1996 (NSW) s 101. 324. SSMA s 180(1)(b). See former Strata Schemes Management Act 1996 (NSW) s 102. 325. SSMA s 180(1)(c). The phrase ‘financial statements’ is defined in s 4(1) to mean those statements required under SSMA Pt 5 Div 3. See former Strata Schemes Management Act 1996 (NSW) s 106. 326. SSMA s 182. See former Strata Schemes Management Act 1996 (NSW) s 108(2); former Strata Schemes Management Regulation 2010 (NSW) Sch 1 item 9. 327. SSMA s 6. See former Strata Schemes Management Act 1996 (NSW) Dictionary Pt 2 cl 5. 328. SSMA s 95. See former Strata Schemes Management Act 1996 (NSW) s 107(2).

499

9.100

Property Law in New South Wales

cannot then be exceeded by more than 10%;329 and written notice of strata committee meetings to be provided to each lot proprietor at least 72 hours before the meeting.330

Responsibilities of owners and occupiers 9.101  Part 8 of the SSMA (see Ch 4 of the 1996 Act) confers a number of responsibilities on owners and occupiers of lots. These duties operate independently of the by-laws. An owner, mortgagee or covenant chargee in possession, lessee or occupier of a lot must not do anything, or permit anything to be done, which interferes with any support or shelter provided by that lot for another lot or for the common property, or which interferes with the passage of water, sewage, drainage, gas, electricity and other services.331 If the owner of a lot wishes to alter the structure of the lot, he or she must give the owners corporation a written notice describing the alteration not less than 14 days before commencement.332 9.102  An owner, mortgagee or covenant chargee in possession, lessee or occupier of a lot must not use the lot, or permit the lot to be used, so as to cause a nuisance or hazard to an occupier of any other lot.333 Also, the common property must not be used in a way that either interferes unreasonably with the use and enjoyment of it by anyone entitled to use and enjoy it, or interferes unreasonably with the use and enjoyment of any other lot.334 9.103  The Act imposes obligations in relation to the giving of notices on the occurrence of certain events. A person who has an interest in a lot that gives a right to vote at general meetings of the owners corporation must give notice in writing to the owners corporation of that interest.335 The owner of a lot who grants a lease of the lot, or lessee who assigns the lease or grants a sublease, must give notice of the lease, assignment or sublease within 14 days after the grant.336 Failure to do so attracts a maximum penalty of five penalty units. If a mortgagee takes possession of a lot, notice of the fact must be given to the owners corporation within 14 days.337

329. SSMA ss 79(6), 102. See former Strata Schemes Management Act 1996 (NSW) ss 75(5), 80A. There is an exception for emergency expenditure in SSMA s 102(4). See former s 80C. 330. SSMA Sch 2 cl 4(1). See former Strata Schemes Management Act 1996 (NSW) Sch 3 cl 6(1). For ordinary strata schemes, notice of such meetings may usually be given by the placement of a notice on a noticeboard: see SSMA Sch 2 cl 4(2). 331. SSMA s 151. See former Strata Schemes Management Act 1996 (NSW) s 116(1). 332. SSMA s 152. See former Strata Schemes Management Act 1996 (NSW) s 116(2). 333. SSMA s 153. See former Strata Schemes Management Act 1996 (NSW) s 117(1)(a). Note that SSMA s 153(1) contains a ‘Note’ that ‘the penetration of smoke from smoking into a lot or common property may cause a nuisance or hazard and may interfere unreasonably with the use or enjoyment of the common property or another lot’. See The Owners Strata Plan No 2245 v Veney [2020] NSWSC 134 at [46]–[47], which confirms that ‘nuisance’ here means the common law tort of nuisance. 334. SSMA s 153(1)(b), (c). See former Strata Schemes Management Act 1996 (NSW) s 117(1)(b), (c). 335. SSMA s 22. See former Strata Schemes Management Act 1996 (NSW) s 118(1). 336. SSMA s 258. See former Strata Schemes Management Act 1996 (NSW) s 119. 337. SSMA s 259. See former Strata Schemes Management Act 1996 (NSW) s 120.

500



Common Property

9.104

By-laws General 9.104  The by-laws of a strata scheme regulate the activities that interest holders may conduct in a lot or on the common property. They may also regulate what the owners corporation may do. Section 43 of the former Act sets out a list of matters that the by-laws might provide for. Under the current SSMA, this specific list has been removed; s 136 of the SSMA simply provides in general terms that by-laws may be made ‘in relation to the management, administration, control, use or enjoyment of the lots or the common property and lots of a strata scheme’.338 In determining whether an initial by-law governing a strata scheme fell within the various categories set out in s 43 of the former Act, the courts adopted a fairly generous attitude to validity. In Casuarina Rec Club Pty Ltd v The Owners — Strata Plan 77971,339 the Court of Appeal said that, in relation to a by-law authorising use of certain amenities (there, membership of a nearby gymnasium), the by-law would be valid if the amenities were ‘capable of enhancing the occupiers’ use or enjoyment of the premises’. The fact that the by-law was present at the commencement of the strata scheme, however, was also significant, as purchasers would be aware of it when entering in.340 Now that there is no specific list of factors to be considered, in the previous edition of this book it was suggested that it was likely that the very broad connecting factor ‘in relation to’ the specified matters would see few challenges to the validity of by-laws on the basis that their purpose goes beyond that set out in s 136 of the SSMA. This comment now needs to be qualified in light of analysis of the provision in the decision of the New South Wales Court of Appeal in Cooper v The Owners – Strata Plan No 58068.341 In the Cooper decision, the court (Basten and Macfarlan JJA, Fagan J) held that a by-law made by the owners corporation of a large block of units known as The Horizon, which prohibited the keeping of pets, was invalid. In broad terms, the decision hinged on the by-law operating so as to restrict the rights of lot owners with no necessary impact on the rights or interests of other lot owners or impact on the common property. One basis for the decision was a contravention of s 139, discussed below. But Basten JA said that an alternative basis for the finding of invalidity was that the by-law exceeded the limits of s 136. While on its face the s 136 power seems largely unconstrained, his Honour held 338. For a decision on what was properly the subject of by-laws under the former Act, see White v Betalli [2006] NSWSC 537 at [38], for comment on what matters might be considered ‘appropriate to the type of strata scheme’ (emphasis in original).There, a by-law allowing one lot owner use of part of another lot for access to the water was held to be appropriate. See the later discussion on the appeal in White v Betalli below, at note 359. 339. Casuarina Rec Club Pty Ltd v The Owners — Strata Plan 77971 (2011) 80 NSWLR 711 at [2]. 340. This decision was taken on appeal from the decision of McDougall J in the differently titled Santai v The Owners — Strata Plan No 77971 [2010] NSWSC 628. That decision dealt with other by-laws that were not in issue on the appeal, and also contains an interesting discussion of the implied limits on the subject matter of by-laws under former s  43. For comment, see  S Chambers and D Russell, ‘Supreme Court Reconsiders Key Aspects of Strata Title Law’ (2010) 48(8) LSJ 38. 341. Cooper v The Owners – Strata Plan No 58068 [2020] NSWCA 250.

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Property Law in New South Wales

that it must be read in the context of the legislation as a whole, and that ‘a by-law which restricts the lawful use of each lot, but on a basis which lacks a rational connection with the enjoyment of other lots and the common property, is beyond the power to make by-laws conferred by s 136’.342 9.105  There are specific negative prohibitions, however, limiting the sort of by-laws that may be made, some of which are mentioned below (at 9.108–9.109). By-laws may not be passed to override specific obligations and rights conferred by the Act, nor will they be effective if they conflict with any other Act or law.343 Strata schemes coming into existence after 30  November  2016 are governed by the by-laws registered with the strata plan adopted under the SSMA and may be altered under that Act.344 Strata schemes that came into effect before that date and after 1 July 1997 are governed by those by-laws that were registered with the Registrar-General under the former SSMA.345 The by-laws governing strata schemes that came into effect before 1 July 1997 are those contained in Sch 1 of the former SSMA, including any additions and amendments registered for the strata scheme.346 9.106  The by-laws for a strata scheme bind the owners corporation, the owners, mortgagees and chargees in possession, lessees and occupiers of lots as if they had been signed and sealed by each party, and contained mutual covenants to observe and perform them.347 There is also an implied covenant in every lease of a lot that the lessee will comply with the by-laws in the strata scheme.348 When a lease is granted, the landlord must provide the lessee with a copy of the by-laws and any strata management statement affecting the lot or common property within seven days, and with a copy of any amendment to the by-laws within seven days of the passing of the amendment.349

New by-laws, and amendment or repeal of existing by-laws 9.107  By s 10(1)(b) of the SSDA (see s 8(4B) of the former Strata Schemes (Freehold Development) Act 1973 (NSW)), a plan intended to be registered as a strata plan must be accompanied by a copy of the proposed by-laws for the strata scheme. By-laws may be added to, amended or repealed by a special resolution of the owners corporation.350 Any new by-law, or an amendment or repeal of an existing by-law, has no effect until the owners corporation has lodged an approved form of notification with the RegistrarGeneral, and the Registrar-General has made an appropriate recording of the notification

342. Cooper v The Owners – Strata Plan No 58068 [2020] NSWCA 250 at [61], adopting submissions of counsel. For comment see  A Benson, ‘Harsh, Unconscionable, Oppressive: Angus Has the Last Bark on Strata By-law’ (2020) 72 LSJ: Law Society of NSW Journal, 80–81. 343. SSMA s 136(2). See former Strata Schemes Management Act 1996 (NSW) s 43(4). 344. SSMA s 134(1). 345. SSMA s 134(2). See former Strata Schemes Management Act 1996 (NSW) s 41. 346. SSMA s 134(3). See former Strata Schemes Management Act 1996 (NSW) s 42. 347. SSMA s 135(1). See former Strata Schemes Management Act 1996 (NSW) s 44(1). 348. SSMA s 135(2). See former Strata Schemes Management Act 1996 (NSW) s 44(2). 349. SSMA s 186. See former Strata Schemes Management Act 1996 (NSW) s 46. 350. SSMA s 141(1). See former Strata Schemes Management Act 1996 (NSW) s 47.

502



Common Property

9.108

in the folio of the Register comprising the common property.351 A notification cannot be lodged with the Registrar-General more than six months after the passing of the resolution creating, amending or repealing the by-law.352 9.108  As noted previously, the SSMA places some specific restrictions on the capacity of the owners corporation to pass by-laws in respect of certain matters. These are set out in s 139 of the SSMA. In particular, there is a broad prohibition in s 139(1) on a by-law being ‘harsh, unconscionable or oppressive’. (Jurisdiction to determine this question is given to NCAT in SSMA s  150.) In the Cooper decision noted above, all members of the New South Wales Court of Appeal agreed that a by-law completely forbidding the keeping of pets in any lot breached this prohibition and was invalid. There was a slight difference of approach to interpretation of the phrase, however. Basten JA said that the phrase should be read as a whole: ‘a triune, three words conveying a single criterion’.353 Fagan J said that the word ‘oppressive’ was the appropriate description to apply to the by-law in question.354 But all members of the court agreed that s 139 was breached by a by-law that restricted the use of lots in ways that had no impact on other lot users or the common property.355 After the Cooper decision, the New South Wales Parliament amended the SSMA by adding s 137B, which makes it clear that a by-law must not ‘unreasonably prohibit the keeping of an animal on a lot’.356 Other restrictions relate to specific policies under the legislation. In keeping with the general objective of ensuring freedom of alienation for each owner, s 139(2) of the SSMA (compare s 49(1) of the former Act) provides that no by-law is capable of operating to prohibit or restrict the devolution of a lot, or a transfer, lease, mortgage, or other dealing relating to a lot. However, decisions under former s  49 establish that this prohibition does not prevent by-laws being made that will have an impact on the use that may be made of a particular lot, so long as the restrictions on use do not amount to a substantial interference with the rights of the registered proprietor. In Salerno v Proprietors of Strata Plan No 42724,357 a by-law was approved by a majority prohibiting smoking in any lots. The Salernos complained because they wanted to sell their lot to a club, which in turn wanted to allow smoking.Windeyer J held that the by-law did not restrict the legal transfer of the lot and was not invalidated by the predecessor of s 49(1), even though it had the effect of making the purchase of the lot less attractive to some buyers. 351. SSMA s 141(2). See former Strata Schemes Management Act 1996 (NSW) s 48(1). 352. SSMA s 141(4). Compare former Strata Schemes Management Act 1996 (NSW) s 48(2), which previously allowed two years for lodgment. 353. Cooper, note 341 above, at [26]. 354. Cooper at [90]. 355. Cooper at [49], per Basten JA; [78] per Macfarlan JA; [88] per Fagan J: “the prohibition provides no material benefit to other occupiers of the building in their use or enjoyment of their own lots or of the common property.” 356. Added by the Strata Schemes Management Amendment (Sustainability Infrastructure) Act  2021, with effect from 25  August  2021. See  also the model by-laws set out in the Strata Schemes Management Regulation 2016 (SSMR) — Schedule 3, cl 5, which provides two alternative by-laws dealing with animals in lots. 357. Salerno v Proprietors of Strata Plan No 42724 (1997) 8 BPR 15,457.

503

9.108

Property Law in New South Wales

In White v Betalli358 a by-law allowing one lot proprietor to use a portion of another lot for storing a boat was held not to breach former s 49, despite the fact that this effectively meant that part of the other lot was not available to the lot-owner.359 This decision, and the decision in The Owners of Strata Plan No 3397 v Tate,360 are presented in an article by Sherry as providing examples of how there is a danger that strata scheme by-laws may undermine the indefeasibility title under the Torrens system, by creating proprietary interests that are not readily discoverable on the Register.361 Note, however, that in The Owners Strata Plan No 60919 v Consumer Trader and Tenancy Tribunal362 the court held that a by-law that was beyond power would not be validated by being registered by the Registrar-General. 9.109  Other specific restrictions under s  139 of the SSMA include that any by-law for a residential scheme (not being a retirement village or housing for aged persons) that purports to prohibit children under 18 from occupying a lot is of no effect.363 Also, the owners corporation cannot prohibit, by means of a by-law, an occupier from keeping an ‘assistance animal’ such as a guide dog or hearing dog.364 Section 137 of the SSMA now clarifies that a by-law may be passed, if desired, limiting the number of adults who may reside in a lot by reference to the number of bedrooms of the residence. But the lower limit is two adults per bedroom, and such a by-law may only be passed where it is not inconsistent with local planning laws. This section is also subject to further limits imposed by the Regulations; it should be noted that cl 36 of the SSMR provides that such a by-law is ineffective if all the persons who reside in the lot are related to each other. Section 137A of the SSMA allows a by-law to be made forbidding the use of a lot for ‘short term rental accommodation’, except where such arrangement is put in place by the

358. White v Betalli [2006] NSWSC 537. 359. The Court of Appeal upheld the trial judge’s decision on appeal in White v Betalli (2007) 71 NSWLR 381, although it should be noted that McColl JA dissented. Her Honour reasoned, in part from the fact that the Strata Schemes (Freehold Development) Act 1973 (NSW) dealt with ownership while the Strata Schemes Management Act  1996 (NSW) dealt with relationships between lot holders, that it was inappropriate to interpret the general words of former s 49 as allowing what was effectively ‘expropriation’ of part of another lot. 360. The Owners of Strata Plan No 3397 v Tate (2007) 70 NSWLR 344. 361. See C Sherry, ‘How Indefeasible Is Your Strata Title? Unresolved Problems in Strata and Community Title’ (2009) 21 Bond LR 159. 362. The Owners Strata Plan No 60919 v Consumer Trader and Tenancy Tribunal (2009) 16 BPR 31,673 at [21]. It should be noted, however, that a later decision of a different judge in Italian Forum Limited v Owners — Strata Plan 60919 [2012] NSWSC 895 cast some doubt on the correctness of the ruling in the 2009 decision as to the validity of the specific by-law. 363. SSMA s 139(4). See former Strata Schemes Management Act 1996 (NSW) s 49(3). 364. SSMA s 139(5). See former Strata Schemes Management Act 1996 (NSW) s 49(4). Note, however, that SSMA s 139(6) allows the owners corporation to request suitable evidence that an animal claimed to be an ‘assistance animal’ does, indeed, meet the description of an ‘assistance animal’ under disability legislation.

504



Common Property

9.110

person for whom the lot is their principal place of residence.365 The aim of the provision is to allow the prevention of lots being used solely for short-term letting.366 9.110  Lot holders may sometimes wish to make use of common property for their own special use; for example, where the owner of a lot on the top floor of a block of units wants to put in a skylight, or where lot-holders want designated parking spaces. (For another example of a proposed exclusive use by-law, see Gazebo Penthouse Pty Ltd v Owners Corporation SP 73943,367 where the question was whether one of three lifts in a tower could be devoted to service only the top three floors.) In these circumstances, it is possible for the owners corporation to grant a right of exclusive use and enjoyment of, or special privileges in respect of, the whole or part of the common property.368 The by-law must be passed by a special resolution, and must have the written consent of the owner or owners of the lots on whom the by-law confers rights or special privileges.369 The by-law may also impose conditions such as payment of money.370 While a by-law of this nature remains in force, it operates for the benefit of, and is binding on, the owner of the lot for the time being.371 In many circumstances, however, and especially as by-laws may be amended and repealed by special resolution, it may be preferable for the owner of a lot to seek a transfer of a portion of the common property from the owners corporation.372

365. Added by the Fair Trading Amendment (Short-term Rental Accommodation) Act 2018. 366. Note also, while not only applicable to strata title, there are now requirements for most properties being made available as ‘short-term rental accommodation’ to be registered with the New South Wales Government and to be subject to a code of conduct: see ; and see the Environmental Planning and Assessment Amendment (Short-term Rental Accommodation) Regulation 2021, which commenced for most of the State on 1 November 2021. 367. Gazebo Penthouse Pty Ltd v Owners Corporation SP 73943 [2015] NSWCATCD 93. 368. SSMA Pt 7 Div 3. See former Strata Schemes Management Act 1996 (NSW) s 51(1). But note that equitable principles relating to ‘fraud on a minority’ may apply where the majority of lot proprietors may be making a profit out of dealing with common property and not sharing that with other proprietors: see Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46, noted at 9.76. See also Young v Owners Strata Plan No 3529 (2001) 54 NSWLR 60; [2001] NSWSC 1135, where it was held that the majority of proprietors could not exclude other proprietors from using a swimming pool that was common property. For discussion of decisions on this issue in New South Wales and Queensland, see L Alford and J Sommer, ‘Protection of Minority Owners in a Body Corporate’ (2005) 11 Australian Property Law Journal 141. For detailed comment on the interpretation of ‘exclusive use’ by-laws under the previous legislation, see The Owners of Strata Plan No 3397 v Tate (2007) 70 NSWLR 344. In The Owners — Strata Plan No 73943 v Gazebo Penthouse Pty Ltd [2014] NSWSC 1536, the Tate decision was applied to rule that an ambiguous exclusive use by-law had to be interpreted narrowly, given the need for third parties interested in a lot to determine the rights and obligations attached to the lot. 369. SSMA s 143(1). Former Strata Schemes Management Act 1996 (NSW) s 52 used slightly more ambiguous language, referring to need for consent from ‘owners of the lots concerned’. In Young v Owners Strata Plan No 3529 (2001) 54 NSWLR 60, Santow J held that the ‘owners of lots concerned’ included the owners of lots who would be excluded from use of part of the common property, under a resolution giving exclusive use to other owners. Such an interpretation would not seem possible under the current provision, which only seems to require the consent of the lots given a benefit by the by-law, not those who may suffer a detriment. 370. SSMA s 143(2). See former Strata Schemes Management Act 1996 (NSW) ss 53, 54. 371. SSMA s 145. See former Strata Schemes Management Act 1996 (NSW) s 55. 372. See 9.77.

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Enforcement of by-laws 9.111  A by-law may be enforced in a number of ways. First, it may be enforced by means of voluntary mediation. Second, enforcement can occur by the issue of a notice from the owners corporation requiring the owner to comply, if the corporation is satisfied that an owner or occupier has breached a by-law.373 The issuing of such a notice requires a specific resolution of the owners corporation or the strata committee, except where the notice is issued by a strata managing agent to whom the power to issue such notices has been delegated.374 The use of this ‘warning notice’ procedure gives rise to a right to apply to NCAT to impose a pecuniary penalty if the owner or occupier later contravenes the by-law.375 Finally, the complainant may seek a remedy through the ordinary courts for breach.These remedies, as well as those sought in relation to other breaches of duty under the SSMA, are the subject of the next section of this chapter. Note, however, that legal action that requires expenditure of funds may not be initiated to enforce the rights of the owners corporation unless authorised by a resolution of a general meeting.376

Disputes 9.112  Disputes that arise in relation to strata schemes are dealt with according to the provisions of the SSMA and the Civil and Administrative Tribunal Act 2013 (NSW). The latter Act provides that disputes under the SSMA will be dealt with by the Consumer and Commercial Division of  NCAT (the Tribunal).377 The Department of Fair Trading suggests that there are four possible steps to dispute resolution of issues arising under the SSMA:378 1. discussion between the disputing parties; 2. an order made by the owners corporation; 373. SSMA s 146. See former Strata Schemes Management Act 1996 (NSW) s 45(1). 374. SSMA s 146(3), (4). See former Strata Schemes Management Act 1996 (NSW) s 45(2), (3). 375. SSMA s 147. See former Strata Schemes Management Act 1996 (NSW) s 203. Note that under the former Act, a Strata Schemes Adjudicator may have been involved in some enforcement of by-laws, but this office does not exist under the current SSMA. 376. SSMA s  103. See  former Strata Schemes Management Act  1996 (NSW) s  80D. There is an exception prescribed by SSMA s  103(2) where the matter is urgent or expenditure will be less than $10,000 or other limit set by the Regulations. Currently the SSMR cl 26(1) sets a higher limit of $15,000. Clause 26(2) of the SSMR allows the obtaining of legal services in relation to a matter that is not urgent if the cost of the legal services does not exceed $3000. Note that, previously, cl 15 of the former Strata Schemes Management Regulation 2010 (NSW) allowed legal expenditure where the estimated costs of the legal advice or action would not be greater than $1000 per lot, or $12,500, whichever was the lesser amount. In The Owners — Strata Plan No 70798 v Bakkante Constructions Pty Ltd (2014) 88 NSWLR 513, the effect of the prohibition in former s 80D on subsequent litigation was held to be not an automatic invalidation of the litigation (though, in the circumstances of that case, the proceedings were struck out). See  also 2 Elizabeth Bay Road Pty Ltd v The Owners — Strata Plan No 73943 (2014) 88 NSWLR 488. Current SSMA s 103(4) confirms that the validity of proceedings will not be affected by a failure to comply with s 103. 377. See Civil and Administrative Tribunal Act 2013 (NSW) Sch 4 cl 3(1). 378. NSW Fair Trading, Strata and community disputes (accessed 17  December  2021), , click on ‘Housing and Property’, ‘Strata and community living’, ‘Strata schemes’ then ‘Resolving disputes in strata schemes’.

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3. mediation, either through the Department of Fair Trading or by an approved mediation service; or 4. an order made by the Tribunal. As noted below, in some cases there may also be a residual jurisdiction in a relevant court, either the District Court or Supreme Court, which might be invoked (particularly in cases involving the validity of by-laws.) The SSMA also allows strata schemes to have their own internal dispute resolution policy in place, under s 216 of the Act (although failure to engage with that policy is said not to have any adverse impact on formal mediation or other processes.)

Mediation 9.113  Since the first Strata Titles Act was enacted in 1961, various legislative reforms have given ever greater prominence to informal dispute-resolution mechanisms. There are two basic reasons for the changes. The first is the need for inexpensive justice. Often disputes involve relatively minor matters, which are too costly to prosecute in the ordinary courts. Informality generally reduces costs. The second reason is the need to ensure the longer term effectiveness of dispute resolution. Where, as in a strata scheme, parties will continue to live in close and regular contact after the dispute has been resolved, a process that leads to a ‘winner’ and a ‘loser’ may have the effect of creating the conditions for further acrimonious disputation. By contrast, if parties can be induced to resolve their differences in ways that avoid this, they may be less inclined to have, or pursue, grievances later. 9.114  The SSMA has continued this policy by setting out requirements for parties to a dispute to attempt mediation before applying for an order from the Tribunal. Mediation is defined as: … a structured negotiation process in which the mediator, as a neutral and independent party, assists the parties to a dispute to achieve their own resolution of the dispute.379

Thus, the Registrar of the Tribunal will not usually accept an application for an order unless he or she is satisfied that mediation has been attempted but was unsuccessful.380 The Registrar is, however, given a discretion to proceed if of the view that mediation is unnecessary or inappropriate.381 If the matter has not been mediated, the applicant will be notified by the Registrar that it should be.382 9.115  The process of mediation is commenced by an application to the ‘Secretary’ (currently defined in SSMA s 4(1) as the Commissioner for Fair Trading, Department of Finance, Services and Innovation) for mediation of any matter for which an order may 379. SSMA s 217, definition of ‘mediation’. See former Strata Schemes Management Act 1996 (NSW) s 127. 380. SSMA s 227(1). See former Strata Schemes Management Act 1996 (NSW) s 125(1)(a). 381. SSMA s  227(1)(c). See  former Strata Schemes Management Act  1996 (NSW) s  125(1)(b). Nor will mediation be required in the case of applications for various formal orders listed in SSMA s 227(4) — see former s 125(1)(c). 382. SSMA s 227(2). See former Strata Schemes Management Act 1996 (NSW) s 125(3).

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be sought from the Tribunal under the Act.383 The Secretary may dismiss an application if he or she believes that it is ‘frivolous, vexatious, misconceived or lacking in substance’.384 Evidence given and documents prepared for mediation sessions are inadmissible in proceedings before any court, tribunal or body without the consent of the parties, or unless there are reasonable grounds to believe that the disclosure is necessary to avoid the danger of personal injury or property damage.385 9.116  Under the former legislation, provision was made for a Strata Schemes Adjudicator to play an ‘intermediate’ role in dispute resolution between the process of mediation and any necessary action in the Tribunal. As this office has now been removed from the SSMA, its former operation will not be discussed here.386

Civil and Administrative Tribunal 9.117  General  The Tribunal, established by the Civil and Administrative Tribunal Act 2013 (NSW), operates as the other main external dispute resolution mechanism for strata schemes. Its jurisdiction now includes matters formerly dealt by adjudicators under the previous legislation. Part 12 of the SSMA deals with the Tribunal’s general powers, and an important legislative note to Pt 12 describes the specific areas in which it may make ‘orders to settle disputes about certain matters relating to the operation and management of a strata scheme’. In broad terms (the details can be found in the note and the various provisions of the Act granting jurisdiction), the Tribunal may make orders in relation to the running of meetings, restrictions on the use of various types of lots, arrangements with strata managing agents or building managers, financial matters, disputes over maintenance or repairs, unit entitlements, by-laws, the presence or otherwise of animals in lots, insurance premiums, and other matters. 9.118  Procedure  The procedure of dealing with applications to the Tribunal under the SSMA is generally the same as that for other applications to the Tribunal, having noted already that most applications will need to have at least attempted mediation first. The Registrar is to give notice of an application for an order to the interested parties, and where an owners corporation receives such a notice, it must display it on its regular local notice board.387 In addition, the owners corporation must immediately serve a copy of the application on each owner of a lot in the strata scheme (except an owner who is a named party to the application, who will of course already know about it).388

383. SSMA s 218(1). See former Strata Schemes Management Act 1996 (NSW) s 128. 384. SSMA s 218(3). See former Strata Schemes Management Act 1996 (NSW) s 130. 385. SSMA ss 223, 224(c). See former Strata Schemes Management Act 1996 (NSW) ss 132, 133(c). 386. The third edition of this work may be consulted for more detail on the role and functions of former adjudicators. 387. SSMA s 228. 388. See SSMA s 228(2)(c), added by the Strata Schemes Management Amendment (Sustainability Infrastructure) Act 2021.

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9.119  The Tribunal may dismiss an application if the ground for the application is the absence of a quorum at a meeting or ‘a defect, irregularity or deficiency of notice or time’, and it ‘believes no substantial injustice has resulted’.389 9.120  The Tribunal’s procedures are informal. Under its head legislation, the Tribunal is ‘to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms’.390 Importantly, there is no general right to representation by counsel, solicitor or agent before the Tribunal.391 As there are no special rules governing the matter in the SSMA, the normal rule as to costs of proceedings before the Tribunal is that the parties must pay their own costs except in ‘special circumstances’.392 The circumstances regarded as ‘special’ for this purpose will include that the proceedings were ‘frivolous, vexatious, misconceived or lacking in substance’.393 9.121  Orders  As noted above, the Tribunal has jurisdiction in a wide range of matters under the SSMA. Here, some of the more common orders made under this and the previous legislation will be commented on: first, applications authorising certain matters in the initial period; and second, applications to reallocate unit entitlements. Under s 27 of the SSMA (see s 182(1) of the former Act), the Tribunal may make an order to waive, vary or extinguish a restriction relating to the initial period, or to authorise any matter to be done in relation to the waiving, varying or extinguishing of such a restriction. The applicant, owners corporation, owner, mortgagee, covenant chargee and any other affected person must be given notice of the application, and have the right to appear and be heard on the hearing of the application.394 9.122  Another area of the Tribunal’s jurisdiction is the allocation of unit entitlements. Given that unit entitlements determine such matters as voting rights, obligations to make contributions to the sinking and administrative funds, and rights to distribution on a termination of the strata scheme,395 the question of allocation of these entitlements — made by the original owner or developer — goes to the heart of the fairness of the scheme. Section 236 of the SSMA (see s 183 of the former Act) details the requirements for an order for reallocation. The Tribunal may make an order only if it considers that the allocation of unit entitlements among the lots was either unreasonable when the strata plan was registered (or when a revised schedule of unit entitlements was lodged at the

389. SSMA s 242. 390. Civil and Administrative Tribunal Act 2013 (NSW) (CATA) s 38(4). See, in relation to the operation of the former Consumer, Trader and Tenancy Tribunal (CTTT) under the earlier legislation, Strata Schemes Management Act 1996 (NSW) s 186(2). 391. CATA s 45. Compare the right of representation under former Strata Schemes Management Act 1996 (NSW) s 193(2). 392. CATA s 60. 393. CATA s 60(3)(e). Compare former Strata Schemes Management Act 1996 (NSW) s 192. 394. SSMA s 27(3), (4). See former Strata Schemes Management Act 1996 (NSW) s 182(2), (4). 395. As to termination of strata schemes, see 9.128.

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conclusion of a development scheme), or became unreasonable because of a change in the permitted land use; for example, because of rezoning.396 In making a determination, the Tribunal is under a duty to have regard to the respective values of the lots, and to this end an application must be accompanied by a certificate of valuation for the relevant time (ie, either on registration or on a change of permitted use) prepared by a qualified valuer.397 The value of a lot is assessed by reference to its market value,398 commonly referred to as the ‘willing vendor/willing purchaser’ test.399 The Tribunal may make ancillary orders on a finding that the original valuation was unsatisfactory, requiring the developer to reimburse the applicant for costs associated with the valuation, the giving of evidence by the valuer, and payments to those owners and the owners corporation in the amount of any overpayments incurred as a result of the unreasonable allocation in the six years prior to the date of the order.400 9.123  An application under s 236 of the SSMA may be made by an owner of a lot, the owners corporation, the local council, or any other body representing the Crown with the power to impose rates, taxes or charges by reference to the valuation of land.401 9.124  The Tribunal also exercises jurisdiction in relation to building manager agreements and the appointment of a strata managing agent.402 9.125  Appeals from orders of the Tribunal will be dealt with under the Civil and Administrative Tribunal Act 2013 (NSW) (CATA). That Act provides for ‘internal appeals’ (where the Tribunal at  first instance has been exercising its general jurisdiction) to be brought to the Internal Appeal Panel of the Tribunal.403 It should be noted that, while appeals on a question of law are available ‘as of right’,404 leave to appeal other matters dealt with in the Consumer and Commercial Division (including matters arising under the strata scheme laws)405 may only be granted where the Internal Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).406 396. SSMA s 236(1). See former Strata Schemes Management Act 1996 (NSW) s 183(2). 397. SSMA s 236(4), (5). See former Strata Schemes Management Act 1996 (NSW) s 183(3)–(5).The question whether issues other than the monetary value of the respective lots may be taken into account, under former s 183, was discussed in Sahade v The Owners — Strata Plan 62022 (2014) 87 NSWLR 261. 398. Brisbane Water County Council v Commissioner of Stamp Duties [1979] 1 NSWLR 320. 399. Spencer v Commonwealth (1907) 5 CLR 418. 400. SSMA s 236(6). See former Strata Schemes Management Act 1996 (NSW) s 183(6). 401. SSMA s 236(3). See former Strata Schemes Management Act 1996 (NSW) s 183(8). 402. SSMA ss 72, 237. See former Strata Schemes Management Act 1996 (NSW) ss 183A, 183B. 403. CATA s 32. 404. CATA s 80(2)(b). 405. CATA Sch 4 cl 3(1). 406. CATA Sch 4 cl 12.

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9.127

It should also be noted, however, that decisions of the Tribunal imposing a civil penalty are not able to be internally appealed.Appeals on a question of law following the imposition of a penalty may be taken to the ‘appropriate appeal court’ under CATA s 83. This will be either the Supreme Court (if the Tribunal making the order had been constituted by one or more senior judicial officers), or otherwise the District Court.407 9.126  Imposition of civil penalties  The Tribunal may, on an application by an owners corporation, order a person to pay a fine of up to ten penalty units if it is satisfied that the owners corporation served an SSMA s 146 (former s 45) notice on the person, and that he or she has since breached the by-law.408 This penalty may be doubled for a second failure to comply within 12 months.409 A higher penalty will apply if the contravention concerns a by-law made under s  137, concerning occupancy limits.410 An owner or occupier cannot seek this ‘warning notice’ procedure. An unpaid fine is a charge on the lot, until paid to or recovered by the owners corporation.411 The Tribunal may also, under s 147A, require a person to pay a pecuniary penalty of an amount of up to 50 penalty units for contravention of an order. An application for a s 147A order may be made not only by the owners corporation, but also by the applicant for the original order, or by an owner or other person having or acquiring an estate or interest in a lot in the strata scheme to which the order relates.

District Court and Supreme Court 9.127  Avenues of appeal from orders of the Tribunal were noted above.412 The effect of this scheme is that generally an appeal is available only on a point of law.413 Appeals to the District Court or the Supreme Court are possible where civil penalties have been imposed, depending on the constitution of the Tribunal that made the order.414 The Supreme Court may also retain, however, its inherent jurisdiction to provide judicial review of orders made under the strata schemes legislation.415 Accordingly, it may still be open to a complainant to bypass the specific strata schemes dispute-settlement mechanisms entirely.416 However, 407. CATA s 82(3). 408. SSMA s  147. See  former Strata Schemes Management Act  1996 (NSW) s  203(1). For details of the enforceability of by-laws, see 9.111. For penalty units, see note 293. 409. SSMA s 147(2). 410. SSMA s 147(3), imposing a limit of 50 penalty units for a first failure to comply, and 100 penalty units for a repeat failure within 12 months. 411. SSMA s 248. See former Strata Schemes Management Act 1996 (NSW) s 206. 412. See  9.125. The previous legislation allowed appeals to the District Court in relation to some orders. See former Strata Schemes Management Act 1996 (NSW) s 200(1), (2). 413. For a recent decision where an appeal to the Supreme Court against a finding of the NCAT Appeal Panel failed as there were no errors of law in the Panel’s decision, see Taylor Construction Group Pty Ltd v Strata Plan 92888 t/as The Owners Strata Plan 92888 [2021] NSWSC 1315. 414. CATA s 82(3). 415. Regis Towers Real Estate Pty Ltd v Kin Fung (2001) NSW ConvR ¶55-960. 416. For a discussion of the changing judicial approach to this question, see  Butt, Land Law, note 7 above, [2148]; Ilkin, NSW Strata and Community Schemes Management and the Law, note 221 above. For a case where the Supreme Court proceeded to hear issues relating to the validity of by-laws, see Santai v The Owners — Strata Plan No 77971 [2010] NSWSC 628. (While the decision in that case as to the validity of

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note that s 253(2) of the SSMA provides that where rights are enforced in a court, the plaintiff must pay the defendant’s costs if the court is of the opinion that, having regard to the subject-matter of the proceedings, the taking of the proceedings was not justified because the Act itself makes adequate provision for the enforcement of those rights or remedies. The Supreme Court or other relevant court also retains jurisdiction where title to land is in question.417

Termination of strata schemes 9.128  A strata scheme can be terminated pursuant to an order of the Supreme Court on the application of the owner of a lot, the owners corporation, or a mortgagee or covenant chargee of a lot.418 Such an order must contain directions for, among other things, the: • sale or disposition of any property of the owners corporation; • discharge of liabilities of the owners corporation; • persons liable to contribute moneys required for the discharge of the liabilities of the owners corporation and their proportionate liability; and • distribution of the assets of the owners corporation and the proportionate entitlement of each person under that distribution.419 Similar powers and rights arise where a strata scheme is terminated by the RegistrarGeneral.420 This procedure will usually be invoked only where all proprietors and any others having a legal interest in the lots agree.421

Strata renewal process 9.129  What if all the owners do not agree in the need to terminate the scheme? Until recently, it was not possible to end a strata scheme without unanimous agreement of all lot owners. But the SSDA introduced a new Pt 10, dealing with what is called the ‘strata renewal process’. SSDA s  153(2) says that the purpose of the Part is ‘to facilitate the collective sale or redevelopment of freehold strata schemes’.422

the by-law was overturned on appeal in Casuarina Rec Club Pty Ltd v The Owners — Strata Plan No 77971 (2011) 80 NSWLR 711, no challenge was made to the jurisdiction of the Supreme Court to consider the question.) 417. SSMA s 239, which provides that determination of questions of title to land by the Tribunal are effective only for the purposes of the Act. See former Strata Schemes Management Act 1996 (NSW) ss 176, 199. 418. SSDA s 135. See former Strata Schemes (Freehold Development) Act 1973 (NSW) s 51(1), (4). 419. SSDA s 136. See former Strata Schemes (Freehold Development) Act 1973 (NSW) s 51(6). 420. SSDA s 142. See Strata Schemes (Freehold Development) Act 1973 (NSW) s 51A. 421. See SSDA s 142(3); former Strata Schemes (Freehold Development) Act 1973 (NSW) s 51A(3). 422. For comment on some issues around the process of these applications, see  P Vergotis and K Huxley ‘Judicial Guidance on Procedure in Strata Renewal Proceedings’ (Aug 2018) 47 Law Society Journal 86–87. See also ESW Ti, ‘Collective Best Interests in Strata Collective Sales’ (2019) 93(12) Australian Law Journal 1025.

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9.130

The details of the strata renewal process are, of course, set out in Pt 10.423 But, in general terms, it allows the termination of a strata scheme where only 75% of lot owners may be in favour.424 The Act provides a detailed process where a proposal must be approved by the strata committee and owners corporation in general meeting,425 and then considered by a specially established ‘strata renewal committee’.426 Once the required level of support from lot owners has been reached, the Registrar then records that the strata scheme is the subject of a ‘strata renewal plan’.427 Of course, compensation is to be paid to lot owners who did not agree with the proposal but will lose their property.428 The Land and Environment Court is given jurisdiction to make orders implementing the strata renewal plan. In doing so, it must ensure that all appropriate procedures leading up to the action were followed. The court is also required to order compensation to a ‘dissenting owner’, whose lot is being taken away contrary to their wishes, of an amount that is not less than the amount that owner could have obtained for their lot if they had approved the renewal scheme.429 The decision of the LEC in Application by the Owners Strata Plan No 61299430 provides a worked example of a successful application for approval of a strata renewal plan where there were no dissenting owners, though not all could be located for approval.431

Reform Unilateral severance of Torrens title land 9.130  One important reform suggested by the New  South  Wales Law Reform Commission in 1994 was to simplify the process of severance of joint tenancies of Torrens title land.432 As Corin v Patton433 and Costin v Costin434 have shown, a joint tenant without possession of the certificate of title can face serious difficulties if he or she wishes to make a gift of the interest. Either registering a severance (for which the certificate is needed) or severing in equity (for which the certificate is also necessary for the purposes of ‘perfecting’ a gift) in practice become impossible if a co-joint tenant in possession of the

423. For an overview, see A Benson, ‘The Nuts and Bolts of the Latest Strata Reforms’ (2016) 19 Law Society of NSW Journal 78–79 at 79. 424. See the definition of ‘required level of support’ in SSDA s 154. 425. SSDA s 158. 426. SSDA s 160. 427. SSDA s 176(3). 428. SSDA s 171(2). 429. SSDA s 182(1)(e). 430. Application by the Owners Strata Plan No 61299 [2019] NSWLEC 111. 431. Note, however, that ESW Ti ‘Towards Fairly Apportioning Sale Proceeds in a Collective Sale of Strata Property’ (2020) 43/4 UNSW Law Journal 1494 suggests at 1509–1510 that one aspect of this decision, the reallocation of unit entitlements as part of the strata renewal process, might be subject to challenge in a future defended proceeding. 432. New South Wales Law Reform Commission, Unilateral Severance of Joint Tenancies, Report No 73, 1994. 433. Corin v Patton (1990) 169 CLR 540. 434. Costin v Costin (1997) NSW ConvR ¶55-811 (CA).

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certificate refuses to produce it. Such a person may have a vested interest in survivorship in cases where a joint tenant is terminally ill. 9.131  The New  South  Wales Law Reform Commission recommended adoption of a provision from s 63 of the Land Titles Act 1980 (Tas), which allows for a ‘declaration of severance’ to be recorded on the Register.435 The advantage of this procedure is that there is no need to produce the certificate of title for registration. Section 97 of the Real Property Act 1900 (NSW) is aimed at achieving this object by providing for registration of a transfer to self without production of the certificate of title. However, given that this provision allows a co-joint tenant to stall the process by objecting to severance (see ss 97(5) and 12A(2) of the Real Property Act) the position, while an advance, does not resolve all of the problems of the previous law. For instance, mere lodgment of an objection might buy time for the non-severing joint tenant, so that the same result as in Corin and Costin could theoretically result under the reformed law. Arguably, enactment of a provision that reflects the simpler English position (severance by notice in writing)436 to the Torrens system would go some way to solving this problem. A joint tenant could be allowed to sever merely by a notice given to co-joint tenants. An instrument recording this notice could be immediately registrable. Co-joint tenants disadvantaged by such a process (eg, where the severance was in breach of a contractual agreement not to sever for a specific period) would retain in personam rights to have the Register amended.The requirement of notice, coupled with the caveat provisions, would afford the holder of in personam rights adequate means to protect them.

Occupation rents and profits 9.132  The rules governing accounting for improvements and occupation rents, devised in a very different social and historical context to the present day, are unduly cumbersome. This is especially evident when set alongside the rules that govern the distribution of property on divorce, or on separation of de facto partners under the Property (Relationships) Act 1984 (NSW). In particular, the law of co-ownership — unlike other areas of property law examined in this work — has until recently seemed peculiarly blind to the differences that exist between domestic and intimate personal relationships, on the one hand, and forms of commercial relationships, on the other. Certainly, the Family Law Act 1975 (Cth) overrides s  66G of the Conveyancing Act  1919 (NSW), but only to the extent of the jurisdiction of the Family Court. Thus, in relation to suits for partition or sale initiated by parties who are not covered by either the Family Law Act or Property (Relationships) Act, there is no consideration of responsibility for children. It is encouraging to see that the decision in Callow v Rupchev437 recognises the relationship status of parties as a relevant issue in determining the entitlement to occupation rent — a matter that, for all their other

435. See C Sherry, ‘Unilateral Severance of Joint Tenancies’ (1995) 3 Australian Property Law Journal 1. 436. See Law of Property Act 1925 (UK) s 36. 437. Callow v Rupchev (2009) 14 BPR 27,533.

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disagreements, forms the shared substratum of concerns of Kirby P and Meagher JA in Forgeard v Shanahan.438 9.133  This issue was pursued in Kirby P’s strong dissenting judgment in Forgeard v  Shanahan, where he argued that a generous reading of the partition provision (s 66G of the Conveyancing Act) would confer on the courts an analogous discretion to that contained in the property distribution provisions of the Family Law Act and the Property (Relationships) Act. The Queensland legislation, which offers a general right to account in relation to rents and profits received other than as a result of the co-owners’ own exertions on the land, such as rent from a tenant, appears a much fairer solution.439 Moreover, the reasoning in Carmody v Delehunt440 in the New South Wales Court of Appeal, which made use of general legislative intent to interpret s  26 of the Conveyancing Act, might have yielded a similar result for s 66G. A further advantage of a reform of this nature would be to resolve the general legal uncertainty surrounding liability to account for rents, profits and income.441 There seems no good reason why these should not be dealt with in the same way as other costs and expenses.

Strata scheme by-laws and property rights 9.134  With the increasing density of city living, more and more property owners are becoming registered proprietors of lots as part of strata schemes or other forms of statuteregulated systems where the law regulates not only property boundaries but relationships between owners in close geographical proximity. One of the major challenges facing courts and legislators in this area, as indicated by a number of recent decisions and the comment by Sherry noted above,442 is the protection of those lot-holders in the minority: there is real potential for ad hoc arrangements created by by-laws, which have been approved by a 438. Forgeard v Shanahan (1994) 35 NSWLR 206. 439. Section 43(1) of the Property Law Act 1974 (Qld) provides:

A co-owner shall, in respect of the receipt by the co-owner of more than the co-owner’s just or proportionate share according to the co-owner’s interest in the property, be liable to account to any other co-owner of the property.

440. Carmody v Delehunt [1984] 1 NSWLR 667. 441. The unsatisfactory position in relation to rents and profits in New South Wales is a consequence of the repeal of the Administration of Justice Act 1705 (Imp) by the Imperial Acts Application Act 1969 (NSW), as held in Forgeard v  Shanahan (1994) 35 NSWLR 206. The repeal followed a recommendation of the New South Wales Law Reform Commission — ‘a neat illustration of the havoc which can be wrought by high-minded but ignorant people’: Forgeard v Shanahan (1994) 35 NSWLR 206 at 222 per Meagher JA. The more satisfactory Queensland reform updated the old, much-criticised and cumbersome English provision, as recommended by the Law Reform Commission in that state. See Queensland Law Reform Commission, A Bill to Consolidate, Amend, and Reform the Law Relating to Conveyancing, Property, and Contract to Terminate the Application of Certain Imperial Statutes, Report No QLRC 16, 1973, pp 29–30; and generally, Moore, Grattan and Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, note 2 above, pp 571–80. 442. See White v Betalli [2006] NSWSC 537; White v Betalli (2007) 71 NSWLR 381; The Owners of Strata Plan No 3397 v  Tate (2007) 70 NSWLR 344; Casuarina Rec Club Casuarina Rec Club Pty Ltd v  The Owners — Strata Plan 77971 (2011) 80 NSWLR 711; Sherry, ‘How Indefeasible Is Your Strata Title? Unresolved Problems in Strata and Community Title’, note 335 above.

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majority of lot-holders, to undermine the traditional strength of property rights enjoyed by those who may be in the minority. In particular, the introduction into the SSDA of new Pt 10 allows a lot owner to be deprived of their interest in a lot where 75% of other lot owners agree. Whether the compensation and other procedures are adequate to protect the interests of individual ‘dissenting owners’ in these circumstances remains to be seen. It seems that this is an important area that warrants careful monitoring if the integrity of the Torrens system, and the strength of property rights, is to be maintained.

9.135  Strata schemes felt the impacts of the COVID-19 pandemic from 2020. Shared spaces such as stairwells, hallways, lobbies and lifts became spaces where residents and their invitees (eg, delivery people) became vulnerable. Consequently, New South Wales Public Health Orders had to be crafted to cover these situations, and owners corporations had to implement the orders.443 Planning for future possible pandemics may include additional requirements such as increased ventilation for indoor areas, and these will need to be considered in developing strata schemes. However, in considering this matter it may be necessary to take into account the requirement in cl 30 of the SSMR, which requires a window in a unit above ground level to have a window safety device, which prevents it being fully opened if it can be accessed by young children. While this provision is clearly important for child safety, it does reduce the amount of ventilation that is available in such units. More work may be needed to strike the right balance in this area.

443. For example, the New South Wales Public Health (COVID-19 General) Order (No 2) 2021 (in force as at  12  Jan  2022) cl 6(1)(b) required fitted face coverings to be used ‘in an indoor area on common property for residential premises’, with ‘common property’ including that term as used in the SSDA (see the Dictionary to the Order).

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Chapter 10

Perpetuities Introduction 10.1  The concept of free alienability has become one of the key and enduring principles of land law.1 However, as noted in Chapter 3, property owners in England with dynastic aspirations were eager to rule from the grave and ensure that interests in land remained in the hands of established families, land being associated with power and kudos. Property owners sought to achieve this end by a variety of methods, including: • the use of fee tail estates, whereby the testator sought to pass an interest down a line of lineal descendants; and • contingent remainders, whereby a party took an interest only if he or she complied with certain preconditions. Such restrictions were in conflict with the freedom to alienate and, perhaps not surprisingly, several attempts were made to restore that freedom.2 Historically, the two competing principles (free alienability and restricted alienability) vied with each other for supremacy, but eventually equivocation concerning the control of land ownership was resolved by restoring the balance in favour of free alienability.3 Today, one of the main tools ensuring relatively free alienability is the ‘rule against perpetuities’, a rule that prohibits attempts to ‘tie up’ (or restrict the vesting of) property for unreasonably long periods of time.4 F Pollock and F Maitland, The History of English Law, 2nd ed, Cambridge University Press, 1924, Vol 2, pp 18–19. 2. See AWB Simpson,‘Introduction’ to W Blackstone, Commentary on the Laws of England, Facsimile ed, Chicago and London, 1979,Vol 2, pp x–xi; AWB Simpson, History of the Land Law, 2nd ed, Clarendon Press, Oxford, 1986, pp 126–7. Consider the Statute of De Donis Conditionalibus 1285, the recovery and the fine. Note that, under Roman law, a fideicommissum (a form of trust) was used to extend settlements. However, Justinian ultimately decreed that settlements could not extend beyond four generations with the effect that land was somewhat freed from the tentacles of the settlor. Much European law adopted the Justinian approach. See JKBM Nicholas, An Introduction to Roman Law, Clarendon Law Series, Clarendon Press, Oxford, 1962, pp 268–69; DM Walker, The Oxford Companion to Law, Clarendon Press, Oxford, 1980, pp 468–69. 3. For further discussion of this equivocation, see  JHC Morris and W Barton Leach, The Rule Against Perpetuities, 2nd ed, Stevens, London, 1962, p 3. 4. Acts such as the Succession Act 2006 (NSW) preserve reliance on the rule against perpetuities; for example, see s 41 of the Succession Act. 1.

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10.2  The rule against perpetuities has been complemented by: • another rule that makes clauses in wills or other instruments void for public policy reasons if those clauses prevent the free alienation of property;5 and • the state settled land legislation.6 This chapter will examine the rule against perpetuities. The rule of perpetuities may appear to be an arcane rule and, as is discussed in 10.62–10.63, there is room for disagreement about whether its retention is good policy. Nevertheless, the timing of the vesting of interests has important practical implications, including in relation to taxation,7 so it is important for lawyers to understand the operation of the rule.

History of the Rule against Perpetuities 10.3  Historically, the principle of free alienation has had to survive the oscillation and vacillation of various legislators. For example, the Statute De Donis Conditionalibus 1285, in permitting the creation of an estate (a ‘fee tail’) that was inalienable until the death of the most distant descendant of the original tenant,8 had the effect of limiting freedom of alienation by giving the grantor the ability to direct the course of alienation down specific lines of descent, while the Statute of Quia Emptores 1290 bolstered the concept of free alienability by ensuring that the holder of a fee simple estate had a right to alienate his or her estate either wholly or partially. Such ambivalence about whether land should be ‘tied up’ for long periods of time is probably partially explained by reference to polar objectives. On the one hand, landowners approved of freedom of alienation because it gave them the opportunity to acquire more land; on the other hand, however, once acquired they wished to prevent their holdings from passing in a manner contrary to their wishes.9 10.4  It took the formulation of a rule against the perpetual restriction of alienability to reaffirm the principle of (fairly) free alienability.10 This rule altered over time and its earlier manifestations are quite different from the rule we know today. It was a rule formulated at common law, legislation not playing a direct role in the issue of the perpetual restriction of land until the 20th century.

5.

Today, there is some relaxation of this rule and some partial restraints have been permitted. See Wollondilly Shire Council v  Picton Power Lines Pty Ltd (1994) 33 NSWLR 551; Hall v  Busst (1960) 104 CLR 206. See also P Butt, ‘Restraints on Alienation: Tenants in Common’ (1995) 69 Australian Law Journal 683. 6. See the Conveyancing and Law of Property Act 1898 (NSW), for example, ss 37, 77. 7. J Main, ‘A Matter of Trust: Working Together to Avoid Hidden Tax Strings’ (2020) 72 Law Society Journal pp 76–77. 8. The fee tail estate is discussed in Chapter 3. 9. Butt’s Land Law speaks of a ‘conundrum’ for policymakers; that is, ‘can the freedom to alienate one’s land to anyone extend to the freedom to impose fetters on it in the hand of the transferee?’ (B Edgeworth, Butt’s Land Law, 7th ed, Thomson Reuters, Sydney, 2017, [5.10] p 174. 10. The rule against perpetuities was, according to Holdsworth, first formulated in Perrot’s Case (1594) Moo KB 368; 72 ER 634:W Holdsworth, A History of English Law, 2nd ed, Methuen and Co, Sweet & Maxwell, London, 1937,Vol 7, p 193. By the time Whitby v Mitchell (1890) 44 Ch D 85 (CA) was decided, a clear and unequivocal expression of the rule was available to be taken up in that case.

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The 19th-century case of Whitby v Mitchell11 affirmed the validity of the ‘old rule’ — that after a limitation for life to an unborn person, any further limitation to his or her issue was void — despite the later development of the ‘modern’ rule (referred to in 10.5 below). The old rule resolved the contest regarding perpetual freeholds.12 This formulation of the rule was not to last, and in New  South  Wales it was abolished by s  23A of the Conveyancing Act 1919 (NSW).13 Section 23A does, however, preserve the ‘modern’ rule against perpetuities. 10.5  The ‘modern’ rule against perpetuities (which was part of the received law of New  South  Wales) can be traced back to Lord Nottingham’s decision in the Duke of Norfolk’s Case;14 a case that allowed the vesting of interests to be delayed for one generation. Any interest created by the disposition had to vest, if it vested at all, within one generation. Hence, the modern rule did not prevent a future interest in property from being ‘tied up’ per se.15 It merely prevented it from being ‘tied up’ in perpetuity. That same principle was retained in later manifestations of the modern common law rule against perpetuities, which altered the perpetuity period from one generation (the life of ‘a life in being’) to ‘a life in being’ plus 21 years. A ‘life in being’ is a person who is alive when the instrument that creates the interest comes into effect, and who is relevant to the identification of the interest-holder and the timing of the vesting of the interest. For example, where interests are to be conferred upon the children of X, X would be a life in being for the purposes of the disposition.16 Hence, the modern rule against perpetuities is perhaps better described as a rule against the remoteness of vesting. Its main aim is to prevent grantors or testators restricting the vesting of property for an excessive period of time.17 10.6  In New South Wales, the common law position as outlined in the ‘modern’ rule against perpetuities has been amended by the Perpetuities Act 1984 (NSW). Section 7 of that Act alters the perpetuity period to a statutory period of 80 years. As the Act neither 11. Whitby v Mitchell (1890) 44 Ch D 85 (CA). See Morris and Barton Leach, The Rule Against Perpetuities, note 3 above, p 4. Note that ‘issue’ means offspring or progeny. 12. For example, ‘To A for life, remainder to A’s as yet unborn second daughter, remainder to the children of that daughter and their heirs’ was void after application of the rule in Whitby v Mitchell (1890) 44 Ch D 85 (CA). 13. Section 23A(1) of the Conveyancing Act states: (1) The rule of law prohibiting the limitation after a life interest to an unborn person of an interest in land to the unborn child or other issue of an unborn person is hereby abolished, but without prejudice to any other rule relating to perpetuities. 14. Duke of Norfolk’s Case (1682) 3 Ch Cas 1; 22 ER 931. The rule was recast in Cadell v Palmer (1833) 1 Cl & Fin 372; 6 ER 956. Note that, except for having the same general objective of preventing longterm controls on alienability, the modern rule of perpetuities (per the Duke of Norfolk’s Case) has little in common with the rule in Whitby v Mitchell (1890) 44 Ch D 85 (CA). Note also that the modern law of perpetuities developed in response to concerns about the Statute of Uses 1535 and the Statute of Wills 1540 having created a new type of interest, known as an executory interest, which, as a result of the decision in Pells v Brown (1620) Cro Jac 590, was rendered indestructible. The rule against perpetuities emerged as a method to circumvent a string of executory interests tying up land alienation in perpetuity. 15. Here, ‘tied up’ means that the settlor or testator controlled the vesting of the interest. 16. Lives in being are discussed in greater detail at 10.27. 17. For a discussion of the rationale for the rule, see  DE Allan, ‘The Rule Against Perpetuities Restated’ (1963) 6 University of Western Australia Law Review 27 at 30–3.

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codifies the common law position nor provides a complete new code, it is necessary to be familiar with both the common law and the statute. However, given the effluxion of time, there are fewer and fewer cases where the common law position is applicable. Accordingly, the importance of the common law rule is becoming increasingly historic.

Modern Rule Against Perpetuities 10.7  Today, the modern rule against perpetuities consists of the relevant common law and the Perpetuities Act 1984 (NSW).

Shared principles 10.8  Certain principles are shared between the common law and the Perpetuities Act. They are: • • • • • •

the formulation of the rule against perpetuities; the kinds of interests to which the rule applies; whether the interest is vested or contingent; a perpetuity period; class gifts; and class-closing rules. These shared principles are discussed below.

Formulation of the rule 10.9  The rule against perpetuities may be expressed broadly in the following terms: For an interest in property to be valid, it must vest, if it vests at  all, not later than the expiration of the perpetuity period.18

Under the common law this formulation also incorporated a certainty component, leading to the rule’s expression in the following terms: For an interest in property to be valid, it must be certain to vest, if it vests at all, not later than the expiration of the perpetuity period.19

In other words, if there is a possibility that an interest created by the disposition will vest after the expiry of the perpetuity period, the disposition will be invalid. Figure 10.1 represents diagrammatically when the interest must vest to avoid falling foul of the rule against perpetuities.20 18. Modified version of the formulation of J C Gray, The Rule Against Perpetuities, 4th ed, Little, Brown & Co, Boston, 1942, p 201. 19. Gray, The Rule Against Perpetuities, note 18 above, p 201. In Morris and Barton Leach, The Rule Against Perpetuities, note 3 above, p 51, the authors frame the rule in the following manner: ‘No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest’. 20. A similar chart appears in L McCrimmon, ‘Understanding the Rule Against Perpetuities: Adopting a Five Step Approach to a Perpetuities Problem’ (1997) 5 Australian Property Law Journal 130.

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10.11

Figure 10.1:  Estimating the perpetuities period

Perpetuity period Life in being plus 21 years (common law); or 80 years (Perpetuities Act 1984 (NSW)). Interest must be certain to vest, if it vests at all, within this perpetuity period. Time Start Date testator dies; or Date deed is executed and delivered.

End

Note: Life in being must have commenced at date perpetuity period commences.

Kinds of interests in property to which the rule applies 10.10  The rule against perpetuities applies to many contingent interests in realty or personalty, whether they are legal or equitable. Included in the interests to which the rule applies are: • executory interests (by conveyance or devise), except those subject to the rule in Purefoy v Rogers;21 • legal interests that rely on s 44(2) of the Conveyancing Act 1919 (NSW); • equitable interests arising from limitations inter vivos behind a trust; • beneficial interests under a will that came into operation after the Probate Act 1890 (NSW); • equitable contingent remainders; • rights of re-entry for conditions broken; • options to purchase land; and • directions for accumulations of income.22 10.11  There remains uncertainty as to whether the rule against perpetuities applies to legal contingent remainders. Statutory reforms to the legal contingent remainder rules saved legal contingent remainders that had not vested before the determination of the prior particular estate, but the reforms had the effect of creating an interest with a propensity for perpetuity.As Rossiter points out, whether legal contingent remainders are now to be treated as equitable from the beginning or only after the remainder fails, or whether they are to be treated as executory limitations in the event of ex post facto failure or as having been abolished altogether 21. Purefoy v Rogers (1671) 2 Wms Saund 380; 85 ER 1181. 22. See C Sappideen and P Butt, The Perpetuities Act 1984, Law Book Co, Sydney, 1986, p 7; Re Frost (1889) 43 Ch D 246; Re Ashforth [1905] 1 Ch 535; Whitby v Von Luedecke [1906] 1 Ch 783; In the Will and Estate of Malin [1905] VLR 270.

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is difficult and complex.23 It would seem, however, that where a legal contingent remainder is to be treated as either an equitable or executory interest, it will be subject to the rule against perpetuities. If the interest infringes that rule at common law, it will be void. The rule against perpetuities has no application if the interest is already vested at the time that the instrument containing the disposition takes effect, because clearly there is no issue concerning whether the interest will vest outside the perpetuity period. Vesting has already occurred.

Vested or contingent? 10.12  When considering whether the rule against perpetuities operates, the necessary starting point is to ask, of any interest, whether it is vested or contingent at the time that the instrument containing the disposition takes effect. If the interest is already vested, as stated above, it will not be affected by the rule.24 There are three requirements for an interest to vest: 1. it must be possible to identify who is to take; 2. the interest must be capable of taking effect in possession — that is, without the need to fulfil any conditions precedent;25 and 3. in the case of class gifts, all members of the class must be known so that the size of each member’s share can be calculated. The only exception to the second requirement above is where a prior interest, such as a prior particular estate (a life estate), prevents the (other) interest taking effect in possession. Hence, an interest that vests ‘in interest’, but does not vest in possession because the prior particular estate has not yet ended (the life estate holder still being alive), presents no perpetuity problems.26 The rule against perpetuities is concerned only with when the interest vests in interest.27 10.13  Examples of contingent gifts include: • A gift by T in a will ‘To my first granddaughter’. Such a gift would be contingent if T’s children were childless at  T’s death (T’s death being the moment at  which the instrument containing the gift takes effect), because the identity of the granddaughter is unknown. The gift is contingent on the granddaughter being born. • A gift subject to a condition precedent. For example, a grant ‘To B at 21 years’ would be contingent if B were not yet 21 years when the instrument containing the gift takes effect, because the attainment of 21 years is a condition precedent to B taking the gift. • A class gift by T in a will ‘To my grandchildren’. Such a gift would be contingent if T’s children were alive at T’s death. It is not possible at that time to know how many 23. CJ Rossiter, Halsbury’s Laws of Australia, LexisNexis,  Australia,Vol 19, 310 — Perpetuities and Accumulations, [310-85]. 24. Monds v  Stackhouse (1948) 77 CLR 232; Carroll v  Perpetual Trustee Co Ltd (1916) 22 CLR 423; Evans v Walker (1876) 3 Ch D 211; Abbiss v Burney (1881) 17 Ch D 211. 25. Reversions are always vested. Remainders may be vested or contingent, depending on the circumstances. 26. A prior particular estate is an earlier estate less than a fee simple, such as a life estate. 27. An interest vests in interest when the contingency is satisfied.

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grandchildren there will be. T’s children could have further children. It is also possible to have class gifts subject to a condition precedent. Thus, an inter vivos gift ‘To all of my children who attain 21 years’ is also contingent. The children who reach 21 years will be admitted to the class. As the children turn 21 years, the class will expand to admit them. If the gift is to a class, the interests of all of the class must vest, if they vest at all, within the perpetuity period or the gift will fail. 10.14  Wherever possible, the court will lean in favour of finding the interest vested rather than contingent. Hence, a grant ‘To B at 25 years’ is contingent, but a grant ‘To B payable at 25 years’ is vested, subject to a postponement of enjoyment.28 The gift is said to be owed at the present time but payable (or to be performed) in the future (in this case when B is 25 years old). The inclusion of income in a gift has tended to allow the gift to be characterised as vested rather than contingent. Hence, a bequest ‘To T on trust for B for life, then on trust for M’s children at 25 years, but after the death of M the trustees shall pay the income in equal shares to M’s children until they attain 25 years’ resulted in the gift of the corpus being vested in each of the children at birth, while the age of 25 years was held to be the time to which the payment of the corpus was postponed.29 The same presumption of vesting has been applied in circumstances where the trustees were directed to apply the income for the maintenance of the beneficiaries instead of paying it directly to them.30 If, however, the provision assumes the form of a mere power of appointment and not an actual trust, then this presumption will not apply.31 A grant that is subject to a condition subsequent will be vested subject to divesting. For example, in a bequest ‘To T, on trust for M for life, then on trust to M’s first child, but if M’s first child becomes a lawyer, then to K’, M’s first child has a vested interest, but that vested interest is subject to divesting if he or she becomes a lawyer. As the devise in favour of M’s first child is vested, it cannot offend the rule against perpetuities. The question to be resolved in such cases is whether the event that could cause divesting is too remote, causing the divesting contingency to fail. Sometimes a gift to a beneficiary is not only tied to an age requirement, but also specifies that if the beneficiary fails to meet that requirement, there is ‘a limitation over’. In such cases, where the beneficiary fails to reach the specified age, the attainment of that

28. Clobery v Lampen (1683) 2 Free 24; 2 Ch Cas 155; Farmer v Francis (1824) 2 Bing 151; (1826) 2 S & St 505; Chaffers v Abell (1839) 3 Jur 577; Re Bartholomew’s Will (1849) 1 Mac & G 354; Williams v Clark (1851) 4 De G & Sm 472; Shrimpton v Shrimpton (1862) 31 Beav 425; Maher v Maher (1877) 1 LR Ir 22. 29. Hanson v Graham (1801) 6 Ves 239; Lane v Goudge (1803) 9 Ves 225; Re Hart’s Trust (1858) 3 De G & J 195; Hardcastle v Hardcastle (1862) 1 H & M 405; Scotney v Lomer (1886) 31 Ch D 380 (CA); Re Wrey (1885) 30 Ch D 507. 30. Jones v Mackilwain (1826) 1 Russ 220; Re Hart’s Trusts (1858) 3 De G & J 195; Boulton v Pilcher (1861) 29 Beav 633; Re Bunn (1880) 16 Ch D 47. 31. Re Hume [1912] 1 Ch 693; Re Blackwell [1926] Ch 223 (CA); Wilson v Knox (1884) 13 LR Ir 349; Russell v Russell [1903] 1 IR 168; Barrett v Barrett (1918) 18 SR(NSW) 637; Re Benjamin [1926] VLR 378; Re Zahl [1931] St R Qd 1; Re Harding [1956] NZLR 482.

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age is treated as a condition subsequent rather than a condition precedent. Hence, the beneficiary takes a vested interest that is subject to divesting on death under the age that was specified in the limitation.32 Finally, to reiterate, in deciding if an interest is vested or contingent for the purpose of perpetuities, the time at which the interest vests in interest is what is important, not the duration of the interest. Therefore, it does not matter that a vested interest endures well beyond the perpetuity period. The rule is a rule about remoteness of vesting. It is not a rule about the duration of interests.

Perpetuity period 10.15  The perpetuity period is the period by the end of which the interest must vest so as to prevent the vesting from being regarded as occurring at too remote a time. Under the common law and the Perpetuity Act, there is a perpetuity period. In both cases, it begins to run from the date the instrument containing the disposition comes into operation. In the case of a will, this is the date of the testator’s death;33 and in the case of a disposition inter vivos (by deed), it is the date on which the relevant deed is executed and delivered. At common law, the perpetuity period is a ‘life in being’ plus 21  years. Under the Perpetuities Act, it is 80 years.34

Class gifts 10.16  A class gift is a gift to an identified group of people (rather than to particular people identified as individuals). Class gifts present the problem that the number in the group may be uncertain at the time the instrument creating the disposition takes effect. Clearly, it is impossible to calculate the quantum due to each member of the class until the class has closed, because only then can the total amount available be divided by the number of members of the class. It would be most unwise to distribute a gift among donees before the exact number of donees entitled to take was ascertained. Not to wait until this time may mean that: • portions already allocated would have to be given back; • new sums would have to be calculated, taking into account the changed number of donees; and • another distribution would have to be made. To avoid offending the rule against perpetuities, the interest of each and every member or potential member of the class must vest within the perpetuity period. The necessary analysis 32. This principle is known as ‘the rule in Phipps v Acker’, so named because of Phipps v Acker (1842) 9 Cl & F 583; 8 ER 539. It does not apply if the attainment of the specified age is the method by which beneficiaries are to be identified. A gift ‘To my grandson, J, at 35 years, but if he does not attain 35 years, then to my niece, L’ would give J a vested interest subject to divesting on his death under 35 years. As the identity of J is not determined by the attainment of age (we know who J is), the rule in Phipps v Acker would apply. 33. Note that, under s 4(3) of the Perpetuities Act, there is an exception to this position. 34. These terms are discussed later at 10.26 and 10.43.

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10.17

involves standing at the moment that the relevant instrument takes effect and asking whether it is possible that an interest might vest, if it vests at all, after the expiry of the perpetuity period. If it is possible that the interest of any one member of the class could vest outside the perpetuity period, then the whole gift will fail.This is known as the ‘all or nothing’ rule. 10.17  Some examples of class gifts are: • • • •

‘To my grandchildren’; ‘To all my grandchildren who graduate in law’; ‘To my brothers and sisters who marry’; and ‘To those children of mine who matriculate to the University of New South Wales’.

By contrast, a gift ‘To my grandchildren, A, B and C’ is not a class gift because the three grandchildren are mentioned by name (ie, identified as individuals). The gift is limited to those three individually identified grandchildren and, consequently, each child’s share is certain from the outset. Nor is a gift of ‘$1000 to each of my grandchildren’ a class gift even when the number of grandchildren is capable of increase, as the quantum of each grandchild’s entitlement is not dependent on the number of grandchildren. A gift ‘To those of my grandchildren who marry’ is a class gift. At common law, where the testator’s only child, C, is still alive when the gift takes effect, the whole gift will fail and none of the class will take because C, as is explained later in this chapter, is the life in being and it is possible for any of the grandchildren (ie, children of C) to marry more than 21 years after C’s death. Although some of the class of grandchildren might marry within the perpetuity period, it remains possible for others to marry beyond the perpetuity period. That is enough to cause the whole gift to fail. That is the effect of the ‘all or nothing’ rule. Under the Perpetuities Act, the ‘all or nothing’ rule is not applicable to class gifts because the Act operates to exclude those members of a class whose interest does not vest until the perpetuity period has expired.35 The gift to the remaining members of the class continues to take effect. A gift may be to a sub-class of a class. The grant to the sub-class will be either per stirpes or per capita. A grant per stirpes is a grant ‘through the stocks or families of descent’, while a grant per capita is a grant based on one share per head.36 The validity of each individual grant may turn on whether the grant is per stirpes or per capita. 35. Perpetuities Act 1984 (NSW) s 9(4). This is explained further at 10.45 and 10.48. 36. IJ Hardingham, M Neave and H Ford, Wills and Intestacy, 2nd ed, Law Book Co, 1989, pp 359–61. See also the examples of both per stirpes and per capita distributions provided by the same authors.To explain, assume that Mary’s will states that she leaves Blackacre to her son Lee-Nam and her daughter My-Linh jointly, but that, in the event of her son or daughter pre-deceasing her, the heirs of the pre-deceased beneficiary are to take per stirpes. If Lee-Nam pre-deceases Mary, My-Linh will still receive her half-share but Lee-Nam’s half-share will be taken in equal shares by his children. If, however, Mary’s will stipulated that the property be divided per capita (rather than per stirpes) on the basis of the same facts, My-Linh and each of Lee-Nam’s children will each take an equal share. Hence, if Lee-Nam had two children, each party (ie, My-Linh and the two children) will take a one-third share each of Blackacre. Note that if the will simply left Blackacre to Lee-Nam and My-Linh jointly, s 38 of the Succession Act 2006 (NSW) would apply.

525

10.18

Property Law in New South Wales

Class-closing rules 10.18  The class-closing rules artificially close the class.37 Although the rules were developed for the administrative convenience of trustees and executors, they have had an impact on gifts that might otherwise offend the rule against perpetuities.38 The class-closing rules have the effect of closing the class as soon as the first person is entitled to take his or her share. Everyone who is born at this time will be included in the class. All those born afterwards will be excluded. As the rules are rules of construction and not rules of law, it is possible to exclude them; however, the intention to do so must be made very clear.39 If the class is incapable of increase, the class-closing rules will have no application. Hence, in the example ‘To A’s children’, where A has predeceased the testator, there will be no role for the class-closing rules. The class of A’s children cannot increase once A has died. The class-closing rules make it possible to identify who will be a member of the relevant class and, consequently, to what share each member will be entitled. Of course, it is still possible that once members of the class have been identified one or more of the gifts to them may vest outside the perpetuity period, causing a breach of the rule against perpetuities. In regard to the class-closing rules there are four sets of circumstances to consider: (i) no prior life estate and no contingency; (ii) contingency, but no prior estate; (iii) prior particular estate, but no contingency; and (iv) prior life estate and contingency.These circumstances are discussed below, and represented diagrammatically in Figure 10.2 (at 10.22). 10.19  No prior life estate and no contingency  A gift to a class where there is no prior life estate and no contingency to be satisfied is sometimes referred to as an ‘immediate class gift’. Here, the class closes when the instrument creating the interest comes into effect. Hence, those already born at  the time the interest is created are included in the class. If there are no class members in existence at the time the interest is created, the class will stay open to include all members whenever they are born. For example, consider a bequest in the will of Tom ‘To Mary’s children’. The rule is that if Mary has one or more children alive at the time the instrument comes into effect (ie, when Tom, the testator, dies), that child or children will take the property and share it as joint donees, if applicable. Any children who are born after the testator dies will be excluded from the class and will take nothing. If Mary has no children when the testator dies, all the children of Mary, whenever born, will take a share.40 10.20  Contingency, but no prior particular estate  Here, there is no prior particular estate, such as a life estate, but there is a class gift that requires the satisfaction of a contingency 37. See JHC Morris, ‘The Rule Against Perpetuities and the Rule in Andrews v Partington’ (1954) 70 LQR 61; Andrews v Partington (1791) 3 Bro CC 401; 29 ER 610. 38. For a recent case that discusses whether a class of beneficiaries has been closed, see Re Estate Late Chow Cho-Poon; Application for Judicial Advice [2013] NSWSC 844. 39. Re Manners (dec’d); Public Trustee v Manners [1955] 1 WLR 1096; [1955] 3 All ER 83; Re Chapman [1977] 1 WLR 1163; Re Clifford [1980] 2 WLR 749; Re Wernher’s Settlement Trusts [1961] 1 WLR 136. 40. Morris and Barton Leach suggest this is so because this must have been what the testator intended: Morris and Barton Leach, The Rule Against Perpetuities, note 3 above, p 113. See Re Manners (dec’d); Public Trustee v Manners [1955] 1 WLR 1096; [1955] 3 All ER 83.

526

Perpetuities

10.22

before the gift can be distributed. In these circumstances, the class closes when the first member of the class satisfies the contingency.41 An example might be a bequest in the will of Tom ‘To the children of Mary who graduate in medicine’. If Mary does not have a child who has graduated in medicine when the instrument comes into effect (ie, on the date of the testator’s death), the class closes when the first of Mary’s children graduates in medicine. Children already born at that time are included in the class and they have the chance to satisfy the contingency and subsequently take a share. Children who are born after the date when the first child satisfies the contingency (ie, graduates in medicine) are excluded altogether. 10.21  Prior particular estate, but no contingency  A gift to a class that is preceded by a prior particular estate or other interest but is not subject to any contingency is sometimes referred to as a ‘future class gift without a contingency’. Here, the class closes when the preceding interest or estate ends, but only if one or more members of the class exist.42 Those who come into existence after this time are excluded. Consider, for example, a bequest in the will of Tom ‘To Mary for life, remainder to the children of Anna’. If Anna already has a child when Mary dies, the class closes on Mary’s death. If, however, Anna has not had a child before Mary dies, then all of Anna’s children will take a share; that is, the class remains open until Anna dies. If Mary died before the testator died, this would be an example of a gift where there was no prior life estate and no contingency attached.43 10.22  Prior life estate and contingency A gift to a class preceded by a life estate and subject to a contingency is a future class gift with a contingency. In these circumstances, the class remains open until the first member of the class satisfies the contingency or the life tenant dies, whichever is the later. Potential members of the class born after that time are excluded from the class. Those born before this time will take if they subsequently satisfy the contingency. Suppose, for example, that the will of Tom includes a bequest ‘To Mary for life, remainder to the children of Mary as attain the age of 21 years’. If Mary has a child who has reached 21  years at  the time of her (Mary’s) death, then the class closes. All the children born already are included in the class. If Mary does not have a child who has reached 21 years when she dies, the class closes when the first child of Mary attains 21 years. Alternatively, imagine that Tom’s will includes a bequest ‘To Mary for life, remainder to the children of Anna who attain 21 years’. If Mary survived Tom and Anna was still alive on Mary’s death, the class of Anna’s children would not have closed naturally. Anna could have more children.Yet, by application of the class-closing rules, if a child of Anna reached 21 years before Mary died, then the class of Anna’s children would be closed. That closed class would include all of Anna’s children already born at Mary’s death. Those children of 41. Picken v Matthews (1878) 10 Ch D 264; 39 LT 531; In the Will of Breheney [1915] VLR 242; (1915) 21 ALR 273. 42. Ayton v Ayton (1787) 1 Cox 327; 29 ER 1188; Baldwin v Rogers (1853) 3 De GM & G 649; 43 ER 255; Re Bleckly; Bleckly v Bleckly [1951] Ch 740 at 749–50 per Evershed MR; at 755 per Jenkins LJ. 43. See 10.19.

527

10.22

Property Law in New South Wales

Anna would take when they reached 21 years. Any children born after Mary’s death would be excluded from the class. If, however, none of Anna’s children was 21 years old when Mary died, the class would stay open until the first of Anna’s children reached 21 years.Then it would close, excluding any later-born children of Anna. If Mary died before Tom, the gift would be construed as one of an immediate class gift (to Anna’s children) subject to a contingency (of reaching 21 years). Figure 10.2:  Applying the class-closing rules No

No

Are there existing class members when the instrument comes into effect? Yes

No

Is there a contingency to be satisfied?

Yes

No

The class is closed. Those already born form the class, and are given the chance of satisfying the contingency.

No

The class stays open until the prior life interest determines.

Are there existing class members when the instrument comes into effect?

Is there a contingency to be satisfied?

Yes

The class closes when the first member satisfies the contingency. Those born at that point are given the chance of satisfying the contingency.

Yes

Yes Yes

The class is closed. Those already born form the class.

Are there class members who have satisfied the contingency when the instrument comes into effect?

Start Does the gift contain a prior life estate?

No

The class is open.

No

The class is closed. Those already born form the class. The class closes when the first member satisfies the contingency. Those born at that point are given the chance of satisfying the contingency.

Are there class members who have satisfied the contingency when the life estate determines?

Yes

528

The class is closed. Those already born form the class, and are given the chance of satisfying the contingency.

Perpetuities

10.24

Impact of the class-closing rules on the rule against perpetuities 10.23  It is useful to restate these two rules and then examine how one has an impact on the other. The common law rule against perpetuities invalidates any interest that might possibly vest outside the perpetuity period. The class-closing rules artificially close a class earlier than it might close naturally. Hence, it is possible that the operation of the class-closing rules means that someone could be excluded from a class even though he or she met the description of a class member and satisfied the contingency. If it is possible for the interest of any member of the closed class to vest outside the perpetuity period, then that interest will be void. By limiting the membership of the class, the class closing rules may have the effect that a gift that would otherwise have been invalid, is saved from invalidity. It is important to apply the class-closing rules first and then apply the rule against perpetuities to this closed class. It is also important to bear in mind that the limitation itself may exclude the operation of the class-closing rules. If this is so, the rule against perpetuities must be applied in the context of the class closing naturally. The class-closing rules cannot do more than close the class. They cannot be used for other purposes, such as validating a gift so that a member of a closed class can take outside the perpetuity period. 10.24  Consider a bequest in the will of Tom ‘To the nieces of Mary’. Assume that Mary’s brothers and sisters are still alive and that two nieces have already been born. To determine whether the gift is invalidated by the rule against perpetuities, we take the following two steps: 1. Apply the class-closing rules to close the class artificially. Otherwise, we would have to wait until Mary’s brothers and sisters were dead in order to ensure that the class is not capable of increase and was therefore closed. The first class-closing rule is applicable because we are dealing with a gift to a class where there is no preceding interest or estate and no contingency. At the time the instrument comes into effect (ie, when the testator, Tom, dies), there are already nieces born. Hence, the class is closed and laterborn nieces will be excluded. 2. Apply the rule against perpetuities to the closed class. Hence, the question becomes: Is it possible for the interests of any of the nieces already born to vest outside the perpetuity period? The answer is negative. They have already vested, so the gift is valid.44

44. As is explained at 10.26 and 10.43 respectively, the common law perpetuity period ends 21 years after the death of the life (or lives) in being, and the perpetuity period under the Perpetuities Act ends 80 years after the date the instrument creating the interest takes effect. Hence, in this example, assuming Mary’s parents are dead, the lives of Mary’s brothers and sisters are the lives in being and the gift to the nieces could not vest beyond that period plus 21 years. Nor is it the case that the gift could vest 80 years after Tom, the testator, dies. Hence, the gift is valid.

529

10.24

Property Law in New South Wales

Even without the benefit of the operation of the class-closing rules, the gift to Mary’s nieces would be presumed to be valid pursuant to s 8 of the Perpetuities Act. Nevertheless, some of Mary’s nieces may not be born until after the 80-year perpetuity period imposed by the Act has elapsed. The Act allows us to ‘wait and see’ if some nieces will take their gift outside the perpetuity period. Where they would, s 9(4) of the Perpetuities Act may be used to exclude any nieces who are born after the 80-year period has elapsed. As a niece of Mary is alive when Tom dies, however, the class-closing rules may be applied to close the class at that time. Consequently, all after-born nieces will be excluded from the class. Accordingly, it would not then be necessary to apply the class-reduction provision in s 9(4) of the Act.

Common law position 10.25  Having outlined above some of the shared features of the common law position and the Perpetuities Act, we now turn to a more detailed discussion of the common law position. As noted above (at 10.6), the common law remains relevant to pre-Act dispositions that must comply with pre-Act law on the rule against perpetuities. Further, the Perpetuities Act proceeds on the basis that those using it have a knowledge of the preceding common law position.

Perpetuity period 10.26  At common law, the perpetuity period is the period of time that starts at the date the instrument containing the disposition/interest comes into operation and ends 21 years after the death of the life in being (or the last survivor of the lives in being).45 The date the disposition takes effect varies according to the type of instrument containing the grant. For example, under a will, the interest becomes operational on the death of the testator;46 whereas, under a deed, the interest becomes operational when the deed is executed and delivered.47 In the case of a revocable gift, the perpetuity period runs from the date on which the right to revoke is terminated.48 Hence, limitations in exactly the same language, but contained in different kinds of instruments, may well yield different results regarding the validity of the gift.49 A child in the womb (or en ventre sa mère as it is often called) may be a life in being. Accordingly, the perpetuity period will be extended to 21 years from the death of that child. If a child of X has been conceived, but has not yet been born at the end of the 45. See  Figure 10.1 in 10.9, above. Lives in being are discussed at  10.27. Twenty-one years was the age of majority and an arbitrary choice for the additional number of years forming part of the perpetuity period. 46. Abbiss v Burney (1881) 17 Ch D 211; Re Mervin [1891] 3 Ch 197 at 204; Vanderplank v King (1843) 3 Hare 1 at 17; 67 ER 273 at 279. 47. Robinson v Hardcastle (1788) 2 TR 241; 100 ER 131; Routledge v Dorrill (1794) 2 Ves Jun 357; 30 ER 671. For dates of commencement of the perpetuity period in relation to appointments and trusts, see Rossiter, note 23 above, [310–25]. 48. For a more detailed list of these dates, see Rossiter, note 23 above, [310–25]. 49. This is because, for example, the date the will comes into effect is different from the date the deed creating the inter vivos grant comes into effect.

530

Perpetuities

10.27

perpetuity period, the child may still be included as a beneficiary in respect of a gift to the children of X.50 It has been accepted that, in such a case that the perpetuity period may be extended by the length of the human gestation period, so that child’s interest will vest within the perpetuity period. Such an extension of the perpetuity period does not risk creating a perpetuity.51

Lives in being 10.27  A life in being is a life in existence at the time the instrument that creates the interest takes effect, and is either mentioned expressly in the disposition or mentioned by implication, in the sense that that person is relevant to identifying who takes an interest and the timing of the vesting of that interest. It is possible for there to be more than one life in being in respect of a disposition. The perpetuity period will end 21 years after the death of the last survivor of the lives in being. For a class of persons to be lives in being, the class must not be capable of increase at the time the relevant instrument takes effect.52 For example, a gift by Tom in a will ‘To my grandchildren’ implies that Tom’s children’s lives are the lives in being. Tom’s grandchildren will necessarily be born during the lives of Tom’s children (subject to what has been said about children en ventre sa mère), so their lives affect the identification of who takes an interest and the timing of the vesting. Tom’s children are not a class capable of increase because, at the time that Tom’s will takes effect (ie, Tom’s death), Tom will not be capable of having further children (except for a child en ventre sa mère who will be a life in being and the last of Tom’s children). This puts to one side the issue of frozen embryos, which remains problematic.53 In practice, most problems with lives in being arise when the lives are not expressly mentioned but mentioned by implication. A life in being that is mentioned expressly does not have to be otherwise related to the gift. Therefore, an instrument could name a particular person as the life in being or, alternatively, a means for ascertaining the identity of a life in being could be spelled out in the instrument. An example of the latter method is the ‘royal lives clause’. Historically, these clauses were a popular method of designating the life in being. Hence, a gift might have said ‘To my grandchildren living on the death of the last survivor of all the lineal descendants of his Majesty King George V who shall be living at the time of my death’. As this class is not capable of increase and is certain, it is a valid measuring facility. Clauses of this nature had to strike a balance between, on the one hand, casting the net of lives in being wide enough to attract a large pool of lives from which one person might live for 50. Re Stern [1962] Ch 732 at 737. 51. For the historical development of the inclusion of the gestation period, see Stephens v Stephens (1736) Cas t Talb 228; 25 ER 751; Cadell v Palmer (1833) 1 Cl & Fin 372; 6 ER 956. 52. Regarding the justification for this requirement, see Edgeworth, note 9 above, p 186 [5.120]. 53. Re Estate of K (1996) Tas R 365 suggests that a frozen embryo if later born alive may qualify as a life in being. That case also found that a child conceived, but not yet born at the end of the perpetuity period may also qualify as a beneficiary. By contrast, Napper v Miller (2003) 11 BPR 21,175 held that a will referring to grandchildren ‘who survive me’ did not include grandchildren who were born after the testator’s death and by virtue of frozen embryos created before the testator’s death. It found surviving implies outliving. See J Greenfield, ‘Dad Was Born a Thousand Years Ago? An Examination of Post-Mortem Conception and Inheritance, with a Focus on the Rule Against Perpetuities’ (2007) 8 Minnesota Journal of Law, Science and Technology 277.

531

10.27

Property Law in New South Wales

a long time, and hence extend the perpetuity period; and, on the other hand, not casting the net so widely that it was impossible to ascertain the lives in being in the pool.54 In Re Villar,55 the court found the gift valid where the vesting was postponed until 21 years after the death of the last survivor of Queen Victoria’s lineal descendants living at  the death of the testator — a period of approximately 120 years. In New South Wales, with the enactment of the Perpetuities Act, lawyers cannot include royal lives clauses because the perpetuity period is now determined by the Act. (However, this drafting device is still available in some other Australian jurisdictions.) 10.28  A life in being must be a human life.56 According to Re Kelly,57 ‘“Lives” means lives of human beings, not of animals or trees in California’. It certainly did not mean the lives of dogs as a court ‘does not enter into the question of a dog’s expectation of life’.58 10.29  While it is possible that there may be more than one life in being, it is necessary only to find one life in being for the purposes of the rule against perpetuities. In the example ‘To Ted in fee simple on trust for Zoe for life, remainder on trust for Ken’s first child to attain 21 years’, Ken, Zoe and Ted are all mentioned expressly in the disposition and were alive when it took effect.59 That said, it is Ken’s life that is immediately relevant to who takes an interest and when that interest vests. Therefore, if it can be demonstrated, as it can, that Ken’s first child will attain 21 years within 21 years of Ken’s death, then it can be demonstrated that the interest contained in the limitation ‘To Ken’s first child to reach 21 years’ cannot possibly vest outside the perpetuity period. It is not necessary to check the limitation against the other possible measuring lives. Ken’s life alone is enough. As previously mentioned, a class of persons could be used as the measuring lives only if that class were no longer capable of increase.60 Hence, in a grant ‘To Ted on trust for the grandchildren of Susan’, the grandchildren themselves could not be the lives in being if Susan’s children were alive, because the class of grandchildren could still increase. Further, Susan’s children could not be the lives in being if Susan were still alive, because Susan could have more children. If there is no life in being at the creation of the interest, the perpetuity period is simply 21 years.61

54. Re Moore [1901] 1 Ch 936. 55. Re Villar [1929] 1 Ch 243 (CA). Re Leverhulme [1943] 2 All ER 274 followed the decision in Re Villar, but the court issued a firm warning that it would not, in the future, be so willing to sustain such a large number of lives. In South Eastern Sydney Area Health Service v Wallace (2003) 59 NSWLR 259 at 265, Burchett AJ proceeded on the basis that a ‘King George VI’ clause was valid. In that case, the testator died in 1970. 56. See L McCrimmon, ‘Gametes, Embryos and the Life in Being: The Impact of Reproductive Technology on the Rule Against Perpetuities’ (2000) 34 Real Property, Probate and Trust Journal 697. 57. Re Kelly [1932] IR 255. 58. Re Kelly [1932] IR 255 at 260–1 (Meredith J). 59. See B Edgeworth, C Rossiter, P O’Connor and A Godwin, Sackville and Neave Australian Property Law, 10th ed, LexisNexis Butterworths, Australia, 2016, p 670, Example 10. 60. See Tidex v Trustees Executors and Agency Co Ltd [1971] 2 NSWLR 453. 61. Re Kelly [1932] IR 255.

532

Perpetuities

10.31

Possibilities not probabilities 10.30  At common law, the rule against perpetuities was concerned with whether it was possible for an interest to vest outside the perpetuity period. For example, if a will devised a gift, ‘To Chee for life, remainder to the first of Chee’s children to graduate in law’, the gift to Chee’s child would fail if the testator were alive at the time of Chee’s death and none of Chee’s children had graduated in law. This is because Chee would be the life in being and it would be possible for the first of Chee’s children to graduate in law more than 21 years after Chee’s death. It follows from this that, even if an interest did vest inside the perpetuity period, it would fail if, at the time the instrument came into effect, the interest could have possibly vested outside the perpetuity period. To explain, if one of Chee’s children did, in fact, graduate in law during the perpetuity period, the gift would still fail because it was possible, at the time the testator died, that the interest would vest beyond the perpetuity period. At the time that Chee died, it could not be known whether that possibility would eventuate, but it was a possibility. The fact that it was unlikely or improbable for the interest to vest outside the perpetuity period was irrelevant. 10.31  Perhaps not surprisingly such a requirement led to some extreme results, which were captured in the principles known as ‘the fertile octogenarian’, ‘the precocious toddler’, ‘the unborn widower’ and ‘the magic gravel pits’ principles. Jee v Audley62 is usually regarded as an example of the fertile octogenarian principle.That case involved a bequest ‘To Mary Hall and the issue of her body, and in default of such issue for the daughters then living of Elizabeth Jee’. The phrase ‘then living’ was taken to restrict the gift to the daughters of Elizabeth Jee who were living at the date that Mary Hall died without issue, but this included daughters who were born after the death of the testator. When the testator died, Elizabeth Jee was 70 years old and had four daughters. Mary Hall was around 40 years of age. In an era before in vitro fertilisation, Elizabeth was probably factually infertile at this time, but as the common law considered people of all ages fertile, it was possible for the number of Elizabeth’s daughters to increase, and the gift to the daughters of Elizabeth, who were living at the date of the death of Mary, would not necessarily vest in the perpetuity period.63 Re Gaite’s Will Trusts64 raises the converse situation and considers the minimum age at which a person can have a child. The term ‘precocious toddler’ is simply a euphemism for ‘the fertile and sexually active toddler’. The presumption at common law is that there is no minimum age to have a child.

62. Jee v Audley (1787) 1 Cox Eq Cas 324; 29 ER 1186. For a contrary view, see AWB Simpson, Leading Cases in the Common Law, Clarendon, Oxford, 1995, pp 76–99. 63. In Morris and Barton Leach, The Rule Against Perpetuities, note 3 above, p 79, the authors suggest that had the term ‘daughters’ been construed as meaning the daughters of Elizabeth Jee at the time of the testator’s death, the gift would have been saved. 64. Re Gaite’s Will Trusts [1949] 1 All ER 459; (1949) 65 TLR 194.

533

10.31

Property Law in New South Wales

Harris v  King65 raised the issue of an unborn widower. In that case, Wilhelmina, the testator’s daughter, was left property on trust for life with the remainder to be taken by those issue of Wilhelmina living at the death of the survivor of Wilhelmina and her husband. The court found that the will required Wilhelmina’s children to be alive at the death of the survivor of Wilhelmina and her husband. However, it was possible that Wilhelmina’s husband may not even have been born at the time of the testator’s death. Accordingly, the lives after which the children’s interests were designed to vest ‘are not necessarily lives of persons in being at  the death of the testator’.66 In actual fact, Wilhelmina’s husband predeceased her and her children’s interest would have vested within the 21 years of her own death (she being the life in being for the purposes of the rule), but the court could not take this into account because it was bound to consider possibilities and not what actually occurred. Re Wood;Tullett v Colville67 again concerns the issue of possibilities and not probabilities. It is sometimes called the ‘magic gravel pits’ case. Here, the testator left his freehold interest in gravel pits on trust for his children, instructing that they carry on the business until the gravel supplies were exhausted. The pits were then to be sold, and the proceeds were to be divided among the children who were still living. Although the pits in fact had been exhausted within the perpetuity period, it was possible that they could have failed to have been exhausted within the perpetuity period. Hence, the gift was held to offend the rule against perpetuities.

Alternative contingencies 10.32  As we have observed, the requirement of certainty is linked to the need to establish whether there was a possibility, rather than a probability, that an interest would vest beyond the perpetuity period. However, an exception to the requirement of certainty existed in the form of the ‘alternative contingencies’ principle. The principle applied when a gift depended on one of two alternative contingencies occurring. Where one contingency was valid because it would certainly vest, if at all, in the perpetuity period, but the other contingency was not valid (because it might vest beyond the perpetuity period), the alternative contingency principle applied. The principle allowed one to ‘wait and see’ which contingency actually occurred.68 If the contingency that actually occurred was the one that offended the rule against perpetuities, the gift was void. However, if the contingency that actually occurred was the one that must vest, if at  all, within the perpetuity period, the gift was valid.69 Where a settlor or testator wished to create alternative contingencies, he or she needed to ensure that the contingencies were clearly expressed in the instrument. That contingencies are alternatives will not be implied.70 Harris v King (1936) 56 CLR 177. Harris v King (1936) 56 CLR 177 at 184. Re Wood;Tullett v Colville [1894] 3 Ch 381 (CA). See Morris and Barton Leach, The Rule Against Perpetuities, note 3 above, p 181. Cambridge v Rous (1858) 25 Beav 409; 53 ER 693 cited in South Eastern Sydney Area Health Service v Wallace (2003) 59 NSWLR 259 at 269. 70. Morris and Barton Leach, The Rule Against Perpetuities, note 3 above, p 181. 65. 66. 67. 68. 69.

534

Perpetuities

10.35

In Curryer’s Will Trusts,71 the instrument passed an interest to T’s issue then living at the death of T’s last surviving child, or of the last surviving widow or widower of T’s children. The contingency involving the surviving widow or widower of T’s children normally would have caused the gift to fail because it involved an ‘unborn widow’ type of situation.72 However, the gift could be split, and if the death of T’s last child occurred after the death of the last surviving widow or widower of T’s children, then the gift would be valid.73

Series of gifts 10.33  Sometimes, limitations involve a series of gifts. For example, ‘To Mary for life, remainder to the first child of Mary to marry but, if he or she marries a dentist, then to Roberto’. If all the seriatim (‘in a series’) gifts are valid, clearly there is no problem. However, if some of the gifts in the series are valid and others are not, potential problems exist. Gifts in series generally fall into three categories: • a valid gift followed by an invalid gift; • an invalid gift followed by a dependent but otherwise valid gift; and • an invalid gift followed by a valid gift with its own independent date of vesting. 10.34  Valid gift followed by void gift  If a valid gift is followed by a void gift, then the preceding gift is unaffected by the lack of validity of the subsequent gift. For example, if a will bequeathed property ‘To Mary for life, remainder to the first child of Mary to graduate in law’, and Mary was alive at the time the testator died, but no child of Mary’s had graduated in law at the testator’s death, the subsequent gift to Mary’s child would be void. It would be possible for Mary’s child to graduate in law more than 21 years after Mary’s death (Mary being the life in being for the purposes of that gift). However, the preceding gift to Mary is not invalidated by the subsequent void gift to Mary’s child. 10.35  Void gift followed by dependent but otherwise valid gift  By contrast, a gift that follows a void gift will be void itself if it is dependent on the preceding void gift.74 For example, if a will bequeathed property ‘To the first daughter of Mary to qualify as a paediatrician and then to her issue, but if she has no issue, to Ted’s niece, Nina, and her issue’, the original gift to the first daughter of Mary to qualify as a paediatrician is void, because it is possible for it to vest more than 21 years after the death of Mary, the life in being. Hence, the dependent gifts to Mary’s issue, Nina and Nina’s issue, will also fail. Put another way, the vesting dates for the gifts to Mary’s issue, Nina, and to Nina’s issue are not independent of the circumstances relating to the void gift.

71. Curryer’s Will Trusts [1938] Ch 952. 72. See 10.31. 73. For other cases dealing with this issue, see Cambridge v Rous (1858) 25 Beav 409; 53 ER 693; Hancock v Watson [1902] AC 14. 74. Proctor v Bishop of Bath and Wells (1794) 2 Hy Bl 358; 126 ER 594.

535

10.36

Property Law in New South Wales

10.36  Void gift followed by a gift with its own vesting date  If a gift follows a void gift, but has a vesting date of its own that is within the perpetuity period, the subsequent gift will not be void.75 Hence, in the example ‘For life to the first daughter of Mary to qualify as a paediatrician, and then in remainder to Nina and her issue’, if Nina is alive then the gift to her will vest within the perpetuity period and will not be void.

Age reduction 10.37  It is not uncommon to find that gifts are contingent on a person attaining a certain age. Without the assistance of statutory age reduction provisions, these gifts would fail if the age contingency is not met. Section 36 (now repealed) of the Conveyancing Act provided that where a gift would fail because the donee had not reached the specified age in the limitation, and that age was itself in excess of 21 years, the age in the limitation could be read down to 21 years if reading it down saved the gift.76 The section operated as a substitution provision and allowed the age of 21  years to be substituted to save a gift that otherwise would have been void for perpetuity, because it contained an age greater than 21 years. Despite the repealing provision, s 36 remains operational in some specific circumstances. These are: • where the instruments came into effect before 31 October 1984;77 and • for some wills made before 31 October 1984.78 Without the operation of s 36, a limitation in a will such as ‘To Mary’s first child to attain the age of 27 years’ would fail if Mary survived the testator and had no 27-year-old child. It would be possible for Mary’s child to reach 27 years of age more than 21 years after Mary’s death. For example, if Mary’s child were three years old when Mary died, it would take 24 years after Mary’s death for that child to reach 27 years of age. However, if 21 years were substituted for 27 years, it would be impossible for Mary’s child to turn 21 more than 21 years after Mary’s death. Hence, the gift would be saved. Note that if Mary had predeceased the testator, Mary’s children would become the lives in being and it would be impossible for any of them to turn 27 more than 21 years after their own deaths. In those circumstances, there would have been no need to rely on s 36. Note that s 36 could only substitute the age of 21 years where the instrument postponed the vesting of the interest to an age greater than 21 years. Hence, s 36 would have been no assistance if the gift was in the following form, ‘To Mary’s children living 30 years after my death’.79

75. Re Canning’s Will Trusts [1936] Ch 309; Re Coleman [1936] Ch 528; Macpherson v Maund (1937) 58 CLR 341; 11 ALJ 346. 76. This section  was in operation between 1920  and  1984, but was repealed by s  19 and Sch 1 of the Perpetuities Act. See Permanent Trustee Co of NSW v Richardson (1948) 48 SR (NSW) 313 at 318. 77. Perpetuities Act 1984 (NSW) s 20(2). 78. See Perpetuities Act 1984 (NSW) s 4(3). 79. This point is made by Edgeworth, note 9 above, [5.360] p 204.

536

Perpetuities

10.39

Section 36 was not applicable if the class-closing rules would have saved the limitation.80 All other methods, such as the class-closing rules, had to be applied before turning to s 36 for assistance.

Determinable interests and conditions subsequent 10.38  At common law, the grantor’s possibility of reverter after a determinable interest was not subject to the rule against perpetuities, even though it was possible that the determining event could occur outside the perpetuity period. One possible explanation for this is that the right of reverter was already vested, so there was no question of dealing with a contingent interest.81 By contrast, the right of re-entry that arose when a condition subsequent was broken was subject to the rule against perpetuities. Hence, if it were possible that the right of re-entry might arise beyond the perpetuity period, it was void.82 The effect was to free the interest from the condition subsequent.83

Determining whether a gift breaches the common law rule 10.39  The following list of questions may be helpful when ascertaining if an interest will breach the rule against perpetuities at common law:84 • Is the interest vested or contingent? If the interest is vested, the rule against perpetuities will not be applicable. If the interest is contingent, the rule may apply.85 • When does the perpetuity period (in which the interest must vest) commence? The answer depends on the nature of the instrument containing the gift. If it is a will, the date will be the date of the testator’s death; but if the gift is contained in a deed, the date will be the date that the deed comes into effect — that is, when it is executed and delivered. • Who is the life in being? The life or lives in being can either be expressly mentioned in the instrument or implied from it. When ascertaining who is the life in being, remember the following: – the life in being must be human; – the life in being must have commenced (ie, be alive) at the date the instrument containing the disposition takes effect; – if a class of persons is to constitute the lives in being, the class must not be capable of increase; and – the members of a class of lives in being must be ascertainable.

80. 81. 82. 83.

The class-closing rules are discussed at 10.18–10.24. Re Essex County Roman Catholic Separate School Board and Antaya (1977) 80 DLR (3d) 405 at 408. For a detailed discussion of determinable interests and conditions subsequent, see 3.80–3.89. See the English case of Re the Trustees of Hollis’ Hospital and Hague’s Contract [1899] 2 Ch 540 at 544–5; followed in In the Will of Brett [1947] VLR 483 at 488 per Herring CJ. 84. These questions should be read in conjunction with Figure 10.3 at 10.59 below. 85. See earlier discussion of ‘vested or contingent’ at 10.12–10.14.

537

10.39

Property Law in New South Wales

• When does the perpetuity period end? The perpetuity period ends 21 days after the death of the life in being (or the last survivor of the lives in being). • Does the class need to be closed artificially? Apply the relevant class-closing rule. • Is it possible that the interest could vest outside the perpetuity period? The common law is concerned with possibilities, not probabilities. If it is possible that the interest will vest outside the perpetuity period, then it will offend the rule and the interest will be invalid under the common law. Simply ask the following question: Is it possible that the interest could vest beyond 21 years after the date on which the life in being ends? 10.40  The application of the common law rule is illustrated by the following examples: • Example 1 — The following bequest is made in a will: ‘To A for life, remainder to A’s eldest daughter when she graduates in law’. If A’s eldest daughter has not graduated in law at the time the testator dies, then the gift of the remainder is contingent. It will not have vested in interest.86 The gift is, therefore, subject to the rule against perpetuities. The perpetuity period will commence at the date of the testator’s death. It will end 21 years after the death of the life in being.Who is the life in being? A’s existence is relevant to the vesting of the interest. The recipient of the gift will be a daughter of A. A was alive at the date the interest was created; that is, on the date of the death of the testator. A is not a member of a group that is capable of increase, and A is a person.The question then becomes: Is it possible for A’s daughter to graduate in law more than 21 years after A’s death? As the answer is affirmative, the gift to A’s eldest daughter is void pursuant to the common law rule against perpetuities. • Example 2 — The following gift is made inter vivos in a deed: ‘To A for life, remainder to the first son of S to marry’. If S has a married son who is alive, the gift will be vested. If, however, S has a son who is not married, then the gift is contingent. The interest will have not vested in interest. Hence, it will be necessary to determine whether it is possible for the interest to vest outside the perpetuity period. When does the perpetuity period commence? It will begin at the date the deed comes into effect; that is, when the deed is executed and delivered. The perpetuity period will conclude 21 years after the life in being dies. Who is the life in being? S was alive at  the date the deed was delivered, and the beneficiary is to be identified by reference to his relationship to S. S is a life in being. Sons of S will not be lives in being because they make up a class capable of increase. The question then becomes: Is it possible that the first son of S to marry could do so later than 21 years after S’s death? The answer is affirmative. Hence, this gift offends the rule against perpetuities. 86. An interest is vested in interest if it is presently ‘owned’, but the ‘owner’ must wait for the determination of a prior interest or estate before he or she is entitled to take possession. When the ‘owner’ is entitled to possession of the interest, and there is no preceding interest or estate preventing the ‘owner’ from taking possession, the interest is said to have vested in both interest and possession. In the case of the rule against perpetuities, we are concerned with whether the interest has vested in interest not possession.

538

Perpetuities

10.41

• Example 3 — The following inter vivos gift is contained in a deed: ‘To T (the trustee) on trust for S’s grandchildren who attain 21  years’.  Assume that, at  the date of the settlement, S has two grandchildren aged five years and one year respectively. The limitation is contingent because the number of grandchildren who could take is not yet known, and hence the share that each would receive cannot be calculated. When does the perpetuity period commence? It commences on the date that the deed of settlement comes into effect, which is the date the deed is executed and delivered. The perpetuity period will end 21 years after the death of the life in being. Who is the life in being? The grandchildren cannot themselves be lives in being, because they make up a class capable of increase. The child of S also cannot be the life in being because, while S is alive, it is presumed that S could have more children (ie, the fertile octogenarian rule), making S’s child a member of a class capable of increase. Hence, only S can be the life in being. Is it possible that S’s grandchildren could turn 21 more than 21 years after S’s death? Yes, it is. At common law, S could have children at any time prior to dying (ie, fertile octogenarian rule), in which case the grandchildren would turn 21 years outside the perpetuity period. The gift is void.

Perpetuities Act 1984 (NSW) 10.41  The Perpetuities Act came into effect on 31 October 1984. It does not operate retrospectively. As noted above, it is not simply a codification of the common law position. Equally, since the Act preserves the rule but makes a number of important changes to the way that it operates, it is impossible to apply the provisions of the Act without a knowledge of the common law position. The Act applies to ‘settlements’ (which, according to s 3(1) of the Act, include a will, an instrument exercising a power of appointment, and any other instrument, transaction or dealing pursuant to which a person makes a disposition) of property that come into operation after the commencement of the Act are subject to it. Further, a disposition includes a power of appointment87 and any other power to dispose of property as well as any alienation of property. Dispositions made before the commencement of the Act are tested for remoteness of vesting by the common law. The position is less clear in regard to some wills. Subsection 3(2) states that ‘a will shall, in relation to a disposition contained within it, be deemed to take effect on the death of the testator’. The legislative intention behind subsection 4(3) seems to be to preserve the validity of dispositions in wills that were executed before the Act came into force where the testator died (and the disposition took effect) after the Act came into force. Section 4(3) provides that the Act will not invalidate a will executed before the Act’s commencement, but taking effect after the Act’s commencement, ‘if the provision would not have offended the rule against perpetuities had this Act not been enacted and had the will taken effect when it was executed’. Subsection 4(3) does not place such dispositions outside of the scope of the Act. It merely provides that the Act does not invalidate a disposition that would have been 87. This includes a trustee’s powers to distribute capital or income under a discretionary trust.

539

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Property Law in New South Wales

valid at common law. This raises a question as to whether the validity of such dispositions is to be tested by applying the common law first and, where the disposition is invalid at common law, then applying the Act or, alternatively, applying the Act first and, where the disposition is invalid under the Act, applying the common law. The second approach would seem to be more consistent with the terms of subsection 4(3).88 10.42  Pursuant to s  15 of the Perpetuities Act, the rule against perpetuities does not apply to: ‘any option to renew a lease of property’; ‘any option to acquire a reversionary interest in property comprised in a lease’; ‘any right of pre-emption given for valuable consideration or by will in respect of property’; or ‘any other option given for valuable consideration or by will to acquire an interest in property’.

Perpetuity period 10.43  Section  7 of the Perpetuities Act provides that the perpetuity period is set at 80 years from the date the instrument comes into effect.There is no need to ascertain the identity of the life in being because the length of the perpetuity period is not dependent on any person’s life. Further, there is no place for royal lives clauses. If, for example, an inter vivos deed containing a limitation were executed and delivered in 2022, the interest would simply need to vest by 2102. The Act does not expressly provide for the extension of the perpetuity period by the length of a gestation period. Therefore, the existence of a child en ventre sa mère at the end of the 80 year period, who could potentially take an interest under the disposition, may have the effect of invalidating the disposition. In relation to wills executed before the commencement of the Act to which s 4(3) of the Act applies, there is a question as to whether the perpetuity period commences on the date on which the will is executed rather than the date of the testator’s death. This issue will be addressed at 10.53.

‘Wait and see’ rule 10.44  At common law, whether the rule against perpetuities invalidates a disposition is assessed by placing oneself at  the time that the disposition takes effect and asking whether it is possible that the interest could vest after the expiry of the perpetuity period. Indeed, even if it were extremely unlikely that an interest would vest after the expiry of the perpetuity period, the disposition would be invalid. A possibility is enough to invalidate the disposition. One of the perceived advantages of this ‘initial certainty’ rule was that the validity of the interest could be determined immediately upon the disposition taking effect. In reality, however, the interest, although not necessarily infringing the rule against perpetuities, was still contingent. While the disposition was known to be valid, it was not known who was entitled to take the interest and, if more than one person was entitled, in what shares they were entitled.89 By contrast, under the Perpetuities Act, no 88. See Sappideen and Butt, The Perpetuities Act 1984, note 22 above, p 28, for a discussion and examples of the different outcomes. 89. RH Maudsley, The Modern Law of Perpetuities, Butterworths, London, 1979, p 82.

540

Perpetuities

10.44

decisions concerning validity can be made at the outset unless it is absolutely certain that the interest will fail to vest within the perpetuity period,90 or it is absolutely certain that the interest will vest (if at all) within the perpetuity period.91 Instead, pursuant to s 8 of the Perpetuities Act, one must ‘wait and see’ if the interest vests inside or outside the 80-year perpetuity period.92 Hence, the ‘wait and see’ rule is practically relevant in circumstances where there is uncertainty about when the interest will vest. In practice, the ‘wait and see’ rule saves a lot of gifts that would have failed at common law. It has recently been observed that: The learning on the rule against perpetuities has quickly faded from view since enactment of the ‘wait and see’ provisions of the Perpetuities Act  1984 which, in the mindset of the current generation of lawyers, effectively ‘abolished’ (but in truth, only modified) the rule against perpetuities.93

Section 8(1) of the Perpetuities Act requires that the gift be treated as valid until it is known for certain that it will vest outside the perpetuity period.When it is certain that the interest will vest outside the perpetuity period, the gift is void unless it is saved by the age reduction provisions in s 9(1), or the class-closing rules in s 9(4), of the Act.94 Put another way, under s 8 the interest is presumptively valid from the outset. Whether it remains valid is determined by ‘waiting and seeing’ if the interest does, in fact, vest in the perpetuity period. Should it vest within the perpetuity period, the interest remains valid. In Nemesis Australia Pty Ltd v  Commissioner of Taxation,95 the rule was applied in the context of the relevant Queensland legislation.96 There, the question was whether distributions made by one trustee, in favour of other beneficiary trustees, would offend the rule against perpetuities given that the vesting date of one trust had been read back into the original trust. The result was to extend, beyond 80 years, the period in which a trustee could make a disposition. The court affirmed that the ‘wait and see’ rule is: … designed to enable the court to look at what actually occurs before the expiry of the perpetuity period and the circumstances as they have unfolded in order to determine whether there has been a vesting within the perpetuity period. If, in fact, the interest is vested prior to the expiry of the perpetuity period, notwithstanding that a longer period is provided for in the trust deed, the trust may be valid.97

The court went on to observe that the ‘wait and see’ rule was designed to avoid the ‘draconian consequences’ of the common law rule.98 90. For example, ‘To A 90 years from the date this will comes into effect’. 91. For example, ‘To A 50 years from the date this will comes into effect’. 92. As noted, at common law there were rare exceptions when a form of the ‘wait and see’ rule could be applied; for example, where there were alternative contingencies. 93. Re Estate Late Chow Cho-Poon; Application for Judicial Advice [2013] NSWSC 844 at [81]. 94. See P Sparkes and R Snape, ‘Class Closing Rules and the Wait and See Rule’ [1988] Conv 339. 95. Nemesis Australia Pty Ltd v Commissioner of Taxation (2005) 225 ALR 576. 96. Property Act 1974 (Qld) s 210. 97. Nemesis Australia Pty Ltd v Commissioner of Taxation (2005) 225 ALR 576 at [41]. 98. Nemesis Australia Pty Ltd v  Commissioner of Taxation (2005) 225 ALR 576 at  [45]. For another recent application of the ‘wait and see’ rule, see Public Trustee v Bennett [2004] NSWSC 955.

541

10.45

Property Law in New South Wales

Age reduction 10.45  If it becomes obvious that a gift will fail because an age contingency is not met, s 9(1) of the Perpetuities Act permits the age in the limitation to be read down to the greatest age that will save the gift. Put another way, s 9 allows for substitution of the maximum lower age that will save the gift. This section differs from s 36 (now repealed) of the Conveyancing Act, in that s 36 permitted age reduction only if vesting depended on attainment of an age greater than 21 years. Then the greater age could be read down to 21 years.99 Section 9 of the Perpetuities Act operates in relation to the attainment of any age and is not limited to ages above 21 years. The age contingency may be reduced to ‘the greatest age which … would save the provision from infringing’ the rule against perpetuities. Like s 36 of the Conveyancing Act, s 9 of the Perpetuities Act operates as a last resort. It also applies only where vesting is dependent on the attainment of a specific age. Therefore, it is inapplicable in circumstances where a disposition, for example, refers to the vesting of an interest 100 years after a given event. The intention of s 9 is to allow the settlor’s or testator’s wishes to be adhered to by changing the limitation slightly so that the gift remains valid. For example, consider a bequest in the will of Tom ‘To the first grandchild of Mary to reach 21 years’. Assume Tom died in 2020 and that, in 2100, Mary has grandchildren, but none of those grandchildren has yet reached 21 years. By applying s 9(1), the eldest grandchild will take in 2100, even if he or she is not 21 years old, because the age the grandchild has reached by this date will be substituted. Where a disposition is in favour of a class of persons and the inclusion of a person in that class would cause the whole disposition to fail, by virtue of subsection 9(4), that person may be excluded from the class, unless such exclusion would ‘exhaust the class’.

Interaction of ‘wait and see’ rule and age reduction 10.46  Section  10 of the Perpetuities Act sets out the order in which the statutory provisions should operate. It requires that the provisions should be applied in the following order: (i) the ‘wait and see’ provisions in s 8 of the Act; (ii) the age reduction provisions in s 9(1) of the Act; and (iii) the exclusion of persons from the class under s 9(4) of the Act. Under s 8(1), an interest is to be treated as valid until it ‘becomes certain’ that it must vest, if at all, outside the perpetuity period. Under s 9(1), the age in the limitation is reduced only when it ‘becomes apparent’ that the interest will offend the rule against perpetuities unless a lower age is substituted.Yet, despite the assistance of s 10, difficulties still arise in applying the age reduction provisions. These difficulties can be observed by examining how the ‘wait and see’ provision and the age reduction provision interact with each other.

99. Similar provisions still exist in some other Australian jurisdictions. See, for example, Property Law Act 1974 (Qld) s 213, which applies where the age contingency is 18 years or greater and allows the age contingency to be reduced to the age that would make the disposition vest within the perpetuity period, although in no case is the age to be reduced to less than 18 years.

542

Perpetuities

10.48

10.47  For example, suppose that the will of Tom includes a bequest ‘To the first of Kim’s grandchildren who reaches 30 years’. Assume that Tom died in 2020 and that, 60 years after Tom, Kim dies leaving children but no grandchildren. The perpetuity period would commence in 2020 and conclude in 2100. Clearly, Kim’s children could continue to have children between the date of Kim’s death (2080) and the date when the perpetuity period expires in 2100. However, the maximum age that any of Kim’s grandchildren could reach would be 20 years, but the limitation requires them to reach 30 years in order to be entitled. Pursuant to s 8(1) of the Perpetuities Act, it is ‘certain’ that no interest will vest, if at all, in the perpetuity period. It is also ‘apparent’ according to s 9(1), that the interest will infringe the rule against perpetuities unless a lower age than 30 years is substituted. Nevertheless, according to s 10 of the Act, we must first ‘wait and see’ under s 8. Even if the eldest grandchild of Kim would potentially turn 20 years old at the expiration of the perpetuity period, one cannot simply read down the limitation to 20  years on the birth of this grandchild without facing potential difficulties. This grandchild might die prior to reaching the age of 20 years, so we would have to consider the possibility that a subsequently born grandchild might become the recipient of the gift. Such a grandchild, being younger, would not be able to reach the age of 20 years within the perpetuity period. Presumably, Tom would have preferred that Kim’s eldest surviving grandchild take the gift rather than to limit the gift to the first born grandchild and failing if that grandchild were not to reach the age of 20 years.The difficulty with applying s 9(1) in such a scenario comes from the phrase ‘becomes apparent’. One approach would be to wait until the end of the perpetuity period in order to see what age the eldest surviving grandchild has attained at that time. A plausible criticism of this approach is that it may involve waiting and seeing for long after it has become apparent that the interest will vest after the expiry of the 80 year perpetuity period. It is perhaps possible, however, to reduce the age successively. Such an approach is suggested by the authors of Megarry and Wade: The Law of Real Property.100 Hence, the age of the grandchild might first be reduced to 20 years; but if that grandchild died before reaching 20  years, the age could be successively reduced to the next greatest age that would allow the interest to be taken within the perpetuity period, for example, to 15 years. It has been pointed out that such an interpretation would require the words ‘it becomes apparent’ in s 9(1) to be treated as meaning ‘it becomes apparent from time to time’.101 The question of which of these approaches should be taken remains unresolved.102

Interaction of ‘wait and see’ rule, age reduction and class-closing rules 10.48  As previously mentioned, subsection  9(4) provides that if, at  the end of the perpetuity period, it is clear that a member of a class will not be able to take his or her 100. C Harpum, S Bridge and M Dixon, Megarry and Wade: The Law of Real Property, 8th ed, Sweet & Maxwell, London, 2012, p 351. 101. This observation is made in Edgeworth, note 9 above, [5.380] p 206. 102. For a more comprehensive analysis of the problems, see C Sappideen, ‘Perpetuities — Age Reduction and the Application of the Eighty-Year Period: Some Unexpected Problems’ (1986) 60 Australian Law Journal 471.

543

10.48

Property Law in New South Wales

share inside the perpetuity period and, as a result, the whole class gift would fail, then that member will be excluded from the class. This might be described as a ‘class closing rule’, although it is distinct from the common law class closing rules discussed earlier in this chapter. The common law class closing rules are rules of construction and continue to apply to dispositions to which the Act applies. Logically, the common law class closing rules come first. In other words, the statutory perpetuity period should be applied on the basis of the construction of the disposition that arises from the application of the common law class closing rules. Therefore, it would seem necessary to apply the common law and statutory provisions in the Perpetuities Act in the following order: 1. 2. 3. 4.

the common law class-closing rules; section 8 (‘wait and see’); section 9 (age reduction); and section 9(4) (statutory class-closing rule).103

In a devise ‘to the grandchildren of Mary as attain 30 years’, it is possible to see some of the practical difficulties involved in integrating the application of the remedial provisions. For example, if it became apparent that none of Mary’s grandchildren could attain 30 years within the perpetuity period, there would be no benefit in reading down the age to less than 30  years. This would be the case if no grandchildren had been born at  all in the perpetuity period and, therefore, there were no children to whom the age reduction could apply. If, however, Mary’s first grandchild was born, say, 55 years after the testator’s death, we could then reduce the age to be attained to 25  years and that would allow one of Mary’s grandchildren to reach 25 years within the 80-year period following the testator’s death. However, if Mary’s children were still alive, the class of grandchildren could keep expanding and hence it would be necessary to close the class. Section 9(4) would need to be employed to close the class of grandchildren. Yet, the result of closing the class would be to exclude Mary’s later-born grandchildren; a result that would appear contrary to the testator’s intention. Further, if the class were closed with Mary’s first grandchild to reach 25 years constituting its only member, and that grandchild died and hence did not reach 25 years, the whole gift would fail. Again, this would seem not to be the intention of the testator. One possible alternative would be to exclude the operation of the ‘wait and see’ rule until the death of Mary and her children, assuming that they die before the perpetuity period has elapsed. Another interesting issue is whether the age reduction is employed for all members of the class or only for those members of the class who cannot meet the original requirement within the perpetuity period.104 Perhaps a better way of dealing with the problems raised here would be to extend the ‘wait and see’ period for longer than a literal interpretation of s 10 of the Act might suggest.

103. See above in this paragraph. 104. This question is raised by Sappideen and Butt, The Perpetuities Act 1984, note 22 above, pp 98–100. This discussion draws heavily on the material discussed by those authors.

544

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10.52

Series of gifts 10.49  Examples of possible ‘series of gifts’ scenarios include: • a valid interest followed by an invalid interest; • an invalid interest followed by an interest with its own vesting date; and • a dependent interest that follows an invalid interest (ie, an interest that is dependent on the preceding invalid interest). 10.50  Valid interest followed by an invalid interest  Under the Perpetuities Act, as under the common law, a valid interest followed by an invalid interest still remains valid. The invalidity of the later interest under the rule against perpetuities does not affect the earlier valid interest. For example, consider a bequest in a will ‘To Mary for life, remainder to Anna when New  Zealand becomes part of Australia’. Under the Act, the ‘wait and see’ provisions still apply. One must ‘wait and see’ if the later sequential interest vests within the 80-year perpetuity period. Even if it does not, the preceding interest remains valid. 10.51  Invalid interest followed by an interest with its own vesting date  The later interest is valid if it has an independent date of vesting that is within the perpetuity period. Further, under the Act, the ‘wait and see’ rule is applied, rather than testing the validity of the later interest at the outset. Accordingly, we ‘wait and see’ if the interest vests in the 80-year perpetuity period. For example, suppose that the will of Tom includes a bequest ‘To Mary for life, then to Anna for life when Australia becomes a republic, and then to Nina in fee simple at 25 years’. Mary’s interest will be valid, but Anna’s interest might or might not vest within the perpetuity period. One must ‘wait and see’ if Anna’s interest is valid. However, Nina’s interest has an independent date of vesting, so it is valid if it vests in the 80-year period after the death of Tom, the testator. It is necessary to ‘wait and see’ if this happens. 10.52  Dependent interest following an invalid interest  In this case, an invalid interest is followed by an interest that is dependent on the preceding invalid interest. Section  17(1) of the Perpetuities Act abolished the common law rule against perpetuities and states that an interest that is part of a series of interests is not invalid merely because it is ‘ulterior to and dependent upon’ an invalid interest. Pursuant to s 17(1), each interest is to be treated independently and separately. Hence, an interest is not automatically invalid because it is linked to a prior invalid interest in the series. In effect, dependent ulterior interests are treated under the Act as though they are independent ulterior interests. For example, consider a bequest in the will of Tom ‘To the first of Mary’s children who becomes a resident of Queensland, but if Mary has no children, then to Anna’.

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It is necessary to ‘wait and see’ if the first of Mary’s children to become a resident of Queensland does so within 80 years of Tom, the testator, dying. If none of Mary’s children becomes a resident of Queensland within the perpetuity period, the gift to Anna, although dependent on the earlier gift, is valid under the Act, because it is treated independently and separately. If all Mary’s children died before the effluxion of the perpetuity period or, alternatively, if the state of Queensland ceased to exist before the perpetuity period had elapsed, then the interest to Anna would become effective as soon as either of these events occurred.

Section 4(3) of the Perpetuities Act 10.53  The operation of this subsection was raised at 10.42 and 10.43, and is considered in more detail here because of its complexity and uncertain operation. The ambiguity arises from the inclusion of the phrase ‘had the will taken effect when it was executed’. Should this phrase be taken to mean that the validity of a disposition in a will executed before the commencement of the Act is to be tested on the basis that the will takes effect, and so the perpetuity period begins to run, at the date of execution (rather than the date at  which the testator dies)? Alternatively, does the reference to the time of execution merely preserve the legal position that would have prevailed at the date of execution — that is, the common law — so that the perpetuity period will still commence at the date of the testator’s death? The interpretation we take will affect the outcome, as the following example demonstrates. Kai’s will was executed in 1980 (ie, before the commencement of the Act) and contained a gift ‘to the first child of Lim who obtains a doctoral degree from a university’. At the time the will was executed, Lim was alive but did not have any children who had obtained doctoral degrees. Lim subsequently had one child, Mei, and died in 2016. When Kai died in 2017, Mei had not obtained a doctoral degree. If, for argument’s sake, Mei was awarded a doctoral degree in 2100 (ie, 83 years after Kai died), the date on which the perpetuity period commences would affect the analysis. The disposition would be invalid under the Act because the interest actually vests more than 80 years after the date on which the will takes effect. However, if we apply the common law on the basis that s 4(3) requires that the perpetuity period runs from the date of execution of the will (ie, 1980), then Lim would be alive and would be the life in being. It would be possible for a child of Lim to obtain a doctoral degree more than 21 years after Lim’s death. If the perpetuity period runs from the date of Kai’s death, then Lim would not be a life in being, but Lim’s child (no longer being a member of a class capable of increase) would be a life in being and, if she obtains a doctoral degree at all, would do so during her own life. It seems improbable that Parliament would have intended that the perpetuity period would run from the date that the will was executed. This would be a departure from the normal application of the rule against perpetuities and would not seem to serve

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any useful purpose. Butt’s Land Law has suggested a reading of s 4(3) under which the subsection would ‘permit a disposition that breaches the rule in their post-Acts form to be tested for validity under the pre-Acts rule’, but ‘we nevertheless apply the pre-Acts rule in the conventional manner and test [the disposition’s] validity in the light of facts as they stand at the testator’s death’.105 If that is the correct interpretation of s 4(3), then, in the example concerning Kai’s will, the perpetuity period will run from the date of Kai’s death and the disposition will be valid.

Determinable interest and conditions subsequent 10.54  Pursuant to s 14(2) of the Perpetuities Act, possibilities of reverter are subject to the rule against perpetuities.106 This brings them into line with rights of entry for breach of a condition subsequent, but is contrary to the favoured position at common law regarding determinable interests, where possibilities of reverter escaped the tentacles of the rule against perpetuities.107 10.55  Hence, under the Perpetuities Act, if a possibility of reverter offends the rule against perpetuities, the determinable interest is not terminated by the determining event, and any later interests that do not themselves offend the rule are postponed to the extent necessary to preserve the determinable interest (now liberated from the offending determining event).108 Suppose, for example, that the will of Tom contains a bequest ‘To the Senior Citizens’ Corporation while the land is used for a community hall’. Under the Act, the possibility of reverter remains valid during the 80-year perpetuity period. Section 14 of the Act means that, if at the end of the perpetuity period the land was still being used for a community hall, the interest of the Senior Citizens’ Corporation would become absolute. Anyone taking under a residuary clause would receive nothing. If, however, the land ceased to be used as a community hall during the perpetuity period, then the interest would pass under the residuary clause in the will or on intestacy.

Accumulations 10.56  It is possible to draft a will or other instrument so that the income from a fund or from property accrues for some time before the accumulated amount is finally distributed. The rule against accumulations is applied in these circumstances.

105. Edgeworth, above n 9, [5.250] p 196. 106. See 3.82–3.83 for discussion of the possibility of reverter. 107. The Attorney-General v Pyle (1738) 1 Atk 435, Re Cooper’s Conveyance Trusts [1956] WLR 1096 and The Cram Foundation v  Corbett-Jones [2006] NSWSC 495 (Cram’s case) support the view that the grantor’s possibility of reverter after a determinable fee is not subject to the rule against perpetuities at common law but a contrary and less appealing position was taken in Hopper v Liverpool Corp (1944) 88 Sol J 213. Hopper’s case has been widely criticised, including in Cram’s case. Cram’s case was followed in Freemasons Hospital v Attorney General (Vic) [2010] VSC 273. 108. See Perpetuities Act 1984 (NSW) s 14(2).

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While the rule against perpetuities sought (and continues to seek) to prevent remoteness of vesting, the rule against accumulations was directed against remoteness of control.109 At common law, the accumulation could only be directed as long as the property could be rendered inalienable.110 Hence, the rule against accumulations was inextricably tied to the rule against perpetuities. This remained the case until the Accumulations Act 1800 (UK) was passed.111 It reduced the period for accumulation.The key aspects of the Accumulations Act were incorporated into ss 31 and 31A of the Conveyancing Act, which were repealed by s 19 and Sch 1 of the Perpetuities Act. Since then, s 18 of the Perpetuities Act has governed the situation. Section 18(1) of the Perpetuities Act provides that, if a settlement takes place after the commencement of the Act, a power or direction to accumulate is valid if the disposition of the accumulated income is valid. Hence, a direction to accumulate will only be valid if the accumulated income vests in the distributee within the perpetuity period (ie, in the 80-year period from the date the disposition comes into effect).112 One must ‘wait and see’ if the disposition of the accumulated income will vest within the perpetuity period. Until this is decided definitively, the direction to accumulate is treated as valid.113

Powers of appointment 10.57  Under a power of appointment, the title holder of property, known as the donor of the power, permits another person, known as the donee of the power, to deal with or dispose of the property. However, the donor does not give the donee title to the property. Usually the donee of the power is able to choose who will be the object of the power; that is, who is to receive the property. A general power allows the donee to appoint the property to anyone at all, even himself or herself,114 while a special power gives the donee the right to appoint the property to specific individuals or classes of individuals excluding himself or herself.115 Other categories of powers have also developed and they cross the boundaries between the first two categories. For example, a hybrid power permits the donee of the power to appoint anyone in the world except certain individuals or people of a certain class and an intermediate power permits the donee of the power to add to the already specified class of objects. An instrument granting a power of appointment 109. See Harpum, Bridge and Dixon, Megarry and Wade: The Law of Real Property, note 100 above, p 382, where the term ‘remoteness of control’ is used. 110. Harpum, Bridge and Dixon, Megarry and Wade: The Law of Real Property, note 100 above, p 382, citing Thellusson v Woodford (1799) 4 Ves 227 at 317, 318, 338 and 339; 31 ER 117; (1805) 11 Ves 112 at 146–7. 111. This Act is sometimes called ‘the Thellusson Act’. See Harpum, Bridge and Dixon, Megarry and Wade: The Law of Real Property, note 100, p 382. 112. As noted previously, s 7 of the Perpetuities Act sets the perpetuity period. 113. See Perpetuities Act 1984 (NSW) s 8. The rule against perpetuities also interacts to varying degrees with powers of appointment, the administrative powers of a trustee, the remuneration of a trustee and options to purchase land, among other things; however, these issues are beyond the scope of this work. 114. An example of general power contained in a settlement would be ‘To Fred for life, remainder to such person(s) as Fred may appoint’. 115. An example of a special power contained in a settlement would be ‘To Fred for life, remainder to such of Fred’s children as Fred may appoint’.

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might also contain a gift in default of appointment. As the name suggests, such a gift will take effect in the event that the donor of the power fails to exercise the power within a specified time. Section 6(1) of the Perpetuities Act requires that all powers of appointment be treated as special powers of appointment unless the donee of the power can exercise the power unconditionally and appoint himself or herself. The rule against perpetuities is relevant to general powers of appointment at  the following stages: • the first time the power is created; • the time the power is exercised; and • when considering the validity of the gifts over in default of appointment. The rule against perpetuities is relevant to special powers of appointment at  the following stages: • when the power is conferred or created; • when the power is exercised; and • when considering a gift over in default of an appointment. How the rule applies in each of these circumstances is complex and space does not permit further elaboration at this point. Reference should be made to specialist texts in the area.116

Superannuation funds 10.58  As superannuation funds assume growing significance in our society, it has become more important to preserve the validity of such funds and prevent them from falling foul of the rule against perpetuities. This has been achieved by s 13 of the Perpetuities Act, whereby an exemption is created in favour of provident, superannuation, sickness, accident, assurance, unemployment, pension and co-operative benefit funds.117

Applying the Rule against Perpetuities 10.59  Figure 10.3 below summarises the common law and statutory rules discussed in this chapter.118

116. See Sappideen and Butt, The Perpetuities Act 1984, note 22 above, pp 37–42. 117. Note that s 1346 of the Corporations Act 2001 (Cth) exempts trust funds established for the benefit of employees of corporations. 118. For another flow chart setting out the steps to follow when addressing a perpetuities problem, see P Tan, E Webb and D Wright, Land Law, 2nd ed, LexisNexis Butterworths, Sydney, 2002, p 120.

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Property Law in New South Wales Figure 10.3:  Applying the rule against perpetuities

Interests created before 31 October 1984

Interests created after 31 October 1984

Is the interest vested or contingent?

Is the interest vested or contingent?

When does the perpetuity period (in which the interest must vest) commence?

When does the perpetuity period (in which the interest must vest) commence? That is, on what date did the interest come into effect?

Who is the life in being?

When does the perpetuity period end? (Add 21 years to the date on which the life in being ends.)

When does the perpetuity period end? (Add 80 years to the date on which the instrument creating the interest came into effect.)

Is this a class gift? If not, or if the class-closing rules are excluded, proceed to the next step. Otherwise, apply the common law closing rules in Figure 10.2 above before proceeding to the next step.

Is this a class gift? If not, or if the class-closing rules are excluded, proceed to the next step. Otherwise, apply the common law closing rules in Figure 10.2 above before proceeding to the next step.

Is it possible for the interest of the closed class or individual to vest beyond the perpetuity period? If so, the interest is void.

Will the gift (to the individual or closed class) vest inside or outside the perpetuity period? Apply the necessary statutory provisions: s 8 (wait and see); s 9(1) (age reduction); and s 9(4) (statutory class-closing rule).

If the gift is in a will executed before 1984, but coming into effect after 1984, and the interest offends the statutory rule, apply the common law rule. If valid under common law, the gift can be saved.

Examples of the rule’s application 10.60  The application of the rule is illustrated by the following examples of perpetuity problems and the steps required to answer them:119 119. The authors would like to acknowledge the work of WJ Chappenden, formerly Lecturer in Law at the University of Sydney, for his assistance in originally formulating these examples and the accompanying solution strategies, which they have modified and updated.

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• The will of Tom includes a bequest ‘To my grandchildren’. Tom died in 2021 and his will was made in 2016. At his death, he had two grandchildren. In this case, we need to apply the common law class-closing rules.The two grandchildren alive at the testator’s death take half each. Their interests vest upon Tom’s death. Any grandchildren born subsequently will not be entitled to anything. • The will of Theresa includes a bequest ‘To Matthew for life, remainder to the children of Anna’. Theresa’s will was executed in 2008 and she died in 2009. At her death, Matthew and Anna were both alive and Anna had no children. Matthew died in 2011 and Anna had one child at that time. Anna had another child in 2012. In this case, we must apply the common law class-closing rules.The first child of Anna, being the only child of Anna who was alive at the time that the disposition took effect, takes everything. • An inter vivos trust makes a gift ‘To Margaret for life, remainder to Margaret’s grandchildren who reach the age of 25’. The trust deed was executed in 2001 and, at this time, Margaret had no grandchildren. For the purpose of this example, assume we know that Margaret dies in 2036. In 2079, the first of Margaret’s grandchildren turns 25 and her only other grandchild turns two. In this case, we need to take the following steps: – Apply the common law class-closing rules. When Margaret dies, it remains the case that there is no grandchild of Margaret who has attained the age of 25. The class closes at the later of the termination of the life estate and the time at which the first grandchild attains the age of 25. When the elder grandchild reaches the age of 25, the class is closed to include that grandchild and the second grandchild who is alive (and aged two years) at that time. All later-born grandchildren are excluded. The first-born grandchild will take a share immediately. – ‘Wait and see’ and apply the age reduction rule. The second-born grandchild will take a share if he or she is alive at the end of the perpetuity period in 2081, no matter how old he or she is.120

Reform 10.61  As we have seen, despite the introduction of the Perpetuities Act 1984 (NSW), difficulties still exist in the application of the law regarding perpetuities. Some states have decided that the best way to approach the issue is to offer testators and settlors a choice between using the common law perpetuity period or specifying a number of years as the perpetuity period. If a number of years is not specified as the perpetuity period, the common law perpetuity period applies by default.121

120. For further worked examples, see McCrimmon, note 20 above. 121. See, for example, Property Law Act 1974 (Qld) s 209(1) and Perpetuities and Accumulations Act 1968 (Vic) s 5.

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Abolition of the rule against perpetuities 10.62  By contrast, South Australia has abolished the rule against perpetuities.122 However, this does not mean that property can simply be tied up in perpetuity. Amendments to the Law of Property Act 1936 (SA) were passed in that state, so that if an interest has not vested within 80 years from the date of disposition of the property, an application can be made requesting that the court exercise its discretion to vary the disposition so that the interest vests immediately.123 Under the South Australian legislation, there is no need to wait until 80 years have elapsed before such an application is made. Further, any exercise of discretion is to have regard to the spirit of the original disposition.124 Pursuant to s 62(2) of the Law of Property Act, the court may bring forward the date of vesting of interests that clearly would vest beyond the 80-year period, or would be likely to vest beyond it. The practical effect of these reforms is to make valid many more dispositions than would the common law, which adopted what might be described as a vigilant approach to the perpetuities question.125 10.63  Since much case law reflects the difficulty practitioners have had in drafting wills126 and transfers that do not fall foul of the rule against perpetuities, perhaps it could be said that the South  Australian approach has the benefit of simplifying the law and that would be advantageous for all concerned. However, law reform should not be about mere simplification. Any simplification would also need to reflect appropriate policy considerations. Hence, only if New  South  Wales were to adopt a policy that inclined towards validating dispositions rather than striking them down, would abolition of the rule be an attractive alternative.127 Perhaps one reason to support the early vesting of dispositions is that today’s society is less accommodating of the view that parents and grandparents have an ongoing right to control the lives of their children and grandchildren. Given the changing nature of families and, in particular, the perceived trend towards the democratisation of the family through feminism and other forces, reform that reduces the ability to restrict the alienation of property (rather than increases it) might find widespread 122. Law of Property Act 1936 (SA) s 61. 123. Law of Property Act 1936 (SA) s 62(1), (2). 124. Law of Property Act 1936 (SA) s 62(4). 125. Moore, Grattan and Griggs seem to share this view when they refer to the common law ‘remorselessly striking down gifts or bequests’: A Moore, S Grattan and L Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, 6th ed, Thomson Reuters, Sydney, 2016, p 545. 126. This is demonstrated in Public Trustee v Bennett [2004] NSWSC 955 at [10], where Gzell J says of the will in question: ‘The will appears to have been drawn by a solicitor but it is badly drawn and should, in my view, be treated similarly to a will drawn by a lay person’. 127. A possible alternative approach is the introduction of a ‘cy-près’-type rule because such a rule would be more likely to accord with the testator’s intention. Cy-près schemes operate in relation to charitable trusts and involve the variation of the creator’s intended charitable purpose, so as to save the trust. They operate only where there is a general charitable purpose that is impossible to perform. It is worth noting that some jurisdictions do not have any rule against perpetuities. For example, in Scotland there has never been such a rule, and in some other jurisdictions, including Ireland and some American states, the rule has been abolished. However, there are many other international jurisdictions that still have such a rule. See discussion in Northern Territory Law Reform Committee, Northern Territory Law Reform Committee: Report on Perpetuities, Report No 40, Department of Attorney-General and Justice (NT), July 2014, p 12.

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support. A view that one has temporary stewardship of land rather than control over its use now and forever tends to reinforce this position. Restrictions on alienability have historically often operated alongside contingencies restraining and controlling the lives of others, and, as a consequence, have caused relevant dispositions to vest a long time into the future and often only after specified conduct has been fulfilled.128 In thinking about the issue of reform, the changing nature of the family may well have implications for how we decide upon an appropriate legal solution. Further, the trend towards the embracing of sustainability principles in relation to resource management may also indirectly influence how we approach the rule against perpetuities in regard to dispositions of land. If, for example, land is to be used sustainably, perhaps it is important to reinforce the principle of sustainability through a legal system that acknowledges human beings’ temporary stewardship of land above and beyond a rigid, pre-determined course of ownership commonly tied to particular behaviours. The latter method may be less likely to support the adaptive management of land as a resource because it is not particularly amenable to change and flexibility. Running contrary to the view that restrictions on alienation should be reduced or abolished is the view that one should be able to do with one’s property what one likes and that present ownership includes extensive rights to determine the future use of the property. Accordingly, if one has presently accumulated property, one should be able to determine what happens to that property for a long time into the future. In recent years, Australian scholarship has been fairly inactive on the question of perpetuities generally;129 in particular, on the question of whether the rule against perpetuities should remain at all. Perhaps it is time to revisit the question of whether the present rule remains relevant today. It has been described as ‘an absurd anachronism’,130 and in its common law form it was criticised for being: … abstruse and misunderstood by a substantial percentage of those who advise the public, so unrealistic that its ‘conclusive presumptions’ are laughable nonsense to any sane man and 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.131

128. See A Giddens, Transformation of Intimacy, Blackwell, Oxford, 1995, particularly pp 53–65; C Smart and B Neale, Family Fragments, Blackwell, Oxford, 1999; E Silva and C Smart (eds), The New Family?, Sage Publications, London, 1999. 129. Going against the trend are J Glover, ‘The Rule Against Perpetuities and Its Application to Unit and Discretionary Trusts’ (2007) 14 Australian Property Law Journal 255; J Glover and P von Nessen,‘Unintended Consequences: International Accounting Standards, Public Unit Trusts and the Rule Against Perpetuities’ (2008) 80 Australian Law Journal 675; McCrimmon, note 20 above, for example. 130. Moore, Grattan and Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, note 125 above, p 534. 131. W Barton Leach, ‘Perpetuities Reform: London Proposes, Perth Disposes’ (1965) UWALR at 12; quoted in Moore, Grattan and Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, note 125 above, p 534.

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Whether the present mix of statute and the common law relied on in New South Wales is regarded as any more efficient and effective invites attention. If retention of the rule were favoured, the appropriateness of the 80-year perpetuity period would remain open to question. Although proponents of free alienation think this period is too long, the English Law Commission recommended an even longer period in its 1998 report: 125 years.132 Meanwhile, the 2014 Northern Territory Law Reform Committee: Report on Perpetuities recommended a 150-year perpetuity period given increased life expectancies.133 On the question of whether a better statutory form of the rule may be devised, perhaps guidance may be found in United States jurisprudence and scholarship. That jurisdiction has demonstrated legislative enthusiasm and an academic appetite for the subject of perpetuities. In fact, in about one third of American states, the common law rule of perpetuities has been largely abolished and partially replaced by the Uniform Statutory Rule Against Perpetuities (USRAP), which operates under a version of the ‘wait and see’ rule. The sudden transformation of the law in this area seems to have been provoked by the flow-on effects of the Generation Skipping Transfer Tax (GSTT).134

Section 4(3) of the Perpetuities Act 10.64  As noted at  10.41 and 10.53, subsection 4(3) concerns wills that are executed before the appointed day, that is, the commencement date of the Perpetuities Act. Under the present provision, a will can be tested for validity at the time of execution according to the common law relevant at the time. If the will fails those requirements, the Perpetuities Act can then be applied. However, an alternative approach is available, and its application could yield very different outcomes. For example, it is possible to apply the provisions of the Perpetuities Act first; if this results in a void disposition, the disposition may be able to be saved under the common law. If it does not fall foul of the common law, it will be saved.135 Further, in requiring consideration of the date of execution of the disposition, which is obviously earlier than the date of the testator’s death, the result well might be that the disposition is found to be too remote. By contrast, it is possible that if the relevant date were the testator’s death, the disposition might not be found to be too remote.

132. Law Commission, The Rules Against Perpetuities and Excessive Accumulations, Report No 251, London, 1998, [8.13]. 133. Northern Territory Law Reform Committee, Northern Territory Law Reform Committee: Report on Perpetuities, note 127 above, p 27.The US state of Texas has recently adopted a statutory perpetuity period of 300 years for trusts that become effective on or after 1st September 2021. See Texas Trust Code s 112.036. 134. See S Foster, ‘Fifty-One Flowers: Current Perpetuities Law in the United States’ (2008) 22 Probate and Property 3; S Shepard, ‘Which the Deader Hand — A Counter to the American Law Institute’s Proposed Revival of Dying Perpetuities Rules’ (2012) 86 Tulane Law Review 559. 135. See Sappideen and Butt, The Perpetuities Act 1984, note 22 above, p 28, for examples of how different outcomes could be arrived at.

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Amendments which deal with the present level of diversity of outcomes arising from the application of s 4(3) would appear to be necessary.

‘Wait and see’ rule 10.65  If the favoured approach is to retain the statutory rule against perpetuities, perhaps further consideration needs to be directed towards the effectiveness of the ‘wait and see’ rule, which presently forms part of the statutory approach to the rule against perpetuities. Can the ‘wait and see’ rule be reformed to accommodate social and scientific change better? The ‘wait and see’ rule overcomes difficulties associated with the ‘initial certainty rule’. However, the ‘wait and see’ rule has its own drawbacks. One drawback is the potential delay in ascertaining whether a disposition is valid. Clearly, waiting involves delay and it has been observed that the delay may be considerable.136 Indeed, a South Australian Law Reform Committee report observed that the ‘wait and see’ approach merely ‘puts off the evil day’.137 Further, with advances in scientific and medical knowledge, the waiting period may be very long. For example, it is now possible for sperm and ova to be stored well into the future and for women to be artificially inseminated well into their later years. This has the potential to expand considerably the length of time in which children or grandchildren might be born or qualify to take interests.138 The waiting period, for example, may be extended for the full length of the perpetuity period. In considering the effects of the ‘wait and see’ rule, the Irish Law Reform Commission observed: [I]t is by no means a flawless method of reform.To begin with it provides only limited relief. Where vesting occurs outside the perpetuity period, the ‘wait and see’ principle is useless, and legatees’ interests continue to be disappointed. Secondly, the ‘wait and see’ rule does not affect the length of the perpetuity period. … Thirdly, the introduction of a ‘wait and see’ principle brings with it new problems of its own. Throughout the perpetuity period the validity of the gift remains mired in uncertainty, as does the identity of the proper recipient of any intermediate income generated by the subject matter of the gift.139

It would be beneficial to investigate ways in which these weaknesses could be overcome.

136. Northern Territory Law Reform Committee, Northern Territory Law Reform Committee: Report on Perpetuities, note 127 above, p 12. 137. Law Reform Committee of South  Australia, Seventy-Third Report of the Law Reform Committee of South Australia to the Attorney-General — Relating to the Reform of the Law of Perpetuities, 1984, p 7. 138. Northern Territory Law Reform Committee, Northern Territory Law Reform Committee: Report on Perpetuities, note 127 above, p 12. 139. Irish Law Reform Commission Report, 2000, p 21 as cited in Northern Territory Law Reform Committee, Northern Territory Law Reform Committee: Report on Perpetuities, note 127 above, p 12.

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Chapter 11

Leases and Tenancies Introduction 11.1  The law of leases in Australia is complicated by the existence of a number of statutory regimes, none of which entirely abolish the common law. Important statutory regimes are those relating to residential leases and retail shop leases, but common law rules continue to apply to the extent that the relevant statutes do not override them. Non-retail commercial leases continue to be governed primarily by common law rules. Accordingly, this chapter will begin with a discussion of the common law rules relating to leases. This will be followed by a discussion of the significant statutory reforms of the law relating to residential and retail shop leases.

Leases at Common Law — Terminology 11.2  A lease is an interest in land granted by one person, the ‘landlord’ or ‘lessor’, to another, the ‘tenant’ or ‘lessee’, which confers a right to exclusive possession of land for a fixed period of certain duration. This interest is also known by the older expression ‘demise’. The term ‘lease’ is also used to describe certain rights to land granted by the Crown, mostly for pastoral and agricultural purposes. These rights were discussed in Chapter 31 and will not be further discussed in this chapter. A lease, in the sense that we are concerned with here, is usually created by a document such as a deed, but may also be created informally.2 As an interest in land, the lease is inherently capable of being dealt with in its own right.3 The same principle applies to the interest that the landlord retains, which is called the ‘reversion’. Thus, each interest may be transferred outright to third parties, so that the transferor retains no property rights. These transactions are known as ‘assignments’ of the lease and reversion respectively. The transferees are referred to as the ‘assignees’. The tenant may also carve a lease out of his or her lease to create a separate interest. This will be effected where the tenant grants a right of exclusive possession to the premises for a period less than he or she has, or where the tenant grants a right of 1. See 3.22–3.26. 2. See 11.6–11.8 and 11.12–11.14. 3. Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR (NSW) 47.

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Property Law in New South Wales

exclusive possession to part only of the premises. In these cases, the new tenant is known as a ‘sublessee’ or ‘subtenant’, and his or her interest a ‘sublease’. The former tenant can now be variously described as the ‘head-tenant’ or ‘headlessee’ with respect to the original lease (the ‘headlease’), and the ‘sublessor’, with respect to the sublease. The subtenant has the same rights to assign and sublet, and so on, theoretically indefinitely, although the terms of a lease may restrict a tenant’s ability to assign or sublet without the landlord’s approval.4 This fragmentation of interests is represented diagrammatically in Figure 11.1. Figure 11.1:  Leases — fragmentation of interests L (fee simple)

T (lease)

25 years

R (assignee of reversion)

A (assignee)

10 years

ST (subtenant)

AST (assignee of ST) Time

In this hypothetical example, the original lease granted was for a fixed term of 25 years. The tenant later assigned her interest to assignee A. A then became L’s tenant, having stepped into T’s shoes. A later created a sublease of 10  years in favour of a subtenant, ST. A is now both a landlord (in respect of ST) and a tenant (in respect of L). When ST assigns his sublease to an assignee, AST, AST becomes A’s new tenant. When L assigns the reversion to R, R becomes A’s new landlord.

Creation of Leases 11.3  The requirements necessary to create a valid lease may be divided into two basic categories: substantive and formal.

Substantive requirements Certainty of duration 11.4  For a lease to be valid, the maximum duration of the lease must be ascertainable at the commencement of the lease. This means that both the commencement date5 and the maximum duration of the term must be, or be capable of being, rendered certain at the time the lease takes effect.6 Accordingly, leases expressed to last ‘for the duration of the War’,7 ‘until the completion of new premises owned by the lessor M which are being

4. See 11.40–11.42. 5. Say v Smith (1561) 1 Plowd 269; 75 ER 410. 6. Lace v Chantler [1944] KB 368 at 370–1. 7. Lace v Chantler [1944] KB 368.

558



Leases and Tenancies

11.4

built’,8 until ‘the end of the peanut crop’9 or ‘until the land is required by the council’10 are void.11 By contrast, if the duration of the lease is potentially uncertain, but its maximum duration is certain, such as a lease ‘for 21 years determinable if the tenant ceases to live on the premises’, it is valid.12 Such a lease will necessarily come to an end after 21 years, but may end earlier, that is, if the tenant ceases to live on the premises. An exception to the rule that the maximum duration of a lease must be ascertainable is a tenancy for life, that is, a tenancy which is to terminate when the tenant dies.13 Periodic tenancies do not present a certainty of duration problem because, even though it may not initially be known how long the relationship between landlord and tenant may endure, each period for which rent is accepted by the landlord can be seen as a distinct lease of certain duration. At the end of each period, a new lease is created for the next period until one party gives notice terminating the arrangement. It is difficult to see what value there is in a requirement that the duration of a lease be fixed at the outset.14 One possible objection to leases of uncertain duration would be that they make certain classes of lease parties vulnerable to the termination of a valuable asset in a highly unpredictable way.Yet, against this, it can be argued that with special legislation now governing specific types of landlord–tenant relations, such as residential and retail tenancies, where particular inequalities of bargaining power are addressed, this concern has receded. Moreover, insisting on such a requirement for leases is inconsistent with the law’s flexibility as to the duration of determinable and conditional freehold estates. The Residential Tenancies Act 2010 (NSW) deals with the matter by providing that continuing tenancies cannot be terminated without a minimum notice period, and provides different notice periods for landlord and tenant.15 It does not seem to have presented difficulties in application. One jurisdiction that has chosen to significantly modify this requirement for all leases is New Zealand. Section 212 of the Property Law Act 2007 (NZ) provides that a lease is not invalid because it provides for termination on the occurrence of a future event, as long as the event is sufficiently defined in the lease so that it can be identified when it happens. The section further provides, however, that the lease will terminate on the 10th anniversary of its commencement if the future event has not yet occurred.

Mangiola v Costanzo [1980] ANZ ConvR 331. Bishop v Taylor (1968) 118 CLR 518. Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386. However, if the tenant goes into possession and pays rent a valid tenancy may otherwise arise under s 127 of the Conveyancing Act 1919 (NSW). 12. Doe d Lockwood v Clarke & Brown (1807) 103 ER 313. 13. Berrisford v Mexfield Housing Co-operative Ltd [2012] 1 AC 955. 14. In Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386 at 396–7, Lord Browne-Wilkinson stated that no one has produced a satisfactory explanation for the genesis or retention of this ‘ancient and technical rule’, and called on the Law Commission to investigate whether it should be overturned by statute. Lord Mustill (at 397) agreed that the rule could produce unsatisfactory results. See also see S Bright, ‘Uncertainty in Leases: Is It a Vice?’ (1993) 13 Legal Studies 38; P Sparkes, ‘Certainty of Leasehold Terms’ (1993) 109 Law Quarterly Review 93. 15. See 11.119–11.122. 8. 9. 10. 11.

559

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Exclusive possession 11.5  A further substantive requirement for the validity of a lease is that the tenant must be given the right to exclusive possession of the premises that are leased. This is a matter of substance rather than form. It requires an examination of the rights the parties have created, rather than the label they have used to describe the relationship. Thus, in Radaich v Smith,16 where parties entered into an agreement to ‘license’ premises and were described as ‘licensor’ and ‘licensee’, they were held to be landlord and tenant because the document (which conferred on the occupant a right to occupy two specified rooms within a building along with rights to control who could come on to the premises, as well as imposing a duty to deliver up the premises at the end of the term, pay rent and be responsible for the repair of locks and windows) could be said to have given the tenant exclusive possession of the premises and was, therefore, a lease. A useful case to contrast with Radaich v Smith is KJRR Pty Ltd v Commissioner of State Revenue (Vic).17 In this case, the parties to a franchise agreement also entered into a licence agreement whereby the franchisor granted the franchisee permission to conduct a retail business from premises of which the franchisor was lessee. The licence provided that the franchisor was entitled to possess and use the premises except to the extent that this would prevent the franchisee from enjoying its rights under the agreement. The franchise agreement gave the franchisor rights to supervise the franchisee  in the conduct of the business, including rights to enter the premises without notice during business hours for the purpose of inspections.The question for the court was whether the licence agreement was actually a lease, thus assessable for stamp duty. The Victorian Court of Appeal concluded that the licence agreement created a licence and not a sublease because it did not create in the franchisee a right of exclusive possession of the premises.18 The court rejected the argument that the transaction was a ‘sham’ that had been structured so as to avoid liability for stamp duty. The fact that the franchisor had extensive rights to supervise the conduct of the franchisee’s business was consistent with an intention not to confer exclusive possession on the franchisee. It was not possible to conclude that the relevant provisions were inserted merely for the sake of maintaining a pretence that exclusive possession had not been conferred on the franchisee.19

16. Radaich v Smith (1959) 101 CLR 209. 17. KJRR Pty Ltd v Commissioner of State Revenue (Vic) [1999] 2 VR 174. 18. KJRR Pty Ltd v Commissioner of State Revenue (Vic) [1999] 2 VR 174 at 176, 186 per Tadgell JA; at 187 per Callaway JA; at 187 and 189 per Chernov JA. 19. KJRR Pty Ltd v Commissioner of State Revenue (Vic) [1999] 2 VR 174 at 182–4 per Tadgell JA; at 187 per Callaway JA; at 189–90 per Chernov JA. An example of the sham and pretence doctrines being employed by a court to find that a purported licence was truly a lease is Antoniades v Villiers (jointly reported with AG Securities v Vaughan) [1990] 1 AC 417. In this case, the purported licence agreement granted severally to the two licensees the right to occupy a small, one-bedroom flat, but also reserved to the licensor the right to occupy the flat and the right to allow additional persons to occupy the premises as well. These reservations were characterised as shams designed to deceive the court and were never intended to be relied on. Alternatively, Lord Templeman (at 465) characterised them as a pretence intended to deprive the grantees of the legislative protection applying to lessees.

560



Leases and Tenancies

11.5

The notion that exclusive possession is the hallmark of a lease has also been approved by the House of Lords.20 In Bruton v London and Quadran Housing Trust, it was made clear that the intention of the parties that is relevant to the question of whether a lease or a licence has been granted is the intention whether or not the grantee is to have a right to exclusive possession of the premises, and not the intention to make a grant to which the terms ‘lease’ or ‘licence’ can be attached.21 In this case, the parties truly intended that a licence be granted, as the grantor itself held only a licence in respect of the premises, rather than a proprietary interest in them. Nevertheless, because the grant evinced an intention to confer on the grantee a right of exclusive possession of the premises, it was effective, as between those parties, to create a lease.22 The question as to whether exclusive possession has been granted in the instrument is one of construction.23 The fact that the premises are part of the alleged lessor’s own home is a strong indicator that a licence, rather than a lease, was intended, but the whole of the evidence must be examined to determine what is the appropriate inference to draw as to the grantor’s intention.24 To the rule that the conferral of the right of exclusive possession on the grantee creates a lease rather than a licence, there appears to be a qualification: a licence rather than a lease may arise in ‘special’ or ‘exceptional’ circumstances.25 Although not seeking to define exhaustively these circumstances, the courts have made clear that exceptional circumstances can be present where the conferral of the right of exclusive possession on the grantee is referable to a relationship between the parties other than lessor and lessee.26 Thus, where close family relationships are concerned, the parties may be considered to have created a licence rather than a lease, even where exclusive possession is granted.27 Also, where there is a special relationship, such as between an employer and employee, a licence rather than a lease may arise if the intention to create the former is present, even if a right of exclusive possession is granted.28 However, in Bruton the fact that: (a) the grantor was a charitable housing trust that performed the important social function of providing residential accommodation to the homeless; and (b) the grantor itself lacked a proprietary interest in the land (so was merely a licensee in respect of the land), did not constitute

20. Street v Mountford [1985] AC 809; Bruton v London and Quadrant Housing Trust [2000] 1 AC 406. 21. Bruton v London and Quadrant Housing Trust [2000] 1 AC 406 at 411 per Lord Jauncey of Tullichettle; at 413 per Lord Hoffmann. Also see Street v Mountford [1985] AC 809 at 826. 22. Third parties, such as the owner of the land, are not bound by the lease. See Kay v Lambeth London Borough Council [2004] 3 WLR 1396, noted in P Butt, ‘Leases, Licences and the Modern “Contractual Tenancy”’ (2005) 79 Australian Law Journal 145 at 146. 23. Lewis v Bell (1985) 1 NSWLR 731. 24. Stuart v Marshall (1958) 75 WN (NSW) 252. 25. Street v Mountford [1985] AC 809 at 822, 823; Bruton v London and Quadrant Housing Trust [2000] 1 AC 406 at 411 per Lord Jauncey of Tullichettle; at 414 per Lord Hoffmann. 26. Street v Mountford [1985] AC 809 at 826–7; Bruton v London and Quadrant Housing Trust [2000] 1 AC 406 at 413 and 414 per Lord Hoffmann; at 417 per Lord Hobhouse of Woodborough. 27. Errington v Errington [1952] 1 KB 290; Heslop v Burns [1974] 3 All ER 406. 28. Metropolitan Fire Brigades Board v Tait [1949] VLR 231.

561

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Property Law in New South Wales

special or exceptional circumstances so as to deprive the purported grant of a right of exclusive possession of its prima facie character as a lease.29

Formal requirements Old system 11.6  At law As we have seen above,30 the basic rule for the creation of legal interests under old system title is contained in s 23B(1) of the Conveyancing Act 1919 (NSW): no interest can be created or transferred at law unless by a duly executed deed. A lease must, therefore, be created by deed to be valid at law. There is an important exception to this requirement. By s 23D(2) of the Conveyancing Act, a lease may be created at law ‘by parol … at the best rent which can reasonably be obtained without taking a fine taking effect in possession for a term not exceeding three years’.31 A fine is a lump-sum payment, or premium, given for the grant of the lease. ‘Taking effect in possession’ has been interpreted to mean ‘conferring a right to immediate possession’.32 Section  23D(2) includes short-term leases that contain options to renew, where any option, when added to the original term, is three years or less. A lease that may be terminated by notice prior to the end of a fixed term does not come within the meaning of this section if the fixed term exceeds three years.33 A short-term lease within the meaning of section 23D(2) is a legal lease notwithstanding the lack of a deed. As will be seen below, periodic tenancies may come into existence at law by implication from the manner of payment of rent where no documentary formalities have been concluded.34 11.7  In equity  Equity has been less concerned with requirements of form than the common law has, so equitable leases for a fixed term can be created without the formality of a deed. Generally speaking, a grant of an equitable interest in land need only satisfy the more lenient requirement of ‘by writing … or by will, or by operation of law’ in s  23C(1)(a) of the Conveyancing Act.35 Moreover, according to Walsh v  Lonsdale,36 an agreement to grant a lease that is capable of specific performance creates a lease in equity. For the agreement to be enforceable, the requirements for agreements to grant interests in 29. See Bruton v London and Quadrant Housing Trust [2000] 1 AC 406 at 411 per Lord Jauncey of Tullichettle; at 414 per Lord Hoffmann. 30. See 6.5. 31. This provision does not apply only to oral leases, but extends to written leases as well: Dockrill v Cavanagh (1944) 45 SR (NSW) 78 at 84; Enkelmann v Glissan (1982) 2 BPR 9640 at 9642–3. It was explained in the latter case that because the type of lease described in s 23D(2) of the Conveyancing Act need not be in writing, such a lease — whether in writing or not — comes within s 23B(2)(d), and is thus an exception to s 23B(1). 32. Haselhurst v Elliot [1945] VLR 153. 33. Kushner v Law Society [1952] 1 KB 264; [1952] 1 All ER 404. 34. See 11.12–11.14. 35. See 6.22. 36. Walsh v Lonsdale (1882) 21 Ch D 9. See also Leitz Leeholme Stud Pty Ltd v Robinson [1977] 2 NSWLR 544.

562



Leases and Tenancies

11.7

land generally (set out in s 54A of the Conveyancing Act) must be met.Thus, there must be a sufficient note or memorandum of the agreement.That said, Conveyancing Act expressly provides that the doctrine of part performance continues to apply in New South Wales, so requirements of writing are not insisted upon where there are acts of part performance that are solely referable to an agreement of the general nature of that alleged.37 Entering into possession of premises pursuant to an agreement to grant a lease has been held to constitute a sufficient act of part performance.38 An equitable lease will not arise unless it would be possible to obtain an order for specific performance of the agreement. Accordingly, the agreement must be one for which damages would not be an adequate remedy for breach of the agreement. As a general rule, agreements to grant specific interests in specific land will meet this requirement. Even so, the case law on specific performance recognises that there are a number of situations in which a plaintiff would be disqualified from obtaining an order for specific performance. For example, where performance of an agreement to sublet would involve a breach of the headlease,39 or where the tenant has persistently breached a term of the agreement so that it could not be said that the tenant is ready, willing and able to perform its side of the agreement,40 specific performance would be refused. In such circumstances, an equitable lease does not arise because the relevant contract is not capable of specific performance. The relationship of lessor and lessee arises in equity as soon as it can be said that there is an agreement capable of specific performance. The existence of an equitable lease does not depend on an order for specific performance being obtained. Nevertheless, where the lessee seeks to have such an equitable lease enforced against someone other than the lessor, the lessee must join the lessor as a party to the action so that the specific enforceability of the agreement to lease can be tested.41 A lease may also be created in equity in the absence of formalities by operation of the doctrine of equitable estoppel. Where a party relies on another’s representation that a lease will be granted or taken, and suffers detriment as a consequence of that reliance, the circumstances may be such as demand that the representor make good the representation.42 Waltons Stores v Maher is an example of a situation in which the detriment that a prospective landlord suffered, namely the cost of demolishing an existing building and commencing to erect a new building designed for the prospective tenant’s use, was of such a nature that it would have been unconscionable for the prospective tenant not to proceed with the lease. Similarly, where a prospective tenant had surrendered its existing lease in the expectation, encouraged by the landlord, that a new lease would be granted, the appropriate relief was to require the landlord to grant the lease. Not every case of induced detrimental reliance

37. 38. 39. 40. 41. 42.

For these requirements generally, see Chapter 6. Kingswood Estate Co Ltd v Anderson [1963] 2 QB 169; [1962] 3 All ER 593. Warmington v Miller [1973] QB 877; [1973] 2 All ER 372. Marshall v Council of the Shire of Snowy River (1994) NSW ConvR ¶55-719 per Kirby P. Vella v Wah Lai Investment (Aust) Pty Ltd (2004) 12 BPR 22,671 at 22,772–6. Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 2016.

563

11.7

Property Law in New South Wales

will necessarily lead to relief that makes good the representation.43 The Australian case law on equitable estoppel more generally recognises that a monetary compensation may be awarded where that would be adequate to repair the detriment that the relying party has suffered.44

Torrens title 11.8  As has already been discussed,45 the basic distinction in interests under the Torrens system is between registered and unregistered interests. Accordingly, in order to acquire the benefit of indefeasibility, the lease must be registered. Section 53 of the Real Property Act  1900 (NSW) requires leases of more than three years duration to be registered. However, leases of less than three years may be registered.46 In this case, they will become indefeasible by s 42 of the Real Property Act. Unregistered leases, unlike other interests under the Torrens system, may be either legal or equitable. Thus, because s 23D(2) of the Conveyancing Act applies to Torrens system land, it is possible to have such a legal lease over Torrens title land.47 Equally, an implied lease at common law can arise under the Torrens system.48 Of course, whether an unregistered lease is legal or equitable has no bearing on whether the lease is enforceable against the holder of a registered interest. Holders of registered interests are bound by unregistered interests only if they fall within one of the exceptions to indefeasibility (see  Chapter 8, 8.60–8.114). Where s  23D(2) does not apply, a deed of lease in respect of Torrens land will be effective in equity only, as a memorandum of an agreement to grant a lease.49 Also, an executed memorandum of lease that remains unregistered will give rise to an equitable lease as a memorandum of agreement to grant a lease.50 In both of these circumstances, because the lessee’s rights arise out of a contract to grant a lease, the lessee  must have provided consideration for the grant of the lease, and the contract for the grant must be one for which equity would decree specific performance. Equitable leases under the Torrens system can also arise by estoppel.51

43. S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd [1994] FCA 1109; (1994) 122 ALR 637. 44. See 6.42. 45. See Chapter 8. 46. Parkinson v Braham [1962] SR (NSW) 663. 47. See P Butt, Land Law, 6th ed, Lawbook Co, Sydney, 2010, pp 300, 734. And as with old system land, such a lease in respect of Torrens title land will be legal, whether made by deed, in writing or orally. See Dockrill v Cavanagh (1944) 45 SR (NSW) 78 at 84 and Enkelmann v Glissan (1982) 2 BPR 9640 at 9642–3. 48. Dockrill v Cavanagh (1944) 45 SR (NSW) 78. For implied leases, see 11.12–11.15. 49. Carberry v Gardiner (1936) 36 SR (NSW) 559. Because s 53 of the Real Property Act does not require a lease for a term not exceeding three years to be registered, it might be possible to argue that such a lease, if made by deed, is a legal lease even if it does not satisfy the other requirements of s 23D(2). 50. Australian Provincial Assurance Co Ltd v Rogers (1943) 43 SR (NSW) 202 at 205. 51. See 11.7.

564



Leases and Tenancies

11.12

Types of Tenancies at Common Law Fixed-term leases 11.9  Where the parties to a lease have agreed that it will expire at  a certain time in the future, there is a fixed-term lease. This period may be for a number of years or for any definite shorter period, such as a lease for one day. It may be described in terms of a specified number of years or as terminating on a specified date. A lease may even be for discontinuous periods, as long as the certainty of duration requirement is met, such as a lease for one week a year for 80 years.52 A fixed-term tenancy automatically comes to an end when the period expires.

Periodic tenancies 11.10  Periodic tenancies arise in two ways: (i) by express agreement; or (ii) by implication, as where there is payment and acceptance of rent. An express periodic tenancy arises where the parties have agreed that the tenant will pay rent in respect of an agreed period but have not agreed on a term of years. In theory, this period could be any period of time — such as one day53 or 364 days.54 — but most such tenancies are for weekly, fortnightly or monthly periods. The relationship will continue for as long as the tenant continues to pay rent at the commencement of each new period and the landlord continues to accept it and neither party gives notice to terminate the tenancy. Periodic tenancies by express agreement are subject to the same formal requirements as leases for a term of years.Thus, a weekly periodic tenancy will be effective at law if granted orally and the other conditions in s 23D(2) of the Conveyancing Act 1919 (NSW) are met. 11.11  A periodic tenancy can be determined by notice given by either party at  any time. In the absence of agreement, the notice must be at least equivalent to the duration of a period, and must expire at the end of a period.55 For example, notice to terminate a monthly tenancy must expire at the end of a monthly period in respect of which rent has been paid. An exception to this rule is the yearly periodic tenancy. It can be brought to an end by notice equivalent to one-half of a period expiring at the end of a completed year of the tenancy.56 The notice period in respect of all periodic tenancies can be varied by agreement between the parties.57

Implied periodic tenancies 11.12  In certain circumstances, periodic tenancies would be implied at common law where formalities were absent entirely or were inadequate, as in the case of an unsigned deed. The typical scenario in which a periodic tenancy is implied involves a tenant taking Cottage Holiday Associates Ltd v Customs and Excise Commissioners [1983] QB 735. Butcher v Bowen [1964] NSWR 36. Land Settlement Association Ltd v Carr [1944] 1 KB 657. Crate v Miller [1947] KB 946. Sidebotham v Holland [1895] 1 QB 378; Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386. 57. Re Threlfall (1880) 16 Ch D 274. 52. 53. 54. 55. 56.

565

11.12

Property Law in New South Wales

exclusive possession of property and paying rent by reference to a specific period, such as a week, fortnight or month.58 The landlord’s acceptance of the rent is the basis for saying that that there is a weekly, fortnightly or monthly tenancy, as the case may be. It is possible for an implied periodic tenancy at  common law to co-exist with an equitable lease for an agreed term between the same parties in respect of the same land. This is an example of the rules of common law and the rules of equity leading to different outcomes in relation to the same set of facts. In such a case, termination of the implied tenancy by giving the appropriate notice will not be effective to terminate the equitable lease.There are at least two possible bases for such a conclusion. First, since equity exists to supplement and correct the common law, rules of equity must prevail over common law rules to the extent that there is a conflict. Second, it has been recognised that a tenancy at  will implied at  common law and a relationship arising in equity by reason of the agreement between the parties are ‘independent sources of rights’, so a notice to terminate the implied tenancy will not affect the equitable relationship.59 11.13  Historically, implied yearly tenancies arose in a number of ways apart from the payment of rent annually. As Jordan CJ stated in Dockrill v Cavanagh,60 the implied yearly tenancy at common law was a clear example of judicial creativity: ‘By a process of judicial legislation, considerable encroachments had been made upon the provisions of the Statute of Frauds’. The reasons for this creativity are obvious enough. Significant hardship could arise for tenants, especially agricultural tenants, where the requisite formalities for the creation of leases were not followed. In these circumstances, by s  1 of the Statute of Frauds 1677 (UK) and its present-day successor in New South Wales, s 23D(1) of the Conveyancing Act, a tenancy at will would be created.This could mean that an agricultural tenant could plant crops and tend them, only to have his or her lease brought to an end at the will or whim of the landlord. Accordingly, the common law courts would imply a yearly periodic tenancy where evidence was present to suggest that a yearly tenancy, rather than some other periodic tenancy, was intended. It is a question of fact as to whether a yearly tenancy or some other tenancy should be implied.61 There are basically four separate fact situations where courts would find sufficient evidence to imply a yearly periodic tenancy: 1. Where a tenant was let into occupation and no agreement was concluded as to the duration of the term, if rent was paid ‘by reference to a year or an aliquot part of a year’, the tenant would be deemed to hold a yearly periodic tenancy. Rent will be paid ‘by reference to a year’ if there is evidence to suggest that the parties computed the rent for the premises on an annual basis. Thus, a rent of $300 per month as a component of a $3600 yearly rent would imply a yearly periodic tenancy, rather than a monthly periodic tenancy.62 By contrast, if a tenant took possession and merely 58. 59. 60. 61. 62.

Turner v York Motors Pty Ltd (1951) 85 CLR 55. Leitz Leeholme Stud Pty Ltd v Robinson [1977] 2 NSWLR 544. Dockrill v Cavanagh (1944) 45 SR (NSW) 78 at 81. Moore v Dimond (1929) 43 CLR 105. Ladies’ Hosiery & Underwear Pty Ltd v Parker [1930] 1 Ch 304 at 328–9.

566



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paid a rental of $300 a month, a monthly periodic tenancy would arise.63 Also, if the rent was paid in aliquots (ie, in fractions that, when divided into the whole year, left no remainder, such as half-yearly or quarterly), a yearly periodic tenancy would be implied.64 2. Where the lease was void — for instance, because a deed was defective or the term was of uncertain duration — but rent was paid by reference to a year or an aliquot part of a year, a yearly periodic tenancy would be implied.65 3. Where a tenant held over at the expiry of a fixed-term lease, and paid rent by reference to a year or an aliquot part of a year, a yearly periodic tenancy would be implied.Thus, where a tenant had paid rent in the previous lease by reference to a sum computed on an annual basis, such as a rent of $5200 a year payable in weekly instalments of $100, an implied yearly periodic tenancy would arise if the tenant continued to pay in exactly the same way.66 Equally, if the rent was changed, but was paid by reference to a year or in aliquots, an implied yearly tenancy would arise. 4. Where there was an enforceable agreement to grant a tenancy, a yearly periodic tenancy would arise if the tenant took possession and paid rent by reference to a year or a proportionate part of a year.67 There is also weighty authority for the proposition that rent paid by reference to any period in this situation will give rise to a periodic yearly tenancy at  common law, for the reason that the intention to grant a term gives the lease a yearly character. In Moore v  Dimond,68 the parties entered into an agreement for a lease for five years. The tenant took possession and paid rent weekly in accordance with the terms of the agreement. It follows that, in these circumstances, the parties will have two co-existing leases: one equitable (a fixed term), and one legal (implied from the payment of rent). As these leases have separate lives, owing their existence to different acts of creation, they must also be terminated separately. Thus, a tenant in possession under an equitable lease of Torrens title land, paying rent periodically, could bring the implied legal tenancy to an end by giving the appropriate notice, but that would not affect the equitable lease.69 Where an implied yearly tenancy at  common law arises, the courts will imply into such a lease any covenants that are contained in the agreement. Thus, if the agreement originally envisaged that the lease was to last for no longer than two years, the yearly 63. For such periodic tenancies, see 11.12. 64. Richardson v Langridge (1811) 4 Taunt 128. In this case, there is some disagreement between Mansfield CJ, who confines aliquots to half-yearly or quarterly (at 131), and Chambre J, who suggests that payment of rent by reference to any aliquot will do. 65. Morison v Edmiston [1907] VLR 191. In that case, the lease was void for uncertainty of duration, since it was expressed to last ‘while the tenant is stationed at Hamilton’. See also 11.4. 66. Adler v Blackman [1953] 1 QB 146 (CA). There is some doubt, however, about the interest of the overholding tenant where a one-year lease expires and the original rent was expressed simply as a weekly sum. In Adler v Blackman, it was held that a weekly tenancy arose; in Bank of Victoria v M’Hutchison (1881) 7 VLR (L) 452, yearly. 67. Dockrill v Cavanagh (1944) 45 SR (NSW) 78 per Jordan CJ. 68. Moore v Dimond (1929) 43 CLR 105. 69. Leitz Leeholme Stud Pty Ltd v Robinson [1977] 2 NSWLR 544.

567

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periodic tenancy will automatically expire at the end of that period without the need to give notice.70 11.14  The law relating to implied yearly tenancies has been altered by s 127(1) of the Conveyancing Act, which provides: (1)  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.

The section has presented problems of interpretation. First, the phrase ‘and no agreement as to its duration’ gives rise to some difficulties. On one reading, it is hard to see  it as other than surplusage. An implied tenancy at common law would never arise where its duration was agreed — it would simply be a fixed-term lease. The courts have resolved this by interpreting the phrase to mean ‘where there is no agreement effective at law as to duration’.71 The effect of this is to extend the applicability of the provision to cases where there is an agreement to grant a lease for a specific duration that is enforceable only in equity. Second, it is not clear from the wording of the section whether it applies to all implied periodic tenancies, or only implied yearly periodic tenancies. In Burnham v Carroll Musgrove Theatres Ltd,72 it was held that s 127 applied only to those leases where no agreement as to duration would, but for the section, have given rise to a year-toyear tenancy at common law. For example, a lease where the payment of rent was made by reference not to a yearly rent, but to a monthly rent, would not be converted to a tenancy at  will terminable by one month’s notice. It would become, and remain, an implied monthly tenancy.73 Though described as ‘a tenancy determinable at the will of either of the parties’, a s 127 tenancy differs from the common law tenancy at will: it may be assigned, and may support a sublease.74

Tenancy at will 11.15  A tenancy at will arises where a person is let into occupation as a tenant with the consent of the owner on the basis that either party may determine the tenancy at any time. This type of tenancy may be created expressly,75 or more commonly by implication, as where a tenant holds over at the expiry of a fixed-term lease with the consent of the landlord or a purchaser is let into occupation prior to settlement, but there are no periodic payments of rent that would provide the basis for implying a periodic tenancy.76 If the

Dockrill v Cavanagh (1944) 45 SR (NSW) 78. Larke Hoskins & Co Ltd v Icher (1929) 29 SR (NSW) 142. Burnham v Carroll Musgrove Theatres Ltd (1928) 41 CLR 540. Turner v York Motors Pty Ltd (1951) 85 CLR 55. Metropolitan Trade Finance v Coumbis (1973) 131 CLR 396. Manfield & Sons Ltd v Botchin [1970] 2 QB 612; Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23. 76. Francis Jackson Developments Ltd v Stemp [1943] 2 All ER 601. 70. 71. 72. 73. 74. 75.

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parties have agreed that rent is payable, but the exact amount has not been determined, the landlord is entitled to compensation for use and occupation.77 While the name ‘tenancy at will’ suggests that the tenancy may be terminated at any time, it is possible that there may be an implied agreement to give reasonable notice of termination. The High Court of Australia found such an implied agreement in Landale v  Menzies.78 Chief Justice Griffith said that a reasonable notice requirement could be implied on the basis that the parties’ agreement as to the use and occupation of land required ‘such a degree of permanency as not to be terminable by either party without reasonable notice to the other’.79 What period of notice amounts to reasonable notice will depend upon the circumstances of the case. A tenancy at will is unassignable; in McMahon v Docker,80 it was held that a purported assignment will automatically determine the tenancy. A tenancy at will also determines on the death of either party.81

Tenancy at sufferance 11.16  A tenancy at sufferance arises where a tenant remains on premises after the expiry of a fixed-term lease without either the assent or dissent of the landlord. Like a tenancy at will, it is unassignable. In the normal course of events, a tenancy at sufferance would last for only a short period of time until either the landlord expressly agrees to a new tenancy (such as a tenancy at  will, for a fixed term or whatever it may be), or a new implied tenancy comes into effect from the payment and acceptance of rent,82 or the landlord notifies the tenant that he or she must quit the premises. In this last-mentioned case, the tenant becomes a trespasser, entitling the landlord to mesne profits for any further period of possession. Until that time, the landlord under a tenancy at sufferance is not entitled to rent, but to compensation for ‘use and occupation’ on the basis that the tenant remains in breach of an implied covenant to deliver up the premises to the landlord at the termination of the lease.83

Tenancy by estoppel 11.17  A tenancy by estoppel will arise where the landlord purports to grant a tenancy in respect of premises to which he or she lacks the necessary title because, for example, he or she is an adverse possessor, a tenant at will, or a licensee. As between the parties to the tenancy, it will be binding despite this defect: neither the landlord nor the tenant will be able to deny that a lease exists between them.84 Thus, the landlord will be able to enforce any of 77. Howard v Shaw (1841) 8 M & W 118; Zegir v Woop [1955] VLR 394. 78. Landale v Menzies (1909) 9 CLR 89. 79. (1909) 9 CLR 89 at 99. 80. McMahon v Docker (1945) 62 WN (NSW) 155. 81. James v Dean (1805) 11 Ves 383. 82. See 11.12–11.14. 83. Anderson v Bowles (1951) 84 CLR 310 at 319. 84. Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580. In Bruton v London and Quadrant Housing Trust [2000] 1 AC 406, it was said that it is the grant of the lease that gives rise to

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the covenants of the lease granted. Likewise, a tenant will be able to sue the landlord for any breaches of the landlord’s covenants. There is one exception to this principle: it cannot be asserted where the tenant is evicted by the exercise of title paramount, such as where the owner repossesses in the case of adverse possession. In this case, the tenant is liable to the owner for mesne profits, and so, for instance, is not obliged to pay rent. Rent already paid can be reclaimed.85 Where there is a tenancy by estoppel successors in title are also bound, so that those claiming through the original parties to the lease are also estopped.86 As discussed previously, where one party leads another to believe that a lease will be taken for granted and the other party relies on that promise to his or her detriment, the doctrine of equitable estoppel may operate so as to create the relationship of lessor and lessee.87

Concurrent leases 11.18  A concurrent lease is a lease of the landlord’s reversionary interest. It has the effect of making the lessee of the reversion the landlord of the original tenant for the term of the concurrent lease.88 If the original lease expires before the concurrent lease, the concurrent lessee will have a right to possession of the demised premises at the expiry of the first term. Until that point, the concurrent lessee is entitled to the benefit of all the tenant’s covenants and subject to the burden of all the landlord’s covenants in the original lease. It is also possible to have a concurrent lease that is shorter than the original lease; for example, where L grants a lease to T for five years, then immediately to R for three years, R will be T’s landlord for the three-year period.89 Thereafter, L will become T’s landlord.

Reversionary leases 11.19  A reversionary lease is a lease expressed to come into existence at some time in the future. There is a limit to how far into the future such an interest can be made. By s 120A(3) of the Conveyancing Act, no reversionary lease can be granted if expressed to take effect more than 21 years from the date of the grant.

Covenants in Leases Introduction 11.20  A lease confers sets of rights and obligations on both landlord and tenant. These rights and obligations will often be set out in express terms in the lease itself. There may the estoppel, rather than the estoppel giving rise to the lease: at 415–16 per Lord Hoffmann; at 418 per Lord Hobhouse of Woodborough. 85. Industrial Properties (Barton Hill) Ltd v  Associated Electrical Industries Ltd [1977] QB 580 at  596 per Lord Denning. 86. Webb v Austin (1844) 7 Man & G 701. 87. See 11.7. 88. Minister for the Interior v Brisbane Amateur Turf Club (1949) 80 CLR 123. Also see D Klineberg, ‘Concurrent Leases in Commercial Transactions’ (2004) 10 Australian Property Law Journal 222. 89. Conveyancing Act 1919 (NSW) s 120A(5).

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also be terms that are implied at  common law, by statute or by necessary implication in the particular case. The terms of a lease are commonly referred to as ‘covenants’. In general, at common law, parties may agree to such covenants as they wish, although statute law imposes some minor restrictions on this freedom of contract.90 An express covenant will preclude the operation of an implied covenant relating to the same subject-matter,91 although the extent to which an express covenant overrides the implied covenant is a question of construction in each case. In many leases, there will be express covenants that adopt the language and concepts of implied covenants and will be similar in effect to the implied covenants. In addition to these contractual obligations, parties to leases will have obligations arising from tort law. In particular, it is possible for landlords and tenants to be liable to each other and to third parties in negligence and nuisance.

Implied covenants At common law 11.21  There are six covenants implied at common law: three that impose obligations on landlords, and three that impose them on tenants. The three covenants imposing obligations on the landlord are: 1. to give the tenant quiet enjoyment of his or her lease; 2. not to derogate from the grant; and 3. in the case of furnished dwellings, to provide the premises in a state fit for habitation at the commencement of the term. The three covenants imposing obligations on tenants are: 1. to use the premises in a tenant-like manner; 2. to yield up the premises at the expiry of the lease; and 3. in the case of a tenancy of agricultural land, to cultivate the land in a husband-like manner. 11.22  Quiet enjoyment The landlord is under an implied duty at  common law to allow the tenant quiet enjoyment of the premises. This duty is implied in all leases.92 As Megarry and Wade have noted,‘quiet enjoyment’ is not confined to freedom from noise.93 ‘Quiet enjoyment’ means a right to occupy and enjoy the premises without disturbance or interference from the lessor or those for whom he or she is responsible.94 Breach of the 90. This position is reversed in the case of residential tenancies and retail leases, where statute establishes a large number of rights and obligations which the parties are prohibited from contracting out of: see  11.107–11.114 and 11.139. 91. Malzy v Eichholz [1916] 2 KB 308 at 314. See also Carpet Fashion Pty Ltd v Forma Holdings Pty Ltd [2004] NSWCA 150. 92. Markham v Paget [1908] 1 Ch 697. 93. C Harpum, Megarry and Wade:The Law of Real Property, 6th ed, Sweet & Maxwell, London, 2000, p 861. 94. Hudson v Cripps [1896] 1 Ch 265 at 268.

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covenant requires substantial interference with the tenant’s enjoyment of the premises. This requires material inconvenience, but need not amount to ‘practical frustration’ of the purposes of the lease.95 Acts that have been held to break this covenant are trespasses, such as the removal of the windows and doors of the demised premises;96 cutting off the tenant’s gas and electricity;97 overflow of water from blocked pipes on the landlord’s adjacent property;98 and repeated threats to remove the tenant.99 However, merely writing letters demanding that the tenant vacate is not a breach of covenant.100 In Browne v Flower,101 the building of an external staircase that passed the tenant’s bedroom and so interfered with the tenant’s privacy was held not to constitute a breach of this covenant. This case should be contrasted with J C Berndt Pty Ltd v Walsh,102 where it was held to be a breach of the covenant to erect a hoarding outside the tenant’s jewellery shop for the purposes of structural repairs, causing damage to the tenant’s business. A tenant may be able to get damages for mental distress if it ‘proceed[s] from physical inconvenience caused by the breach’.103 It had, in the past, been assumed that there was no breach of the covenant for quiet enjoyment where another tenant of the landlord committed unlawful acts. Accordingly, where a tenant on adjoining premises committed a nuisance, the landlord was not liable unless the landlord had actively participated in the nuisance, and could therefore be held to have committed the unlawful act.104 In more recent times, landlords have been found liable for breach of a covenant for quiet enjoyment where the landlord has in some way authorised the activity that constitutes the alleged breach.105 In Aussie Traveller Pty Ltd v Marklea Pty Ltd,106 the plaintiff tenant had complained that the use of sawmilling machinery by another tenant had interfered with the plaintiff ’s conduct of its business. The lease between the landlord and the other tenant expressly gave the landlord the power to prohibit activities that would constitute a nuisance to other tenants.The landlord was aware of the problem, but failed to take adequate steps to address the problem. In the circumstances, it was appropriate to hold the landlord responsible for the actions of  the  tenant who had created the nuisance. Similarly, in Nordern v  Blueport Enterprises Ltd,107 the lawful use of downstairs premises as a brothel, causing disturbance to another tenant and his employees, amounted to a breach of the covenant for quiet enjoyment 95. Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd 1 at 10 (McPherson JA) 96. Lavender v Betts [1942] 2 All ER 72. 97. Perera v Vandiyar [1953] 1 WLR 672. 98. Martins Camera Corner Pty Ltd v Hotel Mayfair [1976] 2 NSWLR 15. 99. Kenny v Preen [1963] 1 QB 499. 100. David Jones Ltd v Leventhal (1927) 40 CLR 357. 101. Browne v Flower [1911] 1 Ch 219. 102. J C Berndt Pty Ltd v Walsh [1969] SASR 34. 103. Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723 at 752 per Santow J. 104. Malzy v Eichholz [1916] 2 KB 308. 105. Nordern v Blueport Enterprises Ltd [1996] 3 NZLR 450; Southwark London Borough Council v Mills [2001] 1 AC 1. 106. Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd 1. 107. Nordern v Blueport Enterprises Ltd [1996] 3 NZLR 450.

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on the part of the landlord. Elias J characterised the breach as ‘the landlord’s actions in countenancing a use wholly inconsistent with the respectable business being run by [the plaintiff]’.108 In that case, the landlord had approved the assignment of the premises to an ‘escort agency’, despite being aware of the true nature of the business. The landlord will be liable for the lawful acts of tenants, sub-tenants or assignees that cause interference, such as where the proper use of defective drains causes flooding,109 or where the use authorised in the lease of adjoining premises would necessarily cause disturbance to the tenant.110 There was once some doubt as to whether there is a need for some physical interference for this covenant to be breached.111 However, in a number of cases where the tenant’s business custom was reduced by a refurbishment of premises, it has been held not to be necessary.112 The landlord will not be liable where the disturbance from another tenant results from structural defects in the premises, as in the case where a poorly constructed block of flats with negligible sound insulation between units allowed intolerable transmission of noise, even though the noise in question resulted from the ordinary use of premises by neighbours.113 There is no breach of the covenant for quiet enjoyment where the tenant’s enjoyment of the premises is interrupted by the exercise of a title that is paramount to that of the landlord. Thus, a landlord who is also a head-tenant will not be liable for a breach of a covenant for quiet enjoyment if he or she grants a sublease longer than his or her own, and the head landlord evicts the tenant when the headlease expires.114 Nor will such a landlord be liable where the head landlord prevents a use authorised in the sublease but prohibited by a covenant in the headlease.115 The situation where one tenant complains about the acts of another tenant is to be distinguished from that where a neighbour complains about the tenant’s acts. The general rule is that a landlord will not be liable to third parties under a covenant for quiet enjoyment for the acts of a tenant.116 However, a landlord will be liable in nuisance to a neighbour if he or she authorised his or her tenant to commit the nuisance or if a nuisance was certain to result from the authorised use under the terms of the lease.117 11.23  Non-derogation from the grant  The landlord is under an implied obligation not to derogate from his or her grant. A derogation from grant typically arises where the landlord uses the retained premises in such a way as to undermine the purpose for which 108. [1996] 3 NZLR 450 at 458. 109. Sanderson v Berwick-upon-Tweed Corporation (1884) 13 QBD 547. 110. Malzy v Eichholz [1916] 2 KB 308. 111. Browne v Flower [1911] 1 Ch 219. 112. Owen v Gadd [1956] 2 QB 99; J C Berndt Pty Ltd v Walsh [1969] SASR 34; Lamiri v Aidan Nominees (1987) ANZ ConvR 497. 113. Southwark London Borough Council v Mills [2001] 1 AC 1. 114. Baynes & Co v Lloyd & Sons [1895] 2 QB 610. 115. Jones v Lavington [1903] 1 KB 253. 116. James v Harris (1876) 35 LT 240; Smith v Scott [1973] 1 Ch 314; Wilkie v Blacktown City Council (2002) 121 LGERA 444. 117. See Peden Pty Ltd v Bortolazzo [2006] 2 Qd R 574 at [29].

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the leased premises are let.118 In Harmer v Jumbil (Nigeria) Tin Areas Ltd,119 the landlord was held to derogate from his grant where, having granted a lease for the purpose of storing explosives, he granted a lease over adjoining premises for a purpose which jeopardised the tenant’s statutory licence. A landlord will breach this covenant if he or she uses retained premises in a way which blocks the flow of air to the adjacent tenant’s premises, if the tenant requires ventilation for the ordinary conduct of his or her business.120 A landlord will be similarly liable for removing a lift and obstructing a corridor needed to bring goods to the lessee’s business premises.121 A landlord will also be liable if he or she demolishes buildings on adjacent land and goods are stolen from the tenants because the work has rendered the tenants vulnerable to burglary.122 A landlord will not be in breach of this covenant if he or she did not know at the time of the grant that the demised premises were to be used for a special purpose, and the use of retained premises interfered with this special purpose. Thus, where a lease authorised the storage of paper generally, and the tenant stored a special kind of paper, the landlord was not liable for damage caused to such unusual aspects of the business.123 Where the landlord retains control of public areas adjoining the tenant’s premises, any nuisance caused by other tenants will constitute a derogation from the grant to aggrieved tenants.124 The boundary between the covenant for quiet enjoyment and the covenant not to derogate from grant is not clear and, in practice, the operation of the two covenants may overlap.125 In Lamiri v  Aidan Nominees, for example, Burt CJ suggested that ‘[t]he obligation created by the tenant’s covenant for quiet enjoyment would seem to be the same as his duty not to derogate from his grant’.126 One way of distinguishing between the two covenants has been to treat ‘threats and other intolerable nuisances’ as breaches of the covenant of quiet enjoyment and ‘user of the retained part which makes the demised premises less fit for the purpose for which they were let’ as breaches of the covenant not to derogate from the grant.127 The same issues arise with respect to the landlord’s liability for the actions of tenants as we saw in the context of the covenant for quiet enjoyment.128 A number of the cases

118. Aldin v Latimer Clark, Muirhead & Co [1894] 2 Ch 437. Gordon v Lidcombe Developments Pty Ltd [1966] 2 NSWR 9. 119. Harmer v Jumbil (Nigeria) Tin Areas Ltd [1921] 1 Ch 200. 120. Aldin v Latimer Clark, Muirhead & Co [1894] 2 Ch 437 (drying sheds for timber business); Cable v Bryant [1908] 1 Ch 259 (hoardings obstructed ventilation for a stable). 121. Edward Kazas & Associates Pty Ltd v Multiplex (Mountain Street) Pty Ltd (2002) 11 BPR 20,353 at 20,364. 122. Lend Lease Development Pty Ltd v Zemlicka (1985) 3 NSWLR 207. 123. Robinson v Kilvert (1889) 41 Ch D 88. 124. Chartered Trust plc v Davies (1997) 76 P & CR 396. 125. See Harpum, Megarry and Wade:The Law of Real Property, note 94 above, p 869. 126. Lamiri v Aidan Nominees Pty Ltd (1987) ANZ ConvR 497 at 501. 127. Lend Lease Development Pty Ltd v Zemlicka (1985) 3 NSWLR 207 at 208 per Kirby P, with whom Hope and Samuels JJA agreed. 128. See 11.22.

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discussed in that context also involved the covenant not to derogate from the grant,129 and the same considerations apply in determining liability. 11.24  Furnished dwellings fit for habitation  Where the demised property is a furnished dwelling-house, the landlord is under an obligation to ensure that the premises are fit for habitation at  the commencement of the term.130 This will not be implied in leases of unfurnished dwellings,131 nor will it be implied where premises have become unfit for habitation during the currency of the lease.132 In the absence of express agreement, a landlord of unfurnished premises is not liable for defective premises or premises unfit for the purposes for which they are let.133 The covenant implied at  common law has become much less important in New  South  Wales owing to statutory law reform. The Residential Tenancies Act  2010 (NSW) imposes a very much enlarged array of responsibilities on landlords of residential premises. The Act draws no distinction between furnished and unfurnished dwellings. Accordingly, only those furnished dwellings that fall outside either the definitions of ‘residential tenancy’ or ‘residential premises’ in the Act will be covered by this implied obligation.134 Moreover, a landlord could potentially be liable in the tort of negligence for loss or injury arising from the unfitness of the premises for human habitation.135 11.25  Tenant-like use of premises  This covenant requires the tenant to use the premises in the manner of a reasonable tenant. It involves both positive and negative duties. The positive duties include carrying out small repairs such as unblocking sinks, replacing light bulbs and keeping premises clean.The negative duties include refraining from intentionally or negligently damaging the premises, as well as ensuring that guests do not damage the premises. These duties do not extend to putting the premises into repair; nor is the tenant liable for ‘fair wear and tear’. So, in Warren v Keen,136 the tenant was not liable for damp in walls caused by water seeping in through gaps in brickwork. ‘Fair wear and tear’ has been defined as ‘reasonable use … by the tenant and the ordinary operation of natural forces’.137 In Haskell v Marlow, the tenant was liable for failing to take steps to ensure that the natural processes of decay would not cause consequential damage to the premises, as in the case where a tile falls from a roof (for which the tenant is not liable) and water then gets in, causing damage to ceilings (for which the tenant is liable). Thus, the exception for fair 129. Aussie Traveller Pty Ltd v Marklea Pty [1998] 1 QdR 1 and Nordern v Bluepoint Enterprises Ltd [1996] 3 NZLR 450 are examples of cases in which breaches of both the covenant of quiet enjoyment and the covenant of non-derogation from the grant were argued. In the latter case, Elias J (at 458) stated that ‘derogation by the landlord from the grant will often, but not inevitably, entail breach of the covenant of quiet enjoyment’. 130. Smith v Marrable (1843) 11 M & W 5; 152 ER 693. 131. Cruse v Mount [1933] Ch 278. 132. Pampris v Thanos [1968] 1 NSWR 56. 133. Manchester Bonded Warehouse Co Ltd v Carr (1880) 5 CPD 507; [1874–80] All ER Rep 563. 134. See 11.109. 135. See 11.36. 136. Warren v Keen [1954] 1 QB 15. 137. Haskell v Marlow [1928] 2 KB 45 at 58 per Talbot J.

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wear and tear also requires the tenant to take steps to ensure that further damage does not result from the initial damage due to fair wear and tear.138 11.26  Yielding up premises at expiry of the lease  At first glance, this implied covenant would appear to be unnecessary. However, it extends beyond merely vacating the premises at  the expiry of the lease. The tenant must ensure that the landlord receives vacant possession of the premises. Accordingly, the tenant will be liable for any costs incurred by the landlord in evicting a subtenant after the expiry of the headlease.139 11.27  Cultivation in a husband-like manner  In the case of a tenancy of agricultural land, the tenant is under a duty to cultivate the land in a husband-like manner. ‘Husbandlike’ refers to the customary usages in the local area.140 The obligations of tenants in this respect have been substantially modified by statute.141

Covenants implied by statute 11.28  Sections  84 and 85 of the Conveyancing Act  1919 (NSW) cause a range of covenants to be implied into leases. Section  74(2) of the Act provides that freedom of contract is preserved. In other words, the implied covenants may be ‘negatived, varied or extended by … an express declaration’. It appears, though it is not certain, that an express covenant on the same subject-matter as a statutory implied covenant and inconsistent with it will amount to such an ‘express declaration’.142 These covenants are examined below. 11.29  Covenant to repair  By s 84(1)(b) of the Conveyancing Act, the tenant is taken to have covenanted: (1)(b)  that the lessee … will, at all times during the continuance of the said lease, keep and, at the termination thereof, yield up the demised premises in good and tenantable repair, having regard to their condition at  the commencement of the said lease, accidents, war damage and damage from fire, flood, lightning, storm and tempest, and reasonable wear and tear excepted.

This implied statutory covenant would appear to override the common law implied covenant that obliges the tenant to keep the premises in a tenant-like manner, so that the common law implied covenant will arise only if the statutory covenant has been excluded and there is no express repair covenant to replace it. The words ‘having regard to their condition at the commencement of the said lease’ suggest that if premises are in disrepair at the commencement of the tenancy, the tenant is not under a duty to put them in repair. ‘Good, tenantable repair’ has been defined to mean:

138. Regis Property Co Ltd v Dudley [1959] AC 370. 139. Anderson v Bowles (1951) 84 CLR 310. 140. Powley v Walker (1793) 5 Term Rep 373; 101 ER 208. 141. See, for example, s 13 of the Agricultural Tenancies Act 1990 (NSW) and the many and varied obligations imposed under the Crown Lands Acts. 142. Bucknall v Reid (1876) 10 SALR 188.

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… 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.143

The situations under which a tenant’s liability is excluded by the implied covenant ‘accidents’ relates to unintentional and unexpected damage that could not have been reasonably foreseen by the tenant. In Saviane v Stauffer Chemical Co (Australia) Pty Ltd,144 Helsham J referred to previous cases and remarked that damage will be the result of an accident ‘only if it was caused by an event which the lessee did not intend to cause damage and which a reasonable person in the position of the lessee  would not have foreseen would probably cause damage of the kind which resulted’.145 In that case, the tenant was found liable for the collapse of a wall because goods were carelessly stacked against it by an independent contractor. 11.30  Covenant to pay rent The tenant must pay the rent reserved by the lease at the times specified in the lease.146 In the absence of express agreement, this means that rent is payable in arrears, at the end of the period specified for payment. Where premises are destroyed or damaged by fire, flood, lightning, storm, tempest or war damage, the rent will abate until the premises are repaired. 11.31  Covenant to allow landlord to inspect and repair  In the absence of agreement to the contrary, the landlord has a right to enter the premises to inspect their state of repair. This right is strictly limited. The landlord may enter only twice a year, and then only ‘at a reasonable time of the day upon giving to the lessee two days’ previous notice’.147 The landlord may also serve a notice in writing on the tenant requiring any repairs to be carried out within a reasonable time. If the tenant fails to repair the premises as required in the notice, the landlord has an implied right to enter and repair.148 Where repairs are of a structural nature or required by statutory authorities, the landlord may enter and carry them out at any time.149 11.32  Covenant to re-enter for non-payment of rent  At common law, the landlord was given no implied right to forfeit the lease in the event of a tenant’s breach of covenant. The landlord now has an implied right to re-enter and forfeit the lease if the rent is in arrears for at least one month.150 Like other implied statutory covenants, this may be varied by agreement.151 11.33  Covenant to re-enter for breach of non-rental covenants Where the tenant has breached any covenant, whether express or implied, for a period of two months, or has 143. Proudfoot v Hart (1890) 25 QBD 42 at 52. 144. Saviane v Stauffer Chemical Co (Australia) Pty Ltd [1974] 1 NSWLR 665. 145. [1974] 1 NSWLR 665 at 670. 146. Conveyancing Act 1919 (NSW) s 84(1)(a). 147. Conveyancing Act 1919 (NSW) s 85(1)(a). 148. Conveyancing Act 1919 (NSW) s 85(1)(b). 149. Conveyancing Act 1919 (NSW) s 85(1)(c). 150. Conveyancing Act 1919 (NSW) s 85(1)(d). 151. Conveyancing Act 1919 (NSW) s 74(2).

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failed to repair the premises after receiving a notice to repair, within a reasonable time, a landlord may re-enter and forfeit the lease.152

Covenants by necessary implication 11.34  Covenants may need to be implied in a particular lease in order to give business efficacy to the contract. In Liverpool City Council v  Irwin,153 tenants in a multi-storey council housing estate claimed that the landlord had breached a duty to keep the lifts and staircases in a satisfactory state of repair. The House of Lords concluded that there was an implied covenant to repair those parts of the building. Equally, in order for the premises to be enjoyed, a right of access to a shop has been implied,154 as has a right of access via the landlord’s premises to a shared toilet.155 In Karaggianis v Malltown Pty Ltd,156 a commercial tenant of sixth-floor premises obtained a declaration that the landlord had breached an implied covenant to keep the lifts and escalators working in the same manner and to the same extent as at  the commencement of the lease. As Wells J emphasised, the basis for implying such a covenant is that it ‘is something so obvious that it goes without saying’.157 Other implied obligations 11.35  As previously remarked, tort law imposes additional and overlapping obligations on parties to leases.The doctrine of waste is another source of obligations that is independent of express or implied covenants. 11.36  Tort of negligence  There was longstanding House of Lords authority that, in the absence of a contractual obligation, a landlord was not liable to the tenant or other entrants for injury caused to them by defective premises.158 The High Court of Australia has, in recent decades, recognised that landlords could be liable in negligence for such injury, although the precise bounds of landlords’ duty of care remain uncertain. In Northern Sandblasting Pty Ltd v Harris,159 the High Court concluded that the landlord owed a duty of care to the tenant and members of the tenant’s family to ensure that reasonably discoverable defects in the premises were remedied at  the commencement of the lease. Accordingly, the landlord was liable where the tenant’s young daughter was electrocuted as a result of defective electrical wiring. Unfortunately, the members of the majority of the court disagreed as to the precise basis for the landlord’s liability. Brennan CJ and Gaudron J found that the landlord was negligent in failing to identify a 152. Conveyancing Act 1919 (NSW) s 85(1)(d). 153. Liverpool City Council v Irwin [1977] AC 239. 154. Dowse v Wynyard Holdings Ltd [1962] NSWR 252. 155. Dillon v Nash [1950] VLR 293. 156. Karaggianis v Malltown Pty Ltd (1979) 21 SASR 381. 157. Karaggianis v Malltown Pty Ltd (1979) 21 SASR 381 at 392, citing MacKinnon LJ in Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206 at  227. Also see  Edward Kazas & Associates Pty Ltd v  Multiplex (Mountain Street) Pty Ltd (2002) 11 BPR 20,353 at 20,362–3. 158. Cavalier v Pope [1906] AC 428. 159. Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313. For a discussion of this case, see L Griggs, ‘The Tragedy of Northern Sandblasting v Harris and the Landlord’s Liability to Third Parties’ (1998) 6 Australian Property Law journal 169.

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Leases and Tenancies

11.36

problem with the earthing system at the commencement of the tenancy, while Toohey and McHugh JJ found that the landlord was responsible for ensuring that repairs to the electric stove performed by an electrical contractor were done properly. Subsequently, in Jones v Bartlett,160 the High Court concluded that a landlord was not liable in negligence where the tenant was injured as a result of crashing through a glass door, where the type of glass installed conformed to building standards at the time of installation, even though the glass failed to meet the standards required for new buildings today. The decisions in Northern Sandblasting v Harris and Jones v Bartlett fell short of recognising a duty on the part of the landlord to make the premises as safe as reasonable care could make them.161 In Jones v Bartlett, Gummow and Hayne JJ drew a distinction between items that might be dangerous when misused and items that are ‘dangerous defects’. Items will fall into the latter category only ‘when being used in a regular fashion and ordinarily would not be dangerous when so used’.162 Whether only dangerous defects of which the landlord had knowledge could be the occasion of landlord liability became the focus of attention in a number of New South Wales cases involving injuries resulting from falls on stairs. Sakoua v Williams,163 the New South Wales Court of Appeal had to determine whether a landlord was liable for the injuries to a tenant who fell down the front steps of residential premises. For Mason P, with whom Brownie AJA agreed, no member of the majority in Jones v Bartlett extended the duty of the landlord beyond remedying defects in the premises of which he or she was aware.164 Although in the case before them the steps could have been safer — they had risers of varying heights and there was no handrail or landing between them and the front door of the premises — according to Mason P this did not constitute a defect. The state of the steps was obvious to the tenant and there was no evidence that they had caused any injury in the past. Because the steps were not defective, the landlord was not liable in negligence for the tenant’s injury.165 In dissent, Beazley JA construed the majority judgments in Jones v Bartlett as holding that a landlord is under an obligation to ensure that premises are, at the time they are let, reasonably safe for the purposes for which they are let. Her Honour relied on evidence that the design of the steps was contrary to good building practice (even though not contrary to the building ordinance in force at the time they were constructed), as well as the fact that the steps were obviously unsafe, to find that the landlord had breached this duty.166 New South Wales Department of Housing v Hume,167 also involved injury following a fall down stairs that had no handrail. All members of the court agreed that the landlord owed a duty of care to take reasonable care to avoid foreseeable risk of injury, but was not required 160. Jones v Bartlett (2000) 205 CLR 166. 161. Ahluwalia v Robinson [2003] NSWCA 175 at [23] (Hodgson JA), cited with approval in Sakoua v Williams [2005] 64 NSWLR 588 at 590 [9] (Mason P). 162. Jones v Bartlett (2000) 205 CLR 166 at p 217 [178]. 163. Sakoua v Williams (2005) 64 NSWLR 588. 164. Sakoua v Williams (2005) 64 NSWLR 588 at 590. 165. Sakoua v Williams (2005) 64 NSWLR 588 at 593–5. 166. Sakoua v Williams (2005) 64 NSWLR 588 at 600–2. 167. New South Wales Department of Housing v Hume [2007] NSWCA 69.

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to make the premises as safe as reasonable care could make them.168 The members of the court disagreed, however, on whether on the facts this nevertheless required the landlord to make the stairs safer by erecting a handrail. McColl JA, with whom Basten JA agreed, held that, while the stairs could have been made safer, they were not inherently defective or dangerous.169 Beazley JA, however, held that the lack of rail posed a serious risk of injury and the erection of a handrail would have been appropriate.170 The more recent decision in Loose Fit Pty Ltd v Marshbaum171 rejected the notion that the question of landlord liability for negligence should be examined solely through the prism of known dangerous defects. Once again, the plaintiff ’s injury arose from falling down a flight of stairs. The steps were of varying height and lacked a handrail for part of the flight.The landlord had, about three years prior to the accident, carried out renovations to the stairs, but did not seek local authority approval and the state of the stairs following the renovations did not comply with relevant safety standards. The landlord subsequently gave a lease to Loose Fit Pty Ltd, under which Loose Fit was permitted to use the premises as a personal training studio and gymnasium. The plaintiff was a patron of Loose Fit’s business. Sackville AJA (with whom Campbell JA and Handley AJA agreed) said that ‘the questions that have to be addressed are whether there was a foreseeable risk of harm to the entrant and, if so, what (if anything) a reasonable person in the landlord’s position would have done in response to that risk’.172 His Honour concluded that a reasonable person in the landlord’s position ‘would have taken steps to ascertain that a handrail was required by safety standards and would have installed the handrail’.173 Since the presence of a handrail would have enabled the plaintiff to prevent her fall, the landlord was liable in negligence for the plaintiff ’s injury. Apart from refocussing attention on the overarching question of what a reasonable person in the landlord’s position would have done in the circumstances of the case, Loose Fit v  Marshbaum makes it clear that a landlord is potentially liable in negligence to the tenant’s customers and visitors, as well as to the tenant itself. In Loose Fit v Marshbaum, the plaintiff had sued landlord. Aldred v  Stelcad Pty Ltd174 involved a negligence action against the landlord brought by an employee of the tenant who was injured in the course of his employment. The employee was injured when he stepped out of his forklift into a depression in the concrete floor of the premises. He rolled on his ankle and fell on his back. Emmett JA (with whom Macfarlan JA and JC Campbell AJA agreed), while noting that the landlord’s duty arises ‘under the ordinary principles of the law of negligence’,175 said that what steps would be reasonable for the landlord to take ‘will be affected by the terms of the lease’.176 The tenant 168. New South Wales Department of Housing v Hume [2007] NSWCA 69, [88]. 169. New South Wales Department of Housing v Hume [2007] NSWCA 69, [93]. 170. New South Wales Department of Housing v Hume [2007] NSWCA 69, [8]–[9]. 171. Loose Fit Pty Ltd v Marshbaum [2011] NSWCA 372. 172. [2011] NSWCA 372 at [90]. 173. [2011] NSWCA 372 at [101]. 174. Aldred v Stelcad Pty Ltd [2015] NSWCA 201. 175. [2015] NSWCA 201 at [38]. 176. [2015] NSWCA 201 at [39].

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Leases and Tenancies

11.38

had obligations under the lease to inform the landlord of any damage or defects to the premises and to keep the premises in good repair. Emmett JA concluded that there was no basis for concluding that the landlord ought to have been aware of the deterioration of the floor and the possible risk of injury arising therefrom and, accordingly, even if a duty was owed by the landlord to the employee, the landlord had not breached that duty. It seems that the precise scope of the landlord’s duty of care can vary considerably depending on the circumstances of the case. Therefore, we can expect the question of a landlord’s liability in negligence to be regularly litigated in the future. 11.37  Waste Waste is an act or omission that causes permanent alteration to the premises.177 The sort of conduct that would constitute waste is mostly covered by either express or implied repairing covenants. An action for waste, by contrast, is an action in tort.The doctrine of waste is a recognition that the use of the land by someone who holds less than a freehold interest can be detrimental to the holders of future interests, including the holder of the reversion.178 Damages are assessed by reference to the damage caused to the landlord’s reversion.179 A distinction is drawn between voluntary waste and permissive waste, the former being the product of acts of commission and the latter being the product of omissions. All tenants are liable for voluntary waste.180 The weight of authority suggests that tenants for a term of years are also liable for permissive waste,181 while tenants holding short periodic tenancies, such as weekly or monthly tenancies, are liable only for voluntary waste.182 The position regarding tenancies from year to year (including tenancies at will under s 127 of the Conveyancing Act) is not clear.183

Express covenants Covenant to repair 11.38  Tenant’s duty to repair Where a lease contains an express covenant ‘to keep and deliver up premises in a satisfactory state of repair’, and the premises are in a state of disrepair at the commencement of the lease, the tenant is immediately in breach. As Lord Esher MR said in Proudfoot v Hart:184 … where the premises are not in repair when the tenant takes them, he must put them into repair in order to discharge his obligation under a contract to keep and deliver them up in repair.

177. For the various types of waste, see 3.50–3.54. 178. For a more detailed discussion of how this may be so, see A Moore, S Grattan and L Griggs, Australian Real Property Law, 6th ed, Lawbook Co, Sydney, 2016 at 621–22. 179. Whitham v Kershaw (1886) 16 QBD 613. 180. Imperial Acts Application Act 1969 (NSW) s 32(1), (3). 181. Warren v Keen [1954] 1 QB 15. 182. Regis Property Co Ltd v Dudley [1959] AC 370. 183. Moore, Grattan and Griggs, note 179 above, at 694. 184. Proudfoot v Hart (1890) 25 QBD 42 at 50.

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There are other serious consequences of this covenant; for example, if the premises are destroyed by fire, lightning or earthquake, the tenant has to rebuild the premises.185 Also, as Bailey v J Paynter (Mayfield) Pty Ltd186 suggests, this rule applies even where the damage to the premises is the result of a former tenant’s breach of the repairing covenant, so that the incoming tenant will be liable under his or her repairing covenant. The obligation to repair is subject to limits. The tenant is not under an obligation to renew or improve the premises.187 Furthermore, a repair covenant does not impose a duty to repair an ‘inherent defect’ in the premises. The tenant’s duty is ‘only to maintain the structure subject to the defect so far as this can be effected by repair’.188 It has been said that an inherent defect is one which is an: … original or supervening defect of an abnormal kind, such as would not be found in a properly built structure, would not be produced in such a structure by the degenerative processes of user or decay, and cannot be remedied except by the replacement or remodelling of the structure or some substantial part of it.189

In the English decision of Ravenseft Properties Ltd v Davstone (Holdings) Ltd,190 by contrast, Forbes J concluded that the notion that the tenant had a ‘complete defence’ in respect of an ‘inherent defect’ was not supported by the previous case law.191 His Honour suggested that the question was one of degree, in particular, whether the tenant was being asked to repair the premises or to give back to the landlord ‘a wholly different thing from that which he demised’.192 In Ravenseft, the landlord was able to require the tenant to replace external stone cladding on a building with expansion joints that were not present in the original structure. Whether there is a replacement of a ‘wholly different thing from that which he demised’ is one of degree. The cost of inserting the expansion joints was £5000 out of a total repair bill of £55,000. The building was worth approximately £3 million. Accordingly, the expansion joints could be regarded as being ‘repair’. It is far from clear whether this approach should be followed in Australia, as it would appear to be inconsistent with the High Court’s reasoning in Graham v The Markets Hotel Pty Ltd.193 In that case, it was ultimately concluded that the leased hotel’s lavatory facilities, in spite of inherent problems with their ventilation and safety of access, were not an inherent defect because there was nothing about their physical structure that made them liable to fall into a state of disrepair.194 185. Matthey v Curling [1922] 2 AC 180. However, the emerging contractualisation of leases and the consequent applicability of the frustration doctrine may render this principle irrelevant. See 11.77. 186. Bailey v J Paynter (Mayfield) Pty Ltd [1966] 1 NSWR 596. 187. Graham v The Markets Hotel Pty Ltd (1943) 67 CLR 567. 188. Graham v The Markets Hotel Pty Ltd (1943) 67 CLR 567 at 580 (Latham CJ). 189. Graham v The Markets Hotel Pty Ltd (1942) 43 SR (NSW) 98 at 103 per Jordan CJ. 190. Ravenseft Properties Ltd v Davstone (Holdings) Ltd [1978] EWHC QB 1. 191. [1978] EWHC QB 1 at [24]. 192. [1978] EWHC QB 1 at [25]. 193. Graham v  The Markets Hotel Pty Ltd (1943) 67 CLR 567. The English position has been followed in New Zealand. See Weatherhead v Deka New Zealand Ltd (No 2) [1999] 1 NZLR 453. 194. Graham v The Markets Hotel Pty Ltd (1943) 67 CLR 567 at 581 (Latham CJ), 586 (Starke J), 596-597 (Williams J).

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The most common express limitation on the duty to repair is damage resulting from ‘fair wear and tear’. As noted above, the meaning of this term has been described as ‘reasonable use … by the tenant and the ordinary operation of natural forces’.195 In the absence of such provision, the tenant is under a duty to make good damage to the premises that would have come under the rubric of fair wear and tear. 11.39  Landlord’s duty to repair  Where the landlord covenants to repair, his or her liability depends on whether the tenant has given notice of the state of disrepair. Where the lessee  and his wife were injured because a ceiling collapsed on them, the landlord was held not liable because he had no notice from the tenant that the premises were in disrepair.196 Moreover, no distinction is drawn between latent and patent defects. In McGreal v Wake,197 the court decided that the landlord is liable if he or she fails to repair within a reasonable time after receiving notice, even if notice is received from someone other than the tenant; for example, a local authority.

Covenant against assignment or subletting 11.40  An assignment is a transfer of the balance of the term of the lease by the tenant. It is possible to assign the lease in respect of part of the demised premises.198 A sublease is the grant by the tenant to a sub-tenant of a term less than that possessed by the tenant. A purported sublease that in fact grants a term at least as long as the balance of the lease will be an assignment. A tenant has an inherent right to assign the lease or to sublet. The lease gave the tenant a property right and the tenant ought to be able to deal with that right to the extent that there is no express restriction upon doing so.199 This right is an incident even of a weekly periodic tenancy,200 though not of a tenancy at will or tenancy at sufferance.201 Accordingly, if the landlord wishes to restrict this right, a covenant to that effect must be included in the lease. Covenants against assignment or subletting are strictly construed against the landlord. A covenant against assignment does not prohibit a sublease, although it is less clear whether a covenant against subletting prohibits an assignment.202 Furthermore, covenants against assignment and subletting are generally construed as applying only to transactions at  law, so transactions that create equitable interests only, such as agreements to assign 195. Haskell v Marlow [1928] 2 KB 45 at 58 per Talbot J. 196. O’Brien v Robinson [1973] 1 All ER 583. See also 7-Eleven Stores Pty Ltd v United Petroleum Pty Ltd [2010] QSC 469. 197. McGreal v Wake (1984) 269 EG 1254. See, generally, A Stanfield, ‘A Landlord’s Liability for Repair: When Does It Arise and How Far Does It Extend?’ (1995) 3 Australian Property Law journal 209. 198. G J Coles & Co Pty Ltd v Commissioner of Taxation (1975) 49 ALJR 188. 199. Keeves v Dean [1924] 1 KB 685. 200. Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR (NSW) 47. 201. Pinhorn v Souster (1853) 8 Exch 763. Brendan Edgeworth has suggested that assignment and subletting are possible in respect of a tenancy at  will that arises under Conveyancing Act  1919 (NSW) s  127. See B Edgeworth, Butt’s Land Law, 7th ed, Law Book Co, Sydney, 2017, p 390 [7.1020]. 202. Marks v  Warren [1979] 1 All ER 29. Edgeworth states, citing Marks v  Warren, that a covenant ‘not to underlet or part with possession’ would prohibit an assignment that involves parting with possession. See Edgeworth, note 202 above, p 392 [7.1070].

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and declarations of trust, will not amount to breaches of such covenants,203 at  least in the absence of clear words that include assignments in equity within the ambit of the prohibition. This leaves open the question of whether, in the case of a lease of three years or more of Torrens title land, a covenant against assignment would be breached by an unregistered assignment. Covenants against assigning or subletting fall into two categories: (i) absolute covenants; and (ii) qualified covenants. 11.41  Absolute covenant  An absolute covenant against assignment or subletting prohibits any dealing with the lease by the tenant.The courts have developed a practice of construing such covenants strictly against the landlord.204 Thus, a covenant not to assign the lease has been held not to restrict the tenant’s right to sublet;205 a covenant against subletting is not breached if the tenant sublets part only of the premises;206 and a covenant against assigning or subletting will not be breached where the tenant merely parts with possession pursuant to the grant of a revocable licence.207 Therefore, allowing an employee, such as a caretaker, to reside in part of the leased premises will not necessarily be a breach of a covenant not to assign or sublet, although it will be a breach if the employee is, in substance, a tenant.208 These covenants do not render assignments or subleases in breach void; they will remain valid until the landlord forfeits the lease.209 Acceptance of rent from the assignee or sublessee will constitute implied consent to an assignment or sublease in breach.210 11.42  Qualified covenant  A qualified covenant against assignment or subletting seeks to limit, rather than prohibit, the tenant’s rights, such as a covenant of the form that ‘the tenant may only assign or sublet with the prior written consent of the landlord’. If the landlord’s consent is required, s 133B of the Conveyancing Act provides that it cannot be withheld unreasonably. Parties cannot contract out of this requirement, though it is possible to limit its effect by an agreement that, as a condition of seeking the landlord’s consent, the tenant offer a surrender of the lease to the landlord first.211 In the Queensland case of J A McBeath Nominees Pty Ltd v Jenkins Development Corp Pty Ltd,212 two considerations were said to be relevant: the effect that the transactions might have on future lettings of the property; and whether a reasonable person in the landlord’s position would anticipate an adverse impact from the transactions on his or her property interests.

203. Macdonald v  Robins [1954] HCA 5 [4] (Dixon CJ), Gentle v  Faulkner [1900] 2 QB 267. See  generally Edgeworth, note 225, p 392 [7.1070]. 204. Field v Barkworth [1986] 1 WLR 137. 205. Sweet & Maxwell v Universal News Service Ltd [1964] 2 QB 699. 206. Cook v Shoesmith [1951] 1 KB 752. 207. Stening v Abrahams [1931] 1 Ch 470. 208. Grepo v Jam-Cal Bundaberg Pty Ltd [2015] QCA 131. 209. Massart v Blight (1951) 82 CLR 423. 210. Hyde v Pimley [1952] 2 QB 506. 211. Creer v P & O Lines of Australia (1971) 125 CLR 84; JB Northridge Pty Ltd v Winner’s Circle Group Pty Ltd [2014] NSWSC 950. 212. J A McBeath Nominees Pty Ltd v Jenkins Development Corp Pty Ltd [1992] 2 Qd R 121 at 130 per Kelly SPJ.

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Leases and Tenancies

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Withholding consent has been held to be reasonable where: a proposed sublease would necessarily involve breach of the user covenant in the headlease;213 the proposed assignee’s references were unsatisfactory;214 the landlord had serious concerns about the proposed assignee’s financial ability to meet the obligations imposed by the lease;215 and the assignment was conditional on the assignee agreeing to additional onerous conditions that significantly restricted its ability to use the property.216 Landlords have been found to have unreasonably withheld consent where the proposed use of an office building, though lawful, was likely to be unattractive to investors;217 where the tenant was a respectable and responsible person who had purchased the tenant’s business;218 and where there was only a possibility that the assignee might breach the user covenant.219 No fine or sum of money in the nature of a fine must be payable as a condition for granting consent.220

Enforceability of Covenants Privity of contract 11.43  Covenants can be enforced by the original parties to the lease as a matter of privity of contract. Each covenant is a term of a contract that, if breached, gives the innocent party a cause of action in breach of contract. Importantly, the right to sue in a contract exists for the duration of the lease: so, for example, a tenant who takes a five-year lease is bound to his or her covenants for five years. The right to sue on a lease covenant survives the other party’s assignment, unless liability is expressly limited in the contract, so that the original covenantee could sue the original covenantor for breach of an express covenant, even where the breach was committed by an assignee of the covenantor.221 Privity of contract continues to exist as between the original parties to the lease. This principle applies to assignments of the lease and assignments of the reversion.222 Therefore, parties cannot escape their contractual obligations by assigning their interests. Equally, contractual rights are of no assistance to, or against, assignees of the covenantee and covenantor, because they are not parties to the same contract. However, while tenants remain bound by the

213. Barina Properties Pty Ltd v Bernard Hastie (Australia) Pty Ltd [1979] 1 NSWLR 480. 214. Shanly v Ward (1913) 29 TLR 714. 215. British Bakeries (Midlands) v Michael Testler & Co Ltd [1986] 1 EGLR 64. 216. Boss v Hamilton Island Enterprises Ltd [2009] QCA 229. 217. International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] 1 Ch 513. 218. McKenzie v McAllum [1956] VLR 208. 219. Killick v Second Covent Garden Property Co Ltd [1973] 1 WLR 658; [1973] 2 All ER 337. 220. Conveyancing Act 1919 (NSW) s 132. 221. The covenantee is the party who receives the benefit of the contractual obligation and the covenantor is the party who is bound to perform the contractual obligation. For example, in respect of the covenant for the payment of rent, the landlord is the covenantee and the tenant is the covenantor. In respect of the covenant for quiet enjoyment, the tenant is the covenantee and the landlord is the covenantor. 222. Moule v Garrett (1870) LR 5 Ex 132 (tenant liable where assignee breached covenant to repair); Stuart v Joy [1904] 1 KB 362 (landlord liable where assignee of reversion breached repair covenant).

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express covenants in the lease following assignment, they are discharged from liability under implied covenants.223

Privity of estate 11.44  If a covenant is to be enforceable against the assignee of the covenantor, it must be on the basis of other than contract. That principle is ‘privity of estate’. Where there is privity of estate between the parties, and the covenant ‘touches and concerns’ the land, it can be enforceable against the assignee. Privity of estate exists wherever there is a relationship of landlord and tenant between the parties.224 Accordingly, on the grant of a lease, the landlord and tenant are in a relationship of both privity of contract and privity of estate. Where one of the original parties to the lease assigns its rights to another, there continues to be privity of contract between the original parties, but there is no longer privity of estate. There is privity of estate between the assignee (either of the lease or the reversion) and the remaining original party (whether landlord or tenant). The possible interactions of privity of contract and privity of estate are illustrated by Figure 11.2. Figure 11.2:  Privity of contract and privity of estate 1

L (fee simple)

T (lease)

25 years 3

2

R (assignee of reversion)

A (assignee)

4

ST (subtenant)

10 years 5

AST (assignee of subtenant) Time Key Privity of contract Privity of estate 1

Order of transactions

223. See Ahern v LA Wilkinson (Northern) Ltd [1929] St R Q 66, in which the ‘express’ covenants by which the tenant continued to be bound included the standard form covenants under the Real Property Act 1861 (Qld) that had been incorporated into the lease by reference. 224. Milmo v Carreras [1946] KB 306.

586



Leases and Tenancies

11.45

In this example, various transactions take place in order of the numbers given to them. Thus, the grant of the lease is 1, the assignment of the lease is 2, the assignment of the reversion is 3, and so on. After assignment of the lease, there continues to be privity of contract between L and T, but not privity of estate. L and A are now in a relationship of privity of estate. The arrows in the figure represent privity of contract; the grey lines represent privity of estate. Where there is neither an arrow or a grey line connecting two parties, each of those parties will be unable to sue the other on the covenants in the lease. If, for example, ST breaches a covenant to repair in the sublease, A can sue him or her for doing so, but nobody else can. Even where the breach involves damage to the premises that T has covenanted not to cause, ST cannot be sued by L. In this instance, L’s remedies lie against either T in contract (because T either has promised expressly or is deemed by s 70A of the Conveyancing Act 1919 (NSW) to have covenanted ‘on behalf of ’ his or her assignees and sublessees225), or A as T’s assignee (as there is privity of estate between L and A). Where there is neither privity of contract nor privity of estate between two parties, as a general rule, neither party can sue or be sued by the other. There are two exceptions to this general proposition. First, the benefit of any contract may be freely assigned as a chose in action.226 An assignee of the benefit of the covenant will be able to sue the person who has the burden of the covenant. Second, restrictive covenants are enforceable where there is neither privity of contract nor of estate.227

Covenants touching and concerning the land 11.45  Only covenants that ‘touch and concern’ the land will, in the absence of agreement, both bind and be enforceable by subsequent holders of the leasehold interest and of the reversion.These covenants are said to ‘run’ with the land. A covenant will touch and concern the land if it ‘affects the landlord qua landlord and tenant qua tenant’.228 The general sense of this somewhat obscure and tautologous formula is that the covenant must work to define the parties’ obligations in relation to the demised premises. In other words, it must not be personal to the parties or relate to other premises. In P & A Swift Investments v Combined English Stores Group plc,229 it was said that three conditions exist for a covenant to touch and concern the land: (i) that the covenant benefits the lessee or reversioner for the time being; (ii) that it affects the nature, quality, user or value of the land; and (iii) that it is not of a personal nature. In that case, it was also observed that 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. The High  Court of Australia,

225. Regarding the effect of Conveyancing Act 1919 s 70A, see 11.48. 226. For the formalities, see s 12 of the Conveyancing Act 1919 (NSW). 227. The principles governing restrictive covenants will be dealt with in detail in Chapter 13. 228. Breams Property Investment Co Ltd v Stroulger [1948] 2 KB 1 at 7 per Scott LJ. 229. P & A Swift Investments v  Combined English Stores Group plc [1989] AC 632 at  642 per Lord Oliver of Aylmerton.

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in Gumland Property Holdings Ltd v Duffy Brothers Fruit Market (Campbelltown) Pty Ltd,230 approved the propositions stated in P & A Swift Investments. A non-exhaustive list of covenants that do and do not touch and concern land is set out in Table 11.1.231 Table 11.1:  Covenants touching and concerning the land Covenants that touch and concern the land

Covenants that do not touch sand concern the land

Tenant

To pay rent232 To repair234233 To insure against fire236234 To use as a dwelling-house237235 Not to assign without consent238236

To pay an annual sum to a third person233237 To repair chattels on the land235238

Landlord

To renew the lease239 Not to build on adjoining land241240 To supply premises with water243241 Not to determine a periodic tenancy during the first 3 years244242

To sell the reversion to the tenant240243 To compensate tenant for non-renewal242244

Assignment of the lease Benefit of covenants 11.46 Since Spencer’s Case,245 it has been clear that the assignee of the tenant has the benefit of covenants that touch and concern the land. The tenant can sue the landlord for breaches because privity of estate exists between them. So, for example, if the landlord

230. Gumland Property Holdings Ltd v Duffy Brothers Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237 at 264–65. 231. For a more complete list and a critical assessment of the requirement, see K Gray and S Gray, Elements of Land Law, 4th ed, Oxford University Press, Oxford, 2005, pp 1565–71. 232. Parker v Webb (1693) 3 Salk 5; 91 ER 656. 233. Mayho v Buckhurst (1617) Cro Jac 438. 234. Williams v Earle (1868) LR3QB 739. 235. Williams v Earle (1868) LR3QB 739. 236. Vernon v Smith (1821) 5 B & Ald 1; 106 ER 1094. 237. Wilkinson v Rogers (1864) 2 De GJ & S 62; 46 ER 298. 238. Cohen v Popular Restaurants Ltd [1917] 1 KB 480. 239. Weg Motors Ltd v Hales [1961] Ch 176. 240. Woodall v Clifton [1905] 2 Ch 257. 241. Ricketts v Enfield Churchwardens [1909] 1 Ch 544. 242. Re Hunter’s Lease [1942] Ch 124. 243. Jourdain v Wilson [1821] 4 B & Ald 266. 244. Breams Property Investment Co Ltd v Stroulger [1948] 2 KB 1. 245. Spencer’s Case (1583) 5 Co Rep 16a; 77 ER 72.

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breaches a covenant not to build on adjoining land, the assignee can sue the landlord directly.

Burden of covenants 11.47  Spencer’s Case also recognised that a landlord can sue an assignee of the tenant where the covenant touches and concerns the land, as there is privity of estate between them. The assignee will be liable for any breaches he or she commits, such as default in payment of rent, but not for breaches committed by later assignees.246 11.48  The landlord may also sue the original tenant where the tenant’s assignee breaches a covenant in the lease, because the tenant who takes a lease for a term agrees to be bound for the duration of the term. Even if there is no express agreement, s  70A(1) of the Conveyancing Act deems a covenant: … unless a contrary intention is expressed … to be made by the covenantor on behalf of himself or herself and the covenantor’s successors in title, and the persons deriving title under the covenantor or the covenantor’s successors in title. …

If the landlord elects to sue the original tenant, the tenant has an implied right of indemnity against the assignee who committed the breach.247 Where a subtenant of the assignee has breached a covenant that would put the assignee in breach — if, for example, ST in Figure 11.2 (at 11.45) above were to breach a covenant to repair in the sublease mirroring a covenant in the headlease — T would have a right of indemnity against A but not ST, as ST is under no direct obligation and, therefore, has no liability to T.248

Situations where there is no privity of estate 11.49  Squatter barring tenant’s title  Tichborne v Weir249 held that a squatter who bars the tenant’s title by a period of adverse possession does not stand in a relationship of privity of estate with the landlord. Accordingly, an adverse possessor cannot be subject to the burden of covenants in the lease, nor can he or she enforce them. 11.50  Informal lease, or informal assignment of legal lease  Privity of estate is a common law principle.250 It follows that, if the assignee requires the assistance of equity to establish his or her title (as where the original lease is equitable, or the assignment of a legal lease is enforceable only in equity),251 there is no privity of estate between them, and the covenants in the lease will not run. In this case neither party can sue on the lease. Of course, if the assignee enters and pays rent, an implied tenancy at common law may arise,252 but this will be a separate source of rights. If not, the landlord’s only remedy will 246. Paul v Nurse (1828) 8 B & C 486. 247. Moule v Garrett (1872) LR 7 Ex 101. 248. Bonner v Tottenham & Edmonton Permanent Investment BS [1899] 1 QB 161. 249. Tichborne v Weir (1892) 67 LT 735; [1891–94] All ER Rep 449. 250. See Old Papa’s Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11 at [41]. 251. Cox v Bishop (1857) 8 De GM & G 815. For the creation of equitable leases, see 11.7. For the creation and assignment of equitable interests generally, see 6.8–6.24. 252. See 11.12–11.14.

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be to sue the original lessee in contract. However, in Boyer v Warbey,253 the English Court of Appeal held that, since the Judicature Act 1873 (UK) and the fusion of law and equity, covenants would not only run in respect of legal leases and legal assignments, but also in the case of equitable leases and equitable assignments. It is not clear whether this is the law in Australia. In Chronopoulos v Caltex Oil (Australia) Pty Ltd,254 Fox J doubted that it was, so that a landlord could not enforce a covenant (a rent review clause) against an equitable assignee of a lease.255

Assignment of the reversion Benefit of covenants 11.51  The rule in Spencer’s Case did not apply to assignments of the reversion. But by statute (now ss  117 and 118 of the Conveyancing Act), parallel rights and obligations arise on transfer of the landlord’s interest. Section 116 extends these provisions to Torrens title land. By s  117(1), ‘[r]ent reserved by a lease and the benefit of every covenant or provision therein contained having reference to the subject-matter [of the lease]’ will run with an assignment of the reversion. ‘Therein contained’ has been held to include implied covenants.256 ‘Having reference to the subject-matter of the lease’ means touching and concerning the land.257 One question that arises with respect to Torrens title land is whether s 51 of the Real Property Act  1900 (NSW) has the effect of overriding the requirement in s  117 of the Conveyancing Act that the covenant touch and concern the land in respect of an assignment of a reversion of Torrens land. On the one hand, s 117 specifically requires that the covenants have ‘reference to the subject matter of the lease’. In other words, it requires that they touch and concern the land. This was confirmed by the High Court in Gumland Property Holdings Ltd v Duffy Brothers Fruit Market (Campbelltown) Pty Ltd.258 However, in the context of assignment of the lessee’s interest, it has been held that s 51 of the Real Property Act removes the requirement in Spencer’s Case that the covenant touch and concern the land.259 This is a result of the specific wording of s  51. Under that section, on transfer the transferee acquires ‘all rights, powers and privileges thereto belonging or appertaining, shall pass to the transferee …’.Transfer is defined as ‘the passing of any estate or interest in land under this Act whether for valuable consideration or

253. Boyer v Warbey [1953] 1 QB 234. 254. Chronopoulos v Caltex Oil (Australia) Pty Ltd (1982) 45 ALR 481. 255. While not directly at  issue, the decision in Chronopoulos v  Caltex Oil (Australia) Pty Ltd would seem supported by the general maintenance of the distinction between law and equity in the context of assignments in Karacominakis v Big Country Developments Pty Ltd (2000) 10 BPR 18,235. See B Edgeworth, ‘The Rights and Liabilities of Assignees of Leases, Reversions and Mortgages under the Real Property Acts: Recent Developments’ (2009) 21 Bond Law Review 26 at 37. 256. Cole v Kelly [1920] 2 KB 106. 257. Davis v Town Properties Investment Corp Ltd [1903] 1 Ch 797; Gumland Property Holdings Ltd v Duffy Brothers Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237 at [67]. 258. Gumland Property Holdings Ltd v Duffy Brothers Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237. 259. See 11.54.

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otherwise’, so includes the assignment of a lease.260 However, s 116 of the Conveyancing Act, a later Act than the Real Property Act, states specifically that it applies to Torrens land ‘notwithstanding anything in that Act contained’ and may, therefore, potentially be interpreted as restricting the operation of s 51 as regards its effect on the assignment of the reversion.261

Burden of covenants 11.52  By s 118 of the Conveyancing Act, the burden of any covenant ‘with reference to the subject-matter of the lease’ (meaning ‘touching and concerning the land’)262 is annexed to and runs with the reversion. 11.53  As noted above, privity of estate is a common law concept. Therefore, where the leasehold interest is equitable, or there has been an equitable assignment of a legal lease, there can be no privity of estate between the parties, so the covenants cannot run: see 11.50. However, these problems do not arise in the case of an assignment of the reversion because the rights of the assignees are statutory and do not rely on privity of estate. Thus, ss 117 and 118 apply not only to legal but also to equitable leases.263 It has been held that these provisions do not extend to merely oral leases.264 On the other hand, they do apply to equitable assignments of the reversion.265 By s 119, where only part of the reversion has been assigned, the assignee can enforce the covenants in relation to that portion of the estate. 11.54  There is an important exception to the general requirement that covenants must touch and concern the land to be capable of enforcement against assignees of the lease. By s  51 of the Real Property Act, all transferees of an estate or interest in land under the Torrens system are subject to the same liabilities as the transferor on registration of the ‘transfer’. ‘Transfer’ includes the assignment of a lease.266 After the registration of a subsequent assignment, the earlier assignee ceases to be liable for a breach of the lease. By s 52, the assignee has the right to sue on an instrument by virtue of the registration of the transfer. The effect of these provisions is that if the land is Torrens land, this right is not limited to covenants that touch and concern the land.267

Can assignors or assignees sue or be sued for past breaches? 11.55  We have already seen how assignors of both lease and reversion can be sued for future breaches; that is, breaches committed by their respective assignees.268 Difficult 260. Real Property Act 1900 (NSW) s 3(1)(a). 261. B Edgeworth, Butt’s Land Law, 7th ed, Lawbook Co, Sydney, 2017, 421 [7.1430]. 262. Re Hunter’s Lease [1942] Ch 124. 263. Rickett v Green [1910] 1 KB 253. 264. Ex parte Anderson; Re Green (1946) 46 SR (NSW) 389. 265. Dalegrove Pty Ltd v Isles Parking Station Pty Ltd (1988) 12 NSWLR 546. 266. See s 3(1)(a) of the Real Property Act; Karacominakis v Big Country Developments Pty Ltd (2000) 10 BPR 18,235. 267. See also Edgeworth, ‘The Rights and Liabilities of Assignees of Leases, Reversions and Mortgages under the Real Property Acts: Recent Developments’, note 244 above, pp 35–36. 268. See 11.43.

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questions arise in relation to another aspect of liability for the acts of others — the liability of assignees of the lease or reversion for breaches committed by their respective assignors. A related question is who has the right to sue in respect of this type of breach.The general position is that, since assignees are not in privity of contract with anyone other than their assignor, an assignee is liable only for breaches that occur while the estate is vested in him or her. Hence, there is generally no liability for breaches which occurred prior to assignment. The possible exception is a continuing breach (eg, breach of a repair covenant where the repair has not been effected). Four different situations are possible: 1. Tenant breaches, then assigns. If the breaches by the tenant are continuing, such as breaches of a repair covenant, the assignee will be liable because the assignee will be obliged to effect the repair.269 However, if the breaches are complete at the time of the assignment, the assignor will remain liable and the assignee will escape liability.270 If the assignee were then to assign, the assignee would continue to be liable for breaches committed while he or she held the lease, but not for future breaches.271 Of course, the landlord can also sue the tenant on contractual principles for any breaches that occur after assignment of the lease.272 2. Tenant breaches, then landlord assigns. In this case, the reversioner, and not the former landlord, can sue the tenant.273 So, if the landlord was entitled to sue for rent arrears and re-enter at the time of assignment, these rights will pass to the assignee. The right to recover rent is within the scope of s 117 of the Conveyancing Act.274 Of course, the rights of the parties may be varied by agreement so as to allow the assignor to sue.275 3. Landlord breaches, then assigns. By s 118 of the Conveyancing Act, the burden of any landlord’s covenant ‘with reference to the subject-matter of the lease’ (meaning ‘touching and concerning the land’)276 is annexed to, and runs with, the reversion. However, in Duncliffe v Caerfelin Properties Ltd,277 it was held that this provision did not make the assignee of the reversion liable merely because there is an accrued cause of action. In other words, assignees are not liable for breaches that were complete before assignment. The assignee will, on the other hand, be liable in respect of continuing breaches, such as a breach of a repair covenant. 269. Granada Theatres Ltd v Freehold Investment (Leytonstone) Ltd [1959] Ch 592. 270. Grescot v Green (1700) 1 Salk 199. 271. Paul v Nurse (1828) 8 B & C 486. 272. Moule v Garrett (1872) LR 7 Ex 101. 273. London and County (A & D) Ltd v Wilfred Sportsman Ltd [1970] 3 WLR 418; Ashmore Developments Pty Ltd v Eaton (1992) Qd R 1. 274. However, in Measures v McFadyen (1910) 11 CLR 723, the High Court held that leases of Torrens title land were governed by ss 51 and 52 of the Real Property Act, and that these provisions did not confer on the assignee the right to sue for pre-assignment breaches. For a persuasive criticism of this decision, see A Lang, Leases and Tenancies in New South Wales, Law Book Co, Sydney, 1976, pp 195–96. Compare with Ashmore Developments Pty Ltd v Eaton (1992) Qd R 1. 275. Dalegrove Pty Ltd v Isles Parking Station Pty Ltd (1988) 12 NSWLR 546 at 555 per Bryson J. 276. Re Hunter’s Lease [1942] Ch 124. 277. Duncliffe v Caerfelin Properties Ltd [1989] 2 EGLR 38.

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4. Landlord breaches, then tenant assigns. The assignment does not affect the tenant’s right to sue for breaches that are complete, such as damage caused by breach of a covenant to repair.278 But it will be the assignee, not the tenant, who will be able to sue for continuing breaches, such as a landlord’s liability where the assignee receives the premises in a state of disrepair.

Termination of Leases Termination by notice 11.56  We have already examined the types of leases that may be terminated by notice. Tenancies at will (both at common law and under s 127 of the Conveyancing Act 1919 (NSW)), tenancies at sufferance and periodic tenancies can all be terminated by notice.279

Effluxion of time 11.57  A fixed-term tenancy terminates automatically at  the end of the period by effluxion of time.

Breach of Lease Covenants 11.58  A lease granted for a term might be capable of termination prior to the end of the term where there has been a breach of a covenant in the lease. To this end, the lease document might confer a right of forfeiture on the landlord. Alternatively, such a right might be implied in the lease by operation of statute law. In New South Wales, a right of forfeiture is implied in leases by s 85(1)(d) of the Conveyancing Act 1919 (NSW). In addition to the right of forfeiture, the rights of termination that exist under the general law of contract apply to leases. Accordingly, either the landlord or the tenant may terminate the lease where there has been a repudiation or fundamental breach of the lease contract. In relation to a breach by a tenant, it may be possible for the landlord to exercise either the right of forfeiture or the right to terminate under general contract law. The rights under general contract law will be discussed first.

Termination for Repudiation or Fundamental Breach 11.59 In Shevill v Builders Licensing Board and Progressive Mailing House Pty Ltd v Tabali Pty Ltd,280 the High  Court recognised that a lease could be terminated under general contract law where the tenant committed a breach that amounted to a repudiation or a fundamental breach of the lease contract, with the result that contractual remedies would be available to the landlord. In consequence, the landlord would be entitled to ‘loss of bargain’ damages; that is, damages for future losses occasioned by the termination of the contractual relationship. Loss of bargain damages will generally comprise the rent that the 278. City and Metropolitan Properties Ltd v Greycroft Ltd [1987] 1 WLR 1085. 279. For the relevant notice periods, see 11.10–11.16. 280. Shevill v Builders Licensing Board (1989) 149 CLR 629; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17.

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landlord would have received, as well as outgoings, from the date of termination until the end of the lease (subject to the duty to mitigate),281 discounted for present value to reflect the fact that the landlord will now receive those payments at an earlier time.282 Prior to these High Court decisions, forfeiture being the only means for terminating a lease, such damages were not possible: When a lease is determined prior to the expiry of the term, the covenant to pay rent for the unexpired portion of the term ceases to bind the lessee.283

This is because forfeiture brings to an end all the covenants of the lease and, therefore, all potential liability under them. As a lease was primarily seen as an estate, contractual damages, such as loss of bargain damages, were not available. 11.60  It is not easy to prove either fundamental breach or repudiation of a lease.A breach of an essential term will be sufficient to trigger the right to terminate. Alternatively, the landlord must show that the tenant intends no longer to be bound by the lease or intends to perform it only in a manner substantially inconsistent with the tenant’s obligations under the lease.284 A repudiation may consist of past conduct — where, for instance, a tenant has committed a single serious breach, such as abandonment of the premises,285 or numerous breaches of the lease, the cumulative effect of which is a fundamental breach. The breach may also be prospective or anticipatory, as where the tenant shows an intention not to meet obligations in the future. Failure to pay rent will not of itself amount to repudiation,286 although a tenant’s persistent default in payment of rent could point to repudiation,287 as could the failure to pay rent in combination with breaches of other covenants.288 The decisions in Shevill and Progressive Mailing House greatly expanded the tenant’s right to terminate the lease. Previously, the tenant’s only common law right to terminate was to ‘throw up’ the lease of a furnished dwelling-house where the premises were unfit for habitation at the commencement of the term.289 It is now clear that the tenant can terminate the lease prior to the expiry of the term where the landlord’s breach amounts to a repudiation. It is possible that the circumstances where the tenant can terminate for repudiation may be more circumscribed than those for landlords — for the reason that, once the landlord has handed over possession of the premises, he or she has executed the bulk of his or her obligations under the lease.290 Nonetheless, it is possible to find examples of where tenants have been able to terminate for repudiation where the landlord has committed a repudiatory breach. In Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty 281. See 11.61. 282. B Edgeworth, Butt’s Land Law, 7th ed, Lawbook Co, Sydney, 2017, p 435 [7.1620]. 283. Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 39 per Brennan J. 284. Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 33 per Mason J. 285. Leitz Leeholme Stud Pty Ltd v Robinson [1977] 2 NSWLR 544. 286. Shevill v Builders’ Licensing Board (1982) 149 CLR 620. 287. See, for example, Batiste v Lenin (2002) 11 BPR 20,403 at 20,414 and 20,417. 288. See, for example, Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17. 289. Smith v Marrable (1843) 11 M&W 5 at 7 per Parke B. 290. Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 43 per Brennan J.

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Ltd,291 the landlord had agreed to grant a registered lease to the tenant but failed to register the lease, despite numerous requests to do so by the tenant.The High Court concluded that this was a repudiatory breach by the landlord. Additionally, in Belperio v Linehaul Holdings Pty Ltd,292 the landlord was held to have repudiated the lease in wrongfully re-entering the premises after mistakenly alleging that the tenant had repudiated the lease. A lease may stipulate that particular clauses are essential or fundamental terms.293 It has been generally accepted that if the parties stipulate a term to be essential, the parties’ views are to be respected.294 Some doubt, however, was cast on this recently by the High Court of  Australia in Gumland Property Holdings v Duffy Brothers Fruit Market (Campbelltown) Pty Ltd.295 In that case, the court left open the question of whether or not the mere description of a covenant in a lease as essential, however trivial the subject matter may be, can make the covenant essential.296 If the clause is effective in stating that a covenant is to be considered essential, or that a breach of the clause will amount to a fundamental breach, loss of bargain damages will be available, subject to the right to mitigate.297 11.61  Where a landlord sues for loss of bargain damages based on fundamental breach or repudiation, he or she is under a duty to mitigate by attempting to obtain a new tenant. It is the duty to mitigate that stops double recovery. By terminating the landlord obtains possession, but can only also obtain loss of bargain damages if they have been unsuccessful in re-letting.298 If the landlord fails to mitigate, the damages will be reduced accordingly.

Forfeiture 11.62  The remedy of forfeiture is available to the landlord where either the lease expressly reserves to the landlord a right to forfeit the lease or there is an implied statutory right of forfeiture.299 There are a number of statutory requirements governing the exercise of the right.These differ, depending on whether the tenant has breached a covenant to pay rent or another type of covenant. 11.63  Breach of covenant to pay rent  Where the tenant is in arrears of rent, the landlord may re-enter and forfeit immediately if the lease so provides. If there is no express right of

291. Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623. 292. Belperio v Linehaul Holdings Pty Ltd (2004) 89 SASR 185. 293. Shevill v Builders Licensing Board (1989) 149 CLR 629. Such clauses are sometimes referred to as anti-Shevill clauses. 294. For recent cases, see, for example, Macquarie International Health Clinic v  Sydney South West Area Health Service [2010] NSWCA 268 at [296] per Hodgson JA; Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 29 at [232] per Barrett J. 295 Gumland Property Holdings Ltd v Duffy Brothers Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237. 296. Gumland Property Holdings Ltd v Duffy Brothers Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237 at [47]. 297. Gumland Property Holdings Ltd v Duffy Brothers Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237 at [58]. 298. Progressive Mailing House Pty Ltd v  Tabali Pty Ltd (1985) 157 CLR 17; Gumland Property Holdings Ltd v Duffy Brothers Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237 at [56]. 299. Conveyancing Act 1919 (NSW) s 85(1)(d).

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forfeiture, the landlord may forfeit if the rent is in arrears for at least one month without making a formal demand for the rent (as had been required at common law).300 11.64  Breach of a non-rental covenant  If the tenant is in breach of a non-rental covenant, the process is more complicated. First, the landlord must have an express or implied right to re-enter and forfeit. The implied right to forfeit will arise if default is made of any express or implied covenant in the lease and has continued for a period of two months, or if the landlord has served a notice to repair and repairs have not been carried out within a reasonable time.301 Second, the landlord must serve a notice under s 129(1) of the Conveyancing Act.There is no fixed form for a notice under s 129, but the notice must specify (1) the alleged breach, (2) if the breach is capable of remedy, that the lessee is required to remedy the breach, and (3) if the lessor is seeking compensation for the breach, that the lessee must pay the compensation.302 In Macquarie International Health Clinic Pty Ltd v South Sydney West Area Health Service, it was said that the notice: … ought to be such a notice as will enable the tenant to understand with reasonable certainty what it is which he is required to do … that the tenant should be informed of the particular condition of the premises which he [is] required to remedy. The expression “breach” means the neglect to deal with the condition of the premises so pointed out, and not merely failure to comply with the covenants of the lease.303

In specifying the alleged breach, the notice should provide particulars of the specific breach alleged. For example, where the premises are in disrepair, it is insufficient for the notice merely to state that the premises are in disrepair. The notice must provide details as to what repairs are required.304 These requirements do not apply to breaches of covenants to pay rent305 and to leases of one year or less.306 Third, if the breach is capable of remedy, the tenant must have failed to remedy the breach within a reasonable time and, if the landlord has required compensation, have failed to pay reasonable compensation. In Penton v Barnett,307 it was held that three months will usually be a reasonable time. It is not for the landlord to define what period of time is reasonable. In Dogan v Morton,308 a period of seven days was specified in the notice. This notice period was held not to be binding. The landlord need not claim compensation in the notice, if he or she does not want to do so;309 nor must the notice require the breach to be remedied if it is incapable of 300. Conveyancing Act 1919 (NSW) s 85(1)(d). 301. Conveyancing Act 1919 (NSW) s 85(1)(d). 302. For an examination of this issue, see  S Christensen and B Duncan, ‘Breaches of Lease “Capable of Remedy”: A Technical or Practical Approach?’ (2006) 13 Australian Property Law journal 204. 303. Macquarie International Health Clinic Pty Ltd v South Sydney West Area Health Service [2010] NSWCA 268 at [311]. 304. Gerraty v McGavin (1914) 18 CLR 152. 305. Conveyancing Act 1919 (NSW) s 129(8). 306. Conveyancing Act 1919 (NSW) s 129(6)(a). 307. Penton v Barnett [1898] 1 QB 276. 308. Dogan v Morton (1935) 35 SR (NSW) 142. 309. Rugby School (Governors) v Tannahill [1934] 1 KB 695.

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remedy,310 as in the case of ‘once and for all’ breaches such as the grant of a sublease or assignment without the requisite consent, or a non-continuing use of the premises for immoral purposes.311 Notice must still be served in the case of irremediable breaches; in these cases, the purpose of giving notice is to afford the tenant the opportunity of considering his or her position as to the remedy of the breach.312 In cases of irremediable breaches, ‘reasonable’ notice period will be a shorter period of time. In Civil Service Co-operative Society Ltd v  McGrigor’s Trustee,313 14 days’ notice was held to be sufficient. In the case of assignments without consent, the notice must be served on the assignee, not the tenant.314 The notice requirement applies notwithstanding any stipulation to the contrary.315 Some ingenious attempts at circumvention have been ineffective. In Plymouth Corporation v Harvey,316 the tenant was required to execute a deed in escrow surrendering the lease to the landlord in the event of a breach. In Holden v  Blaiklock317 and Kemp v Lumeah Investments Pty Ltd,318 the leases provided for conversion from a fixed term to a weekly periodic tenancy in the event of breach of any covenant. All these stratagems were held to fall foul of s 129(10) of the Conveyancing Act and, thus, were void. By s 128 of the Conveyancing Act, the notice requirement extends to equitable leases (‘an agreement for a lease where the lessee has become entitled to have his or her lease granted’); however, where the breach is such as to disentitle the tenant to an order for specific performance (such as the tenant’s persistent refusal to pay rates as required in the lease), no notice is required, on the basis that there is no longer an equitable lease.319 11.65  Repudiation and notice  It has previously been noted that there will be cases where it is possible for the landlord to rely on either a right of forfeiture or a right of termination under general contract law. This raises the question: Does the strict notice requirement under s  129 apply where the lease is terminated using the general law contractual right? Unsurprisingly, legislation enacted prior to the decisions in Shevill and Progressive Mailing House does not address the question. The matter has been considered in several cases. If the landlord seeks to accept the tenant’s repudiatory contract by means of exercising a right of re-entry contained in the lease or implied by statute, it has been held that a s  129 notice must be served.320 This includes the situation where the lease deems a covenant to be essential, and there is a breach of that term.321 Further, where the lease itself stipulates that repudiation will be dealt with as a breach of a covenant of the 310. Horsey Estate Ltd v Steiger & Petrifite Company Ltd [1899] 2 QB 79. 311. See, generally, Harpum, Megarry and Wade:The Law of Real Property, note 94 above, pp 833–35. 312. Horsey Estate Ltd v Steiger & Petrifite Company Ltd [1899] 2 QB 79 at 91–2 per Lord Russell CJ. 313. Civil Service Co-operative Society Ltd v McGrigor’s Trustee [1923] 2 Ch 347. 314. Old Grovebury Manor Farm v W Seymour Plant Sales and Hire Ltd (No 2) [1979] 3 All ER 504. 315. Conveyancing Act 1919 (NSW) s 129(10). 316. Plymouth Corporation v Harvey [1971] 1 WLR 549. 317. Holden v Blaiklock [1974] 2 NSWLR 262. 318. Kemp v Lumeah Investments Pty Ltd (1984) NSW ConvR ¶55-162. 319. Marshall v Council of the Shire of Snowy River (1994) NSW ConvR ¶55-719 per Kirby P. 320. Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105. 321. World Best Holdings Ltd v Sarker [2010] NSWCA 24; Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268.

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lease, rather than through exercising the general contract law right to terminate, this will also require a notice under s 129.322 In New South Wales, there is conflicting authority as to whether a notice under s 129 is required where the landlord accepts the tenant’s repudiatory conduct and rescinds the contract. In Wood Factory Pty Ltd v Kiritos Pty Ltd,323 Priestley and McHugh JJA declared that a notice was required. In Marshall v Council of the Shire of Snowy River,324 by contrast, Meagher JA (Powell JA agreeing) decided that it was not required.325 The Victorian Court of Appeal has endorsed the latter view, holding that a landlord can terminate a lease following the tenant’s repudiation without having to give the notice that would be needed if exercising a right of forfeiture and re-entry.326 To the extent that the basis for allowing contractual remedies lies in seeing the lease as a standard commercial relationship, and that the tenant may avail himself or herself of the remedy of loss of bargain damages without giving notice, it is logical that the same position should be adopted with regard to termination. 11.66  Waiver The landlord may lose the right to forfeit, or elect to abandon the forfeiture of the lease, if he or she has waived the breach of covenant that triggered the right to forfeit. Waiver may be express or implied. It will be implied if the landlord, knowing of the breach, acts in a way that unequivocally recognises the continued existence of the lease. Such acts have included acceptance of rent327 or a demand for rent.328 It is irrelevant that the landlord may have accepted the rent on the basis that it was not to amount to a waiver;329 for example, by treating the rent as ‘mesne profits’.330 Acceptance of rent by the landlord’s agent will bind the landlord if the landlord’s agent has knowledge of the breach,331 even if the landlord has no personal knowledge of the breach332 — or even if the landlord instructed the agent not to demand or accept rent.333

322. World Best Holdings Ltd v Sarker [2010] NSWCA 24. 323. Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105 at 132 per Priestley JA; at 144 per McHugh JA. 324. Marshall v Council of the Shire of Snowy River (1994) NSW ConvR ¶55-719. 325. This question was before the Court of Appeal in the recent Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268. However, that court did not need to rule on the matter as the lease deemed repudiatory conduct to be a matter that should be dealt with under a clause of the lease itself, thus bringing it within the wording of s 129 of the Conveyancing Act. The tenor of the judgment might suggest that a s 129 notice would not be required as on the face of it repudiation is not within the terms of s 129. 326. Apriaden Pty Ltd v Seacrest Pty Ltd (2005) 12 VR 319 at 334–5. One of the reasons given for so holding was that courts are wary about too readily finding repudiation, whereas a lease can be drafted to give the landlord a right of re-entry for a relatively minor breach of covenant. 327. Larking v Great Western (Nepean) Gravel Ltd (in liq) (1940) 64 CLR 221. 328. Dendy v Nicholl (1858) 4 CB (NS) 376. 329. Segal Securities Ltd v Thoseby [1963] 1 QB 887. 330. Lidsdale Nominees Pty Ltd v Elkharadly [1979] VR 84. 331. Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd [1976] 1 NSWLR 377. 332. David Blackstone Ltd v Burnetts (West End) Ltd [1973] 1 WLR 1487. 333. Central Estates (Belgravia) Ltd v Woolgar (No 2) [1972] 1 WLR 1048.

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The waiver may be relied on by both the tenant and the tenant’s assignees, and will bind the landlord and the landlord’s assignees.334 Waiver in respect of one breach does not prevent the landlord from subsequently relying upon a distinct, subsequent breach as a basis for forfeiture.335 It is logical that this should be so. Waiver in respect of a particular breach amounts to a waiver of the landlord’s rights in respect of that breach only. In any event, New South Wales legislation confirms that this is the position.336 Thus, waiver of a past breach of the rent covenant is no obstacle to a forfeiture for future breaches. Nor will waiver prevent a landlord suing for other remedies for breach of the covenant that gave rise to the forfeiture.337

Manner of forfeiture 11.67  Manner of forfeiture  Forfeiture may be effected in two ways: by (i) re-entry by action (court proceedings); or (ii) by physical re-entry. These rules do not apply to residential tenancies because there is legislation that applies specifically to those tenancies.338 11.68  Forfeiture by court proceedings will be complete when the tenant is served with an unequivocal writ demanding possession of the premises.339 Any demand in the writ that implies a continuation of the landlord–tenant relationship, and therefore is inconsistent with termination of the lease, will render the purported forfeiture ineffective. If the writ seeks an order permitting the landlord to inspect the premises, or an injunction to prevent the tenant from doing anything on the land, there will be no forfeiture, as these activities are meaningful only in the context of a continuing lease.340 From the date of service of the unequivocal writ, the tenant is a trespasser (as long as the landlord does indeed have a right to forfeit), and is liable to pay mesne profits.341 The mere issue of the writ is insufficient to effect a forfeiture — it must be served on the tenant.342 11.69  If the landlord chooses to forfeit the lease by physical re-entry, the landlord must not use excessive force. The landlord will be criminally liable if ‘more force than is reasonably necessary’ is used.343 Moreover, if the landlord uses more force than is reasonably necessary to remove the tenant, the landlord will also be liable in tort.344 In an English case in the 1920s, a tenant who shot his landlady when she attempted to remove him pursuant to an invalid notice to quit was found not guilty of the charge of unlawful wounding.345

334. Brikom Investments Ltd v Carr [1979] QB 467; [1979] 2 All ER 753. 335. Bird v Hildage [1948] 1 KB 91. 336. Conveyancing Act 1919 (NSW) s 120. 337. Wilson v Stewart (1889) 15 VLR 781. 338. See 11.118–11.125. 339. Moore v Ullcoats Mining Co [1908] 1 Ch 575. 340. Moore v Ullcoats Mining Co [1908] 1 Ch 575. 341. Elliott v Boynton [1924] 1 Ch 236. 342. Canas Property Co Ltd v KL Television Services Ltd [1970] 2 QB 433. 343. Imperial Acts Application Act 1969 (NSW) s 18. 344. Hemmings v Stoke Poges Golf Club Ltd [1920] 1 KB 720. 345. R v Hussey (1924) 18 Cr App R 160.

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The risks associated with forfeiture by physical re-entry are such as make forfeiture by court proceedings the more advisable option in most cases.346 The right of re-entry is a right that passes with the assignment of the reversion under s 117 of the Conveyancing Act, even in respect of breaches that occurred prior to the assignment.347

Relief against forfeiture 11.70  Relief against forfeiture  After the lease has been forfeited, the tenant, or even subtenant, may still revive the original lease. This may be achieved by a court granting the tenant relief against forfeiture. The grant of relief has the effect of resurrecting the lease in its original form.348 11.71  Where the lease has been forfeited for breach of the covenant to pay rent, equity has historically relieved against forfeiture on the ground that the proviso for re-entry was merely security for the payment of rent. The Conveyancing Act makes it clear that this equitable jurisdiction continues to exist in New South Wales.349 But relief against forfeiture is not awarded automatically. For equity to relieve against forfeiture, the landlord must be in as good a position as she or he would have been had no breach occurred.350 Accordingly, relief against forfeiture will usually be granted if the landlord is compensated for arrears in rent and any loss arising from non-payment.351 Even where the landlord is fully compensated, there may be reasons why relief should be denied. Relief has been denied where the defaulting tenant was also running a brothel,352 and where the tenant’s continuing occupation would jeopardise the landlord’s reversion by rendering it uninsurable.353 Relief will also be denied where the tenant is insolvent,354 but not if the tenant’s financial position is not hopeless, as where the tenant has paid arrears and entered into a scheme of arrangement with creditors.355 11.72  By s 129(2) of the Conveyancing Act, the courts have a statutory power to grant relief against forfeiture for breach of non-rental covenants. This has been interpreted to confer a very wide discretion.356 Normally, relief will be granted if the landlord can be adequately compensated by money and breaches are remedied.357 The discretion is governed by three principles: 1. whether the tenant’s conduct was wilful;

346. For a good discussion, see Gray and Gray, Elements of Land Law, note 232 above, pp 1498–500. 347. London and County (A & D) Ltd v Wilfred Sportsman Ltd [1970] 3 WLR 418. 348. Supreme Court Act 1970 (NSW) s 73. 349. Conveyancing Act 1919 (NSW) s 129(8). 350. Gill v Lewis [1956] 2 QB 1. 351. Pioneer Quarries (Sydney) Pty Ltd v Permanent Trustee Co of New South Wales Ltd (1970) 2 BPR 9562. 352. GMS Syndicate Ltd v Garry Elliott Ltd [1982] Ch 1. 353. Stieper v Deviot Pty Ltd (1977) 2 BPR 9602. 354. Direct Food Supplies (Victoria) Pty Ltd v DLV Pty Ltd [1975] VR 358. 355. Greenwood Village Pty Ltd v Tom the Cheap (WA) Pty Ltd [1976] WAR 49. 356. Hyman v Rose [1912] AC 623. 357. Earl Bathurst v Fine [1974] 2 All ER 1160.

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2. the gravity of the breaches; and 3. the disparity of the damage caused by the breaches and the value of the property.358 Relief may be denied where the personal character of the tenant is important. In Earl Bathurst v Fine,359 the American tenant of an English stately home had been convicted of a drugs offence and was banned from entering the country. It was held that because of the nature and value of the premises, and because he was not of suitable character for the property, he should not be granted relief, even though arrears of rent had been repaid. Relief was also denied where the tenant allowed illegal gambling on the premises, on the basis that the taint of this breach would continue after any relief.360 Section 129(2) allows the court to impose conditions on the tenant on grant of relief. In one English case, relief was granted on the condition that the tenant return the premises to their former condition.361 When considering an application for relief against forfeiture for the breach of nonrental covenants, the court will not usually impugn the tenant with breaches of covenants that were not the subject of a s 129 notice. However, this is not always the case. The court has a discretion to take such breaches into account if to ignore them would be unjust to the landlord. This would be the case where the landlord had terminated the lease by exercising a right of re-entry but where the tenant had also repudiated the lease.362 11.73  Section  129(2) gives courts the power to grant relief against forfeiture ‘where a lessor is proceeding by action or otherwise … or has re-entered without action’. This means that relief is possible at any time while court proceedings are in train; that is, until the landlord is granted an order for possession of the premises and has taken possession pursuant to the order.363 By contrast, where the landlord has re-entered without action (ie, by physical re-entry), the tenant may still get relief against forfeiture. However, in such cases the tenant must act sufficiently promptly to avoid being postponed in equity for delay. Despite these limits, it is possible for the tenant to seek relief against forfeiture as an alternative remedy in an action denying that either breach or forfeiture has occurred.364 Section 129(2) does not apply to leases of one year or less.365 11.74  Sublessees  At common law, forfeiture of the lease entailed termination of all interests and rights carved out of the lease, such as subleases and licences.366 By s 130(1) of the Conveyancing Act, a sublessee has an independent right to relief. The court has a discretion to vest the lease — a new lease, because forfeiture of the lease has terminated the lessee’s interest — or a portion of the term in the sublessee on such terms as it sees fit. However, it should be noted that the power conferred on the court by s 130 is one of 358. Shiloh Spinners Ltd v Harding [1973] AC 691. 359. Earl Bathurst v Fine [1974] 2 All ER 1160. 360. Hoffman v Feinberg [1949] 1 Ch 245. 361. Rose v Spicer [1911] 2 KB 234 at 243 per Lord Cozens-Hardy MR. 362. Batiste v Lenin (2002) 11 BPR 20,403 at 20,420. 363. Billson v Residential Apartments Ltd [1992] 1 AC 494. 364. Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723. 365. Conveyancing Act 1919 (NSW) s 129(6)(a). 366. Great Western Railway Co v Smith (1875) 2 Ch D 235.

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‘vesting for the whole term of the lease, or any less term, the property comprised in the lease’, so the sublessee  cannot acquire a term longer than that in the original sublease. The section also states that the court may not confer rights over an area greater than that covered by the sublease. It is immaterial that the tenant is not entitled to relief, though in this case the sublessee must not have participated in the breach.367 The terms imposed by the courts may involve making good existing breaches.This can include the payment of the tenant’s outstanding rent by the sublessee to the landlord apportioned for the area occupied by the sublessee, even if the sublessee has already paid rent to the tenant for that period.368

Merger 11.75  Where one person becomes entitled to both the lease and the reversion, there is a merger.369 So, if either the landlord or the tenant acquires the other’s interest, as where the tenant purchases the reversion, a lease will come to an end. Merger will also arise where a third party acquires both the lease and the reversion. A merger will bring the lease to an end, but not any sublease.370 Of course, where there is a registered lease of Torrens land, merger is not complete in respect of Torrens title land until the lease is removed from the Register.371

Surrender 11.76  A surrender is a consensual transfer of the lease from the tenant back to the landlord. A surrender may be express or by operation of law. For old system land, a surrender must be by deed, even if the lease is oral.372 For Torrens title land, a surrender will be effective on registration.373 A surrender effective in equity is possible in accordance with the rule in Walsh v Lonsdale.374 A surrender by operation of law originates in the doctrine of estoppel by conduct,375 and is an exception to the old system requirement that a deed is necessary, or for Torrens title, a registered surrender.376 It arises where parties, by their conduct, evince an unequivocal intention to treat the lease as at an end — as where: the landlord, with the tenant’s consent, grants a new lease to a third party;377 the tenant moves furniture out and returns the key to the landlord, who accepts it;378 or the tenant abandons

367. Imray v Oakshette [1897] 2 QB 218. 368. Chatham Empire Theatre (1955) Ltd v Ultrans Ltd [1961] 2 All ER 381. 369. Rye v Rye [1962] AC 496. 370. Conveyancing Act 1919 (NSW) s 122. 371. Shell Co of Australia Ltd v Zanelli [1973] 1 NSWLR 216. 372. Conveyancing Act 1919 (NSW) s 23B(1). 373. Real Property Act 1900 (NSW) s 54(1) and (3). 374. Walsh v Lonsdale (1882) 21 Ch D 9. 375. Robinson v Kingsmill (1954) 71 WN (NSW) 127. 376. Conveyancing Act 1919 (NSW) s 23B(2)(c); Real Property Act 1900 (NSW) s 54(1). 377. Maridakis v Kouvaris (1975) 5 ALR 197. However, this must be distinguished from an agreement between the landlord and tenant that the existing lease be kept on foot and assigned to a third party. See Forte-Senes Hotels Pty Ltd v Austcorp No 473 Pty Ltd (2004) NSW ConvR ¶56-095 at 59,182–3, noted in P Butt, ‘Leases: Some Miscellaneous Issues’ (2005) 79 Australian Law Journal 205. 378. Dykes v Gerke [1963] NSWR 721.

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the premises and the landlord takes possession and changes the locks.379 An abandonment by the tenant, later followed by the landlord’s repossession, will constitute separately both a surrender by operation of law, and acceptance of the tenant’s repudiation of the lease,380 and so will not deprive the landlord of loss of bargain damages.

Frustration 11.77 In Firth v  Halloran,381 the High  Court of Australia held that the doctrine of frustration did not apply to leases, while in Robertson v Wilson382 the Supreme Court of New South Wales held that it did. Statements in Progressive Mailing House Pty Ltd v Tabali Pty Ltd383 that ‘the ordinary principles of contract law, including that of termination for repudiation or fundamental breach, apply to leases’, and ‘the clear trend of common law authority is to deny any general immunity of contractual leases from the operation of those doctrines of contract law’384 suggest that frustration is now as much a part of the law relating to leases as repudiation is.385 The House of Lords, in National Carriers Ltd v Panalpina (Northern) Ltd,386 declared that the doctrine of frustration applied to leases, but concluded that the circumstances of that case, which involved closure by the local council of the only access road to the premises for a period of 20 months of a 10-year lease with four and a half years to run, did not amount to frustration. The closure of the road was a serious inconvenience for the tenant, but it had not ‘so significantly changed the nature of the outstanding rights and obligations under the leases from what the parties could reasonably have contemplated at the time of its execution that it would be unjust’ to hold them to the lease.387 There have been no Australian cases in which a lease was found to have been frustrated. For the time being, whether the doctrine of frustration applies to leases must be taken to be an area of uncertainty in Australian law. Even if the doctrine does apply to leases, it is to be expected that a lease would be frustrated only in very unusual circumstances.388

379. James v Nesbitt (1954) 28 ALJR 482. 380. Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105. 381. Firth v Halloran (1926) 38 CLR 261. 382. Robertson v Wilson (1958) 75 WN (NSW) 503. 383. Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17. 384. Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 29 per Mason J (emphasis added); at 52 per Deane J. 385. Recently in Tim Barr Pty Ltd v  Narui Gold Coast Pty Ltd [2010] NSWSC 29, Barrett J declined to determine the matter. However, he expressed a preference for the view that the doctrine of frustration can apply to leases: at [220]. Some limited support can also be found in City of Subiaco v Heytesbury Properties Pty Ltd [2001] 24 WAR 146. 386. National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675; [1980] UKHL 8. 387. [1980] UKHL 8 at p 19 (Lord Simon of Glaisdale). 388. See, for instance, A O’Hara, ‘The Frustrated Tenant — Towards a Just Solution’ (1994) 2 Australian Property Law journal 1. The doctrine of frustration applies to residential tenancies. See 11.121.

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Remedies 11.78  Once a party to a lease, or an assignee, can establish a breach of covenant, and he or she has a right to sue, a number of remedies are available in addition to the right to terminate the lease.

Damages and injunction 11.79  Damages are awarded to compensate for the injury suffered by the landlord or tenant as a result of the breach. The general rules governing the measure of damages for breach of contract apply to leases. Accordingly, in a case in which the landlord failed to comply with a covenant to paint and varnish the premises, the tenant was entitled to a sum of money that would put it in the position in which it would have been had the landlord performed the painting covenant, and it did not matter that the tenant had not yet incurred the expense of doing the work.389 If the lease is terminated for breach of an essential term or a repudiation, prospective (or loss of bargain) damages can be awarded.390 Where a plaintiff succeeds in a loss of bargain damages claim, he or she is under a duty to mitigate the loss — by, for example, reletting the premises.391 The plaintiff will not be able to claim damages to the extent that the loss could have been avoided by reasonable mitigation. According to s 133A of the Conveyancing Act 1919 (NSW), the amount of damages for a breach of a tenant’s covenant to repair can never exceed the amount by which the value of the reversion is diminished by the breach of the covenant. An injunction will also lie at the suit of the landlord or tenant to restrain the continuation of a breach of covenant392 or, less commonly, to compel performance.393

Set-off 11.80  The general position is that each party’s obligations under the lease are independent of the performance by the other party of his or her obligations. Accordingly, a tenant’s obligation to pay rent under the lease does not cease simply because the landlord is in breach of his or her obligations.394 However, where a party in breach of its obligations could counter-claim damages against the plaintiff in respect of a breach of the plaintiff ’s obligations, it may be possible for the plaintiff ’s award of damages to be reduced; that is, the damages on the counter-claim are ‘set off ’ against the damages on the plaintiff ’s claim.

Common law set-off 11.81  Common law set-off was possible, first, where the tenant expended money, at the request of the landlord, to do something that was properly the landlord’s responsibility 389. Ellis’s Town House Pty Ltd v Botan Pty Ltd [2017] NSWCA 20 at [44] (Gleeson JA). 390. See  11.59. The various bases on which a landlord can recover this form of damages is considered in Bradbrook, MacCallum and Moore, Australian Real Property Law, note 178 above, pp 478–9. 391. Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17. 392. Munday v Prowse (1878) 4 VLR (Eq) 101. 393. Macintosh v Bebarfalds Ltd (1922) 22 SR (NSW) 371. 394. R & J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2006] NSWCA 177.

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and, second, where the tenant spent money on repairs that the landlord had covenanted to carry out, the landlord having failed to do so.395 In the latter case, the tenant must first notify the landlord of the breach, and the claim must not be for unliquidated damages; that is, the claim must be for a sum actually paid and established as certain.396

Equitable set-off 11.82  The rules governing equitable set-off are more flexible. To be able to offset, the tenant’s ‘equity must impeach the title to the legal demand, or in other words go to the very foundation of the landlord’s claim’.397 This means that the tenant’s cross-claim must arise under the lease or from the landlord–tenant relationship. In British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd,398 the tenant sought to offset a claim for unliquidated damages in respect of defects to the floor of the leased premises against the landlord’s claim for rent. The terms of the lease required the landlord to make good any defects in the floor, so the tenant’s claim was one that arose from the parties’ relationship as landlord and tenant. Parties may agree to exclude the equitable right to set-off,399 but this must be expressed in clear and explicit words.400 It is also possible for the landlord to claim a set-off where the tenant is seeking damages. For example, where the landlord negligently stores the tenant’s goods, causing loss, the landlord is able to set off arrears of rent.401

Reform of the Common Law 11.83  A small number of reforms are arguably required to simplify this area of law and render it more equitable.

Removal of the certain duration requirement 11.84  As discussed at 11.4, there do not appear to be any strong arguments for retaining the certainty of duration requirement.

Abolition of s 127 implied tenancies 11.85  The area of implied tenancies at common law is marked by great complexity.The reforming provision — s 127 of the Conveyancing Act 1919 (NSW) — has done nothing 395. Taylor v Beal (1591) Cro Eliz 222; 78 ER 478. 396. Lee-Parker v Izzet [1971] 1 WLR 1688; [1971] 3 All ER 1099. 397. British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1979] 2 All ER 1063 at 1074 per Forbes J. See the general discussion of equitable set-off in this context in the reasons of Campbell JA, albeit in obiter, in Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 297 at [51]–[60] (McColl JA agreeing with these comments). 398. British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1979] 2 All ER 1063. 399. Hong Kong and Shanghai Banking Corp v Kloekner & Co AG [1989] 3 All ER 513. 400. Grant v NZMC Ltd [1989] 1 NZLR 8. See Batiste v Lenin (2002) 11 BPR 20,403 at 20,417, where the court expressed the view, without deciding, that the requirement in the lease that rent be paid ‘without deduction’ would not have been sufficient to displace the common law right of recoupment, had such a right otherwise been available to the tenant. 401. Bowden v Lo (1999) 9 BPR 16,317.

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to reduce this, because it effectively incorporates all the (feudal) learning in relation to implied leases into the contemporary law. This level of complexity is quite unnecessary. It would be much simpler — and more in keeping with the intentions of the parties — if the implied tenancy was measured basically by reference to the paying period, but this evidence could be rebutted by other evidence of a different intention. It should, therefore, be irrelevant that the rental period amounted to an aliquot part of a year or not; thus, payment of rent, say, half-yearly, would give rise to a six-monthly periodic tenancy rather than a tenancy at will terminable by one month’s notice in writing, as is the case at present. Such a reform would more accurately reflect the intention of the parties.

Privity of estate and continuing liability for tenants after assignment 11.86  The authors Megarry and Wade, in their discussion of Boyer v Warbey402 and the problems it raises, refer to ‘[t]he very reasonable decision to hold the assignee bound by the terms of [an equitable lease]’.403 This rule — and its non-application to equitable leases and equitable assignments of legal leases — is traceable to the historic cleavage between the courts of law and equity, and not to reasons of policy or justice. This rule looks even more unsatisfactory in light of the anomalous position of assignments of the reversion. Given that ss 117 and 118 of the Conveyancing Act apply not only to legal but also to equitable leases,404 there seems to be no sound reason why the same principle should not extend to assignments of the lease. A simple amendment of the Conveyancing Act, similar to s 128 (which extends the obligation to give a statutory notice prior to forfeiture to equitable leases), would and should remove this anomaly from the law. As for the question of continuing contractual liability in cases of assignment of leases, the United Kingdom Parliament has enacted legislation limiting the contractual liability of former tenants. The Landlord and Tenant (Covenants) Act 1995 (UK) is based on a report of the UK Law Commission.405 Though the legislation is not without its critics,406 it does point to a fairer, and more efficient, balance between innocent assignor and culpable assignee.407

Residential Tenancies Introduction 11.87  At common law, the duties of landlord and tenant were overwhelmingly a matter of contract. Some terms were implied into leases as a matter of common law, although the 402. Boyer v Warbey [1953] 1 QB 234. 403. Harpum, Megarry and Wade:The Law of Real Property, note 94 above, p 958. 404. Rickett v Green [1910] 1 KB 253. 405. United Kingdom Law Commission Report No 174. 406. See  S Bridge, ‘Former Tenants, Future Liabilities and the Privity of Contract Principle: The Landlord and Tenant (Covenants) Act 1995’ [1996] Cambridge Law Journal 313; P Walter, ‘The Landlord and Tenant (Covenants) Act 1995: A Legislative Folly’ [1996] Conv 432. 407. For a detailed consideration of this issue in the Australian context, see W D Duncan, ‘The Continuing Liability of Original Lessees After Assignment of Lease — Time for Reconsideration?’ (2005) 12 Australian Property Law journal 93.

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parties could agree to exclude these.408 Equity sometimes limited the use of common law rights, such as narrowing the scope for landlords’ recovery of premises following breach of the agreement. Nevertheless, for the most part, the substantive rights and obligations of the parties were a matter for them to agree upon as they saw fit. In circumstances of unequal bargaining power and market pressures, the reality may be that the terms of the agreement have been imposed by the landlord rather than agreed by landlord and tenant. Residential tenancies might be seen as a class of leases in which this problem is particularly acute. The Residential Tenancies Act 2010 (NSW) creates a comprehensive set of rights and duties that, in general, parties cannot contract out of. The residential tenancies legislation therefore steers the market.409 The Act provides for a specialised, informal tribunal, the NSW Civil and Administrative Tribunal,410 to deal with disputes arising under the legislation. This legislation has largely superseded the common law in setting the terms of lettings of residential premises, whether the landlord is the state (in the case of public housing), or a private person or corporation. Though containing a detailed set of rights and responsibilities for residential landlords and tenants, the Residential Tenancies Act is not a comprehensive code. It is not expressed to be an exclusive statement and source of rights for residential landlords and tenants, either in the long title to the Act, or in any specific provision. However, successive versions of the Act have moved closer to being so. The 2010 Act, for example, contains fewer references to the common law and exclusions than its predecessor. Nevertheless, the Residential Tenancies Act still uses some technical terms from the common law, such as ‘merger’ and ‘frustration’, and still expressly excludes some provisions of the Conveyancing Act 1919 (NSW) (implying that other provisions from the Act may not be excluded).411 Moreover, certain matters are not dealt with at all, such as rights of co-owners.  Accordingly, where the Act is silent, or where expressions used are familiar common law concepts, the common law will continue to apply.

What is a residential tenancy? Residential tenancy agreement 11.88  By s 13 of the Residential Tenancies Act, a residential tenancy agreement is: … any agreement under which a person grants to another person for value a right of occupation of residential premises for the purpose of use as a residence. …

408. Conveyancing Act 1919 (NSW) s 74. 409. This is in contrast to the earlier Landlord and Tenant (Amendment) Act 1948 (NSW). Unlike that Act, modern legislation does not provide for rent control, or security of tenure, which were much more radical ways of regulating the market and protecting tenants. See generally see D Dobell, ‘Those Powerful “Protected” Tenants’ (1990) 15 Legal Services Bulletin 270. 410. See 11.126–11.129. 411. A Anforth and T Thawley, Residential Tenancies Law and Practice in New South Wales, Law Book Co, Sydney, 1998, pp 8–9. See  also, A J Bradbrook, ‘Residential Tenancies Law in Australia: The Second Stage of Reforms’ (1998) 20 Syd LR 402. While these comments were made in the context of the Residential Tenancies Act 1987 (NSW), they would equally apply to the Residential Tenancies Act 2010 (NSW).

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It is immaterial for the purpose of this definition whether the right of occupation is a right of exclusive possession.412 From this definition, it is clear that a residential tenancy is much broader than a common law lease. The Act is expressed to bind the Crown: … this Act binds the Crown in right of New South Wales and, in so far as the legislative power of Parliament permits, the Crown in all its other capacities.413

Thus, where the Commonwealth Defence Housing Authority leased a house in New South Wales for defence personnel, the provisions of the Act applied, because the Act applied to the Commonwealth’s actions in New South Wales and the legislation setting up and governing the authority’s activities did not exclude the operation of the residential tenancies legislation.414 A category of ‘social housing tenancy agreement’ in respect of premises let by a ‘social housing provider’, such as the New South Wales Land and Housing Corporation and the New  South  Wales Department of Housing, had been created by the previous legislation, the Residential Tenancies Act 1987 (NSW), and provisions relating specifically to this category of tenancies are continued under the 2010 Act.415 The most important provisions of the Act relating to social housing agreements deal with ‘acceptable behaviour agreements’416 and termination417 of social housing tenancy agreements. The 2010 Act also covers agreements or arrangements under which a person is given the right to occupy premises as part of remuneration for carrying out work on the premises or in connection with their employment.418

Exceptions 11.89  By s 8, certain residential tenancy agreements are excluded from the Residential Tenancies Act. In addition, s  7 of the Act makes an exception for agreements to lease particular sorts of premises. Both classes of exception are described below. 11.90  Occupation agreements in holiday parks and residential parks and for the purposes of holidays The Residential Tenancies Act excludes occupation agreements to which the Holiday Parks (Long-term Casual Occupation) Act 2002 (NSW) applies.419 The Act also

412. See 11.5. 413. Residential Tenancies Act 2010 (NSW) s 4. 414. Re Residential Tenancies Tribunal of New South Wales and Henderson; Ex parte Defence Housing Authority (1997) 146 ALR 495. 415. Residential Tenancies Act 2010 (NSW) Part 7. 416. Residential Tenancies Act 2010 (NSW) s 138. 417. Residential Tenancies Act 2010 (NSW) ss 143–154. 418. Residential Tenancies Act 2010 (NSW) s 9. This section applies even if the premises are premises exempt from the Act by s 7: Residential Tenancies Act s 9(2). 419. Residential Tenancies Act 2010 (NSW) s 8(1)(a). For the definition of ‘holiday park’ and ‘long-term casual occupant’, see s 3 and s 5 respectively of the Holiday Parks (Long-term Casual Occupation) Act 2002 (NSW).

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excludes any agreement made for the purposes of giving a person the right to occupy residential premises for a period of not more than three months for a holiday.420 11.91  Contracts within the meaning of the Retirement Villages Act 1999 (NSW)  The Residential Tenancies Act does not apply to residence contracts within the meaning of the Retirement Villages Act.421 11.92  Boarders and lodgers  The Residential Tenancies Act does not apply to agreements under which a person ‘boards or lodges with another person’.422 These terms are not defined in the Residential Tenancies Act, so it is necessary to examine how they have been defined at common law. Thus, ‘boarder’ has been held to mean: ‘… one who … has his food, or food and lodging, at the house of another for compensation’. … In ordinary circumstances with both lodger and boarder legal possession remains in the person who provides room or rooms, or meals. He retains possession and control over rooms and means of ingress and egress, but grants licence to guests who pay, or give consideration for the privilege.423

‘Lodger’ means an occupant where ‘the landlord retains control of the rooms in question’.424 To determine whether a resident is a lodger, we need to ask: … whether the owner of the house retains his character of master of the house, and whether he occupies a part of it by himself or his servants, and at the same time retains the general control and dominion over the whole house; and this he may do, though he do[es] not personally reside on the premises.425

These meanings have been accepted and applied by the tribunal under the Act. Thus, an occupant of a self-contained unit in a block of flats (licensed to be used as a lodging house), where a manager lived on site and had access to units, was held to be a lodger.426 Conversely, where a resident in a hostel had exclusive use of her own room, she was held to be a tenant, even though the premises were designated as a ‘supported accommodation hostel’ and residents were regularly visited and supervised by social workers.427 Factors that pointed to a tenancy were: • the landlord or landlord’s manager did not live on the premises; • the tenant was generally free to do as she pleased within the hostel; and • access by case workers was limited.

420. Residential Tenancies Act 2010 (NSW) s 8(1)(c). 421. Residential Tenancies Act 2010 (NSW) s 8(1)(b). For the definition of ‘Retirement Village’, see s 5 of the Retirement Villages Act 1999 (NSW). 422. Residential Tenancies Act 2010 (NSW) s 8(1)(c). For a legal and policy analysis of the treatment of such persons under the common law and the former legislation, see  A Bradbrook, ‘Creeping Reforms to Landlord and Tenant Law:The Case of Boarders and Lodgers’ (2004) 10 Australian Property Law Journal 157. 423. Noblett and Mansfield v Manley [1952] SASR 155 at 158 per Mayo J. 424. Torrisi v Oliver [1951] VLR 380 at 385 per Coppel AJ. 425. Thompson v Ward (1871) LR 6 CP 327 at 361 per Bovill CJ. 426. Walker v Puvesi Pty Ltd (RTT 86/000006). 427. Ellis v City Women’s Hostel (RTT 97/022789).

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11.93  Residence in refuge or crisis accommodation The Residential Tenancies Act excludes from its scope agreements under which a person resides in refuge or crisis accommodation provided by a public authority, a council or another body or organisation where that authority, council or body is wholly or partly funded by the Commonwealth or the state, or an agency of the Commonwealth or the state.428 The parties may, however, agree in writing that the Residential Tenancies Act is to apply.429 11.94  Leases and licences under various Crown Lands Acts  The Residential Tenancies Act does not apply to licences and leases under the Crown Lands Act 1989 (NSW),Western Lands Act 1901 (NSW) or Crown Lands (Combined Tenures) Act 1989 (NSW).430 11.95  Tenancies in an agreement for sale or purchase  Where there is ‘an agreement for the sale of land that confers a right to occupy residential premises on the parties to that agreement’, the Residential Tenancies Act will not apply.431 A purchaser under a contract of sale is sometimes allowed to take possession of premises pending completion, either as a tenant at will432 or as a licensee.433 In this case, the rights of the tenant are covered by the common law. The scope of the expression ‘sale or purchase’ is unclear; while it obviously covers the position of the purchaser becoming tenant before settlement, it might also embrace an agreement which gave the vendor a tenancy after completion.434 11.96  Tenancies in a mortgage  Some mortgages involve mortgagor and mortgagee in a simultaneous relationship of landlord and tenant. They are excluded by s 8(1)(g) of the Residential Tenancies Act. 11.97  For the purposes of a holiday  Where an agreement is entered into for a period of not more than three months giving a person the right to occupy residential premises for the purpose of a holiday, that agreement will not be covered by the Residential Tenancies Act.435 11.98  Tenancies under a company title scheme  Company title schemes provide a mechanism for group ownership. A company owns a multi-unit building, and the residents own shares in the company, which entitle them to a right of occupation. Leases to shareholders are not covered by the Residential Tenancies Act,436 though leases to nonshareholders or subleases by shareholders are covered.

428. Residential Tenancies Act  2010 (NSW) s  8(1)(d); Residential Tenancies Regulation 2019 (NSW) reg 25(1). 429. Residential Tenancies Regulation 2019 (NSW) reg 25(5). 430. Residential Tenancies Act 2010 (NSW) s 8(1)(e). 431. Residential Tenancies Act 2010 (NSW) s 8(1)(f). 432. Kater v Kater (No 3) [1964] NSWR 987. 433. Sanders v Cooper [1974] WAR 129. 434. See the analysis of A Lang, Residential Tenancies Law and Practice: New South Wales, 2nd ed, Law Book Co, Sydney, 1990, pp 11–12. 435. Residential Tenancies Act 2010 (NSW) s 8(1)(h). 436. Residential Tenancies Act 2010 (NSW) s 8(1)(i).

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11.99  Term of 99 years Where an agreement has a term (together with any additional term that may be granted under an option) that is equal to or exceeds 99  years, the Residential Tenancies Act will not apply.437 11.100  ‘For value’ In this respect, the definition of residential tenancy is narrower than the definition of lease at common law: leases granted for no value are outside the Residential Tenancies Act.438 In Grundel v Registrar-General,439 payment of rates and body corporate levies was held to be ‘value’. 11.101  Shared households  People who occupy premises that are subject to a residential tenancy agreement and who are not named as a tenant, will be tenants for the purposes of the Residential Tenancies Act only if either they are subtenants under a written residential tenancy agreement with that person or the Tribunal has made an order recognising those people as tenants under s 77 of the Act.440 11.102  Additional exempted agreements  Several additional agreements have been exempted from the operation of the Residential Tenancies Act by Regulation. These include: • equity purchase agreements;441 • agreements applying to heritage properties where the landlord is the Crown, a public authority or council;442 • residential premises that are subject to a life estate (legal or equitable) — however, residential premises occupied by sub-tenants of life tenants are not exempt;443 and • residential halls and halls of residence in educational institutions.444 11.103  Premises  There is a second class of agreements that are excluded from the Residential Tenancies Act by s 7 of the Act. They are agreements to lease particular sorts of residential premises. These include: • tenancies to which the Landlord and Tenant (Amendment) Act 1948 (NSW) applies; • premises used to provide residential care or respite care within the meaning of the Aged Care Act 1997 (Cth); • serviced apartments — in other words, buildings or parts thereof used to provide selfcontained tourist or visitor accommodation, and which are regularly cleaned by or on behalf of the owner or manager; 437. Residential Tenancies Act 2010 (NSW) s 8(1)(j). 438. See the definition of ‘residential tenancy agreement’ in s 13 of the Residential Tenancies Act. 439. Grundel v Registrar-General (1990) NSW ConvR ¶55-548. 440. Residential Tenancies Act 2010 (NSW) s 10. 441. Residential Tenancies Regulation 2019 (NSW) reg 27. An ‘equity purchase agreement’ consists of a series of agreements which provide for an initial purchase by the tenant, as a tenant in common, of not less than 20% of the owner’s interest in the residential premises, as well as the further purchase by the tenant, from time to time, of a greater percentage of the owner’s interest in the premises. 442. Residential Tenancies Regulation 2019 (NSW) reg 16. For the definition of ‘heritage’, see reg 28. 443. Residential Tenancies Regulation 2019 (NSW) reg 30. 444. For the scope of this exemption, see Residential Tenancies Regulation 2019 (NSW) reg 31.

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premises used as hotel or motel; premises used as a backpackers’ hostel; a hospital or nursing home; any part of a club used for the provision of temporary accommodation; and residential premises where the predominant use of the premises is for the purposes of a trade, profession, business or agriculture.

Creating residential tenancies Formalities 11.104  Unlike the common law, no formalities are required by the Residential Tenancies Act for the creation of a valid residential tenancy agreement. Section 13(2) of the Act provides that a residential tenancy agreement may be: express or implied; oral or in writing; or partly oral and partly in writing. Section 14 of the Act imposes an obligation on the landlord to ensure that the agreement is in writing, but the landlord’s failure to do so does not affect the enforceability of the agreement. A landlord who fails to ensure that the agreement is in writing will not be permitted to increase the rent or terminate the agreement during the first six months of the tenancy.445 Section 15 of the Residential Tenancies Act provides for a standard form of residential agreement. The form may be prescribed by Regulations. At present in New South Wales, one standard form is provided.446 However, if the term of the agreement exceeds three years (and therefore requires registration), the standard form must be annexed to the approved form required for registration under the Real Property Act 1900 (NSW).447 The standard form has two parts: the first part sets out the terms of the agreement and the second contains the condition report in triplicate.448 The standard form is taken to include any terms required by the Act and Regulations.449 It is possible to include additional terms in the agreement, but only as long as they do not conflict with the terms in the prescribed standard form.450 Any term of a residential tenancy agreement that is inconsistent with any term included by the Residential Tenancies Act, or prohibited by the Act, is void,451 and it is an offence to include prohibited terms.452 Moreover, s 219(1) of the Residential Tenancies Act provides that any term that purports to ‘exclude, limit or modify the operation’ of the Act or Regulations is void. Further, entering into an agreement to evade or prevent the operation of the Act is an offence and subject to the imposition of a penalty not exceeding 20 penalty units.453 445. Residential Tenancies Act 2010 s 14(3). 446. Residential Tenancies Regulation 2019 (NSW) reg 4(1) and Sch 1. 447. Residential Tenancies Regulation 2019 (NSW) reg 4(2). 448. For discussion of condition reports, see 11.105. 449. Residential Tenancies Act 2019 (NSW) s 15(5). 450. Residential Tenancies Act 2010 (NSW) s 15(4). 451. Residential Tenancies Act 2010 (NSW) s 21(1). 452. Residential Tenancies Act 2010 (NSW) s 22. 453. Residential Tenancies Act 2010 (NSW) s 21(2). For the definition of a ‘penalty unit’, see s 17 of the Crimes (Sentencing Procedure) Act 1999 (NSW).

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Of course, parties may agree to avoid the operation of the Residential Tenancies Act by entering into an agreement that does not come within the Act; for example, a contract for board and lodging, or letting premises that are excluded. Once a residential tenancy agreement as defined by the Act is concluded, however, the requirements of the Act are inescapable.

Condition reports 11.105  The landlord must give the tenant a condition report relating to the condition of the residential premises .The standard form condition report is to be in the form prescribed in Sch 2 of the Residential Tenancies Regulation 2019 (NSW).454 The condition report must be completed by the landlord at or before the time the agreement is given to the tenant for signing.455 Two copies must be given to the tenant at this time, and must then be completed by the tenant within seven days.456 The condition report must also be completed by both landlord and tenant in the presence of the other party at, or as soon as reasonably practicable after, the termination of the agreement.457 A new condition report does not need to be undertaken where a landlord and tenant enter into a new residential tenancy agreement for a property already occupied by the tenant under a previous agreement if they agree that the previous report is to apply to that new agreement.458 Types of tenancies 11.106  The Residential Tenancies Act expressly recognises only two types of tenancies: fixed-term tenancies and periodic (or continuing) tenancies. Unlike the position at common law, a fixed-term tenancy does not automatically terminate by effluxion of time; it must be brought to an end by notice on the part of the landlord or the tenant. Where notice is given by the landlord, it must specify a day for delivery up of the premises that is on or after the date of ending of the fixed term and not earlier than 30 days after the giving of the notice.459 Where a tenant seeks to terminate the tenancy, the tenant is required to give only 14 days’ notice.460 Where a fixed-term tenancy comes to an end, and no statutory notice has been given, a periodic tenancy comes into existence, regardless of the rental period.461 This, too, can be brought to an end by notice. In the case of the landlord, the notice period must be not less than 90 days,462 or 30 days if the landlord has contracted to sell the premises with vacant

454. Residential Tenancies Act  2010 (NSW) s  29(6); Residential Tenancies Regulation 2019 (NSW) reg 7, Sch 2. 455. Residential Tenancies Act 2010 (NSW) s 29(1). 456. Residential Tenancies Act 2010 (NSW) s 29(1)–(3). 457. Residential Tenancies Act 2010 (NSW) s 29(4). 458. Residential Tenancies Regulation 2019 (NSW) reg 32. 459. Residential Tenancies Act 2010 (NSW) s 84. 460. Residential Tenancies Act 2010 (NSW) s 96. 461. Residential Tenancies Act 2010 (NSW) s 18. 462. Residential Tenancies Act 2010 (NSW) s 85.

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possession.463 Where a tenant wishes to terminate a periodic agreement, the notice period must not be less than 21 days.464 These provisions also apply to tenancies that were created as periodic agreements. There is no explicit mention in the Residential Tenancies Act of other types of tenancy (tenancy at will, tenancy at sufferance or implied tenancy). The Act’s provision of only two types of termination by notice without any ground — one for fixed-term tenancies and one for tenancies which are not — would seem to have rendered irrelevant the distinctions between such tenancies in the residential context.

Parties’ obligations 11.107  In contrast to the common law, the Residential Tenancies Act imposes a number of non-negotiable obligations on the parties to a residential tenancy agreement. These statutory obligations are set out in Pt 3 of the Act. The most important of them are outlined below.

Quiet enjoyment 11.108  The tenant has a right to ‘quiet enjoyment’ of the premises.465 The meaning of this common law term has been elaborated in a large body of case law.466 The Residential Tenancies Act builds on this definition by also requiring the landlord not to ‘interfere, or cause or permit any interference, with the reasonable peace, comfort or privacy of the tenant in using the residential premises’.467 There is a penalty not exceeding 10 penalty units applicable for breach of this term.468 The Act also extends the common law by rendering the landlord liable where he or she does not take reasonable steps to ensure that neighbouring tenants of the landlord do not interfere with the quiet enjoyment of another tenant of the landlord.469 Repairs 11.109  By s 52 of the Residential Tenancies Act, a landlord must provide the premises in a reasonable state of cleanliness and fit for habitation. Further, by s 63 of the Act, a landlord must provide and maintain the premises in a reasonable state of repair, having regard to the age of the premises, the rent payable for them and their prospective life. This is so even if the tenant had notice of the state of disrepair before entering into occupation.470 If the state of disrepair is a result of a breach of the tenant’s obligations under Pt 3 of the

463. Residential Tenancies Act 2010 (NSW) s 86. 464. Residential Tenancies Act 2010 (NSW) s 97. 465. Residential Tenancies Act 2010 (NSW) s 50. 466. See 11.22. 467. Residential Tenancies Act 2010 (NSW) s 50(2). 468. Residential Tenancies Act 2010 (NSW) s 50(2). 469. Residential Tenancies Act 2010 (NSW) s 50(3). See also Newman v Blundell-Felisak (RTT 97/023358); 11.22. 470. Residential Tenancies Act 2010 (NSW) s 63(2).

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Act, the landlord will not be in breach of the obligation under s 63.471 Here ‘residential premises’ has an expanded definition to include everything provided with the premises for use by the tenant.472 Unlike the position at common law, no distinction is drawn between furnished and unfurnished premises for the purposes of the landlord’s responsibilities. An obligation that the premises be ‘fit for habitation’ will be breached if ‘by ordinary user damage may be caused to the occupier either in respect of personal injury to life or limb or injury to health’.473 The tenant must take all reasonable measures to mitigate the loss.474 A landlord will be liable in the tort of negligence for injury to the tenant and members of the tenant’s family caused by reasonably discoverable defects in the premises.475 In keeping with a landlord’s express duty to repair at common law, the tenant is under a responsibility to notify the landlord of any damage to the premises as soon as is practicable.476 If the tenant fails to notify the landlord as soon as practicable after discovering the damage, he or she will be liable for any further damage that would have been avoided by earlier notification. The tenant’s primary responsibility is to keep the premises clean.477 The standard of cleanliness required is dependent on the state of the premises at the commencement of the tenancy.The tenant is also under a duty not to intentionally or negligently cause or permit any damage to the premises, and he or she should leave the premises as nearly as possible in the same condition — fair wear and tear excepted — as set out in the condition report.478

Urgent repairs 11.110  The Act makes provision for the tenant to carry out urgent repairs and seek reimbursement from the landlord.479 In the absence of such provision, the tenant would only be able to claim the cost of necessary repairs by way of a set-off against a claim by the landlord in respect of any amounts that the tenant owes the landlord.480 Where the need for urgent repairs has not been the result of a breach of the agreement by the tenant, and they have not been carried out by the landlord or nominated person within a reasonable time after notification, the tenant may authorise the carrying out of the repairs by a qualified person. In these circumstances, the landlord must reimburse the tenant within 14 days of notification of the sum incurred up to a maximum of $1000 (or such other amount as may be prescribed). Urgent repairs include burst water services, blocked or 471. Residential Tenancies Act 2010 (NSW) s 63(3). 472. Residential Tenancies Act 2010 (NSW) s 62. 473. Summers v Salford Corp [1943] AC 283 at 285 per Lord Atkin. 474. See, for example, Bannister v Cheung [2014] NSWCATCD 105. 475. Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313, Jones v Bartlett (2000) 205 CLR 166, Sakoua v Williams (2005) 64 NSWLR 588. 476. Residential Tenancies Act 2010 (NSW) s 51(2)(b). 477. Residential Tenancies Act 2010 (NSW) s 51(2)(a). Here ‘premises’ has an expanded meaning to include everything provided with the premises for use by the tenant: s 51(4). 478. Residential Tenancies 2010 (NSW) s 51(3)(b), (c). 479. Residential Tenancies Act 2010 (NSW) s 64. 480. See 11.80.

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broken lavatory systems, serious roof leaks, gas leaks, dangerous electrical faults, flooding or serious flood damage, serious storm or fire damage, and failure or breakdown of gas, electricity or water supply.481

Fixtures and alterations 11.111  A tenant may not annex anything to the premises, or alter or renovate the premises, unless in accordance with a term of the agreement, or the landlord’s consent.482 The landlord must not unreasonably withhold consent to a fixture, alteration or renovation of a minor nature.483 At the end of the tenancy, the tenant may remove the fixture. If any damage occurs, the tenant must notify the landlord and repair the damage or compensate the landlord.484 Any disputes as to fixtures and alterations may be the subject of an application to the tribunal.485 Locks, security devices and smoke alarms 11.112  Section 70 of the Residential Tenancies Act requires the landlord to provide and maintain such locks or other security devices as are necessary to ensure that the residential premises are reasonably secure. If the premises become insecure during the currency of the term, the landlord must either be aware of this or be informed by the tenant in order to be liable.486 Where the landlord’s agent allowed unsupervised inspections of the premises by prospective tenants, and the premises were subsequently burgled by the use of a duplicate key, the landlord was held liable.487 In Lawson v NSW Department of Housing,488 the tribunal rejected the proposition that deadlocks are necessary in all cases; and the fact that insurance companies will not provide insurance unless they are installed is not decisive. The tribunal accepted that burglary statistics for the district may be relevant, but not decisive, in determining what amounts to ‘reasonable security’. A landlord or tenant must not alter, remove or add to locks or security devices without a reasonable excuse or the consent of the other party.489 By virtue of s 6.34 of the Environmental Planning and Assessment Act 1979 (NSW) (EPAA), regulations may be made so as to require owners to install smoke alarms in premises in which persons sleep. Under cl 42 of the Standard Residential Tenancies Agreement, the landlord agrees to ensure that smoke alarms are installed and maintained in the residential premises in accordance with the EPAA provision. Clause 44 further provides that the

481. Residential Tenancies Act 2010 (NSW) s 62. 482. Residential Tenancies Act 2010 (NSW) s 66(1). 483. Residential Tenancies Act 2010 (NSW) s 66(2). 484. Residential Tenancies Act 2010 (NSW) s 67. 485. Residential Tenancies Act 2010 (NSW) s 68 (tenant’s remedies); s 69 (landlord’s remedies). 486. Tate v Commonwealth (NSWSC, Loveday J, 17 June 1988, unreported, BC8801829). 487. Li v Eliezer (NSWSC, Simpson J, 1 May 1997, unreported, BC9703051). 488. Lawson v NSW Department of Housing (RTT 92/001699). 489. Residential Tenancies Act 2010 (NSW) s 71.

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landlord and tenant each agree not to remove or interfere with the operation of a smoke alarm installed on the residential premises, unless they have a reasonable excuse to do so.490

Assignment and subletting 11.113  The rights of residential tenants to assign and sublet are more restricted than those of tenants at  common law. A tenant has a general right to assign and sublet, but may only do so with the written consent of the landlord.491 In respect of a transfer or sublet of the entire tenancy, there is no requirement that the landlord’s refusal to consent must be reasonable.492 However, in the case of partial transfer or sublet, consent must not unreasonably be withheld.493 A partial transfer is one that results in one or more tenants in addition to the original tenant.494 Since the Act is not a complete codification of the law relating to residential tenancies,495 the common law rule that assignments and subleases in breach are valid until the landlord takes action to terminate the agreement would apply.496 Right to a new tenancy 11.114  The Residential Tenancies Act gives the tribunal discretion to make an order vesting a new tenancy in certain circumstances. Where a person, not the tenant named in the tenancy agreement, is in occupation of premises when the tenant moves out or, in the case of a sole tenant, dies, that person may apply to the tribunal to be recognised as a tenant under the agreement on such terms and conditions as applied under the previous agreement.497 This provision does not apply if the landlord is a social housing provider.498

Rent 11.115  The basic principle underpinning the Residential Tenancies Act 2010 (NSW) in relation to rent is that rents are determined by the parties to the agreement. Rents are not ‘controlled’ as they were under some of the predecessor legislation. On the other hand, the 2010 Act does tightly regulate the manner of payment of, and increases in, rent. It also contains provisions for reduction of rent in certain circumstances.

Rent increases 11.116  In the case of continuing tenancies, rent may only be increased if the landlord has given 60 days’ notice in writing prior to the increase. The notice must contain the amount of the increased rent and the date from which it is payable.499 This requirement 490. See Residential Tenancies Regulation 2019 (NSW) Sch 1. 491. Residential Tenancies Act 2010 (NSW) s 74. 492. Residential Tenancies Act 2010 (NSW) s 75. 493. Residential Tenancies Act 2010 (NSW) s 75(2). 494. Residential Tenancies Act 2010 (NSW) s 75(2). 495. Bradbrook, ‘Residential Tenancies Law in Australia: The Second Stage of Reforms’, note 412 above. 496. Massart v Blight (1951) 82 CLR 423. 497. Residential Tenancies Act 2010 (NSW) s 77. 498. Residential Tenancies Act 2010 (NSW) s 77(5). 499. Residential Tenancies Act 2010 (NSW) s 41(1).

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does not apply to fixed-term agreements of less than two years that specify the increased amount of rent or a method for calculating it and the date on which the increased amount becomes payable.500 In the case of fixed-term agreements for more than two years, rent may be increased whether or not the parties have expressly agreed the amount or a method  of calculating the amount, but the rent may only be increased once in each 12-month period.501 The rule that rent may not be increased more than once in any 12-month period applies also to periodic tenancies.502 There are penalties for failure to comply with these requirements.503 The tenant may challenge a proposed rent increase on the ground that it is excessive. Any such application must be made to the tribunal within 30 days of receipt of the notice of increase.504 In considering whether a rent increase is excessive, the predominant matter to which the tribunal may have regard is the general market level of rents for comparable premises in the same or similar locality, and may also have regard to the value of the premises, landlord’s outgoings, services, fittings, amenities and goods provided, the condition of the premises, and any work done to the premises by the tenant at the landlord’s request, and when the last increase occurred.505 Under the equivalent provision in the 1987 Act, ‘may’ was interpreted to mean ‘shall’, and the onus of proof to show that the increase is excessive is on the tenant. In Kilpatrick v  Gresser,506 it was held that the excessive rent provisions demonstrated that the overriding matter for consideration was the general market rent for comparable premises. The language of the 1987 Act has been retained in the 2010 Act, so these observations remain pertinent. Where the tribunal finds that an increase is excessive, it may specify a maximum rent for the premises and specify that this rent may apply for a period not exceeding 12 months.507 Where any rent has been paid that is not required under the Act, the tenant may make a written request to the landlord to repay the amount. The landlord has 14 days to repay the amount. If the landlord does not pay, the tribunal may make an order for repayment.508

Rent reduction 11.117  If there is a withdrawal or reduction of the goods, services or facilities provided with the premises, the tenant may make a written request for a reduction in rent.509 ‘Reduction or withdrawal by the landlord’ is not limited to intentional action on the part of the landlord. The concept extends to situations where the landlord fails to take steps to

500. Residential Tenancies Act 2010 (NSW) ss 41(1A), 42(1). 501. Residential Tenancies Act 2010 (NSW) s 42(2). 502. Residential Tenancies Act 2010 (NSW) s 41(1B). 503. Residential Tenancies Act 2010 (NSW) ss 41(9), 42(3). 504. Residential Tenancies Act 2010 (NSW) s 44(1); Residential Tenancies Regulation 2019 (NSW) reg 39(1). 505. Residential Tenancies Act 2010 (NSW) s 44(5). 506. Kilpatrick v Gresser (NSWSC, Foster J, 13 May 1987, unreported, BC8701375). 507. Residential Tenancies Act 2010 (NSW) s 44(6). 508. Residential Tenancies Act 2010 (NSW) s 47. 509. Residential Tenancies Act 2010 (NSW) s 43(1).

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remedy problems after notification by the tenant.510 The landlord and tenant are, of course, free to agree to reduce the rent at any time for any reason.511 In addition, rent will abate if the premises are: destroyed or become wholly, or partly, uninhabitable; no longer lawfully usable as a residence; or compulsorily acquired by an authority.512

Termination General 11.118  A residential tenancy can be terminated only in the ways provided for in the 2010 Act.513 The various methods of termination are set out in s 81 of the Act. A residential tenancy can be brought to an end by any of the following: • either party giving a notice of termination, followed by delivery up of possession by the tenant or an order by the tribunal terminating the agreement; • a tribunal order terminating the agreement; • a person with a superior title (eg, a head landlord), a successor in title of the landlord, or a mortgagee becoming entitled to the premises (preserving the old system and Torrens priority rules);514 • abandonment of the premises by the tenant; • express surrender; • merger; or • disclaimer, such as repudiation by the tenant accepted by the landlord.

Termination by notice 11.119  Without any ground Residential tenancies do not automatically terminate when the terms expires. Notice is necessary to bring both periodic and fixed-term agreements to an end.515 In addition, either the tenant must deliver up vacant possession, or the tribunal makes an order under s 83 of the Residential Tenancies Act terminating the agreement. Thus, if the tenant fails to leave following the notice, the landlord must get an order of the tribunal to repossess the premises. There are penalties for landlords or agents who attempt to retake possession by physical re-entry.516 The tribunal has exclusive jurisdiction over proceedings for recovery of possession where the parties are landlord and tenant, but this exclusive jurisdiction does not extend to cases where a third party, such as an assignee, is seeking possession on the basis of priority.517 510. Coombs v Rogers (RTT 88/288). 511. Residential Tenancies Act 2010 (NSW) s 43(4). 512. Residential Tenancies Act 2010 (NSW) s 43(2). On wholly or partly uninhabitable, see Elsom & TaylorParker v Coroneos [2016] NSWCATCD 47. 513. Residential Tenancies Act 2010 (NSW) s 81(1). 514. For a discussion of these cases, see 11.131. 515. Residential Tenancies Act 2010 (NSW) s 81(2). 516. Residential Tenancies Act 2010 (NSW) s 120(1) (not exceeding 200 penalty units). 517. Residential Tenancies Act 2010 (NSW) s 119.

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11.120  Following breach  A landlord or a tenant may give notice of termination where the other party has breached the agreement.518 In the case of a breach of the obligation to pay rent or charges for utilities that are payable by the tenant, the rent or other charges must be at least 14 days in arrears before the landlord can give notice.519 The notice of termination must specify a period of at  least 14 days for the delivering up of vacant possession.520 11.121  Frustration  If the premises are destroyed,rendered wholly or partly uninhabitable, cease to be lawfully usable for the purposes of a residence, or acquired by any authority by compulsory process (otherwise than as a result of a breach of the agreement), either party may give notice of termination of the agreement.521 No minimum notice period is specified, so it appears to be the case that the agreement can be terminated with immediate effect. In these circumstances, rent abates accordingly.522 11.122  Sale of premises  Where there is a periodic agreement and the landlord has entered into a contract to sell the premises that requires the landlord to give vacant possession to the buyer, the landlord may give notice of termination.The minimum notice period in this situation is 30 days.523

Order for termination and possession 11.123  Where the tenancy is terminated other than following a breach of the agreement and the tenant fails to deliver up possession of premises on the day specified in a notice of termination, the landlord may apply to the tribunal for an order of termination no less than 30 days after that day.524 Where the premises are to be sold and the landlord has given the required notice to the tenant and the tenant has not vacated the premises, the tribunal may grant an order for termination.525 In cases of notice of termination for breach, the tribunal may grant an order for termination if the tribunal is satisfied that there was a breach, that, in the circumstances of the case, the breach is such as to justify termination of the agreement, and that a termination notice was given with which the tenant has not complied.526 In determining whether to make an order, the tribunal may take into account certain matters listed in the legislation, which include: • the nature of the breach; • any previous breaches; • any steps taken by the tenant to remedy the breach; 518. Residential Tenancies Act 2010 (NSW) s 87(1) (breach by tenant); s 98(1) (breach by landlord). 519. Residential Tenancies Act 2010 (NSW) s 88(1). 520. Residential Tenancies Act 2010 (NSW) s 87(2). 521. Residential Tenancies Act 2010 (NSW) s 109. 522. Residential Tenancies Act 2010 (NSW) s 43(2). 523. Residential Tenancies Act 2010 (NSW) s 86(1)(2)(3). 524. Residential Tenancies Act 2010 (NSW) s 84(3) (fixed term); s 85(3) (periodic tenancy). 525. Residential Tenancies Act 2010 (NSW) s 86(4). 526. Residential Tenancies Act 2010 (NSW) s 87(4). Section 87(5) specifies the matters which the tribunal may take into account, including previous breaches by the landlord.

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• any steps taken by the landlord about the breach; and • the previous history of the tenancy.527 In all cases, the landlord must satisfy the tribunal that a valid notice was given, although the tribunal may disregard any defect in the notice in the circumstances described in s 113 of the Act.

Suspension or refusal of orders for termination 11.124  The tribunal has discretion to suspend or refuse orders for termination under ss 114 and 115 of the Residential Tenancies Act. First, having regard to the relative hardship that may be caused to the landlord or tenant, the tribunal may suspend the order for possession (as opposed to the order for termination) ‘for a specified period’.528 Second, the tribunal may refuse to make an order terminating the agreement if the landlord’s strategy amounts to a retaliatory eviction; that is, if the landlord is retaliating because the tenant has applied to the tribunal for an order, complained to a governmental authority or taken some other action to enforce his or her rights as a tenant, or because an order of the tribunal was in force in relation to the landlord and the tenant.529 The tribunal must also refuse to make an order for termination if, in the case of failure to pay rent, the tenant pays all the rent or enters into, and fully complies with, a payment plan entered into with the landlord.530 Termination where notice not required 11.125  In certain circumstances, the tribunal may make an order for termination whether or not notice has been given by the landlord or tenant. First, where the tribunal is satisfied that the tenant has intentionally or recklessly caused or permitted serious damage to the premises, or injury to the landlord or the landlord’s agent, employee or contractor, or any person in occupation of neighbouring property or common property,531 it may order a termination of the agreement without notice.532 This order may specify that it is

527. These provisions appear to respond to the decision by the New South Wales Court of Appeal that, under the previous legislation (Residential Tenancies Act 1987 (NSW)), the tribunal was required to consider the circumstances of the case before ordering termination: Roads and Traffic Authority of New South Wales v Swain (1997) 41 NSWLR 452 at 455. In addition, the tribunal had identified other factors as relevant ‘circumstances’, these being the period the tenant has occupied the premises; the age, health and employment status of the tenant; the tenant’s capacity to find alternative accommodation; any breaches by, or neighbours’ complaints about, the tenant; and the landlord’s need for the premises for other persons: Adavale Realty Pty Ltd v Williams (RTT 96/024133). Many, but not all, of these factors would now be relevant under s 86(4) of the Residential Tenancies Act. 528. Residential Tenancies Act 2010 (NSW) s 114. 529. Residential Tenancies Act 2010 (NSW) s 115. 530. Residential Tenancies Act 2010 (NSW) s 89(2). 531. For the definition of ‘neighbouring property’, see s 90(5) of the Residential Tenancies Act. 532. Residential Tenancies Act 2010 (NSW) s 90(1). By virtue of subsection 90(3), the landlord is not required to give a termination notice to the tenant prior to applying to the tribunal.

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to take effect immediately.533 In New South Wales Land and Housing Corporation v Green,534 it was held that use of the term ‘may’ in the previous s 68(2) (of the Residential Tenancies Act 1987 (NSW)) conferred a discretion on the tribunal, and that the tribunal had not erred in law in declining to make an order for termination for a single act of injury to neighbouring premises and nervous shock to the occupants, as the Department of Housing had a relocation policy for difficult tenants that it could have used, but did not. Second, either the landlord or the tenant may apply to the tribunal to terminate the agreement on the basis that he or she would, in the special circumstances of the case, suffer undue hardship if the agreement were not terminated.535 Where the order is made, compensation may be payable to the other party, who is under a duty to mitigate his or her loss.536 Third, the tribunal may make a termination order if it is satisfied that the tenant, or any person who although not a tenant is occupying or jointly occupying the residential premises, has intentionally or recklessly caused or permitted an illegal use of the residential premises, and the use is sufficient to justify termination.537 The tribunal may also make a termination order if the same persons have used the premises, or adjoining or adjacent premises, for the purposes of the manufacture, sale, cultivation or supply of any prohibited drug within the meaning of the Drug Misuse and Trafficking Act 1985 (NSW).538 In either case, the landlord is not required to give a no termination notice prior to making the application.539 Fourth, the tribunal may make a termination order if the tenant, or any person, occupying or jointly occupying the premises has seriously or persistently threatened or abused the landlord.540 It may also make an order if the same persons have engaged or permitted another to engage in conduct that would be reasonably likely to cause the person to be intimidated or harassed.541 In such a case, the landlord is not required to give a termination notice prior to applying to the tribunal.542

533. Residential Tenancies Act 2010 (NSW) s 90(2). 534. New South Wales Land and Housing Corporation v Green (NSWSC, Graham AJ, 31 October 1997, unreported, BC9705949). See also Crook v Consumer,Trader and Tenancy Tribunal (2003) 59 NSWLR 300. 535. Residential Tenancies Act 2010 (NSW) s 93(1) (landlord’s hardship), s 104 (tenant’s hardship). 536. Residential Tenancies Act 2010 (NSW) s 93(2),(3) (landlord), s 104 (2), (3) (tenant). 537. Residential Tenancies Act 2010 (NSW) s 91(1)(b). On ‘intentionally’ and ‘recklessly’, see Cure v Bridge Housing Ltd [2014] NSWCATAP 80. On the Tribunal’s discretion to make an order, see Cain v New South Wales Land and Housing Corporation [2014] NSWCA 28; (2014) 86 NSWLR 1. On connection between premises and offence, see McGuiness v NSW Land and Housing Corporation [2014] NSWCATAP 98. 538. Residential Tenancies Act 2010 (NSW) s 91(1)(a). 539. Residential Tenancies Act 2010 (NSW) s 91(4). 540. Residential Tenancies Act 2010 (NSW) s 92(1)(a). 541. Residential Tenancies Act 2010 (NSW) s 92(1)(b). 542. Residential Tenancies Act 2010 (NSW) s 92(3).

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NSW Civil and Administrative Tribunal (NCAT) 11.126  Disputes between parties to a residential tenancy are dealt with by a specialised, informal tribunal, the NSW Civil and Administrative Tribunal as established by the Civil and Administrative Tribunal Act  2013 (NSW).543 The tribunal has jurisdiction up to $30,000 for matters relating to rental bonds and $15,000 for any other matters.544 The ‘guiding principle’ for the Civil and Administrative Tribunal Act procedurally is to effect a ‘just, cheap and quick resolution’ of the matters before it.545 The tribunal has a wide discretion in the conduct of proceedings before it. The rules of evidence do not apply.546 The tribunal must act ‘with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms’.547 The tribunal is under an obligation to promote the use of other resolution processes, such as mediation and conciliation, in order to narrow or resolve the issues between the parties.548 If a settlement is made, the tribunal may make an order giving effect to the terms of the settlement, as long as the settlement is in writing, signed by the parties and lodged with the tribunal, and the tribunal is satisfied that it would have power to make a decision in terms of the agreement.549 Notably, if an application with respect to a tenancy is made to the tribunal, no court will have jurisdiction to deal with the issues raised in the application.This will not apply if the application is withdrawn or dismissed for want of jurisdiction.550 11.127  The tribunal may dismiss any proceedings where: a party to an application withdraws the application (or an appeal), or fails to appear in any proceedings, or the Tribunal is satisfied that the proceedings are ‘frivolous or vexatious or misconceived or lacking in substance’, or the Tribunal considers there has been ‘a want of prosecution of the proceedings’.551 Hearings are generally open to the public unless the tribunal orders them to be held in private. Reasons for holding the proceedings in private includes the confidential nature of the matter or evidence.552 A hearing can be dispensed with if the tribunal is satisfied that the issues can be determined on the submissions or other documents.553 In proceedings before the tribunal, a tenant may be represented by the Commissioner for Fair Trading or the commissioner’s agent, who can additionally take, defend or

543. Civil and Administrative Tribunal Act 2013 (NSW) s 7 and Sch 4. 544. Residential Tenancies Act 2010 (NSW) s 187(4)(a); Residential Tenancies Regulation 2019 (NSW) reg 40. 545. Civil and Administrative Tribunal Act 2013 (NSW) s 36(1). 546. Civil and Administrative Tribunal Act  2013 (NSW) s  38(2). There are some exceptions, for example, relating to the privilege against self-incrimination and disclosure of documents protected by privilege: ss 38(3)(b), 67. 547. Civil and Administrative Tribunal Act 2013 (NSW) s 38(4). 548. Civil and Administrative Tribunal Act 2013 (NSW) s 37. 549. Civil and Administrative Tribunal Act 2013 (NSW) s 59(1). 550. Civil and Administrative Tribunal Act 2013 (NSW) Sch 4 Pt 5 cll 3, 4. 551. Civil and Administrative Tribunal Act 2013 (NSW) s 55. 552. Civil and Administrative Tribunal Act 2013 (NSW) s 49. 553. Civil and Administrative Tribunal Act 2013 (NSW) s 50(2).

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intervene in proceedings before the tribunal.554 An investigator appointed under the provisions of the Fair Trading Act 1987 (NSW) may be empowered to investigate whether the Act or Regulations are being complied with, and to obtain evidence relation to any contravention.555

Representation and costs 11.128  Consistent with the principles of informality and affordability, there are limited rights to legal representation of parties before the tribunal. The basic principle is that each party shall have carriage of his or her own case, and shall not be represented by any other person.556 The tribunal has, however, wide powers to grant leave for a person to be represented, or it can appoint a person to represent a party, appoint a guardian ad litem or order that a party be separately represented.557 Parties in any proceedings before the tribunal must pay their own costs.558 The tribunal may award costs if it is satisfied that there are ‘special circumstances’.559 The Civil and Administrative Tribunal Act lists matters that may be taken into account in determining if there are ‘special circumstances’. These include matters such as delay, the way in which parties conducted proceedings, whether proceeding were ‘frivolous or vexatious’, and the complexity of the matter.560 Costs include the costs of, or costs incidental to, proceedings.561

Tribunal orders 11.129  There is a wide array of orders that the tribunal may make when disputes arise. These orders include: termination orders;562 orders relating to performance or restraint;563 and orders relating to payments and compensation.564 In Residential Tenancies Tribunal of New South Wales v Offe,565 compensation was held to include compensation for non-economic loss. The tribunal cannot make conditional orders without giving the affected party the opportunity to challenge an applicant’s claim that the condition has been broken.566 554. Residential Tenancies Act 2010 (NSW) ss 192–195. 555. Residential Tenancies Act 2010 (NSW) s 196(1); Fair Trading Act 1987 (NSW) s 18. 556. Civil and Administrative Tribunal Act 2013 (NSW) s 45(1)(a). 557. Civil and Administrative Tribunal Act 2013 (NSW) s 45(1)(b), (4); Civil and Administrative Tribunal Rules 2014 (NSW) r 31. 558. Civil and Administrative Tribunal Act 2013 (NSW) s 60(1). 559. Civil and Administrative Tribunal Act 2013 (NSW) s 60(2). 560. For a full list, see Civil and Administrative Tribunal Act 2013 (NSW) s 60(3). 561. Civil and Administrative Tribunal Act 2013 (NSW) s 60(5). 562. Residential Tenancies Act 2010 (NSW) s 187(1)(i). 563. Residential Tenancies Act 2010 (NSW) s 187(1)(a), (b). 564. Residential Tenancies Act 2010 (NSW) s 187(1)(c), (d). 565. Residential Tenancies Tribunal of New  South  Wales v  Offe (NSWSC, Abadee J, 1  July  1997, unreported, BC9708044). This decision was set aside on appeal, but only for reasons of standing.  Abadee J’s interpretation of s 16(2)(d)(iii) of the Residential Tenancies Act 1987 (NSW) was not considered. The tribunal has since given compensation for non-economic loss in a number of cases: see, for example, Ellis v City Women’s Hostel (RTT 97/022789) (lockout leading to deterioration in the tenant’s health). 566. King v New South Wales Land and Housing Corp (1992) 26 ALD 684.

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Appeals and reservations of questions of law 11.130  The tribunal may refer questions of law to the Supreme Court of New South Wales if the President has consented to the reference in writing.567 Moreover, when a matter is referred to the Supreme Court, the tribunal must not make an order until the Supreme Court has decided the question. Once the Supreme Court has made a decision, it must remit its decision to the tribunal, and the tribunal must not proceed in a manner, or make an order or a decision, that is inconsistent with the decision of the Supreme Court.568 Appeals are possible against decisions of the tribunal. A party to the proceedings may make an appeal to the Appeal Panel of the tribunal.569 The Appeal Panel has power to grant an extension of time in which to appeal.570 Appeals on questions of law may be made as of right, but with respect to any other decision leave of the Appeal Panel is required.571 In order to obtain leave to appeal, the Appeal Panel must be satisfied the appellant may have suffered a substantial miscarriage of justice because the tribunal’s decision was not fair and equitable, because it was against the weight of evidence or because substantial new evidence that was not available at the time of the original proceedings has arisen.572 In the case of termination of a tenancy where a warrant of possession has been executed, an appeal can only be made on a question of law.573 The Appeal Panel can deal with the matter by way of a new hearing if it believes that is warranted.This can include consideration of new or substitute evidence.574 A party to an appeal to the Appeal Panel, with leave, can appeal to the Supreme Court on a question of law in respect of any decision made by the tribunal.575 The court may make such orders as it considers appropriate including affirming, varying or setting aside the tribunal decision, or remitting the case to be reheard by the tribunal.576 Further, a request for judicial review may be made to the Supreme Court. Such relief is discretionary. Moreover, the Civil and Administrative Tribunal Act provides a number of grounds on which the Supreme Court can refuse to exercise its supervisory jurisdiction. Most relevantly, that court can refuse jurisdiction where it believes ‘that adequate provision is made for an internal review of the decision or an administrative review of the decision by the tribunal’ under the Administrative Decisions Review Act 1997 (NSW).577 567. Civil and Administrative Tribunal Act 2013 (NSW) s 54(1), (2). 568. Civil and Administrative Tribunal Act 2013 (NSW) s 54(4). 569. Civil and Administrative Tribunal Act 2013 (NSW) s 80(1). 570. Civil and Administrative Tribunal Act 2013 (NSW) s 41; Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22. 571. Civil and Administrative Tribunal Act 2013 (NSW) s 80(2)(b). 572. Civil and Administrative Tribunal Act  2013 (NSW) Sch 4 Pt 6 cl 12(1). See  Collins v  Urban [2014] NSWCATAP 17. 573. Civil and Administrative Tribunal Act 2013 (NSW) Sch 4 Pt 6 cl 12(2)(b). 574. Civil and Administrative Tribunal Act 2013 (NSW) s 80(3). 575. Civil and Administrative Tribunal Act 2013 (NSW) s 83(1). 576. Civil and Administrative Tribunal Act 2013 (NSW) s 83(3). 577. Civil and Administrative Tribunal Act 2013 (NSW) s 34(1)(a). In effect, this reiterates the common law position that judicial review may be refused if another form of redress, including internal review or appeal, is available.

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Residential tenancies and priorities 11.131  While s 13 of the Residential Tenancies Act has largely removed the distinction between legal and equitable interests by providing that agreements can be either written or oral, or partly written and partly oral, and draws no distinction between agreements under old system title and Torrens title, residential tenancies remain subject to the priority rules in operation under those systems.578 This is evident from s 81(4) of the Act, which provides that residential tenancy agreements will come to an end when various third parties (holders of superior title, assignees or mortgagees) ‘become entitled to possession of the residential premises’. These entitlements are governed by the relevant common law and statutory principles. It follows that, in the case of old system title, for instance, if the agreement is in the form of a deed, or oral within the requirements of s 23D(2) of the Conveyancing Act, it will be legal and will have its priority determined by whether it is an earlier or later interest. Equally, if the agreement is for three years or less and the tenant is in occupation, the tenant will be able to take advantage of the exception to indefeasibility contained in s 42(1)(d) of the Real Property Act in the case of Torrens title. Of course, if the agreement would only qualify as a licence at common law, as where the tenant does not have a right of exclusive possession, but does have the protection of the Residential Tenancies Act because he or she is not a boarder or lodger, that ‘tenant’ will be unable to take advantage of any priority rules because such an interest is not proprietary at common law.579 Although the priority rules prevail in determining disputes where successors in title of either the landlord or the tenant are in dispute, the Residential Tenancies Act contains an important provision that allows the tribunal, or any court that is hearing the action to recover possession, to vary those rules. By s 125 of the Residential Tenancies Act, the tribunal has power ‘in the special circumstances of the case’ to make an order vesting a tenancy in the tenant, or former tenant holding over after termination of the agreement, where a person (the plaintiff) who is not the landlord is proceeding to recover possession of the premises. The tribunal also has power to vest a tenancy in the tenant or former tenant where the plaintiff has recovered possession.580 The person who is successful in obtaining possession will become the landlord and the tenant will hold a tenancy on such terms and conditions as the tribunal thinks fit, having regard to the circumstances of the case.581 Though the heading of s 125 states that it is concerned with orders against a ‘person with a superior title’, and s 81(4) of the Residential Tenancies Act draws a clear distinction between persons with a superior title (‘for example, a head landlord’),582 a person who succeeds to the title583 and mortgagees,584 it has been held that the forerunner to s 125, s 76 of the Residential Tenancies Act 1987, applied to mortgagees, and presumably purchasers, because of the general wording in the section referring to ‘a person … who is not the 578. For the separate sets of rules, see Chapter 7 for old system title; Chapter 8 for Torrens title. 579. See 11.5. 580. Residential Tenancies Act 2010 s 125(4). 581. Residential Tenancies Act 2010 s 125(4). 582. Residential Tenancies Act 2010 (NSW) s 81(4)(a). 583. Residential Tenancies Act 2010 (NSW) s 81(4)(c). 584. Residential Tenancies Act 2010 (NSW) s 81(4)(b).

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landlord’.585 This wording is replicated in s 125. ‘In the special circumstances of the case’ does not merely mean the unique position of the tenant, but imposes a requirement on the tenant ‘to provide grounds for taking his position out of the ordinary’; and it will not be easy to establish special circumstances where the tenant can obtain ‘alternative accommodation of an adequate kind’.586 Where the tribunal exercises its power to vest a tenancy, the effect is to displace pro tanto the priority rules in respect of both the old system and Torrens system. If an agreement has been entered into after a mortgage has been created, and the mortgage prohibits the granting of leases, the agreement is not binding on the mortgagee unless the mortgagee consents.587 Even in this case, the tribunal or court retains a discretion to grant a lease under s 125.588

Reform of residential tenancies legislation 11.132  The previous edition of this text identified a number of desirable reforms in residential tenancies law. Although a new Residential Tenancies Act came into force in 2010, it seems that many of the suggested reforms remain outstanding (and all, therefore, remain addressed below). While not all of these, or possibly even any, would find favour with all those affected by the legislation, they represent serious weaknesses in the Act.

Rent regulation 11.133  As noted above, the tribunal’s power to police rents is very limited. Basically, only rent increases and excessive rent, in the context of withdrawal of services, come within its jurisdiction.Yet high rent is a significant factor in poverty in Australia.589 The excessive rent provision has not been of much assistance to tenants, given the great difficulties faced in proving general market rents for similar premises. In these circumstances, it would be fairer for landlords to have the onus of proving that a rent increase was not excessive, particularly because landlords usually engage agents who have expert knowledge about market rents. A further useful reform could be the restriction of rent increases by reference to the increases in the consumer price index (CPI), as is commonly the case in commercial leases.This could alleviate one of the worst tendencies of housing markets: rapid and steep increases in times of shortage. This is a potentially acute problem in the context of ‘megaevents’, while guaranteeing that landlords have a satisfactory return on their investment.590 Another suggested strategy for dealing with this problem is by means of limiting the number of rent increases over a specified period.591 In respect of this last suggestion, it 585. Perpetual Finance Corporation Ltd v Blain (1996) 9 BPR 16,243. 586. Perpetual Finance Corporation Ltd v Blain (1996) 9 BPR 16,243 at 16,249 and 16,251 per Giles CJ. 587. Real Property Act 1900 (NSW) s 53(4). For the complex issue of the granting of leases by mortgagors, see Chapter 14. 588. Perpetual Finance Corporation Ltd v Blain (1996) 9 BPR 16,243; Halaseh v Citibank Pty Ltd (RTT 96/016769) (referring to the previous s 76 of the Residential Tenancies Act 1987 (NSW)). 589. See, for example, J Hall, Housing New South Wales’s Low to Moderate Income Households: Policies, Conditions, and Performance, 1991–1996, Monograph 47, Planning Research Centre, Sydney, 1998. 590. See, for example, G Cox, The 2000 Olympics and the Residential Tenancies Market, New  South  Wales Department of Fair Trading, Sydney, 1998. 591. This was preferred in Cox, The 2000 Olympics and the Residential Tenancies Market, note 591 above, Ch 8.

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should be noted that in the specific context of fixed term residential tenancy agreements, the Residential Tenancies Act has undertaken one small reform, and limited rent increases to only one per 12-month period.592

Share housing, boarders and lodgers 11.134  The tribunal has no jurisdiction over disputes between tenants, because its jurisdiction is limited to landlord–tenant disputes. These disputes may only surface in the context of a residential tenancy dispute. Moreover, where a co-occupant is not a tenant (as is often the case where one person secures the property as tenant, and later finds others to occupy without the landlord’s consent, or where original tenants leave and others enter without consent), disputes may arise in relation to the bond, or debts incurred during the tenancy, but these parties cannot gain access to the tribunal. Under s 77 of the Residential Tenancies Act, the tribunal may recognise a co-occupant as a tenant, thereby giving the co-occupant access to the tribunal, where the sole tenant has died or no longer occupies the premises. Otherwise, co-occupants must go to the Local Court or engage in an alternative dispute-resolution process in order to get a remedy.This seems both wasteful and inefficient when the tribunal may often have already dealt with the same matter in the context of a landlord–tenant dispute. There appears no good reason why the tribunal should not also determine these disputes, as they will frequently be cognate to the tenancy agreement. A study prepared for the Department of Fair Trading has recommended this.593 A further improvement in the Residential Tenancies Act would be a set of reforms relating to share households.The Act says nothing about the formalities necessary to assign a residential tenancy agreement, or the consequences of informal arrangements such as those noted above. It follows that complex rules of the common law apply. Equally, in many instances, ‘co-tenants’ in share households might be subtenants, boarders or lodgers, which may put them in an even more vulnerable position. A preferable position would be for each occupant, regardless of formal status, to have access to the tribunal to resolve disputes. Indeed, boarders and lodgers generally, given their particular vulnerability in terms of termination by notice (which depends exclusively on the contract), should have access to the tribunal to uphold their rights.

Reasonable security 11.135  A vast number of cases have found their way to the tribunal on the subject of reasonable security. As we have seen above,594 the tribunal uses a number of tests to determine what reasonable security is for particular premises. But, arguably, the best test is that of insurance companies, which have detailed data about such matters. This data forms the basis of decisions to insure. Often these decisions impose conditions on occupants, say, to install deadlocks as a condition of insurance. If the landlord fails to do this, the tenant 592. See 11.116. 593. J Goddard and S Stamatellis, The Fair Share: Reform of Residential Tenancies Law in Relation to Share Housing, New South Wales Department of Fair Trading, Sydney, 1998. 594. See 11.112.

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may be unable to get insurance. As the tribunal has held, these conditions ought to be accepted as proof, in the event of burglary, that the premises were not reasonably secure, as long as they were brought to the attention of the landlord.595

Assigning and subletting 11.136  The Residential Tenancies Act  2010 (NSW) has partially reformed previous problems with assignment and subletting. The 1987 Act gave the landlord an unfettered discretion to withhold consent to a proposed assignment or sublease.596 This was at odds with the retail leases legislation and the residential tenancies legislation in other states. Unfortunately, the Act still gives a right of veto to landlords over an entire transfer or sublease. However, it does now make a request for a partial transfer or sublease subject to a reasonable withholding of consent by the landlord.597 Yet there remains little to justify the conferring of an effective veto on landlords with respect to full transfers and subleases, as long as their investment in the property is satisfactorily protected. This end can be achieved as long as the landlord has ready access to the tribunal, and remedies are prompt, which is the case at  present. As Bradbrook has argued, in principle a tenant’s separate proprietary interest should be as ample as possible, consistent with protection of the landlord’s interest.598 This would require a general right to assign and sublet, subject to a reasonable withholding of consent by the landlord.

Retail Leases 11.137  Leases of retail shops, especially where small traders are tenants of large corporations that own or manage shopping centres, present many of the problems of inequality of bargaining power and market pressure that were previously mentioned in respect of residential tenancies. Small retailers were, of course, heavily affected by government-imposed restrictions related to the COVID-19 pandemic in 2020 and 2021. In New  South  Wales, special regulations were introduced to ameliorate the economic ‘shock’ to this sector. These regulations included a mechanism whereby the rent for an ‘impacted lease’ could be re-negotiated.599 Of longer term significance is the Retail Leases Act  1994 (NSW).600 As is the case with residential tenancies, the legislation has introduced some compulsory terms into retail leases, but this statutory regime differs from that governing residential tenancies in so far as it has not introduced an entirely new specialised tribunal to deal with disputes. Disputes in relation to retail leases may be heard at first instance in the NSW Civil & Administrative Tribunal (NCAT).

595. Moon v Diroan Pty Ltd (RTT 96/024196). 596. Residential Tenancies Act 1987 (NSW) s 33. 597. See 11.113. 598. Bradbrook, ‘Residential Tenancies Law in Australia: The Second Stage of Reforms’, note 412 above. 599. Retail and Other Commercial Leases (Covid-19) Regulation 2021 (NSW) s 6D. 600. A comprehensive evaluation of the current state of retail leases legislation throughout Australia can be found in E Webb, ‘Almost a Decade On — A (Reid) Report Card on Retail Leasing’ (2006) 13 Australian Property Law Journal 240.

629

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Property Law in New South Wales

What is a retail lease? 11.138  For a lease to be governed by the Retail Leases Act, it must be a ‘retail shop lease’. This is defined as an agreement under which one party grants to another, for value, a right of occupation of premises for use as a retail shop.601 The agreement need not confer a right of exclusive possession,602 and the Act applies whether or not the agreement is express or implied, oral or in writing.603 Where the lease covers premises in addition to that of a retail shop, only the shop is covered by the Act.604 The Retail Leases Act applies to two basic categories of retail shop. First, it applies to those retail shops used, or intended to be used, wholly or predominantly for the carrying on of certain types of businesses listed in Sch 1 of the Act.605 The second class comprises those retail shops used to carry on a business (whether or not listed in Sch 1) in a ‘retail shopping centre’.606 A ‘retail shopping centre’ is in turn defined as a cluster of premises with at least five businesses as listed in Sch 1; the premises must be owned by one person, have the same landlord, or be in the one strata plan; the premises must be in one building, or in two or more related buildings; and the cluster must be promoted as, or be generally regarded as, a shopping centre, mall, court or arcade.607 Section 5 of the Act excludes certain leases from the scope of the Act. These exclusions include leases relating to premises that have more than 1,000 square metres of lettable area (which, in practice, excludes large supermarkets and department stores), situations where the lessee carries on business on behalf of the lessor and shops carried on as part of a cinema, skating rink or bowling alley. Premises leased for the purposes listed in Schedule 1A of the Act, which include vending machines and automatic teller machines, are also excluded and other premises may, from time to time, be excluded by regulation. Section 6 of the Act provides that the Act does not apply to leases for a term of 25 years or more (including any options to renew). Section 6A provides that the Act does not apply to leases for a term of six months or less, although the Act does apply to a situation in which the tenant has been or is entitled to be in uninterrupted possession of the premises for a period of more than one year under a succession of leases or extensions or renewals thereof.

Rights and obligations 11.139  By s 7 of the Retail Leases Act, it is not possible to contract out of the Act. If a term of the lease is inconsistent with the Act, the term is void. Part 2 of the Act deals with pre-agreement dealings between the parties. A lease cannot be advertised unless a copy of the proposed lease is available for prospective tenants,608 and each party must give to the 601. Retail Leases Act 1994 (NSW) s 3. 602. Retail Leases Act 1994 (NSW) s 3 definition of ‘retail shop lease’ para (a). 603. Retail Leases Act 1994 (NSW) s 3 definition of ‘retail shop lease’ paras (b)(c). 604. Retail Leases Act 1994 (NSW) s 79. 605. Retail Leases Act 1994 (NSW) s 3 definition of ‘retail shop’ para (a). 606. Retail Leases Act 1994 (NSW) s 3 definition of ‘retail shop’ para (b). 607. Retail Leases Act 1994 (NSW) s 3. 608. Retail Leases Act 1994 (NSW) s 9.

630



Leases and Tenancies

11.141

other a disclosure statement that contains the prescribed information.609 By s 14(1), the landlord, or his or her agent, must not seek or accept key-money610 or lease preparation expenses in connection with the grant of a lease.611 Part 2A of the Act establishes a regime for the lodgment with a government agency of security bonds received by the landlord in respect of a lease, and for the payment of the bond on the application of one or both of the parties.

Rent 11.140  There is no restriction on the starting rent for the premises. Accordingly, a free-market regime applies. However, significant restrictions apply to changes to the rent. Unless the lease provides for the variation of the existing rent by a specified amount or a specified percentage, the rent payable cannot be varied in the first year of the lease, and thereafter may generally be varied only once a year.612 The lease cannot grant to either party a discretion as to which of two or more methods of calculating the variation of the existing rent is to be used on a particular occasion.613 Where the existing rent would decrease under the method selected to calculate the variation, the lease cannot provide that the rent will not decrease.614 Where the lease provides for a review of the rent payable to a current market rent, the Retail Leases Act provides a procedure to be used if the parties cannot agree on the amount of rent payable under the review.615 It is possible to have rent clauses tied to ‘turnover’ (defined to include gross takings, receipts and incomes),616 though many charges, such as interest and refunds, are excluded.617 Charges payable by the tenant in relation to outgoings are strictly regulated.618 Rent abates in cases of damage to premises, but without prejudice to the right of the landlord to recover compensation from the tenant where the tenant caused the damage.619

Assignment and subletting 11.141  The Retail Leases Act represents a significant break with the common law in its very different treatment of the right to assign and the right to sublet. The landlord’s right to restrict dealings by the tenant is limited, though the tenant is given much greater freedom to assign than to sublet. By s 39 of the Act, as long as the tenant complies with the procedural formalities required, a landlord can refuse consent to a proposed assignment 609. Retail Leases Act 1994 (NSW) ss 11, 11A. 610. Defined in s  3 of the Act as money paid ‘by way of premium, non-repayable bond or otherwise’ in connection with the granting, extension or assignment of a lease. 611. Retail Leases Act 1994 (NSW) s 14. 612. Retail Leases Act 1994 (NSW) s 18(2). 613. Retail Leases Act 1994 (NSW) s 18(3). 614. Retail Leases Act 1994 (NSW) s 18(4). 615. Retail Leases Act 1994 (NSW) ss 19, 19A. 616. Retail Leases Act 1994 (NSW) s 20(4). 617. Retail Leases Act 1994 (NSW) s 20(1). 618. Retail Leases Act 1994 (NSW) ss 22–30. 619. Retail Leases Act 1994 (NSW) s 36.

631

11.141

Property Law in New South Wales

of a retail shop lease by the tenant only if the assignment provides for a change of use to which the shop is put,620 or if the financial resources or retailing skills of the assignee are inferior to those of the assignor.621 The lease must not require the payment of keymoney,622 nor must the landlord or his or her agent seek the payment of key-money, in connection with the consent.623 The landlord may, however, require a reasonable sum to cover legal and other expenses incurred in giving consent.624 The landlord must deal promptly with the request. The landlord is taken to have consented to the assignment if he or she has not notified the tenant of any refusal within 28 days.625 Section 41A of the Act provides a procedure through the issue of disclosure statements whereby the assignor can be relieved of liability for future breaches of the lease by the assignee, where the retail shop will continue to be an ongoing business. By s 42 of the Retail Leases Act, a retail lease may contain a clause giving the landlord an absolute discretion concerning: the grant of a sublease or licence; the parting with possession of the whole or part of the shop; or the granting of mortgages or other encumbrances over the lease.

Termination 11.142  A fixed-term retail lease does not expire by effluxion of time. Where the lease does not contain an option to renew, the landlord must give the tenant between six and 12 months’ notice, advising either that a renewal will be offered, or that no renewal will be offered.626 The tenant has one month to accept the offer of a new lease.627 If the landlord does not give this notice, the tenant can, before the expiration of the lease, make a written request for the extension of the lease, in which case the lease is extended until six months from the time the landlord does give the required notice.628 The tenant can terminate the extended lease by giving one month’s written notice.629 The Retail Leases Act imposes significant restrictions on relocation and demolition clauses, to offer a measure of protection to tenants.630 It also prohibits the inclusion in the lease of a power to terminate on the grounds of failure to meet specified turnover or sales targets.631

620. Retail Leases Act 1994 (NSW) s 39(1)(a). 621. Retail Leases Act 1994 (NSW) s 39(1)(b). 622. See 11.139. 623. Retail Leases Act 1994 (NSW) s 40(1). 624. Retail Leases Act 1994 (NSW) ss 39(2), 40(3). 625. s 41(g)–(h). 626. Retail Leases Act 1994 (NSW) s 44(1). 627. Retail Leases Act, 1994 (NSW) s 44(2). 628. Retail Leases Act 1994 (NSW) s 44(3). 629. Retail Leases Act 1994 (NSW) s 44(4). 630. Retail Leases Act 1994 (NSW) ss 34A, 35. 631. Retail Leases Act 1994 (NSW) s 58.

632



Leases and Tenancies

11.144

Disputes Dispute resolution 11.143  Part 8 of the Retail Leases Act deals with dispute resolution. The Registrar of Retail Tenancy Disputes may mediate disputes referred to him or her by either or both parties to a retail tenancy agreement.632 The NSW Small Business Commissioner currently acts as the Registrar.633 Importantly, a court cannot hear a retail tenancy dispute unless it is satisfied that mediation is unlikely to be successful, or that the Registrar has certified that mediation has failed,634 although this requirement does not apply where the relief being sought is an injunction.635

NSW Civil & Administrative Tribunal (NCAT) 11.144  Retail tenancy claims and unconscionable conduct claims may be dealt with at first instance by NCAT.636 When hearing claims of this nature, the tribunal is constituted in accordance with the relevant requirements of the Civil and Administrative Tribunal Act 2013 (NSW).637 Matters can be brought before the tribunal directly, or may be referred to the tribunal by a court where matters are commenced before a court. A court must refer matters to a tribunal if it is satisfied that they may be effectively dealt with by the tribunal, that they are appropriate to be dealt with in this way, and that it is in the interests of justice for them to be dealt with in this way.638 The types of claims that may be made before the tribunal are listed in s 70 of the Retail Leases Act. These include a claim for, or a claim for relief from, the payment of a specified sum of money; a claim for the doing of specified work or the provision of specified services; a claim for the surrender of possession of specified premises; and a claim for assignment of rights under the lease or a declaration that the landlord was not entitled to withhold consent to such an assignment. This clearly includes actions for the payment of rent, but also covers moneys owing under a rent review clause,639 and claims for unliquidated damages.640 Formerly, the tribunal had no jurisdiction in relation to ejectment or equitable remedies, such as relief against forfeiture or specific performance.641 By s 72(1) of the Act, the tribunal may now grant such orders for the surrender of possession of premises and equitable remedies.

632. Retail Leases Act 1994 (NSW) s 66. 633. See . 634. Retail Leases Act 1994 (NSW) s 68. For an application of this provision, see Ticehurst v Cross (2006) NSW ConvR ¶56-136. 635. Retail Leases Act 1994 (NSW) s 68(3). 636. Retail Leases Act 1994 (NSW) ss 71, 71A. 637. See Retail Leases Act 1994 (NSW) Pt 8 Div 3; Civil and Administrative Tribunal Act 2013 (NSW) Sch 4. 638. Retail Leases Act 1994 (NSW) s 75(1). For an application of this provision, see Ticehurst v Cross (2006) NSW ConvR ¶56-136. Note s 75(1) relates to ‘retail tenancy disputes’ (defined in s 63), rather than simply to ‘retail tenancy claims’ and is thus wide enough to encompass unconscionable conduct claims. 639. S O Lovely Foods Pty Ltd v Macquarie Bank Ltd (CT, Cavanagh C, 28 March 1996, unreported). 640. Oxley v Imperial Charter Pty Ltd (1996) NSW ConvR ¶55-783. 641. Henriksen v Bilpin Inn Pty Ltd (CT, Rossiter DC, 3 May 1996, unreported).

633

11.144

Property Law in New South Wales

By ss  62B(8) and 71A of the Retail Leases Act, an unconscionable conduct claim is an action brought by a landlord or tenant who has suffered loss because of the other’s unconscionable conduct in connection with a lease. Under s 72AA of the Act, the tribunal has the power to make an order that a party is obliged, or is not obliged, to pay money to another person, whether by way of debt, damages, restitution or refund. Prior to amendments made in 2005, appeals from orders of the tribunal were possible to the Supreme Court of New South Wales in relation to unconscionable conduct claims. Now those appeals, like those in relation to retail tenancy claims, are made to the Appeal Panel of the Civil and Administrative Tribunal.642 The limit of the tribunal’s jurisdiction is currently $750,000.643

642. Retail Leases Act 1994 (NSW) s 77. 643. Retail Leases Act 1994 (NSW) s 73(1).

634

Chapter 12

Easements and Profits à Prendre Introduction 12.1  Easements and profits à prendre1 (or profits) are sets of limited rights that nonoccupiers of land hold over land occupied by someone else.Along with restrictive covenants, they are in the class of subsidiary interests that burden, or restrict, the full use of the land of an owner.2 Though they confer limited rights, they are nonetheless proprietary interests in land as they involve a right of enjoyment of land that is enforceable in the absence of contractual privity. Easements and profits are sufficiently similar in nature to warrant treatment in a single chapter. However, they also exhibit sufficient differences to be dealt with separately.

Easements General 12.2  Easements belong to a class of interests in land known historically as ‘incorporeal hereditaments’.3 This term captures two features of easements: first, they are classified as incorporeal because they are regarded as conferring rights to the use of the land rather than rights to the physical possession of the land; and second, they are heritable, as they are forms of real property. The essence of an easement, according to Blackstone, is: … a right issuing out of a thing corporate, whether real or personal, or concerning or annexed to, or exercisable within, the same. It is not the thing corporate itself, which may consist in lands, house, jewels, or the like; but something collateral thereto, as a rent issuing out of those lands or houses.4

1. The French verb ‘prendre’ corresponds with ‘to take’ in English. 2. For the most detailed and comprehensive treatment in Australia, see  AJ Bradbrook and MA Neave, Easements and Restrictive Covenants in Australia, 2nd ed, Butterworths, Australia, 2000. 3. See Figure 2.1 at 2.1. 4. William Blackstone, Commentaries on the Laws of England, Dawsons, London, 1966,Vol II, p 16.

635

12.2

Property Law in New South Wales

The most common form of easement is the right of way; that is, a right to pass over or make use of a designated part of the land, although, as we will see later, the term embraces a much wider range of rights. As in the case of other proprietary interests, there are both substantive and formal requirements for the creation of a valid easement. Like other interests in land, easements can be created by express grant, but they can also be created in the following ways: • • • •

express reservation; an approved plan of subdivision under s 88B of the Conveyancing Act 1919 (NSW); an implied grant or reservation; and acquisition by long user or prescription.

Easements may also be granted by the Supreme Court under s 88K of the Conveyancing Act5 and by the Land and Environment Court under s 40 of the Land and Environment Court Act 1979 (NSW).

Substantive requirements for the creation of an easement 12.3  There are four basic substantive requirements for the creation of an easement. The classic statement of these requirements is found ini Re Ellenborough Park:6 1. there must be a dominant and a servient tenement; 2. the easement must accommodate the dominant tenement; 3. the dominant and servient tenements must not be held and occupied by the same person; and 4. the right must be capable of forming the subject matter of a grant.

There must be a dominant and a servient tenement 12.4  An easement must operate for the advantage of one piece of land to the disadvantage of another. The advantaged piece of land is known as the ‘dominant tenement’; and the disadvantaged piece of land is described as the ‘servient tenement’. The dominant tenement, therefore, has the benefit of the easement, while the servient tenement bears the burden. For example, if A grants to B the right to pass over her land so as to reach the road, A’s land is the servient tenement and B’s land is the dominant tenement. B’s land is benefited by the easement and A’s land bears its burden. This is diagrammatically represented in Figure 12.1 below.

5. See 12.34. 6. Re Ellenborough Park [1956] Ch 131.

636



Easements and Profits à Prendre

12.5

Figure 12.1:  Dominant and servient tenement Road Easement

A servient tenement B dominant tenement

A right that merely benefits a person, without also benefiting land is not an easement. It is said that an easement must be appurtenant to the dominant tenement.7 In contrast to a profit à prendre,8 an easement must benefit a particular piece of land. At common law, an easement that is not appurtenant to a dominant tenement is known as an easement in gross.9 The grant of a right to an individual not possessed of a dominant tenement will give rise to personal rights in the nature of a contractual licence only, and will not be enforceable against third parties.10 While the general rule is that an easement in gross is not possible, it is possible to have such an easement in favour of the Crown or a local authority. By s 88A of the Conveyancing Act, easements in gross are permitted in favour of the Crown, a public or local authority established by legislation, or, where the easement is for the supply of a utility service to the public or for the supply of rail infrastructure facilities, a corporation prescribed by regulation.11 This provision applies to both old system and Torrens title land.12 The rights of the Crown or relevant authority or corporation are property rights, not mere contractual licences. There is no need for the dominant tenement to be a corporeal interest, such as a fee simple or life estate. The dominant tenement may be another incorporeal interest, such as an easement or profit. Thus, a profit in the form of a right to fish in a section of a river was held to be a dominant tenement for the purposes of supporting a right of way along the bank of that river.13 The profit was benefited by the holder’s right to pass over the servient land.

Easement must accommodate the dominant tenement 12.5 In Re Ellenborough Park,14 it was held that an easement must ‘accommodate’ the dominant tenement, in the sense that it must confer a benefit on that tenement. In Re Ellenborough Park, the right to use a small park adjacent to the dominant property for 7. Municipal District of Concord v Coles (1905) 3 CLR 96. 8. See 12.65. 9. See also 12.5, 12.15 and 12.75. 10. Ex parte Johnson; Re Whyte (1868) 5 WW & A’B (L) 55. 11. Conveyancing Act 1919 (NSW) s 88A(1)–(1C). 12. Conveyancing Act 1919 (NSW) s 88A(3). 13. Hanbury v Jenkins [1901] 2 Ch 401. 14. Re Ellenborough Park [1956] Ch 131.

637

12.5

Property Law in New South Wales

recreation was held to accommodate that tenement, because this was a right connected with the normal enjoyment of houses. If, however, the rights include both benefits for the dominant tenement and rights unconnected with that tenement, no easement will arise. For example, rights to pass along a road ‘for all purposes’ are not given merely in relation to the use of the dominant tenement, so do not constitute an easement.15 Those rights unconnected to the dominant tenement would amount to an easement in gross. In Hill v Tupper,16 the owner of a canal and land on the bank of the canal leased a small plot of the land to Hill and gave him an exclusive right to hire out pleasure boats for use on the canal. Hill sued for alleged interference with his rights over the canal when Tupper, who owned other nearby land, put out pleasure boats on the canal. The court held that the rights over the canal were personal to Hill only; they did not accommodate his lease. However, if the rights conferred on Hill were rights to go back and forth across the canal for the purposes of access to the leased land, there would have been no doubt that an easement for the benefit of a dominant tenement had been created. A benefit to a business that is conducted on the dominant tenement is sufficient to accommodate the dominant tenement — although there must be a clear connection between the activities on the dominant tenement and the rights granted over the servient tenement. In Moody v Steggles,17 an easement to fix a sign on the wall of the defendant’s house (servient tenement) was held to accommodate the plaintiff ’s dominant tenement because it benefited the business (a public house) that the plaintiff carried on there. Fry J dismissed an argument that the sign benefited the plaintiff ’s business rather than the dominant tenement, saying that the argument ‘was of too refined a nature to prevail’.18 Therefore, it would seem to be sufficient for an easement to be connected with the use to which the occupant uses the dominant tenement. The fact that the right benefits other land as well is no obstacle to its classification as an easement.19 The logic of Moody v Steggles was unsuccessfully invoked by the grantee in Clos Farming Estates Pty Ltd v Easton,20 where the New South Wales Court of Appeal concluded that a purported ‘Easement for Vineyard’ was not a valid easement. The purported dominant tenement (Lot 86) was a small parcel of land in a winery estate.The owner had constructed a machinery shed, chemical shed and a farm office on Lot 86, and used the lot to store farm machinery.The alleged easement purported to allow the owner of the dominant tenement the right to carry out various acts associated with a viticulture operation (such as planting and maintaining vines, and harvesting grapes) on the 80 purported servient tenements, 15. Ackroyd v Smith (1850) 10 CB 164.This finding is doubted by the most recent authors of Gale on Easements: ‘It seems reasonable to suppose, however, that a right granted in the same quite common form would now be treated as annexed to the land conveyed’: JR Gaunt and P Morgan, Gale on Easements, 18th ed, Sweet & Maxwell, London, 2008, p 14. This uncertainty, if it exists, only lends support to the reform arguments below. See 12.75. 16. Hill v Tupper (1863) 2 H & C 121. 17. Moody v Steggles (1879) 12 Ch D 261. 18. Moody v Steggles (1879) 12 Ch D 261 at 266. 19. Simpson v Mayor of Godmanchester [1897] AC 696. 20. Clos Farming Estates Pty Ltd v Easton (2002) 11 BPR 20,605.

638



Easements and Profits à Prendre

12.6

each of which was in separate individual ownership.21 The court held that a valid easement had not been created because the right conferred on the grantee did not benefit the dominant tenement in the sense of being reasonably necessary for its normal use and enjoyment. Instead, the right benefited the owner of Lot 86 in its personal capacity. In this way, the facts of Clos Farming Estates were analogous to the circumstances in Hill v Tupper and distinguishable from those in Moody v Steggles:The purported dominant tenement was merely a convenient incident to the enjoyment of the right.The conduct of the viticulture business did not involve any benefit to Lot 86 as a parcel of land. Lot 86 was incidental to the business rather than the business being incidental to the land.22 There is no need for the dominant and servient tenements to be contiguous, but they must be sufficiently close for the rights over the servient tenement to benefit the dominant tenement in a discernible way. In Todrick v Western National Omnibus Co Ltd,23 the fact that there was an intervening field between the location of the easement and the dominant tenement was held to be irrelevant to the easement’s validity. It has also been found that the right to occupy a church pew is sufficiently close to the homes in the parish to benefit them.24 Where the dominant tenement is subdivided, it is presumed that the easement will enure to the benefit of the subdivided parts of the dominant tenement. Thus, where each of four lot-holders received a right of way over a private road and two of the lots were later subdivided, the new owners’ lots were entitled to the benefit of the easement.25 On the other hand, if the dominant tenement is consolidated with other land, the easement continues to benefit only that part of the new consolidated lot that is constituted by the former dominant tenement.26

Dominant and servient tenements must not be held and occupied by the same person 12.6  An easement is a right over the land of another, so that at general law there cannot be an easement where both the dominant tenement and servient tenement are owned and occupied by the same person. Thus, at  general law, no one can have an easement over his or her own land.27 Similarly, if a dominant and servient tenement come into the same ownership and occupation, the easement will cease to exist; a subsequent transfer of either the former dominant tenement or the former servient tenement will not revive the easement. However, where an owner of two pieces of land leases one of them, or where he or she leases part of the land, there is no obstacle to the tenant holding an easement 21. Clos Farming Estates Pty Ltd v Easton (2002) 11 BPR 20, 605 at [8]–[14]. 22. Clos Farming Estates Pty Ltd v Easton (2002) 11 BPR 20, 605 at [30]–[34] and [43]. 23. Todrick v Western National Omnibus Co Ltd [1934] Ch 561. See also City Developments Pty Ltd v RegistrarGeneral of the Northern Territory [2001] NTCA 7 at [14] and [19], where a right to use the area next to a lake for ‘private recreational purposes’ was held to be a valid easement which could benefit nearby blocks of land. 24. Phillips v Halliday [1891] AC 228. 25. Gallagher v Rainbow (1994) 179 CLR 624; Short v Patrial Holdings Pty Ltd (1994) 6 BPR 13,996. 26. Re Eddowes [1991] 2 Qd R 381. 27. Moody v Steggles (1879) 12 Ch D 261.

639

12.6

Property Law in New South Wales

over his or her landlord’s land.28 In such a case, the dominant tenement is occupied by someone other than the owner of the freehold. The easement binds the landlord and his or her successors in title for the duration of the lease.29 In New South Wales, there are some situations in which the same person can own both the dominant and servient tenements. First, under s 88B of the Conveyancing Act, the registration of a plan of subdivision (which is available for both old system and Torrens title land30) will create all easements referred to in it, and will vest them in the owner of the land benefited by the easement. By s 88B(3)(c)(ii), where the dominant and servient tenements are in the same ownership, or by s 88B(3)(c)(iii), where they come to be in common ownership, they will not be extinguished. Second, under s  46A of the Real Property Act  1900 (NSW), it is possible to create an easement over several parcels of Torrens title land even if those parcels are owned and possessed by the same person. By s 47(7) of the Real Property Act, a recorded easement will not be extinguished by the dominant and servient tenements coming into common ownership and possession.

The right must be capable of forming the subject matter of a grant 12.7 In Dyce v Lady James Hay, Lord St Leonards said, ‘The category of servitudes and easements must alter and expand with the changes that take place in the circumstances of mankind’.31 In other words, the variety of rights that could constitute easements is immense, but that does not mean that the category of easements is infinitely extendable. A right that is too broad or imprecise cannot be an easement.32 The requirement that the right must be capable of forming the subject matter of a grant has two aspects. First, the right must be sufficiently definite to be capable of forming the subject matter of a grant. In Re Ellenborough Park, this was expressed as a requirement that the right be well defined and understood.33 The right to enjoy a park, as in Re Ellenborough Park, is sufficiently confined to meet this criterion; but a right to a general flow of air is not capable of being granted or reserved as an easement.34 Similarly, a right to receive a television signal cannot be an easement.35 However, there can be an easement for the free flow of air through a defined aperture,36 and for air and light for a narrow section of a building.37 Rights of access to 28. 29. 30. 31.

32.

33. 34. 35. 36. 37.

Borman v Griffith [1930] 1 Ch 493. Cardwell v Walker [2004] 2 P & CR 9. Conveyancing Act 1919 (NSW) s 69. Dyce v Lady James Hay (1852) 1 Macq 305, at 312–3. Accordingly: ‘Proprietary estates in easements must have a clear-cut, hard-edged quality. “Property” must come in neat, discrete, pre-packaged conceptual compartments’: K Gray and S Gray, Elements of Land Law, 4th ed, Oxford University Press, Oxford, 2005, p 631. Even a well-recognised type of easement will be held invalid if it is subject to an uncertain condition. So, in Duncan v Cliftonville Estates Pty Ltd (2001) 10 BPR 19,127 a right of way was held to be too uncertain where its existence was made conditional on the size and height of structures on the dominant tenement remaining unaltered. Re Ellenborough Park [1956] Ch 131 at 176. Commonwealth v Registrar of Titles (Vic) (1918) 24 CLR 348. Hunter v Canary Wharf Ltd [1997] AC 655. Bass v Gregory (1890) 25 QBD 481. Commonwealth v Registrar of Titles (Victoria) (1918) 24 CLR 348.

640



Easements and Profits à Prendre

12.7

light so that, for example, a skylight is not rendered useless, may also constitute easements.38 A right to a view is too indefinite to form the subject matter of a grant,39 as is a right to protect one’s privacy or to prevent others from viewing an event or spectacle that one performs on one’s land.40 Rights to hit cricket balls on to neighbouring land41 and rights to have the wall of a house on the dominant tenement weather-proofed by the servient tenement are similarly too indefinite to constitute an easement.42 Second, an easement necessarily involves some interference with the ordinary use of the servient land by its owner. For example, where there is a right of way, the owner of the servient land would not be able to do anything that would obstruct the dominant tenement owner’s passage over the land. That said, a right to exclusive possession of all or part of the servient tenement will not amount to an easement.43 It can, in practice, be difficult to distinguish a degree of interference that falls short of exclusive possession from interference that amounts to a grant of exclusive possession to the dominant tenement owner and that, accordingly, is inconsistent with the grant of an easement. In Copeland v Greenhalf,44 a right to store motor vehicles on the servient tenement was held not to be an easement because it was akin to a right to possession. On the other hand, in both London & Blenheim Estates v Ladbroke Retail Parks Ltd and Owners of East Fremantle Shopping Centre West Strata Plan 8618 v Action Supermarkets Pty Ltd, easements to park motor vehicles were recognised as valid easements, the courts emphasising that whether exclusive possession has been given is a question of degree.45 Further, a right to store goods in a cellar was not an easement because it conferred a right to exclusive use of the confined space,46 while a right to store coal in a shed has been held to be the subject matter of an easement.47 In Clos Farming Estates Pty Ltd v Easton,48 an additional ground for the finding that there was no easement was that the rights of the grantee to enter the alleged servient tenement in order to plant and maintain the vines, and to harvest, market, package and sell the produce, were

38. McManus v Cooke (1887) 35 ChD 681. 39. Re Aldred’s Case (1610) 9 Co Rep 57b. Note, however, that it is possible to protect a view by means of a restrictive covenant. See 13.15–13.28 for the requirements for the enforceability of restrictive covenants. 40. Browne v  Flower [1911] 1 Ch  219 at  225 (Parker J); Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479. 41. Miller v Jackson [1977] QB 966. 42. Phipps v Pears [1965] 1 QB 76. 43. Bursill Enterprises Pty Ltd v  Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73 at  91 per Windeyer J. A number of the relevant authorities were recited in Lolakis v Konitsas (2002) 11 BPR 20,499 at 20,504–7. In that case, however, it was held that the requirement that a right of way over the servient tenement be fenced in with the dominant tenement did not confer on the owner of that land a right of exclusive possession over the site of the easement. 44. Copeland v Greenhalf [1952] Ch 488. 45. London & Blenheim Estates v Ladbroke Retail Parks Ltd [1994] 1 WLR 31; Owners of East Fremantle Shopping Centre West Strata Plan 8618 v Action Supermarkets Pty Ltd (2008) 37 WAR 498. See also Weigall v Toman [2006] QSC 349 at [18] per Wilson J and Brydall v Owners of Strata Plan No 66794 (2009) 14 BPR 26,831. 46. Grigsby v Melville [1973] 1 All ER 385. 47. Wright v Macadam [1949] 2 KB 744. 48. Clos Farming Estates Pty Ltd v Easton (2002) 11 BPR 20,605.

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held to be so extensive that they were inconsistent with the owner of the alleged servient land retaining possession of that land.49 In Moncrieff v  Jamieson,50 several members of the House of Lords suggested that a distinction should be drawn between the grant of a right of sole use or occupation, on the one hand, and a continued right of possession in law, on the other. Lord Scott of Foscote explained the distinction in the following way: Sole user, as a concept, is quite different from, and fundamentally inferior to, exclusive possession. Sole use of a coal shed for the storage of coal does not prevent the servient owner from using the shed for any purposes of his own that do not interfere with the dominant owner’s reasonable use for the storage of coal. The dominant owner entitled to a servitude of way or for the passage of water along a viaduct does not have possession of the land over which the road or the viaduct passes. If the coal shed door had been locked with only the dominant owner possessing a key and entry by the servient owner barred, so that the dominant owner would have been in possession and control of the shed, I would have regarded it as arguable that the right granted was inconsistent with the servient owner’s ownership and inconsistent with the nature of a servitude or an easement. But sole use for a limited purpose is not, in my opinion, inconsistent with the servient owner’s retention of possession and control or inconsistent with the nature of an easement.51

If this distinction is valid, where sole use and enjoyment of the servient tenement for a limited period has been granted to the holder of the dominant tenement and the servient tenement retains possession and control of the land, there could still be an easement.52 In the earlier case of Batchelor v Marlow,53 the English Court of Appeal had suggested that a grant of a right would not be capable of recognition as an easement if its exercise would leave the servient owner with no reasonable use to which he could put the servient land. Such a ‘reasonable use’ enquiry would, in essence, be a matter of degree or proportionality and would rely on an assessment of how much of the land was subject to the easement, 49. Clos Farming Estates Pty Ltd v Easton (2002) 11 BPR 20,605 at [35]–[42] and [45]–[47]. See also Tiller v Hawes (2005) 13 BPR 24,203 at [47]–[49], where the combined effect of an easement and a related covenant was to give exclusive use of a driveway across the servient land to the proprietors of the dominant land. 50. Moncrieff v Jamieson [2007] 1 WLR 2620. 51. Moncrieff v Jamieson [2007] 1 WLR 2620 at [55] per Lord Scott of Foscote. 52. Moncrieff v Jamieson [2007] 1 WLR 2620 at [143]–[144] per Lord Neuberger; at [55] per Lord Scott. In support, Lord Scott pointed to Re Ellenborough Park [1956] Ch 131 at 176, where Lord Evershed noted that the easement amounted to joint occupation of the park, but ‘did not involve an inconsistency with the possession or proprietorship of the council as lessees’. For recent decisions that, while also applying a degree or proportionality approach, are not inconsistent with this decision, see White v Betalli (2007) 71 NSWLR 381 at [39] per Santow JA (‘While [a storage area for watercraft] may affect the exercise or enjoyment by the appellant of her land, I do not consider that it is incompatible with the appellant’s right of possession’); Owners of East Fremantle Shopping Centre West Strata Plan 8618 v Action Supermarkets Pty Ltd (2008) 37 WAR 498; Brydall v The Owners of Strata Plan 66794 (2009) 14 BPR 26,831, noting Moncrieff with approval at [15]. 53. Batchelor v Marlow [2003] 1 WLR 764. This would also call into question whether London & Blenheim Estates v Ladbroke Retail Parks Ltd [1992] 1 WLR 1278 is good authority, as noted by Buss JA in Owners of East Fremantle Shopping Centre West Strata Plan 8618 v Action Supermarkets Pty Ltd (2008) 37 WAR 498 at [64].

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and for what periods of time. By contrast, the distinction drawn by Lord Scott in Moncrieff v Jamieson, would allow a servient tenement owner to grant an easement over his land to any extent he or she wished, subject to retaining possession and control of the land. Accordingly, the question would be determined by looking at whether the servient owner has relinquished possession of the area that is subject to the easement , rather than of the whole of the servient tenement.54 In Registrar-General of New South Wales v Jea Holdings (Aust) Pty Ltd,55 the New South Wales Court of Appeal preferred the ‘degree and proportionality’ approach in order to determine whether the use of the servient tenement as a car park would be capable of forming the subject matter of the grant of an easement.56 In Jea Holdings, the owner of the dominant tenement had the right to park 198 vehicles on the servient tenement, effectively covering the entire surface area of the tenement. The Court of Appeal concluded that the Clos Farming Estates decision did not require that the servient tenement owner retain reasonable use of the tenement in its entirety in order for there to be an easement. The extent of the interference with the rights of the servient tenement owner on the part of the land that is affected by the easement must be considered. As the servient tenement owner still had some ability to park on the servient tenement, to use the fences for advertising and also to use the subterranean land and airspace above, there was still reasonable use of the tenement available to the servient tenement owner, so a valid easement had been granted.57

Examples of easements 12.8  Traditionally, easements are seen as falling into two categories: they are either positive or negative. Positive easements allow the grantee to make positive use of the land burdened by the easement. Negative easements give the grantee the right to restrict certain lawful uses of the servient property. However, there appear to be at least two forms of easement that transcend this dichotomy: the fencing easement58 and the easement for the removal of support that can be created under s 177 of the Conveyancing Act.59 Examples of the different types of rights that have been recognised as easements are mentioned in the following two sections.

54. Moncrieff v Jamieson [2007] 1 WLR 2620 at [57] and [59]. This approach has been noted in Australia in Owners of East Fremantle Shopping Centre West Strata Plan 8618 v Action Supermarkets Pty Ltd (2008) 37 WAR 498 at [64] per Buss JA; Brydall v The Owners of Strata Plan 66794 (2009) 14 BPR 26,831 at [15] per McDougall J. Lord Neuberger, further, was not convinced that effective exclusion of the holder of the servient tenement from the land would necessarily prevent the right from being an easement: Moncrieff v Jamieson at [140]. 55. Registrar-General of New South Wales v Jea Holdings (Aust) Pty Ltd (2015) 88 NSWLR 321. 56. Registrar-General of New South Wales v Jea Holdings (Aust) Pty Ltd (2015) 88 NSWLR 321; [2015] NSWCA 74 at [64] per Bathurst CJ and Beazley P. 57. Registrar-General of New South Wales v Jea Holdings (Aust) Pty Ltd (2015) 88 NSWLR 321; [2015] NSWCA 74 at [64] per Bathurst CJ and Beazley P. 58. See 12.41. 59. See 12.11.

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Positive easements 12.9  Positive easements come in many forms, the paradigm case being a right of way across the land of a neighbour. A right to use the toilet60 or cattle yards61 on a neighbouring property is a positive easement, as are the rights to discharge water,62 occupy a church pew,63 erect advertising signs and hoardings on a servient tenement,64 enjoy a recreation area,65 and use part of a block of land as a garden.66 Negative easements 12.10  Examples of negative easements are: • • • •

the right to a flow of air through a defined aperture;67 the right to receive light for a building;68 the right to receive water through pipes;69 and the right to the support of a building.70

These easements are negative because they restrict what the owner of the servient tenement might do on his or her land. For example, an easement for the flow of air or light might prohibit the owner of the servient tenement from constructing a building above a certain height in a particular location. An easement to receive water through a pipe will preclude the owner of the servient land from removing or blocking the pipe. Similarly, an easement for support might prevent the owner of the servient tenement from removing soil or a structure from his or her own land.

Easements distinguished from other types of rights Natural rights 12.11  An easement differs from a natural right in that an easement must be created; it cannot exist automatically. Natural rights, by contrast, are inherent features of ownership. The usual way of protecting these rights is through tort law, by bringing an action in

60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70.

Miller v Emcer Products Ltd [1956] Ch 304; [1956] 1 All ER 237. Clifford v Dove (2003) 11 BPR 21,149. Mason v Shrewsbury and Hereford Railway Co (1871) LR 6 QB 578. Phillips v Halliday [1891] AC 228. Moody v Steggles (1879) 12 Ch D 261. But compare King v David Allen & Sons, Billposting Ltd [1916] 2 AC 54. See further, 1.50. Re Ellenborough Park [1956] Ch 131. Evanel Pty Ltd v Nelson (1995) 39 NSWLR 209. Bass v Gregory (1890) 25 QBD 481. Colls v Home and Colonial Stores Ltd [1904] AC 179. Rance v Elvin (1985) 50 P & CR 9. B Edgeworth, Butt’s Land Law, 7th ed, Lawbook Co, Sydney, 2017, at 530, citing Dalton v Angus (1881) 6 App Cas 740. Compare Phipps v Pears [1965] 1 QB 76 at 82, in which Lord Denning MR doubted that the easement for support was strictly a negative easement; see Brendan Edgeworth, Chris Rossiter, Pamela O’Connor and Andrew Godwin, Sackville and Neave Property Law: Australian Property Law, 10th ed, LexisNexis Butterworths, Australia, 2016, p 990.

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either trespass or nuisance.71 There are some natural rights that extend to the land of a neighbour, and so resemble easements. Thus, the right of a landholder to prevent the removal of earth by a neighbour in order to maintain support for his or her own land is a natural right rather than an easement.72 The natural right to support does not extend to buildings. If a landowner builds close to the boundary of his or her land and a neighbour digs near the boundary with the consequence that the land can no longer support the ‘artificial weight’ of the building, there is no action in respect of the loss of support for the building.73 However, if the land would have collapsed anyway, as a result of the removal of the adjacent subsoil, the owner of damaged buildings may recover for damage to the buildings.74 Nevertheless, it is possible for such rights to be the subject of an express grant of easement.75 Equally, they may be conferred by any the other ways of creating easements apart from express grant.76 These common law principles have now been significantly modified by statute. In place of a right to sue in nuisance, s 177 of the Conveyancing Act states that ‘for the purposes of the common law of negligence’, there is a duty of care in relation to a right of support for land. This means that landholders whose right to support has been affected will have an action in negligence.77 The action could be brought against the owner of the supporting land or anyone who removes support. Supporting land includes the natural surface of the land, subsoil and subsurface water. It does not, however, include a building or structure on the supporting land unless that building or structure replaced the support provided by the land in its natural state.78 As an action in negligence, the landholder will only be able to sue in cases of reasonably foreseeable loss caused by the withdrawal of support. Section 177 of the Conveyancing Act also allows for the duty of care to be excluded or modified by creating an easement for the removal of support. Such an easement allows the owner of the supporting land to remove the support that his or her land provides to the supported land in circumstances that would otherwise be a breach of the duty of care imposed by s 177.79 Since the easement benefits the supporting land, the supporting land is the dominant tenement. Because the easement for the removal of support allows the owner of the dominant tenement to do something on his or her own land — not on the servient land — which he or she would not otherwise be permitted to do, it does not neatly fit into either the category of a positive or a negative easement.

71. See 1.66 and Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479 for an example of an attempt to protect property rights through tort law. 72. Backhouse v Bonomi (1861) 9 HLC 503. 73. Wyatt v Harrison (1832) 3 B & Ad 871; Fyvie v Anand (1994) BPR 13,743. 74. Stroyan v Knowles (1861) 6 H & N 454; Pantalone v Alaouie (1989) 18 NSWLR 119 at 129. 75. Dalton v Henry Angus & Co (1881) 6 App Cas 740. 76. See 12.24. 77. Introduced by the Conveyancing Amendment (Law of Support) Act 2000 (NSW). 78. Conveyancing Act 1919 (NSW) s 177(3), (4). 79. Conveyancing Act 1919 (NSW) s 177(5)–(7).

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Another natural right that arises at common law is the right to the flow of water in a definite channel.80 This right does not extend to underground, percolating water where there is no channel.81 There is no natural right to light, except by means of protection of the airspace that exists over land through an action in trespass brought by the owner.82

Public rights 12.12 As Stow v Mineral Holdings (Australia) Pty Ltd83 made clear, the rights that members of the public have to cross Crown land or park land are not properly described as property rights. They are licences to use the land. Furthermore, they are rights in gross that do not benefit any land in particular. In this way, they differ fundamentally from easements, which have all the defining characteristics of a property right: a right to enjoyment that is enforceable against third parties.84 Restrictive covenants 12.13  Easements share some characteristics with restrictive covenants.85 They are both forms of limited rights over land, or incorporeal hereditaments. Also, they can both involve a limitation of the rights of the owner of land, as in the case of negative easements conferring rights to light, air, support or water. However, easements differ from restrictive covenants, in that, first, they can be positive in nature; and second, they can exist at law. Restrictive covenants, by contrast, exist in equity only and exhibit the vulnerability of equitable interests.86 Third, easements may be acquired by prescription or long user, which is not possible with restrictive covenants. Licences 12.14  Easements also share characteristics with licences. If A gives B a right to cross A’s land, or to use it for some limited purpose such as billposting, this may be a licence.87 But a licence is not a proprietary right, and so cannot be enforced against third parties. Other differences are that a licence may give a right to occupation (whereas easements do not), a licence does not require a dominant tenement (whereas an easement does) and there are formalities necessary for the creation of easements that do not apply to licences. For

80. Swindon Waterworks Co Ltd v Wilts and Berks Canal Navigation Co (1875) LR 7 HL 697. This area of the law is now heavily regulated by statute, currently the Water Management Act 2000 (NSW). See DE Fisher, Water Law, Law Book Co, Australia, 2000; J Gray, ‘Legal Approaches to the Ownership, Management and Regulation of Water from Riparian Rights to Commodification’ (2006) 1(2) Transforming Legal Cultures eJournal 65, available at . 81. Bradford Corporation v Pickles [1895] AC 587. 82. See  Chapter  2. See  also A Bradbrook, ‘The Development of an Easement of Solar Access’ (1982) 5 University of New South Wales Law Journal 299. 83. Stow v Mineral Holdings (Australia) Pty Ltd (1977) 14 ALR 397. See 1.64. 84. See Chapter 1. 85. For restrictive covenants generally, see Chapter 13. 86. Equitable interests are considered in Chapter 6. 87. King v David Allen & Sons, Billposting Ltd [1916] 2 AC 54.

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instance, an agreement to grant an easement must satisfy the requirements of s 54A of the Conveyancing Act) that do not apply to licences.

Formal requirements for the creation of an easement 12.15  Where land is subdivided, easements can be created in one of two basic forms. First, they may take the form of a reservation, where the vendor retains one parcel, sells the other parcel of land to someone else, but reserves rights over the land parted with. In such a case, the vendor’s retained land will be the dominant tenement and the land sold will be the servient tenement. If the vendor does not retain land, the reservation will be construed as an attempted easement in gross and will accordingly be void.88 Second, an easement may be created in favour of the purchaser, by means of a grant of rights by the vendor. In such a case, the vendor’s land becomes the servient tenement. The same principles apply where an owner leases one parcel of land and retains another. There are some differences between the rules that apply to grants and those that apply to reservations.

Express grant 12.16  Old system — at  law  By s  23B(1) of the Conveyancing Act, a deed must be executed to create an easement effective at law. It is not necessary to use a particular form of words to create an easement.89 12.17  Old system — in equity A variety of ways of creating easements in equity is possible. Just as in Walsh v Lonsdale90 a contract to grant a lease that is capable of specific performance creates an equitable lease, a specifically enforceable contract to grant an easement will give rise to an equitable easement. The agreement must satisfy the requirements of s 54A(1) of the Conveyancing Act or, where those requirements are not met, there must be sufficient acts of part performance.91 So, in McManus v Cooke,92 an oral agreement to allow access to light to a particular window was held to be enforceable after the dominant tenement holder demolished a section  of a party wall to facilitate it. An equitable easement may also be created by signed writing under s 23C(1) of the Conveyancing Act. An easement may come into existence in equity under the doctrine of equitable estoppel,93 or by acquiescence.94 As with other equitable interests, equitable easements will be vulnerable against successors in title to the holder of the legal estate who purchase without notice.95

88. See 12.4. 89. Conveyancing Act 1919 (NSW) s 46. 90. Walsh v Lonsdale (1882) 21 Ch D 9. 91. Conveyancing Act 1919 (NSW) ss 23E(d), 54A(2). 92. McManus v Cooke (1887) 35 Ch D 681. 93. Crabb v Arun District Council [1976] Ch 179. 94. ER Ives Investment Ltd v High [1967] 2 QB 379. For details of these doctrines, see 6.37ff. 95. See 7.10–7.25.

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12.18  Torrens system In order to create a registered easement, the proprietor must execute a document in the approved form.96 The particulars of the easement are to be recorded on the folio of the Register for the servient tenement and the folio of the Register of the dominant tenement if that land is also held as Torrens title.97 The interest of the holder of the dominant tenement in the servient land will be indefeasible on registration.98 Certain easements, however, gain a measure of protection even if unregistered.99 These will be dealt with separately.100 An expressly created unregistered easement, like most unregistered interests in Torrens title land, takes effect as an equitable interest.101

Express reservation 12.19  Old system — at law At common law, a reservation could only be created by means of a re-grant from the purchaser to the vendor. Thus, a separate deed was necessary to reserve an easement effective at law. Section 45A of the Conveyancing Act has abolished this rule. Now, the reservation can be expressed in the conveyance.This will be an effective reservation even if the purchaser has not executed the conveyance. 12.20  Old system — in equity The Walsh v  Lonsdale102 principle ought logically to apply to a specifically enforceable agreement to reserve an easement, so such an agreement will give rise to an equitable easement.103 12.21  Torrens system  The same principles that apply to expressly granted easements in relation to Torrens title land apply also to expressly reserved easements.104

Approved plan of subdivision 12.22  Under s 88B of the Conveyancing Act, the registration of a plan of subdivision, which is available for old system and Torrens title land,105 will create all easements referred to in it, and will vest them in the owner of the land benefited by the easement.106 The Registrar-General will record easements on the folios for the benefited and burdened lands.107 The plan is accompanied by an instrument setting out the terms of the easement, and the lodgment of a plan without an accompanying instrument will not create an easement.108

96. Real Property Act 1900 (NSW) s 46. 97. Real Property Act 1900 (NSW) s 47(1). 98. Real Property Act 1900 (NSW) s 42. 99. Real Property Act 1900 (NSW) s 42(1)(a1). 100. See 12.47. 101. See 8.129. 102. Walsh v Lonsdale (1882) 21 Ch D 9. 103. See 6.8. 104. See 12.18. 105. Conveyancing Act 1919 (NSW) s 69. 106. Also see 12.6. 107. Conveyancing Act 1919 (NSW) s 88B(3A). 108. Edgeworth, note 70 above, p 544 [9.240].

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Section 88(1) of the Conveyancing Act 12.23  At common law, it was not necessary for an instrument that creates an easement to identify the dominant tenement. In Re Maiorana and the Conveyancing Act,109 it was held that a court will look to surrounding circumstances to identify the dominant tenement. In New South Wales, there is an important statutory limitation to the enforcement of such an easement. Section 88(1) of the Conveyancing Act provides that where an easement is expressed to be created by an instrument, the easement is not enforceable against a person interested in the servient land who was not a party to its creation: … unless the instrument clearly indicates: (a) the land to which the benefit of the easement is appurtenant; (b) the land which is subject to the burden of the easement …; (c) the persons (if any) having the right to release, vary, or modify the restriction …; and (d) the persons (if any) whose consent to a release, variation, or modification of the easement … is stipulated for.110

This provision applies to both Torrens title and old system title,111 and to all of the methods of expressly creating an easement described above.112 In Papadopoulos v Goodwin,113 the words ‘clearly indicates’ were held to mean ‘to point out, to point to, or make known without entanglement, confusion or uncertainty’, so that an instrument creating a right of way appurtenant to land conveyed in a specifically identified transfer met this requirement. In accordance with Margil Pty Ltd v Stegul Pastoral Pty Ltd,114 extrinsic evidence, written or unwritten, may be examined to determine whether dominant and servient tenements are clearly indicated.

Implied easements 12.24  Easements may also be created by implication. Easements can be created by implied grant, but, as a general rule, it is not possible to impliedly reserve easements. If the owner of the dominant tenement wishes to reserve an easement, he or she must do so expressly.115 There are two exceptions: easements of necessity and easements of common intention. Both can be created by implied reservation. 12.25  Implied grants  The general rule is that a grant is construed against the grantor.116 It follows that grants will be readily implied in favour of a grantee. They may be created: 109. Re Maiorana and the Conveyancing Act [1970] 1 NSWR 627. 110. The instrument need not refer to the existence or non-existence of a person described in either s 88(1)(c) or (d) unless there is such a person. See Dresdner v Scida (2003) 12 BPR 22,629 at 22,636. 111. Conveyancing Act 1919 (NSW) s 69. 112. See 12.16–12.23. 113. Papadopoulos v Goodwin [1982] 1 NSWLR 413 at 417 per Wootten J. 114. Margil Pty Ltd v Stegul Pastoral Pty Ltd [1984] 2 NSWLR 1. 115. This principle is sometimes referred to as the second rule in Wheeldon v  Burrows: McGrath v  Campbell (2006) NSW ConvR ¶56-159 at 59,896–8. 116. Williams v James (1867) LR 2 CP 577 at 581 per Willes J.

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under the rule in Wheeldon v Burrows; under s 67 of the Conveyancing Act; by necessity; by common intention; or by force of a description of the land.

12.26  Implied easements under the rule in Wheeldon v  Burrows  Wheeldon v  Burrows involved two adjoining blocks of land that had been owned by Tetley. Tetley sold one block to Wheeldon and then sold the other block to Burrows. Wheeldon’s widow (and successor-in-title) erected boardings near the edge of her land facing the windows of a shed on Burrows’ land. Burrows claimed an easement of light in respect of the windows. The English Court of Appeal ultimately concluded that there was no implied easement. Thesiger LJ stated the law as follows:In the case of a grant you may imply a grant of such continuous and apparent easements or such easements as are necessary to the reasonable enjoyment of the property conveyed and have in fact been enjoyed during the unity of ownership …117

An easement will be implied on this basis only in cases where an owner is making a grant or conveyance of part of her or his land to another, so that there was ‘unity of ownership’ prior to the grant. This prerequisite will be satisfied where there has been either a subdivision of a single parcel of the grantor’s land or a grant of one of two parcels of land, both of which were owned by the grantor.118 If the owner had been habitually exercising a right over the land, that right will, when the land passes into the hands of the grantee, become an easement. The right that the grantor had habitually exercised prior to the grant is referred to as a ‘quasi-easement’ because one cannot have an easement over one’s own land. The basis of the rule lies in the principle of non-derogation from grant. It is presumed that the grantor intended to transfer to the grantee all the continuous and apparent easements that the grantor created when the lots were in common ownership. Thus, the grantor is to refrain from doing anything to lessen the rights implicit in that original grant and the provision of the easement is an implied term of the grant.119 So where, for example, prior to a subdivision, the part to be sold received a flow of water through a pipe from the part retained, an implied easement as to the supply of water arose on severance.120 In determining intention, regard can be had to the circumstances surrounding the grant.121 Following the decision in Borman v Griffith,122 there is some doubt about whether a right needs to have been exercised on a continuous basis in order for an easement to be 117. Wheeldon v Burrows (1879) 12 Ch D 31 at 58-59 per Thesiger LJ. 118. McGrath v Campbell (2006) NSW ConvR ¶56-159 at 59,896. 119. Sovmots Investments Ltd v Secretary of State for the Environment [1979] AC 144 at 175 per Lord EdmundDavies; McGrath v Campbell (2006) NSW ConvR ¶56-159 at 59,903. 120. Schwann v Cotton [1916] 2 Ch 459. 121. Cuzeno Pty Ltd v The Owners — Strata Plan 65870 [2013] NSWSC 1385 at [88]–[91] per Darke J. 122. Borman v Griffith [1930] 1 Ch 493.

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12.26

implied. In that case, there was visible evidence that a road over the servient land had existed, Maugham J concluded that the road was necessary for the reasonable enjoyment of the property that was granted.123 Accordingly, it would seem to be sufficient that a right of way is ‘apparent’, in that it is capable of discovery from a careful inspection of the servient land and reasonably necessary for the for the reasonable use of the land. In Ward v Kirkland,124 the right to enter a neighbour’s land for the purpose of maintaining a wall lying on the boundary of the dominant land was held not to be ‘continuous and apparent’. Ungoed-Thomas J observed that, while there had been continuous user, as the right had ‘been in fact used whenever the need arose’, there ‘was no feature on the defendant’s property designed or appropriate for such maintenance’.125 These cases suggest that, at least in relation to rights of way and rights to access, physical evidence of the right of way or right to access may be more significant than evidence of continuous use. The requirement that, at  the time of severance, the quasi-easement must have been used by the grantor for the benefit of the land granted assumes that the land granted and the land retained are not just in common ownership, but also in common possession.126 So, for example, if the land granted was held under a lease, or under a by-law operating to give exclusive use of a common area, then it may not be possible to argue that the owner was using the easement for the benefit of the part of the land granted.127 Where a purchaser was unaware that the vendor also owned adjacent land onto which water from the purchaser’s land drained, it was held that the lack of knowledge at the time of purchase did not prevent an implied easement from arising.128 An implied easement can also arise where a vendor sells land to separate purchasers simultaneously, so that instead of selling the dominant tenement to one party and the vendor retaining the servient tenement, the vendor sells the dominant tenement to one party and the servient tenement to another party.129 For the easement to arise in such circumstances, there must be a basis for saying that the purchaser intended to purchase the land subject to the easement. In other words, the circumstances must be such as to allow the implication of a contractual term under which the purchaser agrees to buy the servient tenement subject to the easement. For this to occur, ‘the probability that the implication of such a term was intended must be so strong that a contrary intention cannot be supposed’.130 An implied easement can arise in respect of Torrens title land in New South Wales if the easement comes within a statutory or in personam exception to indefeasibility.131

123. Borman v Griffith [1930] 1 Ch 493 at 499. 124. Ward v Kirkland [1967] Ch 194. 125. Ward v Kirkland [1967] Ch 194 at 225. 126. Kent v Kavanagh [2007] Ch 1. 127. Cuzeno Pty Ltd v The Owners — Strata Plan 65870 [2013] NSWSC 1385 at [82] per Darke J. 128. Lancaster v Lloyd (1927) 27 SR (NSW) 379. 129. Aldridge v Wright [1929] 2 KB 117 at 130–1 per Greer LJ; White v Taylor (No 2) [1969] 1 Ch 160. 130. McGrath v Campbell (2006) NSW ConvR ¶56-159 at 59,903. 131. See 12.47–12.53.

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12.27  Implied easements under s  67 of the Conveyancing Act Section  67(1) of the Conveyancing Act provides that, unless a contrary intention is evidenced in the conveyance, general words will be imported to transfer, among other rights, ‘liberties, privileges, easements, … rights, and advantages whatsoever appertaining to the land or any part thereof, at the time of conveyance’.This section has primarily a word-saving function. Where easements have been expressly created, the benefit of those easements will pass with the title to the dominant tenement, even where the easements are not mentioned in the conveyance. Nevertheless, the equivalent English provision has been interpreted in as creating implied easements. The section contains the words ‘rights and advantages whatsoever appertaining to the land’, so rights in the nature of privileges only (eg, rights exercisable by permission only), and which were enjoyed at the time of the conveyance, are transformed into easements on conveyance. In Wright v Macadam,132 a landlord gave his tenant permission to store coal in a shed on the landlord’s property.When a new lease was granted, the tenant was taken to have acquired an easement to store coal. There is no requirement that the rights or privilege in question should be ‘continuous or apparent’ at the time of the conveyance, or even reasonably necessary for the enjoyment of the property conveyed; that is, the Wheeldon v Burrows requirements are unnecessary.133 The range of application of s 67 is limited. First, s 67 does not apply to Torrens title land, although a broadly equivalent provision in the Real Property Act might have an analogous effect.134 Second, the section  does not apply to interests which could never meet the substantive requirements for the creation of an easement.135 Thus, in Regis Property Co Ltd v Redman,136 the right to be provided with hot water could not be enforced because this was not a recognised easement; nor could the right to weather-proof the wall of a house, for the same reason.137 Third, in Long v Gowlett,138 it was decided that the provision can apply only if the dominant and servient tenements are in separate ownership at the time of the conveyance. If the two tenements are owned by the same person, then the right or advantage enjoyed over a tenement is one that is enjoyed as the owner of that tenement and not one that is incidental to her or his ownership of the other tenement.139 12.28  Implied easements under s  51 of the Real Property Act While s  67 of the Conveyancing Act does not apply to Torrens land, there is a comparable, although not identical, provision in the Real Property Act. Section 51 of the Real Property Act provides that, on registration, the transferor’s estate or interest passes to the transferee ‘with all rights, powers and privileges thereto belonging or appertaining’. The approved form of transfer is expressed to transfer an estate ‘in land’, and under s 3(1) land includes ‘hereditaments 132. Wright v Macadam [1949] 2 KB 744. The relevant provision was s 62 of the Law of Property Act 1925 (UK). 133. Ward v Kirkland [1967] Ch 194. 134. Conveyancing Act 1919 (NSW) s 67(5). See 12.28. 135. As to these, see 12.3–12.7. 136. Regis Property Co Ltd v Redman [1956] 2 QB 612. 137. Phipps v Pears [1965] 1 QB 76. 138. Long v Gowlett [1923] 2 Ch 177. 139. Long v Gowlett [1923] 2 Ch 177 at 201 (Sargant J).

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corporeal and incorporeal of every kind … together with … liberties, privileges, easements’. Whether s 51 would create easements where only privileges previously existed is unclear. On the one hand, this would not seem to be in keeping with the integrity of a system of title by registration. On the other hand, the language of s 51 is close enough to that of s 67 of the Conveyancing Act that a similar result might be expected. 12.29  Easements of necessity  It is also possible for easements to be granted (or reserved) impliedly if they qualify as ‘easements of necessity’. For an easement to be of ‘necessity’, it must be necessary for the enjoyment of the land conveyed. Most obviously, where land the subject matter of a grant is landlocked, the grantor is held to have impliedly granted an easement of necessity — in this example, a right of way — to get access to the property. These easements arise only where there has been a severance of the land. Where title passes in other ways, such as by adverse possession, there is no such implication.140 Easements of necessity have been held to arise in cases where there is need for the support of a building,141 or where a ventilation shaft has to be constructed to comply with food hygiene regulations.142 But an easement of necessity will not arise unless the easement is essential for the use of the alleged dominant land; mere inconvenience will not do. Thus, in Union Lighterage Co v London Graving Dock Co,143 it was held that as long as the land could be enjoyed in some manner, no easement of necessity would arise. Accordingly, where the owners of a dock that was supported by means of underground tie-rods did not have a continuing right to keep the tie-rods in place, but the dock could still be used without them, no easement of necessity was implied. Stirling LJ distinguished easements of necessity from implied easements of the type envisaged in Wheeldon v Burrows, emphasising that easements of necessity will be available only where the property cannot be used at all without the easement.144 Easements may also be impliedly reserved if they qualify as easements of necessity. Such easements arise on the same basis as where they are impliedly granted, such as when the grantor of the servient tenement retains the dominant tenement, but it is landlocked by virtue of the grant. The landlocked dominant owner may choose the particular right of way required,145 as long as it is a convenient right of way.146 Once a right of way has been chosen, it cannot subsequently be changed.147 An easement of necessity will not arise where parties did not intend that one should exist, even in the event that the grantor’s retained land is landlocked. In North Sydney Printing Pty Ltd v Sabemo Investment Corp Pty Ltd,148 the retained, landlocked land, which was zoned for parking, was always intended for

140. Wilkes v Greenway (1890) 6 TLR 449. 141. Union Lighterage Co v London Graving Dock Co [1902] 2 Ch 557. 142. Wong v Beaumont Property Trust Ltd [1965] 1 QB 173. 143. Union Lighterage Co v London Graving Dock Co [1902] 2 Ch 557. 144. Union Lighterage Co v London Graving Dock Co [1902] 2 Ch 557 at 573. 145. Bolton v Bolton (1879) 11 Ch D 968 at 972. 146. Pearson v Spencer (1861) 1 B & S 571. 147. Deacon v South-Eastern Railway (1889) 61 LT 377. 148. North Sydney Printing Pty Ltd v Sabemo Investment Corp Pty Ltd [1971] 2 NSWLR 150.

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sale to the owner of an adjacent car park. The grantor, therefore, never intended to retain a separate means of access, so was not entitled to an easement of necessity. 12.30  Easements of common intention  The grant of an easement will be implied if it is necessary to give effect to the common intention of parties to a transaction.The common intention is to be inferred: … with reference to the manner or purposes in or for which the land granted or some land retained by the grantor is to be used … But it is essential for this purpose that the parties should intend that the subject of the grant or the land retained by the grantor should be used in some definite and particular manner.149

A common intention can form the basis of an easement either by grant or reservation.150 The purchase of land for an electricity substation gave rise to an implied easement for the transmission of such noise and vibration as was reasonably necessary for the operation of the substation.151 Further examples of easements implied from the common intention of the parties include Jones v Pritchard,152 where the grantee was held to have been impliedly given a right to use the chimneys connected to the grantor’s fireplaces; and Richards v Rose,153 where, on the sale of one of two adjoining houses that depended on each other for support, an implied right to support was granted to the purchaser. In the latter case, there was also an implied reservation of an easement of support.154 These are known as mutual cross-easements, or reciprocal and mutual easements. 12.31  Easements implied from the description of the land  On the conveyance of land described as ‘bounded by’ or ‘abutting on’ or ‘adjoining’ a road or street also owned by the seller, the seller will be deemed to have impliedly granted an easement over such part of the road as forms part of the seller’s land. This is often known as the rule in Dabbs v Seaman.155 Further, if land belonging to the grantor lies between the land sold and the road, the grantor will be deemed to have impliedly granted an easement over the grantor’s land to get access to the road. This principle applies to old system land. It also applies to Torrens title land provided that the road itself is Torrens title.156 The same principle appears to have informed the decision in Mellor v Walmesley.157 Land sold under the description of ‘situate on the seashore’ was actually separated from the seashore by a strip of land belonging to the vendor.The court concluded that the purchaser was entitled to unrestricted access to the seashore from every part of the frontage of the 149. Pwllbach Colliery Co Ltd v Woodman [1915] AC 634 at 646–7 per Lord Parker. 150. For an example of an easement by reservation, see Richards v Rose (1853) 9 Ex 218. 151. Re State Electricity Commission of Victoria and Joshua’s Contract [1940] VLR 121. 152. Jones v Pritchard [1908] 1 Ch 630. 153. Richards v Rose (1853) 9 Ex 218. 154. For easements of support, see 12.40. 155. Dabbs v Seaman (1925) 36 CLR 538. 156. Note that where the road is a public road, a right of access across the boundary between the land and road is given by s 6(1) of the Roads Act 1993 (NSW). See also Weber v Ankin (2008) 13 BPR 25,231. 157. Mellor v  Walmesley [1905] 2 Ch  164. See  also Lake Macquarie City Council v  Luka (1999) 9 BPR 17,481; Permanent Trustee Co of NSW v Campbelltown Municipal Council (1960) 105 CLR 401 at 421–2 per Windeyer J; Weber v Ankin (2008) 13 BPR 25,231.

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land, so there was effectively an easement over the strip of land enabling the purchaser to access the seashore.

Acquisition by ‘long user’ or prescription 12.32  General  In addition to the above ways in which easements can be created, it is possible to acquire an easement by a period of protracted and continuous use, or ‘long user’.158 This doctrine, usually called ‘prescription’, resembles the doctrine of adverse possession in so far as it is activated by a landowner standing by and allowing someone else to use the land for a lengthy period of time. In New  South  Wales, an easement by prescription can arise where the use has continued for at least 20 years. Despite the similarities, there is a fundamental difference between the ways that prescription and adverse possession operate. In the case of prescription, the claimant asserts positive rights acquired by virtue of certain practices, such as the exercise of rights of way or the use of a channel as a drain. By contrast, in the case of adverse possession, the claimant asserts negative rights. The trespasser’s actions have the effect of extinguishing the documentary titleholder’s interest, and consequently the adverse possessor’s trespassory title becomes, by default, the remaining best title to the land.159 In English law, there were three modes of acquisition of an easement by prescription: 1. at common law (involving use from time immemorial);160 2. by the doctrine of the ‘lost modern grant’; and 3. under the Prescription Act 1832 (UK). Only the second has ever been applicable in New South Wales.161 It is presumed that, where 20 years’ use was established, the grant had been made but was later lost. The lost grant is a legal fiction. One rationale for this rule is that the servient owner would not have remained inactive for a period of 20 years had the grant not been made to the alleged dominant owner.162 Another rationale for the rule is that, in the absence of some other explanation, a lawful basis for use of such length will be found.163 The leading Australian case, Delohery v Permanent Trustee Co of New South Wales, preferred to find the rationale in an implied contractual obligation.164

158. See, generally, F Burns, ‘The Future of Prescriptive Easements in Australia and England’ (2007) 31 Melbourne University Law Review  2; L Bennett Moses and C Sherry, ‘Unregistered Access: Wheeldon v Burrows Easements and Easements by Prescription over Torrens Land’ (2007) 81(7) Australian Law Journal 491. 159. See 5.144. 160. See Maher v Bayview Golf Club Ltd (2004) 12 BPR 22,457 at 22,462. 161. Delohery v  Permanent Trustee Co of New  South  Wales (1904) 1 CLR 283 at  183. Note that recently the Victorian Law Reform Commission recommended that the rule of law permitting a person to acquire an easement by long user under the fiction of lost modern grant should be abolished:Victorian Law Reform Commission, Easements and Covenants, Final Report 22, p 55. 162. Wynstanley v Lee (1818) 36 ER 643 at 646 per Plumer MR. 163. Attorney-General v Simpson [1901] 2 Ch 671 at 698 per Farwell LJ. 164. Delohery v Permanent Trustee Co of New South Wales (1904) 1 CLR 283 at 313–14 per Griffith CJ.

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The case of prescription based on the presumption of a lost modern grant marks an additional difference between the doctrines of prescription and adverse possession. In contrast to an easement by prescription, an adverse possessor does not claim any dealings with the documentary title holder. 12.33  Long user The fictional nature of the lost modern grant doctrine is apparent in the notion that the presumption that a grant has been made is irrebuttable, even where it can be proven that no grant was made.165 The only exceptions are illegality of the grant or grantors without legal capacity to make the grant, such as infants, the insane, or corporations that lacked the necessary power.166 In order to establish an easement by lost modern grant, the alleged easement must have been enjoyed ‘as of right’, as in the case where an existing laneway was openly used for a period in excess of 20 years.167 To put it another way, ‘long user’ is concerned with whether the owner of the land has acquiesced in the exercise of the right.168 It has been said that there are three prerequisites to a finding of the necessary acquiescence.These are captured by the Latin expressions nec vi (‘without force’), nec clam (‘without secrecy’) and nec precario (‘without permission’),169 as the early English cases followed Roman law in this area.170 ‘Without force refers to lack of physical violence, as well as use without contention or protest. In Eaton v Swansea Waterworks Co,171 no easement was acquired because the parties were in constant conflict over its existence. ‘Without secrecy’ involves an inquiry as to whether the enjoyment was sufficiently open to allow discovery by the ordinary, diligent owner.172 This principle is most relevant to easements which are least obvious, such as those involving the underground flow of liquids, so that no easement arose in the case of discharge of factory waste fluids into a local authority’s sewers at night.173 Similarly, there was no easement of support by prescription in relation to beams that could not be discovered by an inspection of the external or internal walls of the servient tenement.174

165. Dalton v Henry Angus & Co (1881) 6 App Cas 740. 166. Thwaites v Brahe (1895) 21 VLR 192. See further, Bradbrook and Neave, Easements and Restrictive Covenants in Australia, note 2 above, p 122. In Bakewell Management Ltd v Brandwood [2004] 2 AC 519, it was held that the illegality exception does not apply where the prescriptive acts, which were otherwise illegal, would not be so if authorised by the owner of the putative servient tenement. 167. Dewhirst v Edwards [1983] 1 NSWLR 34. 168. Sturges v Bridgman (1879) 11 Ch D 852; R (Beresford) v Sunderland City Council [2004] 1 AC 889; Dockray v Chick [2010] TASSC 32. 169. Schwann v Cotton [1916] 2 Ch 459 at 475; Williams v State Transit Authority of New South Wales (2004) 60 NSWLR 286 at 292–3. 170. C Harpum, Megarry and Wade:The Law of Real Property, 6th ed, Sweet & Maxwell, London, 2000, p 119. 171. Eaton v Swansea Waterworks Co (1851) 17 QB 267. 172. Union Lighterage Co v London Graving Dock Co [1902] 2 Ch 557. 173. Liverpool Corporation v H Coghill & Sons Ltd [1918] 1 Ch 307. 174. Milne v James (1910) 13 CLR 168.

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‘Without permission’, involves absence of consent on the part of the servient tenement holder.175 Acquiescence in or toleration of a particular use is not permission.176 Neighbourly good nature and toleration of limited use will not give rise to a prescriptive easement,177 though use that commenced by virtue of ‘neighbourly indulgence may come, in time, to bear the stamp of legal right’.178 Even a single instance of asking for or obtaining permission during the period of use, being an admission that there was no right, will be inconsistent with the existence of an easement by prescription.179 The use must be continuous, in the sense that the easement was used whenever needed.180 Occasional use, as where the verges of a one-lane right of way were used to allow vehicles to pass, will not suffice.181 Similarly to the position regarding adverse possession, periods of use of less than 20 years by different owners of the dominant tenement can be added together.182 It is not possible to acquire an easement of light or air by prescription.183 Prescriptive rights of way be acquired against the Crown or against persons holding land on trust for public purposes.184

Creation by statute — s 88K of the Conveyancing Act 12.34  Section 88K was inserted into the Conveyancing Act to provide a supplementary set of rights in the nature of easements of necessity.185 The provision allows the Supreme Court to grant an easement over land ‘if the easement is reasonably necessary for the effective use or development of other land that will have the benefit of the easement’.186 This requirement is different from the requirement for an easement of necessity. An easement of necessity must be essential for the enjoyment of the land. A proposed easement will be reasonably necessary where the use and development of the putative dominant tenement that would be possible with the easement is substantially preferable to the use and development that is possible without the easement.187 Accordingly, ‘reasonably necessary’ means something more than reasonably desirable or preferable to the alternative means available.188 Nevertheless, the mere fact that there is, for example, another means of access 175. Healey v Hawkins [1968] 1 WLR 1967. 176. Dalton v Henry Angus & Co (1881) 6 App Cas 740. 177. Ironside v Cook (1981) 41 P & CR 326. 178. Dobbie v Davidson (1991) 23 NSWLR 625 at 629 per Kirby P. 179. Tickle v Brown (1836) 4 Ad & E 369; 111 ER 826. 180. Dare v Heathcote (1856) 25 LJ Ex 245. 181. Ironside v Cook (1981) 41 P & CR 326. 182. Dobbie v Davidson (1991) 23 NSWLR 625 at 627 per Kirby P. 183. Conveyancing Act 1919 (NSW) s 179. 184. Conveyancing Act 1919 (NSW) s 178. See Williams v State Transit Authority of New South Wales (2004) 60 NSWLR 286 at 289–92. 185. As to the reasons for the enactment of s 88K of the Conveyancing Act, see New South Wales Land Titles Office, Review of Easements Discussion Paper, 1990, pp 32–40. 186. Conveyancing Act 1919 (NSW) s 88K(1). 187. 117 York Street Pty Ltd v  Proprietors of Strata Plan No 16123 (1998) 43  NSWLR 504 at  509; Gittany v McDowell (2009) 14 BPR 26,803; Lonergan v Lewis [2011] NSWSC 1133; Evans v Cornish Nominees Pty Ltd (2009) 14 BPR 27,257; O’Shea v Athanasakis (2009) 14 BPR 27,093. 188. Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445 at [154]. In the Matter of an Application by Kindervater [1996] ANZ Conv Rep 331; Gittany v  McDowell (2009) 14 BPR 26,803; Govindan-Lee v Sawkins [2016] NSWSC 328.

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to the applicant’s land does not preclude the making of an order under s 88K.189 If the applicant proposes to make ‘an economically rational use of the land’ and alternative measures to the proposed easement present such difficulties as make the proposed easement the most practical option, an easement should be granted.190 The reasonable necessity need not exist at the time of the severance of the two parcels of land. Moreover, the court is not confined to considering the circumstances that existed at the time the court proceedings were commenced.191 Reasonable necessity has to be determined objectively in the light of the present circumstances, taking into account the factual position at the time of the making of the order. Thus, matters to be taken into account include: the capacity of the developer’s land for particular kinds of development or use; the nature of the development; the manner in which the development is to be effected; and the effect of the easement on the servient tenement.192 The inquiry as to whether the proposed easement is reasonably necessary also involves consideration of the adverse effect of the imposition of the proposed easement on the use and enjoyment of the putative servient tenement.193 Accordingly, the court might refuse to impose an easement because it would significantly impede the future development of the burdened land,194 or significantly infringe on the privacy of the occupier of that land.195 In addition to establishing that the proposed easement is reasonably necessary for the effective use or development of the putative dominant tenement, the owner of that land must satisfy the court of certain other matters: first, that the use of the benefited land is consistent with the public interest;196 second, that the owner and other registered interest holders of the burdened land can be adequately compensated;197 and third, that reasonable attempts have been made to obtain an easement and those attempts have been unsuccessful.198 Where an easement is imposed under s 88K, the court must provide that the owner of the dominant tenement pay compensation to the owner of the servient tenement unless compensation would not be appropriate in the special circumstances of the case.199 189. Gordon v Lever (No 2) [2019] NSWCA 275 at [36]; Lopeman v WIN Corporation Pty Ltd [2020] NSWSC 1305. 190. Lopeman v WIN Corporation Pty Ltd [2020] NSWSC 1305 at [204]–[205] (Sackar J). 191. Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14,638 at 14,643–4; 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504. 192. Shi v  ABI-K Pty Ltd (2014) 87 NSWLR 568 at  [6]. Thus, the stronger the burden on the servient tenement, the stronger the case needed to justify a finding of reasonable necessity: Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445 at [156]. 193. Katakouzinos v Roufir Pty Ltd (1999) 9 BPR 17,303 at 17,308. 194. Blulock Pty Ltd v Majic (2001) 10 BPR 19,143. 195. See Hanny v Lewis (1998) 9 BPR 16,205 at 16,208–9. 196. Conveyancing Act 1919 (NSW) s 88K(2)(a). See Woodland v Manly Municipal Council (No 1) (2003) 11 BPR 20,903 at 20,910–11 and 20,913. 197. Conveyancing Act 1919 (NSW) s 88K(2)(b). See Blulock Pty Ltd v Majic (2001) 10 BPR 19,143 at 19,150–1; Evans v Cornish Nominees Pty Ltd (2009) 14 BPR 27,257. 198. Conveyancing Act 1919 (NSW) s 88K(2)(c). See Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14,638; PD Consultants Pty Ltd v Childs [2004] NSWSC 1076; Khattar v Wiese (2005) 12 BPR 23,235; Gittany v McDowell (2009) 14 BPR 26,803. 199. Conveyancing Act 1919 (NSW) s 88K(4); Considerations relevant to the assessment of compensation were discussed in Rawson v Studholme [2018] NSWSC 1764 at [31]–[41].

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Section  88K has generated a large body of case law.200 The provision has been used to impose rights of way and easements for temporary or permanent encroachment. For example, it may be used to impose a permanent right of way for access to a road, or to give a temporary right for the encroachment of a crane or scaffolding into the airspace of a neighbour’s land to allow the construction of a building on one’s own land.201 Additionally, drainage easements and easements for the flow of light and air have been imposed in circumstances where such easements need to be obtained as a condition of a council’s deferred development consent. In this respect, s 40 of the Land and Environment Court Act 1979 (NSW) is also relevant. Where the New South Wales Land and Environment Court has determined to grant development consent in respect of land and there is an appeal pending in respect of that consent, s 40 allows the appellant to apply for an order imposing an easement over the land.When dealing with such an application, the court may exercise the jurisdiction of the Supreme Court under s 88K of the Conveyancing Act.202

Common types of easements and the extent of rights conferred 12.35  As previously discussed,203 easements, as a class of interests in land, involve a variety of rights. Some especially common types of easement are: • • • •

rights of way; rights to support; fencing easements; and rights to create a nuisance.

Each of these commonly confers specific, characteristic rights on the owner of the dominant tenement.204

Rights of way 12.36  A right of way is a right to pass over or to make use of the land of another.205 Commonly, an easement for a right of way will include the words ‘pass and re-pass at all times for all purposes’. The precise ambit of rights conferred by such an easement depends on the language of the document creating it.206 A series of cases has examined the possibility of tension between the literal terms of the grant and the context provided by

200. See S Grattan, ‘The Name(s) of the Rose: Personality, Preferences and Court-Imposed Easements’ (2004) 10 Cantab LR 329; S Grattan, ‘Courting Councils and Counselling Courts: Subjectivity and Objectivity in s 88K Applications’ (2005) 12 APLJ 126. 201. 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504; Katakouzinos v Roufir Pty Ltd (1999) 9 BPR 17,303. 202. Land and Environment Court Act 1979 (NSW) s 40(4). 203. See 12.8–12.10. 204. See, generally, Bradbrook and Neave, Easements and Restrictive Covenants in Australia, note 2 above, Chapters 6–10; Gaunt and Morgan, Gale on Easements, note 15 above, pp 42–45. 205. International Tea Stores Co v Hobbs [1903] 2 Ch 165. 206. Gallagher v Rainbow (1994) 179 CLR 624; Moncrieff v Jamieson [2007] 1 WLR 2620.

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the surrounding circumstances at the date of the grant.207 Resorting to extrinsic evidence of the circumstances at  the date of the grant to construe the terms of an easement is particularly problematic where the easement relates to Torrens title land. Where an easement in respect of Torrens title land is registered, the terms of the easement are a matter that can be discovered by searching the register. In Westfield Management Ltd v Perpetual Trustee Co Ltd,208 the High Court of Australia held that the principle of indefeasibility requires that regard be had only to the Register, so the rules as to the admissibility of extrinsic evidence to construe contracts have no place in construing registered dealings. The rationale for this decision is that it is inconsistent with the principles underlying the Torrens system for third parties to be required to go beyond the Register to establish facts and circumstances existing at the time of the grant. There seem to be some exceptions to this general rule. Regard can be had to evidence as to the physical characteristics of the tenement.209 The physical features are there for all to see. In Hare v Van Brugge210 there was an inclinator that crossed the servient tenement. The inclinator was a fixture and, therefore, part of the servient tenement. The inclinator pre-dated the easement, and the court concluded that the right to ‘pass and re-pass’ in the grant included passage by means of the inclinator structure.211 Decisions subsequent to Westfield have considered whether a court may have regard to extrinsic material other than evidence of the physical features of the land. In Tempe Recreation Reserve Trust v  Sydney Water Corporation, Leeming JA held that where several easements were included in a memorandum of transfer and registered with respect to the same land, it was appropriate (and consistent with the decision in Westfield) to interpret one of the easements in the light of the others where it was clear that there was a relationship between definitional terms in the instruments.212 In Currumbin Investments Pty Ltd v Body Corp Mitchell Park Parkwood CTS,213 Fryberg J observed that a court could look at material that could be accessed by third parties without unreasonable effort, expense or delay. 207. See, for example, Kyren Pty Ltd v Cinema Place Pty Ltd [2006] SASC 93 at [6]–[8] per Besanko J; at [17]–[24] per Vanstone J; at [70]–[122] per Layton J.The court referred to its earlier decision in Yip v Frolich (2004) 89 SASR 467, in which a grant expressed in the language of a right of way was construed as creating a drainage easement. 208. Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528 at [37]–[39]. 209. See also Sertari Pty Ltd v Nirimba Developments Pty Ltd (2008) NSW ConvR ¶56-200; Chick v Dockray [2011] TASFC 1 at [19]–[20]. See also M Weir, ‘The Westfield Case: A Change for the Better?’ (2009) 21 Bond Law Review 182. 210. Hare v Van Brugge (2013) 84 NSWLR 41 at 46 per Barrett JA. 211. It has been suggested, without decision, that different considerations may apply if there has been some material change in the physical circumstances since the creation of the easement. This may not be information readily available to third parties: Currumbin Investments Pty Ltd v  Body Corp Mitchell Park Parkwood CTS [2012] 2 Qd R 511 at [49] per Fryberg J (McMurdo P and Fraser JA concurring). See also Hare v Van Brugge (2013) 84 NSWLR 41 at 46 per Barrett JA. 212. Tempe Recreational Reserve Trust v Sydney Water Corporation (2014) 88 NSWLR 449 at [57]. In Currumbin Investments Pty Ltd v Body Corp Mitchell Park Parkwood CTS [2012] 2 Qd R 511 at [52], Fryberg J raised, without deciding, whether resort to extrinsic material might include unregistered instruments explicitly referenced in registered instruments. 213. Currumbin Investments Pty Ltd v Body Corp Mitchell Park Parkwood CTS [2012] 2 Qd R 511 at [53] per Fryberg J.

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In Neighbourhood Association DP No 285220 v  Moffat,214 White J suggested that, where there is a bare grant of a right (eg, the instrument merely specifies ‘a right of way’), the High  Court’s decision in Westfield would not preclude ‘recourse to all of the objective matrix of facts bearing on the construction of the instrument’.215 While the resort to extrinsic material infringes on the strict principles of Torrens title, in cases where there is only a bare grant, it will be difficult to ascertain the extent of the rights conferred upon the dominant tenement owner without referring to such material. If the language of the instrument is clear, the presence of physical obstacles on the route of the right of way will not be a reason for construing the dominant tenement owner’s rights narrowly; so, for example, where a right of way granted was of a specified width, it could not be restricted by the existence of a narrow gate.216 On the other hand, where a right of way potentially affords access to the dominant tenement at a number of points along the right of way, the owner of that land cannot necessarily insist on taking advantage of all of those points of access. The owner of the dominant tenement is entitled only to such access at a point that is reasonable for the use and enjoyment of the dominant land, taking into account the impact of such access on the use and enjoyment of the servient tenement.217 Some recent decisions have contemplated that access may be allowed at more than one point if that would be consistent with the terms of the grant.218 The purpose for which the right of way is granted is also an important consideration. Where the easement was granted for the purposes of passage, momentary stopping that is incidental to passage would be permitted. On the other hand, a right of footway will not normally give the owner of the dominant tenement the right to put up a ladder on the site of the easement in order to paint his or her house.219 However, a right of way conferring vehicular access to business premises has been construed to allow the parking of vehicles for the purposes of loading and unloading,220 but a right to park will not always be taken to be an incident of a right to traverse. The language of the grant will be the ultimate guide.221 For example, in Fanigun Pty Ltd v Woolworths,222 the court held, in respect of an easement giving access to a petrol station on the dominant tenement, that, since the terms of the grant expressly prohibited the obstruction of the right of carriageway, customers were not permitted to stop and queue on the right of way. If a particular mode of carriage that was usual at the time of the grant is specified, more modern modes of carriage would 214. [2008] NSWSC 54. 215. [2008] NSWSC 54 at [35]. See also Berryman v Sonnenschein [2008] NSWSC 213 at [29]. 216. Bulstrode v Lambert [1953] 1 WLR 1064. 217. Natva Developments Pty Ltd v McDonald Bros Pty Ltd (2004) 12 BPR 22,287 at 22,296–300. See also Chiu v Healey (2003) 11 BPR 21,241 at 21,249. 218. Timpar Nominees Pty Ltd v Archer [2001] WASCA 430 at [53]; Krolczyk v Raffan [1992] ANZ ConvR 228 at 231; Berryman v Sonnenschein [2008] NSWSC 213 at [40]; Chick v Dockray [2011] TASFC 1 at [26]. 219. Chiu v Healey (2003) 11 BPR 21,241 at 21,249–50. 220. Elliott v Renner [1923] St R Qd 172. The issue of whether an easement to pass and repass allows parking on the easement is a vexed one, and the subject of much litigation. See, in particular, Moncrieff v Jamieson (2007) 1 WLR 2620. 221. SS & M Ceramics Pty Ltd v Kin [1996] 2 Qd R 540. 222. Fanigun Pty Ltd v Woolworths Ltd [2006] ANZ ConvR 196.

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not necessarily be excluded. For example, a right to drive horse-drawn carriages that was granted when that was the usual means of carriage will generally be assumed to allow motor cars.223 Whether the owner of the dominant tenement and those authorised by him or her can use the right of way to transit from the dominant tenement to another parcel of land that does not have the benefit of the easement is a more difficult question. It has long been thought that such use would be inconsistent with the decision in Harris v Flower.224 The facts of National Trust v White225 point to a possible exception. In that case, it was held to be permissible to use a right of way to gain access to land other than the dominant tenement where the purpose of such access was ancillary to the enjoyment of the dominant tenement.The court upheld the use of the right of way to access a car park for the purpose of getting to and from the historic site on the dominant tenement. The decision in Harris v Flower was revisited by the Supreme Court of New South Wales in Westfield Management Ltd v Perpetual Trustee Co Ltd.226 Brereton J held that the use of an easement cannot be extended so as to impose a burden greater than that which the servient tenement holder agreed to accept. Equally, it would not be in excess of the grant to use the dominant tenement for purposes that were contemplated at the time of the grant. On appeal, the High Court of Australia noted that, while these propositions were useful starting points, the matter remained essentially one of construction of the terms of the particular grant.227 12.37  Extent of obligations The instrument creating the easement will determine the extent of the obligations relating to it. In the absence of express provision to that effect, the grantor of a right of way will not be under an obligation to construct the required road or path.228 Equally, in the absence of express provision, there is no obligation on the part of the grantor to repair or maintain the easement.229 Even where such positive obligations arise, at common law they cannot bind successors in title of the grantor;230 although, by legislation, positive obligations can be imposed on successors in title by registration.231 This applies to both old system and Torrens title land. Where the grantor is free from positive obligations to repair or maintain, the grantee has an ancillary right to enter the servient tenement to establish, repair and maintain the site. A grantee who chooses to do this must 223. Lock v Abercester Ltd [1939] Ch 861. But note Walker v Bridgewood [2006] NSWSC 149 at [61]–[62] per Gzell J, where it was noted, without deciding, that the easement at issue that allowed passage ‘with or without horses carts carriages or wagons laden or unladen’ would not now include vehicular traffic as the easement would have been incapable of use by motor vehicles at the time of the grant. 224. Harris v Flower (1904) 74 LJ Ch 127. For a more detailed consideration of the rule and the exceptions to it, see Bradbrook and Neave, Easements and Restrictive Covenants in Australia, note 2 above, pp 177–79. 225. National Trust v White [1987] 1 WLR 907. 226. Westfield Management Ltd v Perpetual Trustee Co Ltd (2006) NSW ConvR ¶56-163. 227. Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528. 228. Newcomen v Coulson (1877) 5 Ch D 133. 229. Duncan v Louch (1845) 6 QB 904; Carter v Cole [2006] All ER(D) 139 at [8] per Longmore LJ. 230. Austerberry v  Corporation of Oldham (1885) 29 Ch  D 750; Clifford v  Dove (2003) 11 BPR 21,149. For detailed discussion of these principles, see Chapter 13. 231. Conveyancing Act 1919 (NSW) s 88BA.

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12.39

bear the cost of doing so.232 It is also possible for the owner of the dominant tenement to have an implied right to cross various parts of the servient tenement by an undefined route in order to gain access to an expressly granted and defined right of way.233 12.38  Change of use Where an easement is expressed in wide terms, courts will rarely interpret the grant restrictively. The general position is that, in the absence of specific words in the grant, the court will not read restrictions into a grant by reference to the use of the dominant tenement at the time that the easement was created. For example, a right of way ‘to go, pass and repass at all times for all purposes’ will generally be given a wide construction, whereby a change in use of the dominant tenement will not prevent continued use of the easement as a right of way. So, where a private home was converted into a butler’s lodge, the right of way could still be exercised over the servient tenement;234 and where a dominant tenement that originally contained several cottages was developed as a 10-storey building, the easement could be used by construction vehicles.235 The fact that the change in use will result in a substantial increase in use is not, of itself, a reason for reading the terms of the easement so as to exclude the new use. However, there have been cases in which the increase in use was of such a magnitude that it was found to be unreasonable. In Jelbert v Davis,236 for example, the conversion of the dominant tenement from agricultural land to a large camping park led to an unreasonable increase in user of the easement across the servient tenement. Two distinct justifications for restricting the terms of an easement so as to exclude the new use have been offered. One approach is to ask what was in the reasonable contemplation of the parties at the time the easement was created.237 The other approach, which is apparent in Jelbert v Davis, is to ask whether the rights of the servient tenement holder have been unreasonably interfered with.238 12.39  Interference with rights of way  A grantor must not obstruct the right of way. An obstruction amounts to an actionable nuisance,239 but only where it is substantial.240 There was found to be a substantial interference where the owner of the servient tenement had constructed a suspended building over a right of way that would impede access to the dominant tenement by large trucks, even though it would not affect the passage of smaller vehicles. In Sinclair v Jut,241 the erection of a greater than usual number of internal gates on the servient tenement (a rural property) was held to amount to a real and substantial

232. Stokes v Mixconcrete (Holdings) Ltd (1978) 38 P & CR 488; Clifford v Dove (2003) 11 BPR 21,149; Carter v Cole [2006] All ER(D) 139 at [8] per Longmore LJ; Hare v Van Brugge (2013) 84 NSWLR 41 at 48 per Barrett JA. 233. Maurice Toltz Pty Ltd v Macy’s Emporium Pty Ltd [1970] 1 NSWR 474. 234. White v Grand Hotel, Eastbourne Ltd [1913] 1 Ch 113. 235. In Kyren Pty Ltd v Cinema Place Pty Ltd [2006] SASC 93. 236. Jelbert v Davis [1968] 1 WLR 589. See also Walker v Bridgewood [2006] NSWSC 149. 237. Todrick v Western National Omnibus Co Ltd [1934] 1 WLR 589. 238. Jelbert v Davis [1968] 1 WLR 589. 239. Powell v Langdon (1944) 45 SR (NSW) 136. 240. Pettey v Parsons [1914] 2 Ch 653. 241. Sinclair v Jut (1996) 9 BPR 16,219. Also see Dresdner v Scida (2003) 12 BPR 22,629.

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interference with the plaintiff ’s right of carriageway.242 Where there is an obstruction, the grantee is entitled to use an alternative route across the servient land so as to connect the two parts of the easement on either side of the obstruction.While the obstruction remains, such use will not constitute a trespass.243

Rights to support 12.40  As noted previously, a right to the support of buildings is not among the natural rights that form part of the land.244 Accordingly, any such rights must take the form of express or implied easements or arise under a statutory regime such as s 177 of the Conveyancing Act. An easement for support may come from adjoining land or adjoining buildings. In the case of land, this may be done by express or implied grant or reservation, or prescription.With regard to buildings, s 181B(1) of the Conveyancing Act provides that in the case of ‘party walls’, mutual cross-easements of support are created on the severance of buildings that share the party wall where the wall is described in the assurance as a party wall. Also, cross-easements to support of party walls are deemed to be intended by parties on the lodgment of plans for registration or recording.245 In most cases where buildings support one another, they would originally have been in common ownership, and so, on the sale of one lot, there will be an implied grant of an easement in accordance with the law stated in Wheeldon v  Burrows.246 Equally, there can be an implied reservation of an easement in such cases.247 Fencing easements 12.41  A fencing easement is a right of the dominant tenement owner to compel the servient tenement owner to perform fencing work. It is something of an anomaly (‘a spurious easement’)248 because, unlike other easements, it involves a positive duty to fence on the part of the servient tenement owner.249 In the normal case, the servient tenement owner must merely submit to the rights of the owner of the dominant tenement. Section 10 of the Dividing Fences Act 1991 (NSW) eliminates the possibility of acquiring a fencing easement by implication or prescription.250 That legislation provides for the sharing of obligations for the repair of dividing fences. 242. See Middleton v Arthur (2002) 11 BPR 20,263, where an injunction was granted in order to prevent this threatened interference from occurring.This depended on the construction of the easement as permitting access to the dominant tenement by tradesmen’s vehicles and removal vans: at 20,269. 243. Selby v Nettlefold (1873) 9 Ch App 111. 244. Dalton v Henry Angus & Co (1881) 6 App Cas 740. For information about the extent of such natural rights and how they compare with easements, see 12.11. 245. Conveyancing Act 1919 (NSW) s 88BB. On this issue generally, see Bradbrook and Neave, Easements and Restrictive Covenants in Australia, note 2 above, pp 200–02. 246. Wheeldon v Burrows (1879) 12 Ch D 31. See 12.26. 247. Richards v Rose (1853) 9 Ex 218. See 12.24. 248. Coaker v Willcocks [1911] 2 KB 124 at 131 per Farwell LJ (CA). 249. Crow v Wood [1971] 1 QB 77. On fencing easements generally, see Bradbrook and Neave, Easements and Restrictive Covenants in Australia, note 2 above, Ch 10. 250. For the creation of easements by implication, see  12.24–12.31. For easements by prescription, see 12.32–12.33.

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Rights to create a nuisance 12.42  An easement may confer a right to do things on the servient tenement that might otherwise amount to an actionable nuisance. Thus, the right to emit vibrations and noise from an electricity substation over the land of another has been held to be a valid easement,251 as has the right to discharge polluted water over a neighbour’s land.252 Where the right is too vague or indeterminate, however, it cannot be the subject of an easement, as in the case of a right to emit coal dust particles over the entire servient tenement.253

Remedies 12.43  There are two remedies available to the owner of the dominant tenement for the infringement of an easement: (i) abatement; and (ii) action.

Abatement 12.44  Abatement is a remedy of self-help to prevent the continuation of an infringement of an easement. The owner of an easement has a general right to abate the interference, provided that: • no more force is used than is reasonably necessary in the circumstances;254 • there is not likely to be a breach of the peace;255 and • there is no injury to third parties or the public.256 Therefore, in the case of an obstructed right of way, the owner of the dominant tenement may remove the obstruction.This may involve breaking open a locked gate or even pulling down a dwelling house that has wrongfully been constructed over the right of way.257 It is not necessary to give notice to the owner of the servient tenement,258 unless an inhabited dwelling is to be demolished.259

Action 12.45  The owner of the dominant tenement has an action in nuisance where there is an interference with his or her rights.260 Damages, a declaration or an injunction, or a combination of these remedies, may be claimed.261 Interference is not actionable unless it is ‘real and substantial’, although proof of actual damage or loss is not necessary in order to 251. Re State Electricity Commission of Victoria and Joshua’s Contract [1940] VLR 121. 252. Wright v Williams (1836) 1 M & W 77. 253. Pwllbach Colliery Co Ltd v Woodman [1915] AC 634. 254. Lagan Navigation Co v  Lambeg Bleaching, Dyeing and Finishing Co Ltd [1927] AC 226 at  244 per Lord Atkinson. 255. Davies v Williams (1851) 16 QB 546. 209; Roberts v Rose (1865) LR 1 Ex 82. 210; Lane v Capsey [1891] 3 Ch 411. 211; Perry v Fitzhowe (1846) 8 QB 757. 256. Roberts v Rose (1865) LR 1 Ex 82. 257. Lane v Capsey [1891] 3 Ch 411. 258. Perry v Fitzhowe (1846) 8 QB 757. 259. Davies v Williams (1851) 16 QB 546. 260. Paine & Co v St Neots Gas & Coke Co [1939] 3 All ER 812. 261. Leeds Industrial Co-operative Society Ltd v Slack [1924] AC 851.

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obtain an injunction.262 In a case where the owner of the servient tenement erected a gate across a right of way, the interference was held not to be substantial if the gate remained open during business hours and was closed, but unlocked, at other times.263 Where the holder of the servient tenement, over which an inclinator passed, refused to supply electricity to the inclinator, there was not a real and substantial interference; the servient tenement owner had no obligation to maintain the inclinator or to keep it working.264 The owner of an easement does not have possession of the land over which the easement is exercised, so he or she is not able to set up a possessory title against a third party who interferes with the easement. Instead, he or she must prove a good title to the easement. Since title must be proved, the defendant may plead the jus tertii defence, claiming that the plaintiff lacks standing to bring the action.265

Easements and the Torrens system 12.46  The enforceability of easements under the Torrens system is complex. By s 42 of the Real Property Act, a registered easement, like other interests in land, will be indefeasible. The Act makes certain unregistered easements exceptions to indefeasibility. As previously noted, the manner of creation of implied easements is contrary to the Torrens policy of making registration a condition of enforceability. Accordingly, implied easements that are not registered are given limited protection under the Torrens system.

‘Omitted or misdescribed’ easements 12.47  Section 42(1)(a1) of the Real Property Act provides that omitted and misdescribed easements ‘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 Commonwealth Act’ are an exception to indefeasibility. There are two ways in which easements may be omitted from, or misdescribed in, the Register: first, when old system title is converted to Torrens title and an easement ‘subsisting immediately before’ is not recorded; and second, where an easement is ‘validly created’ by statute law over land that is already Torrens title land, but the easement is not registered. 12.48  For the purposes of s  42(1)(a1) of the Real Property Act, ‘omitted’ means ‘left out’ or ‘not there’.266 As noted in Castle Constructions Pty Ltd v Sahab Holdings Pty

262. Mount Cathay v Pty Ltd v Lend Lease Funds Management Ltd [2012] QCA 274 at [17]–[19] per McMurdo P (White and Gotterson JJA agreeing). 263. Pettey v Parsons [1914] 2 Ch 653. 264. Hare v Van Brugge (2013) 84 NSWLR 41 at 49 per Barrett JA. 265. Paine & Co v St Neots Gas & Coke Co [1939] 3 All ER 812. For details of this rule, see 2.54–2.57 and 5.25. For a comprehensive discussion of who can use, and who can be sued, for the infringement of an easement, see Bradbrook and Neave, Easements and Restrictive Covenants in Australia, note 2 above, pp 437–40; Gaunt and Morgan, Gale on Easements, note 15 above, pp 567–79. 266. Dobbie v Davidson (1991) 23 NSWLR 625; Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (2013) 247 CLR 149 at [23] per Hayne, Crennan, Keifel and Bell JJ; Registrar-General of New South Wales v Jea Holdings (Aust) Pty Ltd (2015) 88 NSWLR 321 at [118] per Bathurst CJ and Beazley P.

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Ltd,267 the presupposition of the section is that an easement existed; that is, but for the fact that the easement is not registered, there would be an enforceable easement. The section  provides for the continued effect of the easement in respect of the land. This exception to indefeasibility is not limited to situations in which neglect on the part of the Registrar-General can be shown.268 However, some inquiry is necessary into why the easement is ‘not there’. Where a registered easement was deliberately removed by the Registrar-General with the consent of the holder of the dominant tenement, this was held not to be an ‘omission’ because the presupposition of the section — that the easement continues to exist — was not valid.269 In that case, the easement had been removed with the dominant tenement owner’s consent. 12.49  Where the easement was ‘omitted’ or ‘misdescribed’ during the process of conversion of the land from old system title to Torrens title, the exception includes express easements, implied easements and prescriptive easements.270 12.50  In the case of easements created by statute while the land is held under the Torrens system, the position is more complicated. As s  42(1)(a1) of the Real Property Act makes clear, an unregistered easement will only be an exception to indefeasibility if it is ‘validly created’. Section 41 of the Act requires an instrument to be registered in order to pass an estate or interest in land. By s 46 of the Act, ‘[w]here … any easement … is intended to be created, the proprietor shall execute a transfer in the approved form’. Section  36(6A) of the Act specifies the mode of registration. A dealing is taken to be registered when the Registrar-General has made ‘such recording in the Register with respect to the dealing as the Registrar-General thinks fit’. It seems to follow that, unless an easement is created by an appropriate instrument that is lodged for registration and registered in the Register, the easement has not been validly created. Section 47(1) of the Real Property Act further requires that the Registrar-General record the particulars of an easement on the folios of the burdened and benefited land. It has been, held, however, that the Registrar-General’s obligation to record under s 47(1) is not a requirement for valid creation of the easement.271 Therefore, it is possible to have a situation in which an easement has been ‘validly created’, yet ‘omitted’ or ‘misdescribed’ so as to come within the scope of s 42(1)(a1) and be enforceable against a subsequent registered transferee of the servient tenement. Such an easement will have been registered, in that it has been recorded on the folio for the dominant tenement, but not entered on the folio of the 267. Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (2013) 247 CLR 149 at [24] per Hayne, Crennan, Keifel and Bell JJ. 268. Dobbie v Davidson (1991) 23 NSWLR 625. 269. Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (2013) 247 CLR 149 at [25] per Hayne, Crennan, Keifel and Bell JJ. 270. Australian Hi-Fi Publications Pty Ltd v Gehl [1979] 2 NSWLR 618. 271. Registrar-General of New  South  Wales v  Jea Holdings (Aust) Pty Ltd (2015) 88 NSWLR 321 at  349 per Bathurst CJ and Beazley P; Papadopoulos v Goodwin (1983) 2 NSWLR 113 at 120 per Wooton J (reversed on other grounds by the Court of Appeal in Goodwin v  Papadopoulos (1985) NSW ConvR ¶55-256); Christopoulos v Kells (1988) 13 NSWRL 541.While these cases considered provisions of the Real Property Act that have since been amended, the same determination would seem likely under the current legislation.

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servient tenement, either because of a failure to comply with s  47(1);272 because of a later omission;273 or because it was misdescribed on the folio of the servient tenement.274 The exception is, therefore, a narrow one because of the earlier registration requirement imposed by the term ‘validly created’. Implied or prescriptive easements can never clear this hurdle. In Dewhirst v Edwards,275 it was held that easements by prescription are not included in the exception. This position has been accepted by the New  South  Wales Court of Appeal in Williams v  State Transit Authority of New  South  Wales276 in regard to easements by prescription, and in McGrath v Campbell277 in regard to implied easements arising under the Wheeldon v Burrows principle.

Easements and the in personam exception 12.51  Despite the limited coverage offered by s 42(1)(a1) of the Real Property Act, an unregistered easement can be enforced against the registered proprietor of the servient tenement if the easement comes within the in personam exception to indefeasibility.278 In Ryan v Starr,279 for example, an expressly created, but unregistered, easement was enforced against a registered proprietor of the servient tenement who was not a party to its creation. That registered proprietor had, when purchasing the land, contracted to be bound by the easement, which meant that, consistently with the decision in Bahr v Nicolay,280 the registered proprietor became a trustee for the dominant tenement owner, so the in personam exception to indefeasibility applied to protect the unregistered easement. Discerning the extent to which implied and prescriptive easements are protected by the in personam exception is more complex. It has been assumed that, by virtue of the in personam exception, an implied easement arising under the law stated in Wheeldon v Burrows can exist upon the severance of Torrens title land in a way that is binding on the registered proprietor of the servient tenement at the time of the severance. Such an interest would not be binding on a subsequent registered proprietor, who would take an indefeasible title.281 In McGrath v  Campbell,282 the Court of Appeal rejected a claim that an implied easement over Torrens title land would be protected by the in personam exception. That case concerned two lots (Lot 6 and Lot 12) that had been owned by a single registered proprietor, but sold to separate purchasers in 1980.There had been an easement over both 272. Registrar-General of New South Wales v Jea Holdings (Aust) Pty Ltd (2015) 88 NSWLR 88. 273. James v Registrar-General (1967) 69 SR (NSW) 361. 274. Papadopoulos v Goodwin (1983) 2 NSWLR 113. 275. Dewhirst v Edwards [1983] 1 NSWLR 34. 276. Williams v State Transit Authority of New South Wales (2004) 60 NSWLR 286 at 298. 277. McGrath v Campbell (2006) NSW ConvR ¶56-159 at 59,904. 278. See 8.92–8.105. 279. Ryan v Starr (2005) 12 BPR 22,803. 280. The decision in Bahr v Nicolay (No 2) (1988) 164 CLR 604 is explained at 8.97. 281. Australian Hi-Fi Publications v Gehl [1979] 2 NSWLR 618 at 623–4. See also Kebewar Pty Ltd v Harkin (1987) 9 NSWLR 738 at 743; Dobbie v Davidson (1991) 23 NSWLR 625 at 660. 282. McGrath v Campbell [2006] NSWCA 180.

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lots originally for the benefit of an adjoining block of land, Lot 20, although the easement had also been used for the benefit of Lot 6. After the 1980 sale, the purchasers of Lot 6 (the Campbells) continued to use the easement until 1995. An easement could be implied on the basis that a common vendor had sold the burdened and benefited lots to separate parties in contemporaneous transactions.283 The purchasers of the Lot 12 (the McGraths) had knowledge of two pertinent facts concerning the easement: that while the parcels were in common ownership, the driveway on the Lot 12 was used to gain access to Lot 6; and that the parcels were being sold in contemporaneous transactions. That knowledge may have been a sufficient basis for implying an easement in respect of old system land, but the court did not think that it was sufficient to bring any such easement on Torrens title land within the in personam exception. Tobias JA (with whom Giles JA agreed and Hodgson JA substantially agreed) observed that the McGraths had not ‘in any way contributed to the creation of the implied easement or conducted themselves in any way which could be regarded as unconscionable’.284 Moreover, the McGraths had no control over the terms on which Lot 6 was sold, or even the timing of the sale.285 The McGraths would be bound by an implied easement only ‘it was the actual common intention of all three parties that Lot 6 should have the benefit of, and that Lot 12 should be subject to the burden of, a right of way over the driveway’.286 12.52 In Williams v State Transit Authority of New South Wales,287 the Court of Appeal held that a prescriptive easement in respect of Torrens title land could not fall within the in personam exception. This is so even if the 20-year period of adverse user — in this case, the discharge of sewage through a pipe under the putative servient tenement — occurred while the same party was registered proprietor of the relevant land. Two reasons were given for this conclusion. First, in order to accept that the fiction of the lost modern grant applies to Torrens system land, ‘one would have to presume the delivery of a registrable instrument’ and, second, that the common law nature of the right that arises under that doctrine is incompatible with the equitable origin of the rights and relief that forms the basis of the unregistered interest protected by the in personam exception.288 An application for special leave to appeal to the High  Court against the decision was refused.289 This decision has been criticised by academic writers.290 In particular, it should be noted that it is well established that the in personam exception can be based on ‘a claim in personam, 283. Aldridge v Wright [1929] 2 KB 117. See 12.26. 284. McGrath v Campbell [2006] NSWCA 180, [108]. 285. McGrath v Campbell [2006] NSWCA 180, [112]. 286. McGrath v Campbell [2006] NSWCA 180, [114]. 287. Williams v State Transit Authority of New South Wales (2004) 60 NSWLR 286. 288. Williams v State Transit Authority of New South Wales (2004) 60 NSWLR 286 at 299–300. This logic was accepted in the Tasmanian case of Dockray v Chick [2010] TASSC 32 at [37]. 289. Williams v State Transit Authority of New South Wales [2005] HCA Trans 296. 290. B Edgeworth, ‘The Fate of Prescriptive Easements under the NSW Torrens System’ (2004) 42 Law Society Journal 66; M McGuire, ‘A New  South  Wales Perspective on Implied and Prescriptive Easements and the Rights In Personam Exception to Indefeasibility of Title’ (2006) 12 Australian Property Law Journal 228 at 239–41; L Bennett Moses and C Sherry, ‘Unregistered Access: Wheeldon v Burrows Easements and Easements by Prescription over Torrens Land’ (2007) 81(7) Australian Law Journal 491.

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founded in law or in equity for such relief as the court acting in personam may grant’.291 Accordingly, the ‘incompatibility’ argument is open to question. 12.53  Williams v State Transit Authority of New South Wales severely undermines claims to prescriptive easements on Torrens title land.292 In any event, it is unlikely that the mere acquiescence of the servient tenement owner to the exercise of acts of adverse user, even for a period in excess of 20 years, would amount to an act that would give rise to a claim falling within the in personam exception.293 With regard to implied easements, such as those of the Wheeldon v Burrows type, the position is less clear. The decision in McGrath v  Campbell leaves open the possibility that, where it can be inferred that the registered proprietor of the putative servient land actually intended to take the land subject to an implied easement, the easement will fall within the in personam exception. In McGrath, the vendor had not retained the putative servient tenement. Where the vendor of the putative dominant tenement has retained the putative servient tenement, simply conveying the putative dominant land and retaining the putative servient land may itself be sufficient to give rise to the in personam exception. It is arguable that the vendor’s obligation not to derogate from his or her grant obviates the need for an actual, rather than a presumed or imputed, intention to be bound by the easement. It should be noted, on the other hand, that Tobias JA (in McGrath) noted that there are similarities between implied and prescriptive easements and remarked that if ‘prescriptive easements are trumped by the indefeasibility provisions of the [Real Property Act], logic requires that those provisions should apply to implied easements in the same way’.294 Therefore, considerable doubt surrounds the extent to which either implied or prescriptive easements can fall within the in personam exception.

Easements arising from the description of land 12.54  There is a special exception for easements over Torrens title land where the land is described as abutting a road, street or lane owned by the vendor. In Dabbs v Seaman,295 it was stated that if the vendor is also the owner of the road (and the road is under Torrens title)296 an easement will be implied in favour of the purchaser, even though the easement is not registered. While this principle is ‘settled law’,297 Dabbs v Seaman is usually ‘closely confined’ to its own facts, as it sits outside general Torrens principles.298 An easement of the Dabbs v Seaman type is not an easement ‘omitted’ from the Register, but part of the natural rights of the land.299 291. Frazer v Walker [1967] 1 AC 569 at 585 per Lord Wilberforce. 292. Edgeworth, Butt’s Land Law, 7th ed, p 1124 [16.380]. 293. In this respect, see Dewhirst v Edwards [1983] 1 NSWLR 34 at 48. 294. McGrath v Campbell [2006] NSWCA 180, [118]. 295. Dabbs v Seaman (1925) 36 CLR 538. See 12.31. 296. Cowlishaw v Ponsford (1928) 28 SR (NSW) 331. 297. Lake Macquarie City Council v Luka (1999) 9 BPR 17,481 at [98]. 298. Bellevue Crescent Pty Ltd v Marland Holdings Pty Ltd (1998) 34 NSWLR 364 at 372 per Young J. 299. See T Stein and M Stone, Torrens Title, Butterworths, Sydney, 1991, pp 109–10.

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Extinguishment of easements Express release 12.55  The most obvious way of extinguishing an easement is by means of an express release by the owner of the dominant tenement. In the case of old system title, this can be effected at law only by execution of a deed.300 For land under the Torrens system, a release is effected by means of a registered transfer.301

Abandonment 12.56  At common law, an easement will be extinguished if it is abandoned.The Supreme Court may make declaratory orders as to whether a land is affected by an easement under s 89(3) of the Conveyancing Act. This power will obviously extend to declarations as to whether an easement has been abandoned. Whether an easement has been abandoned is a question of fact. There are two specific matters to be considered. First, the owner must have ceased to use the easement; and second, he or she must have positively intended to abandon the easement.302 The onus of proof is on the person alleging the easement has been abandoned. There is no predetermined abandonment period as in the case of adverse possession.303 It does not follow from this that it is easier to establish abandonment of easements. Mere non-use will be insufficient to found abandonment, although a lengthy period of non-user may be a matter from which an intention to abandon can be inferred.304 The degree of difficulty in inferring an intention to abandon is evident from Treweeke v 36 Wolseley Road Pty Ltd.305 The owner of the dominant tenement had failed to use the easement (which provided access to a beach on Sydney Harbour) for over 40 years. A swimming pool had been built over it without provoking any protest from the dominant tenement owners, the servient tenement owner had placed a fence across it, and bamboo and other obstructions had rendered it all but impassable. In spite of all of this, no intention to abandon was found. The fact that the occupiers of the dominant tenement had been using an alternative means of access to the beach, which explained the lack of any protest about the obstruction of the easement, seems to have been a significant factor in the court’s decision. The alternative means of access to the beach had ceased to be available, so the dominant tenement owners had a reason to assert their rights in respect of the easement. In those circumstances, the lack of use was not an appropriate basis for inferring an intention to abandon.306

300. Conveyancing Act 1919 (NSW) s 23B(1). 301. Real Property Act 1900 (NSW) s 47(6); An ‘affecting interest’ for the purposes of this provision is defined in s 47(1) to include an easement or profit à prendre. 302. Re Marriott [1968] VR 260. 303. As described in 5.67, the relevant period for adverse possession is 12 years. 304. Swan v Sinclair [1924] 1 Ch 254. It is, however, difficult to find a modern case in which non-user for a significant period of time has been found to constitute abandonment. See Couche v Adams (2002) 11 BPR 20,101; Long v Mitchie [2003] NSWSC 233; McIntyre v Porter [1983] VR 439. 305. Treweeke v 36 Wolseley Road Pty Ltd (1973) 128 CLR 274. 306. Treweeke v 36 Wolseley Raod Pty Ltd (1973) 128 CLR 274; [1973] HCA 27 at [19] per Mason J.

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While an easement of old system land can obviously be abandoned at common law, under the Torrens system, it is less clear whether an easement can be abandoned. Where the current owner can be found to have abandoned the easement, the servient tenement owner can seek a declaration to that effect under s 89(3) of the Conveyancing Act.307 In addition, s 49 of the Real Property Act allows the Registrar-General to remove a recording of an easement from the Register on the basis that the easement has been abandoned. Under s 49(2), non-use of the easement for a period of at least 20 years constitutes a basis for the Registrar-General treating the easement as having been abandoned. However, because the provision merely confers an administrative discretion upon the RegistrarGeneral, s  49(2) cannot be relied on if the issue of the abandonment of the easement is brought before a court.308 Nevertheless, if the Registrar-General can be persuaded to cancel the recording of the easement, this provision provides a practical alternative to proving abandonment at common law or under s 89(1) of the Conveyancing Act.

Alteration to the dominant tenement 12.57  As noted above, if the dominant tenement changes significantly in character, an easement may come to an end, as in Jelbert v Davis,309 where a conversion of agricultural land into a large camping park led to an unreasonable increase in the use of the right of way. An excessive burden not within the intention of the parties had been imposed on the servient tenement. In Graham v Philcox,310 by contrast, the enlargement of the dominant tenement to take in an additional floor was not so significant as to lead to an excessive use. Unity of dominant and servient tenement 12.58  Subject to the exceptions noted previously, when ownership and possession of both the dominant and servient tenements pass to the one person, the easement will be extinguished.311 Statutory extinguishment — s 89(1) of the Conveyancing Act 12.59  By s  89(1) of the Conveyancing Act, the Supreme Court is given power to ‘modify or wholly or partially extinguish’ an easement. The court’s power is framed in discretionary terms,312 but the power arises only if the court is satisfied of one of the following: • there has been a change in the user of any dominant land, or in the character of the neighbourhood, or other circumstances render the easement obsolete;

307. See 12.62. 308. Lolakis v Konitsas (2002) 11 BPR 20,499 at 20,512. 309. Jelbert v Davis [1968] 1 WLR 589. 310. Graham v Philcox [1984] QB 747. 311. James v Plant (1836) 4 A & E 749. See 12.6. Real Property Act 1900 (NSW) s 47(6). 312. Pieper v Edwards [1982] 1 NSWLR 336.

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• the continued existence of the easement would impede the reasonable user of the land subject to the easement, without securing practical benefit to the persons entitled to the easement; • where the easement is for the benefit of a ‘prescribed authority’, that authority has agreed to the extinguishment or modification, or the burden of the easement has become unreasonably onerous compared to the benefit to the authority; • the persons entitled to the easement have agreed to the easement being modified or wholly or partially extinguished, or by their acts or omissions may reasonably be considered to have abandoned the easement; • the proposed modification or extinguishment will not substantially injure the persons entitled to the easement. These provisions apply to both old system and Torrens title land.313 The power also extends to easements created under s 88B of the Conveyancing Act. 12.60  Change in use of land or character of neighbourhood Where there has been a change in the land that has the benefit of the easement or the character of the neighbourhood, the easement can be deemed obsolete. This involves an identification of the relevant neighbourhood and an examination of the evidence in order to determine whether there has been a change between the date of the grant and the time of the application. ‘Neighbourhood’ has been held to mean the ‘immediately surrounding area of the dominant and servient tenements’.314 So, in Couche v Adams315 the redevelopment of a former shop and factory on the servient tenement to residential premises where the dominant tenement had always been used for residential purposes did not amount to a change in the character of the neighbourhood. 12.61  No practical benefit The second basis provided for by s  89(1)(a) involves an assessment of whether or not the continued user would impede the reasonable user of the servient tenement without securing any practical benefit to the persons entitled. In order to establish that the easement impedes the reasonable user, it must be shown that no reasonable use of the land is possible unless the easement is modified or extinguished.316 In Durian (Holdings) Pty Ltd v Cavacourt Pty Ltd,317 the court ordered the extinguishment of the easement because it had become obsolete, in the sense that it was no longer capable of fulfilling its intended purpose. The right of carriageway had become physically impassable, it could no longer be used legally to gain access to the relevant public highway and alternative access to the dominant tenement had been created. Similarly, in Walker 313. Conveyancing Act 1919 (NSW) s 89(8); Treweeke v 36 Wolseley Road Pty Ltd (1973) 128 CLR 274 at 301 per Mason J. See also Chiu v Healey (2003) 11 BPR 21,241 at 21,249 at [36]; Campbell v Baigent (2010) 15 BPR 28, 959 at [74]. 314. Markos v O R Autor (2007) 13 BPR 24,487 at [88]. 315. Couche v Adams (2002) 11 BPR 20,101. See also Durian (Holdings) Pty Ltd v Cavacourt Pty Ltd (2000) NSW ConvR ¶55-933; 10 BPR 18,099. 316. Frasers Lorne Pty Ltd v  Joyce Goldsworthy Burke [2008] NSWSC 743 at  [13] per Brereton J; Campbell v Baigent (2010) 15 BPR 28,959 at [72] per Slattery J. 317. Durian (Holdings) Pty Ltd v Cavacourt Pty Ltd (2000) NSW ConvR ¶55-933; 10 BPR 18,099.

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v Bridgewood, a right of carriageway granted in 1899 for horses to reach stables was found to be obsolete to vehicular passage, although not abandoned, because the construction of a driveway in conformity with council requirements would pose an unreasonable interference with the rights of the holder of the servient tenement.318 In Re Bona Vista Properties,319 an easement to draw water from a river was found to be obsolete after the dominant tenement had been redeveloped for residential purposes. 12.62  Agreement or abandonment  While abandonment is a common law doctrine, it is reflected in the court’s power under s 89(1)(b) of the Conveyancing Act. The principles applied under s  89(1)(b) are the same as those at  common law. Abandonment occurs where the dominant tenement owner has made it clear that there will be no further use of the easement, either by the dominant tenement owner or his or her successors-in-title.320 As at  common law, intention to abandon is not lightly inferred. In Ashoil Holdings Pty Ltd v Fassoulas,321 the court refused to order the extinguishment of the relevant easement where there was no evidence of a firm and fixed intention of the owner of the dominant tenement to abandon the easement, and the fact that alternative access to the land had become available did not itself make the easement obsolete.322 Notably, as the result of amendment to s 89 in 2009, the court can now treat an easement as extinguished where it is satisfied that the easement has not been used for at least 20 years before the application is made: see s 89(1A).323 This provision has the effect of aligning s 89(1) of the Conveyancing Act with s 49 of the Real Property Act, under which the Registrar-General has powers, in certain circumstances, to remove easements from the Register. Section 89(1A) of the Conveyancing Act is a deeming provision intended to facilitate proof and, even where there is 20 years of non-use, it is still a matter of discretion as to whether the easement is declared abandoned.324 One question that arises with respect to registered easements is whether the conduct of a predecessor in title to the current registered proprietor can be the basis of a finding of abandonment. Some authority suggests that the court has discretion under s 89 of the Conveyancing Act to order the easement abandoned, even where the easement was on the Register at the time the dominant tenement was purchased by the current registered

318. Walker v Bridgewood (2006) 12 BPR 23,537. 319. Re Bona Vista Properties Pty Ltd [2007] NSWSC 1278. 320. Grill v Hockey (1991) 5 BPR 11,421; Campbell v Baigent (2010) 15 BPR 28,959. 321. Ashoil Holdings Pty Ltd v Fassoulas (2005) NSW ConvR ¶56-125. 322. See  also Treweeke v  36 Wolseley Road (1973) 128 CLR 724; Effeney v  Millar Investments Pty Ltd [2011] NSWSC 708. 323. This section  was intended to facilitate the removal of abandoned easements: Real Property and Conveyancing Legislation Amendment Bill 2009 (NSW), Explanatory Memorandum. In addition, it has the effect of removing any perceived conflict between s 89(1) of the Conveyancing Act and s 49 of the Real Property Act, under which an application can be brought to the Registrar-General for abandonment of easement. 324. In Effeney v Millar Investments [2011] NSWSC 708, Ward J noted that while 20 years did not need to have elapsed prior to filing an application in reliance on s 89(1A) of the Conveyancing Act, it was necessary that there had been 20 years of non-use at the date the applicant moves on the application for extinguishment.

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proprietor.325 In Long v Mitchie,326 Austin J noted that the court, in exercising its discretion under s 89(3), may take into account that the owner of the dominant tenement relied on the existence of the easement as shown on the Register when acquiring the land. In Ashoil Holdings Pty Ltd v Fassoulas,327 this matter was treated as an ‘open question’. 12.63  No substantial injury  The final basis for modification or extinguishment provided for by s 89 is that the modification or extinguishment will not cause substantial injury to the owner of the dominant land.328 A substantial injury is one that has real and present substance, but it need not necessarily be large or considerable.329 In Webster v Bradac,330 McLelland CJ in Eq described the extent of this ground as follows: The kind of injury contemplated in para (c) is injury to the relevant person in relation to his ownership of (or interest in) the land benefited. The injury may be of an economic kind, eg reduction in the value of the land benefited, or of a physical kind, eg subjection to noise or traffic, or of an intangible kind, eg impairment of views, intrusion upon privacy, unsightliness, or alteration to the character or ambience of the neighbourhood. … [I]t is clear that a person may be ‘substantially injured’ within the meaning of para (c) notwithstanding that the value of his land would be unaffected or even increased by the proposed modification.331

The party seeking the extinguishment bears the onus of showing that no substantial injury will occur.332 An order for extinguishment was granted where it was shown that a second easement conferred rights that were at least as extensive as those granted in the easement sought to be extinguished.333 On the other hand, the court has refused to modify a right of way by reducing its width where to do so would injure the dominant owners by reducing the convenience and safety of their existing access.334

Suspension of easements 12.64  Section 28(2) of the Environmental Planning and Assessment Act 1979 (NSW) allows easements to be overridden by, among other things, a council’s local environmental plan or development consent (in combination with a local environmental plan) to the extent that this is necessary to allow the development of land. However, the easement

325. Treweeke v 36 Wolseley Road (1973) 128 CLR 724; Proprietors Strata Plan No 9968 v Proprietors Strata Plan No 11173 [1979] 2 NSWLR 605. 326. Long v Mitchie [2003] NSWSC 23. 327. Ashoil Holdings Pty Ltd v Fassoulas (2005) NSW ConvR ¶56-125. 328. Conveyancing Act 1919 (NSW) s 89(1)(c). 329. Frasers Lorne Pty Ltd v Joyce Goldsworthy Burke [2008] NSWSC 743 at [24] per Brereton J; Re Mason and the Conveyancing Act [1962] NSWR 762; (1960) 78 WN (NSW) 925. 330. Webster v Bradac (1993) 5 BPR 12,032. 331. Webster v Bradac (1993) 5 BPR 12,032 at 12,035. 332. Tujilo v Watts [2005] NSWSC 209 at [36]. 333. Coffill v Lagudi Holdings Pty Ltd [2016] NSWSC 1764 at [54]. 334. Frasers Lorne Pty Ltd v Joyce Goldsworthy Burke [2008] NSWSC 743 at [28] per Brereton J.

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is only suspended and not extinguished in this context. The easement will revive on the lapsing of the plan or consent, or on the issue of a later inconsistent plan or consent.335

Profits à Prendre General 12.65  A profit à prendre, or profit, is a right to remove from the land of another person something naturally occurring on that land.336 A right to remove something that does not naturally occur on the land, such as a cultivated crop, cannot be a profit à prendre under the general law.337 Where rights are given to remove soil or the natural produce of land, the right cannot be an easement, but is a profit.338 Examples of profits include a right to hunt and take wild animals,339 a right to remove slate340 and a right to harvest trees.341 Additionally, by virtue of s 88AB of the Conveyancing Act 1919 (NSW), ‘forestry rights’ (as defined by s 87A of the Act) are deemed to be profits à prendre. Unlike easements, profits can exist in gross; that is, the holder does not need to own a dominant tenement to which the profit is appurtenant. However, like an easement, a profit à prendre cannot be inconsistent with the servient owner continuing to have possession of the land.342 A profit is distinguishable from a licence. A profit is an interest in land,343 whereas a licence is a personal right only.344

Creation of profits à prendre Profits created by an instrument 12.66  By s 88AA of the Conveyancing Act, a profit that is expressed to be created by an instrument is not enforceable against successors in title of the grantor unless the burdened land is identified in the instrument. Where the profit is not in gross, but is appurtenant to other land, the benefited land must also be identified in order for the profit to be enforceable against successors in title in respect of the burdened land.

335. See Natva Developments Pty Ltd v McDonald Bros Pty Ltd (2004) 12 BPR 22,287 at 22,294–6. 336. Australian Softwood Forests Pty Ltd v Attorney-General (NSW) (1981) 148 CLR 121. On profits generally, see  S Hepburn, ‘Carbon Rights as New Property: The Benefits of Statutory Verification’ (2009) 31(2) Sydney Law Review 239. 337. See Natva Developments Pty Ltd v McDonald Bros Pty Ltd (2004) 12 BPR 22,287 at 22,294–6. A distinction can be drawn between crops that need tending after planting and those that do not (fructus industriales and fructus naturales): Permanent Trustee Australia Ltd v Shand (1992) 27 NSWLR 426 at 431; Clos Farming Estates Pty Ltd v Easton (2002) 11 BPR 20,605 at [55]–[58]. 338. Pennant Hills Golf Club v Roads and Traffic Authority of New South Wales (1999) 9 BPR 17,011 at 17,014–15. 339. Mason v Clarke [1955] AC 778. 340. Mills v Stokman (1967) 116 CLR 61. 341. Corporate Affairs Commission v ASC Timber Pty Ltd (1989) 18 NSWLR 577. 342. Clos Farming Estates Pty Ltd v Easton (2002) 11 BPR 20,605 at [57]. 343. R v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327. 344. King v David Allen & Sons, Billposting Ltd [1916] 2 AC 54.

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Formalities — old system 12.67  At law  As with easements, in accordance with s 23B(1) of the Conveyancing Act, a deed must be executed to create a profit effective at law. 12.68  In equity  There are several ways in which a profit may be created in equity. Under s 23C(1) of the Conveyancing Act, an equitable profit can be created by a written instrument signed by the grantor. Also, consistently with Walsh v Lonsdale,345 an agreement to grant a profit will give rise to an equitable profit, provided the formal requirements of s 54A of the Conveyancing Act are satisfied and the agreement is one that is capable of specific performance.346 Obviously, an oral agreement to grant a profit, if supported by sufficient acts of part performance, will give rise to an equitable profit.347 As is the case with easements, profits may arise by prescription. In Earl de la Warr v Miles,348 the defendant and predecessors had jointly taken ferns, heather and litter from a forest without permission for a period of 60 years. These acts were held to give rise to a valid profit.

Torrens system 12.69  A profit is a registrable interest.The particulars of the profit are to be recorded on the folio of the Register for the burdened land and, if the profit is one that is appurtenant to Torrens title land, the folio for that land as well.349 A profit will be indefeasible if registered.350 Unregistered profits are treated in the same way as any other unregistered interests in Torrens title land. They may receive the assistance of equity, with all the vulnerability that attaches to such interests.351 Of course, if the circumstances of a profit fall within an exception to indefeasibility, the profit will be enforceable against the grantor’s successors in title. 12.70  ‘Omitted or misdescribed’ profits à prendre  By s 42(1)(b) of the Real Property Act 1900 (NSW), omitted or misdescribed profits are an exception to indefeasibility. Like easements, they may be omitted from the Register in two ways: first, when old system title is converted to Torrens title and the profit is not recorded; second, where a profit is created over land that is already Torrens title land and the profit is not registered. In the first case, the law is the same as it is for easements. It is not necessary to establish neglect on the part of the Registrar-General in order to gain the protection of the exception.352 The exception covers both express profits and prescriptive profits.

345. Walsh v Lonsdale (1882) 21 Ch D 9. 346. The requirements of s 54A of the Conveyancing Act are considered in 6.8 and 6.10. 347. Mason v Clarke [1955] AC 778. 348. Earl de la Warr v Miles (1881) 17 Ch D 535. 349. Real Property Act 1900 (NSW) s 47(1). 350. Real Property Act 1900 (NSW) s 42. 351. See, generally, Chapter 8. 352. Dobbie v Davidson (1991) 23 NSWLR 625.

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In the second case — profits created while the land is held under the Torrens system — there is a requirement that the instrument creating the profit be properly executed and lodged for registration before it can be said to be ‘omitted’ from the Register.353 If an unregistered profit does not come within s 42(1)(b) of the Real Property Act, it will exist only as an equitable interest and will be enforceable only if, in the circumstances of the case, it falls within the in personam exception to indefeasibility.354

Remedies 12.71  The same remedies are available for interference with profits as for easements: abatement and action.355 While, as previously mentioned, a third party who interferes with an easement can plead the jus tertii against the dominant tenement owner, the defence cannot be pleaded by a third party interferer against the holder of a profit.356 The reason for the difference lies in the nature of a profit: it confers on the holder rights akin to possession, and so the holder does not have to prove title where a third party is alleged to have interfered with the profit.357 By parity of reasoning, where the right is interfered with, the relevant tort is trespass, not nuisance.358

Extinguishment of profits 12.72  A profit will be extinguished in the same circumstances as an easement is extinguished.359 In addition, it will be extinguished on the exhaustion of its subject matter, as where all minerals have been removed from a mine.

Profits à rendre 12.73  A profit à prendre is to be contrasted from a profit à rendre, which gives to the holder the right or obligation to enter another’s land and to leave there something of benefit to the land.360 Profits à rendre are very rare. In Clos Farming Estates Pty Ltd v Easton, Santow JA noted that it was a ‘category [that] may still be alive, if an endangered species, awaiting future use and consideration by the courts’.361

353. James v Registrar-General (1967) 69 SR (NSW) 361. 354. For a discussion of the operation of the in personam exception in the context of unregistered easements, see 12.51–12.53. 355. See 12.43–12.45. 356. For details of this rule, see 2.54–2.57. 357. Nicholls v Ely Beet Sugar Factory Ltd (No 1) [1931] 2 Ch 84. 358. Mason v Clarke [1955] AC 778. 359. See 12.55–12.63. 360. Permanent Trustee Australia Ltd v Shand (1992) 27 NSWLR 426 at 431; Hornsby Council v Roads and Traffic Authority (1997) 41 NSWLR 15. The French verb ‘rendre’ corresponds with ‘to give’ and ‘to return/ restore’ in English. It has an obvious etymological relationship with ‘render’. 361. Clos Farming Estates Pty Ltd v Easton (2002) 11 BPR 20,605 at [60]. See, generally, B Edgeworth, ‘Profits à Rendre: A Reincarnation’ (2006) 12 Australian Property Law Journal 200.

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Easements and Profits à Prendre

12.75

Access to Neighbouring Land Act 2000 (NSW) 12.74  Where a person requires access to land that adjoins or is adjacent to his or her own land for the purpose of carrying out work on his or her own land, the Local Court of New  South  Wales may, under the Access to Neighbouring Land Act  2000 (NSW), make orders permitting the person to have temporary access to the land.362 Examples of the work for which access can be granted include the construction and repair of buildings, ascertaining the course of drains, sewers, pipes or cables, and removing or cutting back hedges, trees and shrubs.363 The applicant must restore the land to its original condition, and indemnify the owner against damage.364 The court may order that the applicant pay compensation to the owner of the land for any damage or injury, including personal property damage, financial loss or personal injury, suffered by the owner, but compensation is not recoverable in respect of loss of privacy or inconvenience.365

Reform Easements in gross 12.75  The reasons for allowing profits à prendre in gross but not easements in gross are obscure and perhaps obsolete. One reason offered by Baron Martin in Hill v Tupper366 was that to recognise interests in gross ‘would lead to the creation of an infinite variety of interests in land, and an indefinite increase of possible estates’. Sturley has argued that two arguments against easements in gross — that they might stifle changes in land use with the onset of industrialisation, and that they would make conveyancing overly complex367 — have now been overtaken by historical changes. Sturley has suggested that there is a contemporary need to make land more productive, so as to allow for multiple forms of access and use, and observed that registration systems minimise title difficulties. Easements in gross are recognised in the United States without any apparent problems.368 Moreover, New  South  Wales law allows easements in gross in certain situations. Section  88A(1) of the Conveyancing Act  1919 (NSW) provides for the existence of easements in gross in favour of public or local authorities. Clearly, the reason for this exception is public interest in public ownership of sewerage pipes, watercourses and so on, but it is not difficult to think of situations in which private individuals might want to create easements in gross. Examples of cases where such easements could be beneficial for 362. Access to Neighbouring Land Act 2000 (NSW) ss 7, 11 and 17(c). For an examination of the doctrinal and policy dimensions of the Act, and its Tasmanian and English equivalents, see S Grattan, ‘Proprietarian Conceptions of Statutory Access Rights’ in E Cooke, Modern Studies in Property Law, Hart Publishing, Oxford, 2003,Vol 2, pp 353ff. 363. Access to Neighbouring Land Act 2000 (NSW) s 12. 364. Access to Neighbouring Land Act 2000 (NSW) s 21. 365. Access to Neighbouring Land Act 2000 (NSW) s 26. 366. Hill v Tupper (1863) 2 H & C 121 at 128. 367. M Sturley, ‘Easements in Gross’ (1980) 96 LQR 557. See also, D McLean, ‘The Nature of an Easement’ (1966) 5 University of Western Ontario Law Review 32. 368. See A Bradbrook, S MacCallum and A Moore, Australian Real Property Law, 3rd ed, Lawbook Co, Sydney, 2002, p 683.

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both grantor and grantee are an easement to land helicopters on a particular property, or the right of a haulage company to park on a particular property on a regular basis.369 Similar sorts of rights to easements could be created by means of a carefully crafted lease, with a reservation in favour of a grantor, as in the case of a right of way over a particular path or advertising hoarding. There would seem to be no principled objection to such interests without a dominant tenement.

Easements and profits by prescription 12.76 In Williams v State Transit Authority of New South Wales,370 the New South Wales Court of Appeal remarked upon the disharmony between easements by prescription and systems of land ownership based overwhelmingly on documentation and registration. In 1966, the majority of the United Kingdom Law Reform Committee concluded that easements and profits by prescription should be abolished,371 although a strong minority dissent suggested that the law should merely be simplified by substituting a 12-year period of use for the traditional 20 years. While the problems in the United Kingdom are slightly different — there are three forms of prescription, rather than the single ‘lost modern grant’ prescription in New South Wales — the argument would seem to apply to systems where the ‘lost modern grant’ basis is the only basis for prescription. The ‘lost modern grant’ is, in any event, a fiction. Moreover, the 20-year period is anomalous. It is a longer period than the 12 years that is now required for a claim by adverse possession, but the arguments in favour of the prescription doctrine ‘appear weaker than those for adverse possession’.372 The abolition of prescriptive easements and profits would have the effect of doing away with the arguably unprincipled distinction that currently exists in relation to the timing of the creation of these interests. It is also difficult to see why a prescriptive interest that came into existence before land was brought under Torrens title should be binding on the current and subsequent registered proprietors under a statutory exception to indefeasibility, but those prescriptive interests that (putatively) arise after the land is brought under Torrens title are not even binding on the current registered proprietor. In cases where the abolition of the doctrine of prescription would work hardship, such hardship could be ameliorated by the imposition of an easement under s  88K of the Conveyancing Act.

369. See Bradbrook, S MacCallum and A Moore, Australian Real Property Law, note 368 above, pp 682–83. 370. Williams v State Transit Authority of New South Wales (2004) 60 NSWLR 286. 371. Law Reform Committee, Report No 14, Command 3100. 372. Edgeworth, note 70 above, 1122 [16.360].

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Chapter 13

Freehold Covenants Introduction 13.1  A freehold covenant is a private means of regulating the use of land in order to preserve its amenity.This can occur on a large or a small scale. For example, if A subdivides her land and sells part to B, she may require B to enter into an agreement which restricts B’s use of the land. The content of such an agreement might be that B not use the land for commercial purposes, or that B is restricted to building a dwelling of only one storey. Entering into an agreement that prohibits certain activities is a way of preserving the amenity of the retained land. On a larger scale, the developer of a planned housing estate may wish to restrict the kinds of dwellings that can be built by the owners of the lots in the estate, so as to maintain a certain ‘look and feel’ on that estate. For example, all purchasers of lots on the estate may have to agree to a specified minimum standard for building materials — say, all ‘brick and tile’ — or to commence building within a particular time frame. The aim is to ensure that the value and amenity on the estate is not jeopardised by undesirable development on some lots at any stage in the future. As between the parties to the agreement, the covenant is clearly enforceable as a matter of contract law. Contract law does not, generally speaking, assist occupants of land who were not parties to the original contract. If, in the example in the previous paragraph, B sells the land to C and C commences building a dwelling of more than one storey, A will not, as a matter of contract law, be able to enforce the covenant against C. A may be able to claim damages for breach of contract from B, but will not be able to obtain an injunction restraining the erection of the multi-storey dwelling. To be effective, such an order would have to be made against C rather than B. Equally, if A were to sell the land to D and B were then to breach the covenant, D would not be able to sue B in contract, because D was not a party to the contract. The law of freehold covenants, therefore, addresses the issue of how and when an agreement reached between two or more parties can have the effect of creating property rights enforceable by and against third parties to that original agreement, notably the successors-in-title to the original covenantor and original covenantee.

681

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Property Law in New South Wales

In Chapter 1, we examined the fundamental distinction between contract and property.1 Contracts bind only the parties who enter into them. In Chapter 11, we examined the concept of privity of estate and looked at a particular example concerning a lease and saw how the enforceability of a covenant contained in a lease agreement could extend beyond the parties to that contract. Where parties are in a relationship of landlord and tenant, the common law permits certain covenants (those that ‘touch and concern’ the land) to be enforceable independently of the law of contract.2 As long as the relationship of landlord and tenant subsists, all those covenants in the original contract that touch and concern the land remain enforceable against successors in title to the original lessor and lessee. Historically, however, the position was different in relation to freehold land. In general, the common law treated covenants concerning freehold land in the same way as it treated any other non-leasehold covenants.They were contractual arrangements only and, as such, binding only the parties to the contract. Equity, however, eventually came to adopt a broader approach so as to render certain covenants binding against third parties and, by that means, enabled freehold covenants to become encumbrances on land in a manner akin to easements and profits à prendre. In relation to Torrens system land, the rules of common law and equity relating to freehold covenants continue to be of great importance because, unlike most real property interests, freehold covenants cannot be registered. Nevertheless, in New South Wales, their particulars may be recorded on the Folio of the land burdened by the covenant and they are regarded as ‘interests’ for the purposes of the Torrens legislation. In modern law, private agreements in the nature of freehold covenants operate alongside a range of public planning and environmental regulations.3 The freedom formerly afforded to land-holders to develop their property however they chose has been restricted to ensure that the character of particular neighbourhoods is preserved, that urban planning proceeds in an orderly and reasonable manner, that the natural environment is not despoiled and that natural resources are not threatened.The most obvious examples of this are the various town planning and development approval regulations administered by local authorities. Despite the increased importance of legislative restrictions, freehold covenants still play a significant role in land regulation, particularly in the case of planned estates. Purchasers of ‘strata title’ units and townhouses will invariably be subject to restrictions as to the use of their lots. The Strata Schemes Management Act 1996 (NSW), provides for obligations in the nature of covenants. In addition to generally applicable statutory obligations, there will usually be by-laws relating to each strata scheme.4 In some states, new forms of statutory covenants are being employed in the context of environmental protection. For example, in New South Wales, legislation facilitates the protection of the 1. See 1.56–1.58. 2. Spencer’s Case (1583) 5 Co Rep 16a; 77 ER 72. 3. See 13.51. 4. See 9.101–9.106. C Sherry, ‘The Legal Fundamentals of High Rise Buildings and Master Planned Estates: Ownership, Governance and Living in Multi-owned Housing with a Case Study on Children’s Play’ (2008) 16 Australian Property Law Journal 1.

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13.2

nature conservation values of land by way of what is termed a conservation land covenant.5 While this type of covenant operates differently to a private law freehold covenant, it takes the basic idea of a legally enforceable restriction on land use which is voluntarily entered into by the owner of the land and places it in a quasi-public context.

Terminology 13.2  It is important from the outset to be clear about a number of key terms relating to freehold covenants. First, there are terms to identify which party is seeking to enforce the agreement and against whom. The original parties to the agreement are known as the covenantor (the party who makes the promise) and the covenantee (the person who receives the benefit of the promise). Where A sells land to B and B covenants not to use it for commercial purposes B is the covenantor and has the burden of, or obligation to perform, the covenant. A is the covenantee and has the benefit of the covenant. In other words, A can enforce the agreement against B. Second, there are terms that describe the nature of the obligation imposed by the covenant. In the foregoing example, the obligation is negative in character. B is restrained from doing something with the land. Such a covenant is usually described as a restrictive covenant. Covenants, however, may be positive in nature. An example would be where A covenants to contribute to the upkeep of a common road. As we will see later, there are limits on the circumstances in which the burden of a positive covenant can be enforced beyond the original parties to the agreement.Thus, it is important to be able to determine whether a covenant is positive or restrictive in nature. A good indicator of whether a covenant is restrictive is whether the covenantor can comply with the covenant by doing nothing. Where B has covenanted not to use the land for commercial purposes or not to erect a dwelling of more than one storey, B will have complied with the covenant by refraining from doing either of those things. Indeed, if B leaves the land vacant, B will have complied. By contrast, if the covenantor is required to take some positive action in order to comply with the covenant, the covenant will be positive. That the covenantor is required to incur expenditure in order to comply with the covenant is a good indicator that the covenant is positive. The language in which a covenant is expressed is not necessarily a good indicator of whether a covenant is positive or restrictive. For example, if B covenants not to allow the premises to fall into disrepair, the covenant will be positive in substance because not allowing the premises to fall into disrepair will involve, from time to time, carrying out repairs and incurring expenditure for that purpose.6 Finally, there is the important concept of whether a covenant runs with the land. As previously explained, as between the original covenantor and covenantee, remedies for breaches of covenant can be enforced simply as a matter of contract law. As there is privity of contract, a covenantee continues to have a right to sue the original covenantor for breaches of covenant even where the covenantee has parted with the land to which the 5. See Nature Conservation Trust Act 2001 (NSW). 6. Haywood v Brunswick Building Society (1881) 8 QBD 403.

683

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Property Law in New South Wales

covenant relates.7 In such a case, only nominal damages are recoverable, however, because the covenantee who has parted with the land will not have suffered any meaningful loss. There are some covenants that can be enforced by or against the successors-in-title to the covenantee or the covenantor. Whether the benefit or burden of a covenant can be enforced by these parties is said to be a question of whether the benefit or burden of a covenant runs with the land of either the covenantor or the covenantee. Different rules apply to running the benefit and to running the burden, both at law and in equity.

Enforceability of the Benefit of a Covenant at Common Law (Benefit of the Covenant Running with the Land of the Covenantee) 13.3  Here we are considering the situation in which the successor in title to the original covenantee wishes to enforce the covenant against the original covenantor. In the situation where A enters into an agreement with B, in which B covenants that she will not build a dwelling of more than one storey on her land, A can enforce the agreement against B in contract law. However, where A subsequently sells her land to A1, whether A1 can enforce the covenant depends on whether the benefit of the covenant has run with the land. Figure 13.1 puts this question in diagrammatic form. Figure 13.1:  Running the benefit at common law

A benefit

A1

B burden

Can A1 enforce against B?

At common law, the general rule is that the benefit of the covenant, whether positive or negative (restrictive) in nature, will run with the land so as to enable a successor in title of the covenantee to sue on it, either if it is ‘annexed’ to the land or if the benefit is expressly assigned by the covenantee to its successor-in-title.  As the common law did not recognise equitable interests, the benefit of a covenant could not run at common law if the covenantee’s interest was equitable in nature only.8 Annexation will arise when the following conditions are met: first, the covenant must not be merely personal in nature but must demonstrate an intention to benefit the land of the covenantee; second, the covenant must ‘touch and concern’ the land; and third, the land to be benefited must be identified, or be capable of being identified. There is no requirement for the covenantor to own burdened or servient land for the benefit to 7. London County Council v Allen [1914] 3 KB 642. 8. Rogers v Hosegood [1900] 2 Ch 388.

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Freehold Covenants

13.4

run. In Smith & Snipes Hall Farm Ltd v River Douglas Catchment Board,9 the defendant had covenanted to keep riverbanks in a satisfactory state of repair, though it owned no land nearby. The court held that the covenant could be exercised by an assignee of the original covenantee. If the covenant has become annexed to the land, then it ‘runs with the land’ of the covenantee. This means that it is not necessary to refer specifically to the covenant on the transfer to the incoming purchaser of the covenantee’s land.10 Further, as the covenant has become annexed to the covenantee’s land, it is not necessary for the purchaser to have notice of the covenant (and that the purchaser will enjoy the benefit of the covenant against the original covenantor) at the time of the transfer. In the example at the beginning of this section, even if A1 did not know of the covenant at the time of purchase, he or she could subsequently enforce the benefit as it is a right that he or she acquired at the time of transfer.

Annexation of covenant to the land Intention to benefit land of the covenantee 13.4  For the benefit of the covenant to run, it must be made not merely for the personal benefit of the original covenantee, but also with his or her successors in title and with a view to benefiting the land. Therefore, it was necessary at common law to show that, at  the time they entered into the agreement, the covenantor and covenantee intended the covenant to run with the land of the covenantee (ie, for the benefit of the covenant to run). This was generally evidenced by pointing to words in the document creating the covenant which provided evidence of the required intention that the covenant continue for the benefit of both the original covenantee and his or her successors in title. In Rogers v Hosegood, it was held that a covenant expressed in terms that it ‘may enure to the benefit of the vendors, their successors and assigns and others claiming under them to all or any of their lands adjoining’ demonstrated the requisite intention.11 By contrast, where the covenant is expressed to be made with persons, without reference to land, there will be no annexation. In Renals v Cowlishaw,12 the covenant was expressed simply to be made with the vendors, ‘their heirs, executors, administrators, and assigns’. The court held that this phrase evinced no intention to annex the covenant to the land and could not benefit the successors in title to the original covenantee (who took their interest as registered proprietors of the covenantee’s land). An intention that the benefit of a covenant run with the land is now generally considered to be implied by statute. Section 70(1) of the Conveyancing Act 1919 (NSW) provides that: 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 9. 10. 11. 12.

Smith & Snipes Hall Farm Ltd v River Douglas Catchment Board [1949] 2 KB 500. Rogers v Hosegood [1900] 2 Ch 388 at 407. Rogers v Hosegood [1900] 2 Ch 388 at 408. Renals v Cowlishaw (1878) 9 Ch D 125.

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Property Law in New South Wales

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 ‘successor 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.

On one view, this type of provision is merely a word-saving device once the covenant has already been effectively annexed to the land.13 In England, however, the  Court of Appeal in Federated Homes Ltd v  Mill Lodge Properties Ltd14 interpreted the equivalent provision15 much more broadly, so that a covenant that touches and concerns the covenantee’s land will be annexed to that land even though the covenant does not use the otherwise appropriate wording. This is because of the breadth of the wording of the section. It makes the covenant enforceable by the covenantee, his or her successors in title, persons deriving title under them and each owner and occupier of the benefited land. The High Court has left open the question of whether the English interpretation should be followed in Australia.16 What s  70 fails to make clear is whether a covenant that expressly provides that its benefit will not pass to the covenantee’s successors in title escapes the deeming effect of the section. Case law on the identical English statutory provision17 has held that the expression of an intention that the benefit will not pass prevents the benefit from passing to the covenantee’s successors in title.18 For example, a statement that the ‘covenant will not enure for the benefit of any owner or subsequent purchaser unless the benefit is expressly assigned’ will exclude the section’s implication that the benefit will run with the land of the covenantee.19 It is also possible to exclude certain persons who derive title from receiving the benefit, such as tenants, while allowing the benefit to run to others.20 The effect in s 70 of the expression ‘and the persons deriving title under the covenantee’ is to allow all occupiers of the land, such as tenants, to enforce the covenant.21

The covenant must ‘touch and concern’ the land 13.5  In order for the covenant to be annexed to the land (ie, be capable of running with the land of the covenantee), the covenant must ‘touch and concern’ the land of the covenantee. Importantly, the covenant must touch and concern land held by the covenantee at the date of creation of the covenant.22 The meaning of the term ‘touch and 13. A Bradbrook and M Neave, Easements and Restrictive Covenants in Australia, 2nd ed, Butterworths, Sydney, 2000, pp 291–92. 14. Federated Homes Ltd v Mill Lodge Properties Ltd [1980] 1 All ER 371. 15. Law of Property Act 1925 (UK) s 78. 16. Forestview Nominees Pty Ltd v Perpetual Trustees WA Ltd (1998) 193 CLR 154 at 171. 17. Law of Property Act 1925 (UK) s 78. 18. See, for example, Crest Nicholson Residential (South) Ltd v McAllister [2004] EWCA Civ 410 at [44]. 19. Roake v Chadha [1984] 1 WLR 40. 20. Forestview Nominees Pty Ltd v Perpetual Trustees WA Ltd (1998) 193 CLR 154. 21. Smith & Snipes Hall Farm Ltd v River Douglas Catchment Board [1949] 2 KB 500. 22. See 13.20.

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Freehold Covenants

13.6

concern’ is similar to the meaning it has in the context of leases; that is, a covenant will touch and concern the land if it enables the land of the covenantee to be benefited in some way.The covenant must affect the use or mode of occupation of the land or must, of itself, affect the value of the land.23 A covenant that is merely personal in nature, so that it benefits only the covenantee herself, does not touch and concern the land. In Rogers v  Hosegood, a covenant to build no more than one dwelling-house on the covenantor’s land was held to touch and concern the covenantee’s land. Other examples of covenants that have been held to ‘touch and concern’ the land are covenants to repair riverbanks to prevent flooding on the covenantee’s land,24 to supply pure water to the covenantee’s land,25 and not to use the covenantor’s land for the retail sale of goods.26 The expression ‘relating to land’ in s 70(1) of the Conveyancing Act means the same as ‘touch and concern’. 13.6  Given the requirements of the touch and concern test — that the covenant must affect the mode of use or occupation of the land, or must of itself affect the value of the land — problems may arise about whether there is actually any benefit for the covenantee’s land, given the nature and location of the respective properties. A covenant cannot touch and concern the land if the land to be benefited is so large that it cannot be benefited as a matter of fact.27 For instance, can a covenant that burdens a small lot, such as a covenant prohibiting the construction of a second storey on a house, benefit the entirety of a very large adjacent estate? Re  Ballard’s Conveyance28 involved a covenant that was purported to burden land of 18 acres and benefit the adjoining estate of 1700 acres. Clauson J acknowledged that a breach of the covenant might affect a portion of the burdened land that bordered the adjoining estate, the larger part of the estate could not possibly be affected by a breach.29 Accordingly, the attempt to annex the benefit of the covenant to the estate was not effective. Moreover, his Honour could find no authority that a court had a power to read down a covenant so as to allow it to benefit only a designated part of the land of the covenantee.30 The facts of the subsequent case of Marquess of Zetland v Driver,31 were distinguished from those in Re Ballard’s Conveyance on the basis that the covenant was expressed to be for the benefit of ‘such part or parts’ of the land as shall be sold or remain unsold. By contrast, the covenant in Re  Ballard’s Conveyance referred to ‘the entire property shown in the plan’.Therefore, it may have been possible to avoid the outcome in Re Ballard’s Conveyance by careful drafting of the covenant. The parties may have, for example, expressed an intention to annex the covenant to ‘each and every part of

23. 24. 25. 26. 27. 28. 29. 30. 31.

Rogers v Hosegood [1900] 2 Ch 388. Smith & Snipes Hall Farm Ltd v River Douglas Catchment Board [1949] 2 KB 500. Shropshire County Council v Edwards (1982) 46 P & CR 270. Forestview Nominees Pty Ltd v Perpetual Trustees WA Ltd (1998) 193 CLR 154. Lane Cove Municipal Council v W & H Hurdis Pty Ltd (1955) SR (NSW) 434. Re Ballard’s Conveyance [1937] Ch 473. [1937] Ch 473 at 480–81. [1937] Ch 473 at 481. Marquess of Zetland v Driver [1939] Ch 1.

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the covenantee’s land’, so that the covenant will touch and concern each and every part that is, in fact, benefited. Subdivisions of land affected by covenants give rise to a similar problem. Does a covenant that touches and concerns a large lot, which is later subdivided, also touch and concern each subdivided portion of the whole? There is case law that suggests that there is a prima facie presumption operating against a covenant for the whole benefiting each and every one of the subdivided parts,32 although the existence of such a presumption has been doubted.33 In any event, any presumption can be rebutted by evidence that the covenant was intended to benefit the constituent parts of the land as well as the totality of the land. This will usually be a matter of construction of the covenant. The expression ‘whole of the land’ has been held to express an intention to benefit each part of the land,34 although more direct words such as ‘each and every part into which it may be subdivided’ (or words to that effect) would undoubtedly be more certain. Another difficulty in discerning actual benefit arises where the covenantee’s land is a considerable distance away from the burdened land. In McGuigan Investments Pty Ltd v  Dalwood Vineyards Pty Ltd,35 a covenant requiring the covenantor not to produce or sell wine under the name ‘Dalwood’ was held not to touch and concern the land of the plaintiff — in part, because the properties were 17 miles apart.

Benefited land must be identifiable 13.7  Under the general law, in order for the benefit of the covenant to run with ownership of the covenantee’s land, the benefited land must be identified by the covenant, or be identifiable by means of extrinsic evidence.36 Section 88(1) of the Conveyancing Act states that a ‘restriction arising under a covenant’ is not enforceable against a person who is not a party to the creation of the covenant unless the instrument containing the covenant ‘clearly indicates’ the land that is benefited and burdened by the covenant. This restricts the enforceability of a covenant against the successors in title of the covenantor, but does not impact on the ability of a successor in title of the covenantee to enforce the covenant at  law against the original covenantor.37 This is because s  88(1) concerns the persons ‘against’ whom a covenant is sought to be enforced, not the persons who are enforcing the covenant.

Express assignment of the benefit at law 13.8  The benefit of a covenant relating to land, whether it is positive or restrictive, may be assigned like any other legal chose in action. Section 12 of the Conveyancing Act Ellison v O’Neill [1968] 2 NSWR 246; Re Roche and the Conveyancing Act (1960) 77 WN (NSW) 431. Gyarfas v Bray (1989) 4 BPR 9736. Application of Fox (1981) 2 BPR 9310. McGuigan Investments Pty Ltd v  Dalwood Vineyards Pty Ltd [1970] 1 NSWR 686. See  also Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227. 36. Newton Abbot Co-op Society Ltd v Williamson & Treadgold Ltd [1952] Ch 286. 37. This provision is discussed in 13.22. 32. 33. 34. 35.

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13.10

provides a procedure for the assignment of legal choses in action. There must be writing that is signed by the assignor, and express written notice of the assignment must be given to the person against whom the chose in action is enforceable (ie, the covenantor). On assignment, the assignee may enforce the covenant against the original covenantor. 13.9  Section 67 of the Conveyancing Act states that all ‘rights … whatsoever appertaining to the land, or any part thereof, at  the time of conveyance’ pass on conveyance of the land. Section  51 of the Real Property Act uses the same language in relation to land held under the Torrens system. It could be argued that these two provisions allow the benefit of any covenant to pass with the land without having to show that the covenant has been annexed. 38 However, in Kumar v Dunning,39 the English Court of Appeal held that the English equivalent of s 67 of the Conveyancing Act passes only rights that have already been annexed. Only rights that have been annexed are rights ‘appertaining to the land’ as required by the section.40 These sections, therefore, operate only as word-saving provisions. They do not cause the benefit to pass unless it would otherwise do so. Notably, however, if s 70(1) of the Conveyancing Act is interpreted as bringing about a statutory annexation of the covenant, then ss 67 and 68 of the Conveyancing Act and s 51 of the Real Property Act might operate in tandem with that provision to pass the benefit where it is not expressly mentioned.41

Enforceability of Covenants and s 36C of the Conveyancing Act 1919 (NSW) 13.10  In some circumstances, third parties to a covenant may also wish to enforce the covenant. If A enters into an agreement with B, in which B covenants that she will not build a dwelling of more than one storey, C, who owns the lot adjacent to that of A, will not, as a matter of contract law, be able to enforce the benefit of the agreement against B, as C was not a party to the contract. However, in certain circumstances, C may be able to enforce the contract by virtue of s 36C of the Conveyancing Act. Based on similar English legislation, s 36C provides that: A person may take … the benefit … of any … covenant, or agreement over or respecting land … although the person may not be named as a party to the assurance or other instrument.

It has been held that the English provision does not overturn the traditional doctrine of privity.42 Instead, it allows a person who is identified in a covenant, although not a 38. A similar question arises as to the effect of these provisions on transfer of the reversion of a leasehold estate, or the leasehold estate itself. See 11.52 and 11.55. 39. Kumar v Dunning [1989] QB 193. 40. By analogy, it has also been found that only rights that touch and concern the land will pass under Conveyancing Act s 68: Harbour Estates Ltd v HSBC Bank plc [2005] 2 WLR 67. For a full discussion, see B Edgeworth, Butt’s Land Law, 7th ed, Lawbook Co, Sydney?, 2017 at 626–27, [10.500]; D Hayton, ‘Restrictive Covenants as Property Interests’ (1971) 87 LQR 539 at 567 and 570. 41. See Registrar-General v Cleaver (1996) 41 NSWLR 713. 42. Beswick v Beswick [1968] AC 58.This is so despite repeated attempts by Lord Denning to interpret the then English provision (s 56(1) of the Law of Property Act (UK)) as abrogating the common law rule: Smith

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13.10

Property Law in New South Wales

party to it, to enforce the covenant. This is only the case, however, where the covenant purports to be made with the person. In the New South Wales case of Dalton v Ellis: Estate of Bristow,43 a party who was intended to benefit under the covenant, but who was not a person with whom the covenant was purportedly made, was not able to enforce the covenant under s  36C. Classes of people may acquire the benefit of a covenant where the covenant identifies them as a class of people who are intended to benefit. For instance, in Re  Ecclesiastical Commissioners for England’s Conveyance,44 a purchaser of land from the Ecclesiastical Commissioners covenanted with the Ecclesiastical Commissioners and ‘their assigns owners for the time being of land adjoining or adjacent to the said land hereby conveyed’. Luxmoore J remarked that ‘adjoining’ referred to that ‘which lies near so as to touch in some part the land which it is said to adjoin’, while ‘adjacent’ referred to that ‘which lies near but is not in actual contact with the land’ and whether land falls within the necessary degree of proximity depends on the circumstances of the case.45 In any event, the covenant identified a class of people who were intended to be benefited by the covenant; namely, those who, at the date of the conveyance, owned adjoining or adjacent land that had formerly belonged to the Ecclesiastical Commissioners. However, if the covenant had been purportedly made with future purchasers of adjoining or adjacent land, such purchasers could not enforce the covenant under the provision because they were not identifiable at the time the covenant was made.46

Enforceability of the Burden of a Covenant 13.11  Here we are considering the situation in which the original covenantee or her successors in title wish to enforce the covenant against a successor in title to the original covenantor. Once again, if we assume that A enters into an agreement with B, in which B covenants that he or she will not build a dwelling of more than one storey. As a matter of contract law, A can enforce the agreement against B. However, B subsequently sells to B1. Can A, or his or her successors in title, enforce the covenant against B1? The answer to this depends on whether the burden of the covenant has run with the land. Figure 13.2 puts this question in diagrammatic form.

43. 44. 45. 46.

& Snipes Hall Farm Ltd v River Douglas Catchment Board [1949] 2 KB 500 at 517; Beswick v Beswick [1966] Ch 538 at 556–57. (2005) 65 NSWLR 134 at [43]–[44]. Re Ecclesiastical Commissioners for England’s Conveyance [1936] Ch 430. [1936] Ch 430 at 440–41. Bradbrook and Neave, Easements and Restrictive Covenants in Australia, note 13 above, pp 279–80.

690



Freehold Covenants

13.12

Figure 13.2:  Running the burden

A benefit

Can A enforce against B1?

B burden

B1

While the burden of a freehold covenant cannot run at common law, the burden can run in equity where certain requirements are satisfied.

At common law 13.12  At common law, the general rule is that a burden that affects freehold land does not run with the land of the covenantor.This rule is a specific example of the fundamental principle of privity of contract. In Austerberry v Oldham Corporation,47 it was held that the burden never runs with land, except where there is privity of estate between the parties; that is, where they stand in the shoes of landlord and tenant. These covenants become enforceable not as freehold covenants but under the doctrine of privity of estate by virtue of the covenant being contained in the lease and binding the leasehold estate. Because the burden of the covenant cannot run at  law, where the successor in title of the covenantor breaches the covenant, the covenantee or its successors in title have no remedy against the successor in title to the original covenantor at  law. However, the covenantor does remain contractually liable to the covenantee for any breaches by the covenantor’s successor in title. This is in accord with contractual principles and works the same way as it does in the case of leases. This is confirmed by s 70A(1) of the Conveyancing Act 1919 (NSW): A covenant relating to any land of a covenantor … shall, unless a contrary intention is expressed, be deemed to be made by the covenantor on behalf of himself or herself and the covenantor’s successors in title … and … shall have effect as if such successors … were expressed.

Section 70A(1) is a word-saving provision. It follows that the convenantor will avoid liability only if the contract stipulates that a covenantor’s obligations will cease on assignment. As we will see, this means that s 70A(1) is still relevant in determining whether the burden of covenant can bind successors in title to the original covenantor in equity. The identical English provision48 has been interpreted as leaving intact the common law

47. Austerberry v Oldham Corp (1885) 29 Ch D 750. For the doctrine of privity of estate, see 11.45. 48. Law of Property Act 1925 (UK) s 79(1).

691

13.12

Property Law in New South Wales

rule that the burden of a covenant at law does not run so as to bind successors in title to the original covenantor.49 13.13  There are a number of techniques which landholders may use to attempt to circumvent the difficulties of enforcing covenants against successors in title of the covenantor and ensure that the land remains subject to a burden after assignment or transfer.50 These include leasing instead of selling land, and relying on privity of estate under the landlord and tenant relationship. Another possibility is the use of a chain of indemnity covenants, whereby each assignee agrees to indemnify the assignor (the covenantor) for any liability he or she incurs. However, the strategy of indemnification will be frustrated by a break in the chain. Moreover, the covenantee’s remedy will only be damages against the covenantor, whereas an injunction against the perpetrator will usually be needed as well. At law, the covenantee has no rights against this person as there is no privity of contract between them.51 13.14  One exception to the rule that the burden of a covenant cannot be enforced at common law against successors in title of the original covenantor arises from the notion that the person who takes the benefit of a covenant must also shoulder any burden that goes with it. Positive covenants may run with the land of the covenantor where that covenantor’s successor in title is taking a benefit that is associated with the burden imposed by the covenant. For example, an obligation to pay for the upkeep of a common road or driveway will run with the land if the covenantor’s successor in title is taking advantage of the easement relating to the common road or driveway that was granted to the covenantor as owner of the dominant tenement. However, the burden will bind successors in title only so long as they elect to take the benefit of the covenant or a right with which the burden of the covenant is inextricably bound. In Halsall v Brizell,52 a covenant requiring a contribution to the upkeep of roads was held to bind the successor in title of the original covenantor because he continued to take advantage of the benefits the roads conferred on him. The defendant was bound by the conditions imposed on the exercise of the right. In E R Ives Investment v High,53 a landowner, who had erected a building that encroached on to his neighbour’s land, granted his neighbour a right of access over his land in exchange for the neighbour agreeing not to insist on the removal of the encroachment. The landowner was held to be subject to the burden of allowing access over his land for as long as his encroachment continued. In Thamesmead Town Ltd v Allotey,54 by contrast, the court held that a successor-in-title of the original covenantor was not bound to contribute to the maintenance costs of the common areas of an estate, even though they added value to the property, because he had no legal right to use them. The rule, therefore, is limited to cases where, first, the 49. Tophams Ltd v Earl of Sefton [1967] 1 AC 50; Rhone v Stephens [1994] 2 AC 310. Compare the interpretation of s 70(1) of the Conveyancing Act, which is discussed at 13.4. 50. For a comprehensive list, see Butt, Land Law, note 36 above, pp 497–502. 51. For the position in equity, see 13.15–13.28. 52. Halsall v Brizell [1957] Ch 169. 53. E R Ives Investment Ltd v High [1967] 2 QB 379. 54. Thamesmead Town Ltd v Allotey (2000) 79 P & CR 557.

692



Freehold Covenants

13.16

obligation is a condition of the exercise of the right, second, the benefit claimed can be linked to a specific burden — in other words, the benefit and burden must be truly reciprocal obligations and, third, the covenantor’s successors in title are in a position to choose whether or not to take the benefit.55

In equity — the doctrine in Tulk v Moxhay 13.15  From the middle of the 19th century, equity developed its own rules for the enforcement of covenants. The nineteenth century was a period of rapid urbanisation and industrialisation in England.This created pressures for the law to achieve a balance between the interests of those who wished to develop their land and their neighbours who sought to protect the amenity of their properties and the surrounding environment. Contract offered feeble obstacles to constrain the otherwise unfettered rights of landholders to develop their land, because its sphere of enforceability was confined to the parties to the contract. Equity’s particular contribution came in the form of affording protection to covenantees by allowing the burden (as well as the benefit) of certain covenants to run. In particular, equity allowed restrictive covenants to be enforced against successors in title of the original covenantor where the original covenant otherwise permitted the burden of the covenant to run with the land of the covenantor.56 By this means, the restrictive covenant became not merely a contractual but a proprietary interest. The seminal case is Tulk v  Moxhay.57 Not all covenants can run in equity. Despite equitable intervention, it remains the case that the burden of a positive covenant does not run with the land of the covenantor. Therefore, unlike negative covenants, positive covenants, with the exception of those associated with easements mentioned above, remain within the sphere of common law contract, rather than that of property.58 The doctrine in Tulk v Moxhay is concerned with restrictive covenants. 13.16  In 1808, Tulk, who owned houses and the adjacent vacant land, sold the vacant land to Elms.The deed included a covenant by Elms that he, his heirs and assignees would keep and maintain the land in its present form, in sufficient and proper repair as a square garden and pleasure ground, and would not build on it.The land was eventually transferred to Moxhay in 1848. The conveyance to Moxhay did not contain the restrictive covenant, but Moxhay admitted that he took with notice of it.Tulk sought an injunction restraining the erection of buildings on the land. The injunction was granted. Lord Cottenham concluded: It is said that, the covenant being one which does not run with the land, this court cannot enforce it; but the question is, not whether the covenant runs with the land, but whether a 55. Rhone v Stephens [1994] 2 AC 310 at 322; Thamesmead Town Ltd v Allotey (2000) 79 P & CR 557. The operation of the benefit and burden principle, in particular in relation to positive covenants associated with easements, has been doubted in Clifford v Dove (2003) 11 BPR 21,149 at 21,164. 56. Now, for example, there must be nothing in the instrument creating the covenant that would rebut the presumption in s 70A of the Conveyancing Act. 57. Tulk v Moxhay (1848) 41 ER 1143. 58. Rhone v Stephens [1994] 2 AC 310; Clifford v Dove (2003) 11 BPR 21,149 at 21,163.

693

13.16

Property Law in New South Wales

party shall be permitted to use the land in a manner inconsistent with the contract entered into by his vendor, and with notice of which he purchased.59

Lord Cottenham’s reasoning in Tulk v Moxhay, based as it is on the purchaser’s notice of the vendor’s prior contractual obligations, is consistent with the enforcement against successors in title of the covenantor of the burden of both positive and negative covenants. However, the court did not go so far as to completely overturn the common law rule prohibiting the running of burdens with the land. The case is authority only for the narrower principle: any purchaser of land who has notice of a restrictive covenant that burdens that land may be restrained in equity from using it in a manner inconsistent with the terms of the covenant.60 As the facts of the case demonstrate, one important aspect of the equitable rule is that it provides for the private control of urban and environmental planning and development. There are four requirements: 1. 2. 3. 4.

the covenant must be negative (restrictive) in substance; the purchaser must have notice of the covenant; the covenant must benefit the covenantee’s land; and the burden of the covenant must be intended to run with the covenantor’s land.

In New South Wales, a covenant, to be enforceable against the successor in title to the covenantor, must also comply with the requirements of s 88(1) of the Conveyancing Act. 13.17  The burden of a covenant enforceable in equity under Tulk v Moxhay is a burden on the land, not on the estate, held by the covenantor.Thus, it is not necessary to show that a successor in title holds exactly the same estate that the covenantor held.The successor in title is bound merely by coming to the land, whether as squatter, tenant at will or underlessee. It follows that the doctrine of Tulk v Moxhay applies to restrictive covenants in a headlease, which may be enforced by the landlord against a sublessee, even though there is neither privity of contract nor privity of estate between them. In Re Nisbet and Potts’ Contract,61 N had purchased land in 1901 from X and Y, who had purchased it from H. H’s title was based on adverse possession of the land since 1878. N agreed to accept H’s possessory title, but restrictive covenants had been imposed on the land before the period of adverse possession. N knew nothing of these covenants, but would have discovered them if he had made appropriate inquiries. It was held that a purchaser has constructive notice of such covenants, and that the restrictive covenants were an equitable burden on the land, and so were not terminated by H’s adverse possession.

59. Tulk v Moxhay (1848) 41 ER 1143 at 1144. 60. Haywood v  Brunswick Building Society (1881) 8 QBD 403. For a thorough discussion of the various theoretical analyses of the Tulk v Moxhay doctrine, see K Gray and S Gray, Elements of Land Law, 4th ed, Oxford University Press, Oxford, 2005. 61. Re Nisbet and Potts’ Contract [1905] 1 Ch 391, affirmed [1906] 1 Ch 386.

694



Freehold Covenants

13.20

Covenant must be negative (restrictive) in substance 13.18  The burden of positive covenants will not run with the land in equity. In Tulk v Moxhay,62 the obligation not to build on the land was enforceable as this was a restrictive covenant, but a further obligation to keep the garden in a state of proper repair was regarded as a positive covenant and, as such, was not enforceable against the covenantor’s successor in title. As explained earlier in this chapter,63 whether a covenant is positive or negative (restrictive) in nature depends on the substance of the covenant.64 Purchaser must have notice of the covenant 13.19  Restrictive covenants create equitable interests, so they are not enforceable against subsequent purchasers of the burdened land who have no actual, constructive or imputed notice of the covenant at the time of the purchase.65 Where a purchaser buys the burdened land without notice of a restrictive covenant but sells the land on to a purchaser who does have notice, the second purchaser will also take free of the covenant.66 The reason for preventing revival of the covenant in these circumstances is to preserve the value of the first purchaser’s interest. Under s 88(3) of the Conveyancing Act, the Registrar-General is authorised to note restrictive covenants on the folio of the burdened land where that land is held under Torrens title. Further, under s 47(1) of the Real Property Act 1900 (NSW), the RegistrarGeneral is required to record the particulars of restrictive covenants on the folio of the burdened land. Where the restrictive covenant has been so recorded on the folio, this recording, in effect, constitutes constructive notice of the restrictive covenant to any subsequent interest holder of the land burdened by the covenant. Further, by virtue of the operation of s 88(3)(c), where the Registrar-General has so noted a restrictive covenant on the folio, the covenant is an ‘interest’ for the purposes of s 42 of the Real Property Act, so that the transferee takes subject to the recorded covenant.67

Covenant must benefit the covenantee’s land 13.20  In order for the burden of a restrictive covenant to run, the covenant must benefit the covenantee’s land at the date of creation of the covenant.The test to determine benefit is broadly the same for covenants in equity as at common law, namely that the covenant must ‘touch and concern the land’ of the covenantee.68

62. Tulk v Moxhay (1848) 41 ER 1143. 63. See 13.2. 64. In Westpoint Corporation Pty Ltd v Registrar of Titles [2004] WASC 189, a covenant not to develop land further, except to the same standard as and complementary with previous development, was held to be negative. 65. Re Nisbet and Potts’ Contract [1906] 1 Ch 386. 66. Wilkes v Spooner [1911] 2 KB 473. 67. See further, 13.36. 68. For all of these requirements, see 13.5–13.6. In New South Wales, this principle has been partly modified by statutory reform in the shape of ss 88D and 88E of the Conveyancing Act, which confer on ‘prescribed

695

13.20

Property Law in New South Wales

The requirement that the covenant ‘touch and concern the land’ of the covenantee has been interpreted to mean that the covenantee must in fact have owned the land at the date of creation of the covenant. The rationale for this is found in Tulk v Moxhay itself; namely, that the covenant must be made for the protection of land held by the covenantee. In London County Council v Allen,69 Allen, a builder, applied to the council for permission to lay out certain land of which he was in possession under an option to purchase. The council gave permission subject to a condition that Allen would enter into a covenant not to build on part of the land which was needed for the construction of some proposed streets. Allen covenanted by deed for himself, his heirs and assigns. Part of the land was sold to Allen’s wife (E) with Allen’s concurrence. E built three houses on the plot and mortgaged it to N.Was the covenant binding on E and N? While the council succeeded in contract against Allen (receiving only nominal damages), the court held that the covenant was not binding on the successors in title, because, at the time the council entered into the covenant, they did not own the land that could be benefited by the covenant. In New South Wales, the same rule was adopted in Kerridge v Foley.70 This requirement can raise particular problems where a vendor (say, a developer) subdivides land into a number of lots, and enters into restrictive covenants with the purchasers of each lot in the subdivision. Assume that the vendor sold lots to A, B and C and entered into a restrictive covenant with each of them that they (A, B and C) will not use the land for commercial purposes. At that point, the developer would want to depart from the scene, leaving each of the purchasers with the ability to enforce the covenants against other purchasers. Each of A, B and C will be subject to the burden of a covenant, but each of them would also want to be able to enforce the benefit against each of the others. A particular problem arises where the sale of lots proceeds in stages. Owing to the rule that the covenantee must also have held the benefited land at the time the covenant was made, whether or not each of A, B and C can enforce the benefit against each of the others will depend on the order in which they purchased the lots. Assuming that the vendor sold the lots in alphabetical order, C will be able to enforce the covenant against A and B because at the time the vendor entered into the covenant with A and B, the vendor still owned the land to be benefited (the land now owned by C). A and B, on the other hand, will be unable to enforce the covenant against C. At the time the covenant was entered into with C, the vendor had already sold the lots to A and B. Hence, the vendor, who made the covenant with C, did not own the land to be benefited (now owned by A and B) at the time the covenant was entered into with C.

authorities’ the right to enforce ‘public positive covenants’ regardless of whether the covenant benefits land of the authority. 69. London County Council v Allen [1914] 3 KB 642. 70. Kerridge v Foley (1964) 82 WN (NSW) 293. See also Hosking v Haas [2009] NSWSC 624.

696



Freehold Covenants

13.23

One way around this problem is to argue that the subdivision is a building scheme.71 Building schemes are seen to be an exception to the requirement that the covenantee must own the benefited land at the time of entering into the covenant.72

Covenant must be intended to run with the covenantor’s land 13.21  It must be intended that the burden of a restrictive covenant run with the covenantor’s land. If the covenant is personal only, the burden will not run. By s 70A(1) of the Conveyancing Act, this intention is presumed unless the covenant indicates the contrary.  The section deems the covenant to be entered into by the covenantor on behalf of himself or herself and the covenantor’s successors in title. Though s 70A(1) does not alter the common law rule that prohibits the burden of a covenant from running with the land, it supplies the requisite intention in equity.

Requirements of s 88(1) of the Conveyancing Act 13.22  Section 88(1) of the Conveyancing Act prescribes certain formalities for creating covenants. These apply specifically to covenants enforceable in equity, and which are contained in an ‘instrument’. Therefore, in order for a covenant to be enforced against successors in title of the covenantor, the instrument must ‘clearly indicate’: • • • •

the land benefited by the covenant; the land burdened by the covenant; the persons (if any) having a right to release, vary or modify the restriction; and the persons (if any) for whose consent to a release, variation or modification of the land is stipulated.73

Enforceability of the Benefit of a Covenant in Equity 13.23  As we have seen, the benefit of a covenant can run at common law. In several circumstances, however, it is necessary to ensure that the benefit has run in equity, rather than at  law, in order for the benefit to be enforceable by the successor in title to the covenantee. The first is where the covenantee holds an equitable, rather than legal, estate. The second is where the successor in title to the covenantee wishes to enforce the benefit of the covenant against a successor in title to the covenantor. Assume that A enters into an agreement with B, in which B covenants that she will not build a dwelling of more than one storey. A subsequently sells to A1. B sells to B1. Can A1, as the successor in title to the covenantee, enforce the covenant against B1? Figure 13.3 puts this question in diagrammatic form.

71. See 13.30–13.35. 72. Re Louis and the Conveyancing Act 1919 [1971] 1 NSWLR 164; Hosking v Haas (No 2) [2009] NSWSC 1328. Building schemes are discussed in more detail at 13.30–13.35. 73. For further discussion see Edgeworth, Butt’s Land Law, note 40 above, at pp 628–31, [10.530]–[10.560].

697

13.23

Property Law in New South Wales Figure 13.3:  Running the benefit in equity

A benefit

A1 Can A1 enforce against B1?

B burden

B1

Assuming that the burden has run in equity under the rules in Tulk v Moxhay, A will be able to enforce the covenant against B1. However, in order for it to be enforceable by A1, the benefit of the covenant must have run in equity. In equity, the benefit of a covenant will run with the land in favour of successors in title in three situations: 1. where the benefit of the covenant was annexed to the land; 2. where the benefit of the covenant was expressly assigned to the successors in title; or 3. in the case of a building scheme.

Benefit annexed to the land 13.24  As in the case of annexation at common law, the benefit will be annexed to the land if all of the following requirements are satisfied: • the covenant is worded to make it clear that the benefit is intended to be taken by the original covenantee and by successors in title; • the covenant touches and concerns the benefited land; • the benefited land is identified; and • the covenantee retained the benefited land at the time the covenant was entered into. As with annexation at common law, where the benefit is annexed in equity it becomes part of the estate.Therefore, no express reference to the covenant in the transfer is needed, nor is it necessary for the covenantor to be aware of the covenant at the time of transfer.

Intention to annex covenant to the land 13.25  As in the case of the running of the benefit at law, the instrument must contain clear words indicating not only that successors-in-title of the covenantee are to benefit, but also the land of the covenantee.74 However, s 70(1) of the Conveyancing Act 1919 (NSW) applies to the running of the benefit in equity no less than at law. It follows that the section has the effect of annexing covenants that touch and concern the benefited land 74. Rogers v Hosegood [1900] 2 Ch 388.

698



Freehold Covenants

13.28

unless a contrary intention is expressed in the instrument, at least if Federated Homes Ltd v Mill Lodge Properties Ltd75 is good law in Australia.

Covenant must ‘touch and concern’ the benefited land 13.26  This requirement is the same as it is at common law. The covenant must affect the mode of use or occupation of the land, or affect the value of the land in a direct way.76 Benefited land must be identified 13.27  The benefited land must be sufficiently identified in the instrument. The requirements are governed by s 88(1) of the Conveyancing Act.77 Covenantee must retain benefited land 13.28  Where the original covenantee did not retain land at the time the covenant was entered into, the original covenantee can nevertheless enforce the covenant against the covenantor under normal contractual principles. However, in order for the benefit of a restrictive covenant to be enforced by a successor-in-title to the covenantee, the covenantee must have retained the land benefited by the covenant at  the time the covenant was entered into. This is also a requirement for the running of the burden of a covenant in equity, and was discussed in that context.78 These principles were demonstrated in Formby v Barker.79 Formby sold all the land he owned to a company. The company covenanted not to use the land for various purposes, which included the building of ‘any beerhouse or shop or any hotel of less annual value than 50 pounds’. The defendant purchased part of that land with notice of the covenant. Formby’s widow, who was the sole beneficiary under Formby’s will, sought to restrain the defendant from building shops on the land, claiming that he was in breach of the covenant. It was concluded that the erection of the shops, not being shops for selling beer, was not a breach of the covenant but, in any event, the widow was not able to enforce the covenant as it was a personal covenant only. Since Formby did not retain any land in the neighbourhood, the benefit that he could claim could only be a personal one and could not be passed to his widow upon his death. Indeed, the benefit of the covenant could not be assigned or transferred to anyone else: It appears to me that it is not legally permissible for him to assign the benefit of such a covenant to any person or persons he may choose, so as to place the assign or assigns in his position.80 75. Federated Homes Ltd v Mill Lodge Properties Ltd [1980] 1 All ER 371. See 13.4. 76. Rogers v Hosegood [1900] 2 Ch 388. In Forestview Nominees Pty Ltd v Perpetual Trustees WA Ltd (1998) 193 CLR 154 at 170, the High Court said: ‘In dealing with restrictive covenants, equity stipulates that the question whether benefited land is touched and concerned is answered by asking whether there is the necessary benefit’. See 13.5–13.6. 77. See 13.22. 78. See 13.20. 79. Formby v Barker [1903] 2 Ch 539. 80. Formby v Barker [1903] 2 Ch 539 at 554 per Romer LJ. See also 551 per Vaughan Williams LJ.

699

13.28

Property Law in New South Wales

Such a covenant may still be enforceable under the principles relating to building schemes.81 As stated previously, building schemes are recognised to be an exception to the requirement that the covenantee own benefited land at the time of entering into the covenant.82

Express assignment 13.29  Where the benefit of a restrictive covenant has not been effectively annexed to the dominant land in accordance with the above requirements, it may be expressly assigned to successors in title of the covenantee. Where the covenantee is seeking to enforce the burden against a successor in title of the original covenantor, and so is relying on assistance from equity, the assignment must be effective in equity. A restrictive covenant, as a subsisting equitable interest in land, must be assigned in accordance with s 23C(1)(c) of the Conveyancing Act.83 This provision allows assignment by way of will but, otherwise, the assignment must be in writing signed by the assignor or a lawfully appointed agent of the assignor. The covenant must be assigned at the same time as the land is assigned. It must also be possible to identify the land benefited by the covenant. In Newton Abbot Co-operative Society Ltd v Williamson & Treadgold Ltd,84 it was held that it was unnecessary for the document itself to identify the land. It was sufficient that the land could be adequately identified from the surrounding circumstances.

Building Schemes 13.30  If land is developed in multiple, subdivided lots, as in the case of a housing estate, the developer may wish to require all purchasers to enter into restrictive covenants for the purposes of maintaining the character of the estate. For example, the developer may wish to prevent certain types of use of buildings, or limit their height. The running of the benefit and burden of such covenants will be integral to the conservation of the estate’s character. The developer will wish to withdraw from the scene while ensuring that each of the purchasers has the benefit of each of the other purchasers’ compliance with the covenants that they made when purchasing. A particular problem arises where the sale of lots proceeds in stages. As discussed in 13.20, the rule that, in order for the burden to run at law, the covenantee must have held the benefited land at the time that the covenant was made, poses particular problems in the context of building schemes. An earlier purchaser (of Lot A) is not in a position to enforce covenants against a later purchaser (of Lot B), because the developer, having previously disposed of Lot A, cannot annex to Lot A the benefit of the covenant burdening Lot B made by the purchaser of Lot B.

81. See 13.30–13.35. 82. Re Louis and the Conveyancing Act [1971] 1 NSWLR 164. See Kerridge v Foley (1964) 82 WN (NSW) 293 at 13.20. 83. Bradbrook and Neave, Easements and Restrictive Covenants in Australia, note 13 above, p 306. 84. Newton Abbot Co-op Society v Williamson & Treadgold Ltd [1952] Ch 286.

700



Freehold Covenants

13.32

Requirements of a building scheme 13.31  One way of ensuring that all the purchasers have the benefits of the covenant they made with each other is by means of s 36C of the Conveyancing Act. If each new purchaser covenants with all earlier purchasers and the vendor, then each of the earlier purchasers — and, by virtue of s 70(1), their successors in title — may enforce the covenant against the new purchaser. However, this is a cumbersome procedure. Instead, building schemes, or ‘schemes of development’ as they are also known, have been preferred as mechanisms to ensure the continuing enforceability of covenants by and against all purchasers of lots. The ultimate result of a building scheme is to annex the benefit of restrictions to all lots in the scheme, irrespective of when the vendor transferred them, so that earlier and later purchasers are in the same position. The basis of the building scheme is the equitable principle of mutuality. There is mutuality when there is a substantial reciprocity of obligations within the scheme. The scheme operates separately from the contractual relationships entered into by the various covenantors in the scheme. In the leading case, Elliston v Reacher,85 Parker J stated the following requirements for the establishment of a building scheme: • Both the plaintiff and the defendant must derive their titles from a common vendor. • Prior to the sales to the plaintiff and defendant, the vendor must have laid out the estate, or a definite part of the estate, for sale in lots, and indicated that the relevant restrictions were intended to apply to all lots. Moreover, the restrictions must be consistent only with a general scheme of development. • The vendor must have intended that the restrictions be for the benefit of all the lots to be sold. • Both plaintiff and defendant, or their predecessors-in-title, must have purchased their lots on the basis that the restrictions were to enure for the benefit of the other lots included in the scheme. The land to which the building scheme is applicable must be clearly identified or be identifiable. In Re  Dolphin’s Conveyance,86 it was said that this requirement will be met where the wording of the document in conjunction with surrounding circumstances identifies the land. One additional question, however, is whether in order to be enforceable the requirements of s 88(1) of the Conveyancing Act must be complied with.87 13.32  It has been observed that the requirements set out in Elliston v Reacher should not be applied as if they were the requirements of a statute.88 The primary focus must be on the intention behind the development. For instance, the first requirement that both plaintiff and defendant derive their titles from a common vendor has been dispensed with to the extent that, where one common vendor died and was replaced by another, a valid building

85. Elliston v Reacher [1908] 2 Ch 374 at 384. 86. Re Dolphin’s Conveyance [1970] Ch 654. 87. See 13.35. 88. Deguisa v Lynn [2019] SASCFC 107 at [140] per Peek J.

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Property Law in New South Wales

scheme could still exist. There was a sufficient continuity of intention that the restrictions would apply to all the lots in the scheme.89 In Re Mack and the Conveyancing Act,90 a number of vendors were involved in a building scheme. Wootten J held that the multiplicity of vendors did not prevent there being a valid building scheme because of the presence of a prevailing common intention that the covenants would apply to all lots. He found that there could be no sound basis for distinguishing between a single vendor and a number of vendors for the reason that ‘“the community of interest” between the purchasers is as real in the one case as the other’. Of course, the lack of a common vendor may well indicate that no such common intention exists, as where a later vendor has very different plans for the development. 13.33  The second requirement laid down by Parker J in Elliston v Reacher — that the scheme be laid out in lots before sale, with allotted restrictions — has also been interpreted flexibly by the courts. The fact that the process of subdividing by the common vendors occurred over a period of time does not, of itself, prevent a finding that the lots were subject to a single building scheme.91 In Baxter v Four Oaks Properties Ltd,92 the size of lots was determined by individual purchasers’ needs. It was held that the requirement would be met if the purchasers were informed on sale that lots would be subject to mutually enforceable covenants, and also if each purchaser would be obliged to execute the same deed. In Re Dolphin’s Conveyance93 the vendors had failed to lay out the estate in demarcated lots prior to sale; yet this was held not to be fatal for the scheme because a common intention of mutuality of obligation could be clearly discerned in the conveyances to the earlier purchasers. Even though, on the facts of this case, the benefit of the covenant had not been annexed to the land of the defendants and the benefit had not been expressly assigned, they were able to enforce it. It follows that, where a valid building scheme exists, annexation of the benefit of the covenants to every plot still unsold is established from the surrounding circumstances, so that no special formula of annexation need be used. In Hosking v Haas,94 a valid building scheme was found where only some of the lots in the estate were subject to covenants and, with respect to those which were, not all were identical. The basic principle is that whether a building scheme exists is a question of fact to be determined from the documents and the circumstances surrounding the sales.95 Relevant evidence may be adduced from the terms and conditions of auction sales and terms in the relevant contracts of sale.96 13.34  Even if two of the plots in the building scheme become united in the hands of one person, the covenants will not be extinguished, but will merely be suspended until 89. Re Dolphin’s Conveyance [1970] Ch 654. 90. Re Mack and the Conveyancing Act [1975] 2 NSWLR 623 at 630. 91. Deguisa v Lynn [2019] SASCFC 107 at [145]. An appeal to the High Court of Australia was allowed on other grounds. See 13.37. 92. Baxter v Four Oaks Properties Ltd [1965] Ch 816. 93. Re Dolphin’s Conveyance [1970] Ch 654. 94. Hosking v Haas [2009] NSWSC 1328. 95. Baxter v Four Oaks Properties Ltd [1965] Ch 816. 96. Eagling v Gardner [1970] 2 All ER 838.

702



Freehold Covenants

13.36

such time as they are subdivided.97 This is an exception to the general rule that unity of ownership will extinguish a covenant.98 The principle of mutuality of obligation will be established even if the restrictions imposed by the covenants are not identical; but not if some lots are to be free of obligations.99 In Ferella v Otvosi,100 Gzell J stated that: … the impact of the various restrictions on an area as a whole [that creates] a local law … may impinge differently on different parts of the area but, overall, [must work] to give a particular character and amenity to the area.101

13.35  Generally, in order for a restrictive covenant to be enforceable, it must comply with s 88(1) of the Conveyancing Act.102 One difficult question, however, is whether the requirements of s  88(1) apply to building schemes. Section  88(1) refers to restrictions ‘the benefit of which is intended to be annexed to other land’. It is not clear that this is wide enough to cover building schemes. The law on this point is somewhat uncertain. However, it appears that after Re Louis and the Conveyancing Act,103 building schemes remain untouched by s 88(1), at least under the general law.This is because s 88(1) operates where there is an ‘instrument’, and there is no relevant instrument between parties where a building scheme is being relied on. The position under the Torrens system would appear to be different, however.104

Freehold Covenants and the Torrens System Restrictive covenants 13.36  As previously noted, by virtue of s 88(3)(c) of the Conveyancing Act, a restrictive covenant that is recorded on the Folio of the burdened land is an ‘interest’ for the purposes of s 42 of the Real Property Act 1900 (NSW). Therefore, the transferee will take subject to the recorded covenant. In the case where the covenant is not recorded, the effect of the transfer will depend on the normal rules applying to indefeasibility.105 In other words, subsequent registered proprietors will take free of the interest — even where they had notice by some other means — unless there is fraud, or a personal right against the registered proprietor can be established. Nevertheless, recording does not confer the full benefits of indefeasibility. As Edgeworth has explained, the recording of a covenant ‘does not warrant its efficacy in the way that indefeasibility of title provisions of the Real Property Act warrant the efficacy of registered dealings’.106 The restrictive covenant remains, to that extent, an unregistered equitable interest. 97. Texaco Antilles Ltd v Kernochan [1973] AC 609. 98. See 13.45. 99. Re Naish and the Conveyancing Act [1960] 77 WN (NSW) 892. 100. Ferella v Otvosi (2004) 12 BPR 22,191. 101. Ferella v Otvosi (2004) 12 BPR 22,191 at [17]. 102. See 13.22. 103. Re Louis and the Conveyancing Act [1971] 1 NSWLR 164 at 180 per Jacobs JA. 104. The difficulties posed by building schemes and the Torrens system are discussed at 13.37. 105. See, for example, Ryan v Brain [1994] 1 Qd R 681. 106. Edgeworth, note 40 above, at 640 [10.700] (italics in source).

703

13.36

Property Law in New South Wales

The Registrar-General has the power to record only those covenants that comply with s 88(1) of the Conveyancing Act 1919 (NSW). If a covenant is recorded which does not comply with this section, the covenant will not bind the new registered proprietor.107

Building schemes and the Torrens system 13.37  The building schemes exception is a doctrine that establishes rights on the basis of facts surrounding a particular type of development, so sits uneasily with a title system that places primary emphasis on the completeness of the register (the ‘mirror principle’).108 Very commonly, the need to rely on the doctrine of the building scheme is obviated by s 88B of the Conveyancing Act. Section 88B provides that when a plan of subdivision is registered by the Registrar-General, all restrictive covenants benefiting and burdening land in the plan, and indicated on the plan, become effective and are annexed to the land. Moreover, s 88B requires vendors to indicate all restrictions intended to benefit and burden lots on the plan. In the absence of registration in this way, is it possible for building schemes to create enforceable rights under the Torrens system? The High Court of Australia considered this question in the context of the South Australian Torrens system in Deguisa v Lynn.109 The relevant certificate of title referred to an ‘encumbrance’ that prohibited the encumbrancer from erecting or permitting the erection of a block of flats or other multiple dwellings on the land.The memorandum of encumbrance contained a statement that the encumbrance formed part of a common building scheme.The High court concluded that the purchasers of the land could not be said to have been notified of the restrictive covenant because it was not possible to identify all of the lots benefited by the restrictive covenant from information on the certificate of title. It was possible only to identify that there was a restrictive covenant in favour of someone. The court commented that it was ‘not to be supposed that the only legitimate concern of a potential purchaser in seeking to ascertain the nature and extent of qualifications upon the potential vendor’s title to land is to enable the purchaser to make a binary choice as to whether to proceed with the purchase or to decline to do so’.110 A purchaser who knows who is benefited by the covenant would have the opportunity to negotiate for the release of the covenant. Since the purchasers were not notified as to who had the benefit of the covenant, they were not bound by the covenant. South Australia, unlike New South Wales, has no statutory provision that specifically allows for the registration of restrictive covenants. In New  South  Wales, a restrictive covenant can be noted on the register under s  88 of the Conveyancing Act, but the Registrar-General is not authorised to note a covenant that does not refer to both the benefited land and the burdened land. Therefore, a covenant that does not identify the benefited land will not be enforceable.

107. Re Martyn (1965) 65 SR (NSW) 387. 108. For details of this principle, see Chapter 8. 109. [2020] HCA 39. 110. [2020] HCA 39, [72] (Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ).

704



Freehold Covenants

13.40

Formal Requirements for the Creation of Freehold Covenants Old system title 13.38  As the burden of a covenant over freehold land does not run at common law, such a covenant does not constitute a legal interest in the covenantor’s land. The use of a deed is, therefore, not essential in the creation of the covenant. However, as the burden of a restrictive covenant can run in equity, a restrictive covenant is an equitable interest in the covenantor’s land, so it must meet the requirements for the creation of equitable interests.111 By s 23C(1) of the Conveyancing Act 1919 (NSW), an equitable interest must be created by writing signed by the person entitled to the interest.112 Lack of writing can, however, often be overcome by recourse to the doctrine of part performance.113 As we have seen above,  s 88(1) of the Conveyancing Act imposes substantive requirements on the creation of covenants. Significantly, the section relates only to ‘restrictions’, so it would appear to have no bearing on the creation of positive covenants. In the absence of a clear indication of the lands burdened and benefited, a covenant will not be enforceable by or against successors-in-title of the original parties to the covenant.  As s 88(1) is concerned only with successor-sin-title, the original parties to the covenant are unaffected by the provision. They may, therefore, rely on the general rule that surrounding circumstances may be adduced to identify the land intended to be benefited by the restrictive covenant.114

Torrens title 13.39  Where a restrictive covenant is created on the transfer of the land, the covenant can be incorporated into the approved form of transfer. Otherwise, the covenant should be created by written agreement — often by deed. A request can then be made to the Registrar-General, under s 47(1) of the Real Property Act 1900 (NSW), to record the particulars of the restrictive covenant on the Folio of the burdened land.115 As they are equitable interests in land, unregistered restrictive covenants may be protected by the lodgment of a caveat noted on the title of the covenantor.116

Section 88B of the Conveyancing Act 13.40  Section 88B of the Conveyancing Act contemplates that a plan indicating ‘what restrictions on the use of land or positive covenants, if any, are intended to be created 111. See Westpoint Corporation Pty Ltd v Registrar of Titles [2004] WASC 189 at [58]–[61] and [92]. 112. For a discussion of this provision, see 6.22–6.24. 113. Conveyancing Act 1919 (NSW) s 23E(d). 114. Newton Abbot Co-operative Society v Williamson & Treadgold Ltd [1952] Ch 286. 115. Edgeworth, note 40 above, [10.520] p 548, noting Baalman and Wells, Land Titles Office Practice, looseleaf, 5th ed, Lawbook Co, Sydney [490,100]. Section 46A of the Real Property Act (NSW) provides that a restrictive covenant can be created by the registration of an instrument, even though the land to be benefited and the land to be burdened are owned by the same person. 116. Blacks Ltd v Rix [1962] SASR 161.

705

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Property Law in New South Wales

benefiting or burdening land comprised in the plan’ may be registered in respect of particular land. When a plan of subdivision is registered by the Registrar-General, all restrictive covenants benefiting and burdening land in the plan, and indicated on the plan, become effective and are annexed to the land.The provision states that the covenants have effect and are annexed ‘notwithstanding that the land benefited and the land burdened may be in the same ownership at the time when the plan is registered or recorded and notwithstanding any rule of law or equity in that behalf ’.117 Any restriction or positive covenant is said to have effect ‘as if it was contained in a deed’.118 Section 88B also applies to Torrens title. Since s  88B makes restrictions and positive covenants effective even though the benefited land and the burdened land belong to the same person, the lodgment of a plan under s 88B is a useful tool for property developers who wish to impose requirements on all purchasers of lots in an estate and ensure that these requirements are subsequently enforceable by and against all subsequent purchasers. This provides a convenient means for the imposition and enforcement in residential estates of house design requirements, including requirements as to the materials used and colours of brick, tiles and paint.119

Remedies 13.41  The common law remedy for breach of a covenant is damages. The covenantee and those of his or her successors in title to whom the benefit of the covenant has run can recover from the original covenantor damages measured by reference to the loss suffered by the covenantee. Where damages would not be an adequate remedy in respect of the particular breach — for example, where the breach is of a continuing nature or the covenantee’s loss is not susceptible to valuation in monetary terms120 — the equitable remedy of injunction may be available in addition to or instead of damages. Prohibitory injunctions, which restrain the continuation of a breach of a covenant, are more common than mandatory injunctions, which require the defendant to perform a positive action such as demolishing a structure that has been erected in breach of a covenant. Mandatory injunctions of that type are sometimes awarded, although courts are often reluctant to order a defendant to demolish structures.121 The court may, for example, grant a mandatory injunction where a defendant acts ‘in flagrant disregard’ of the plaintiff ’s rights. So, where a building was constructed in breach of covenant in order to block the plaintiff ’s view of the sea, the 117. Conveyancing Act 1919 (NSW) s 88B(3)(c). 118. Conveyancing Act 1919 (NSW) s 88B(4). 119. For an example of such a scheme, see  Newpark Design Guidelines . 120. Ampol Petroleum Limited v Mutton (1952) 53 SR (NSW) 1. 121. For recent cases in which a mandatory injunction was issued, requiring the covenantor to demolish structures, see Evans v Miller [2011] WASCA 89; Wakeham v Wood (1982) 43 P & CR 40. See also P Butt, ‘Demolition of Building Erected in Breach of Covenant’ (2006) 80 Australian Law Journal 12, noting the grant of a mandatory injunction by the English Court of Appeal in Mortimer v Bailey [2005] 2 P & CR 9.

706



Freehold Covenants

13.42

court ordered demolition.122 A remedy of damages in this instance would merely have allowed the defendant to compulsorily purchase the right to build. The remedy of injunction may not be available where the usual discretionary bases for denying equitable remedies apply; for example, where the plaintiff has delayed in asserting his or her rights or where an injunction would cause hardship to the defendant. Injunctions may be granted as the final relief in the proceedings (perpetual injunction) or at an early stage of the proceedings in order to maintain the status quo pending the final determination of the matter (interlocutory injunctions). An interlocutory injunction will be awarded only if the plaintiff has some prospect of success in obtaining an injunction as final relief and the balance of convenience as between plaintiff and defendant favours awarding an injunction.123 Courts also have the power to award ‘equitable’ damages instead of an injunction, where an injunction would be ‘oppressive’.124 These damages are sometimes described as ‘Lord Cairns’ Act’ damages. The latter label refers to the English statute in which the power to award such damages was originally conferred.125 There have been English cases in which equitable damages have been awarded for breaches of covenants for which only nominal damages could have been awarded at  common law and an injunction was refused for discretionary reasons.126 In those cases, the damages were awarded on a ‘reasonable fee’ basis. In other words, the covenantee’s loss was taken to be the loss of an opportunity to demand a fee from the covenantor for relaxation of the covenant. As the ‘reasonable fee’ basis is a significant departure from the traditional basis for calculating damages for breach of contract, such damages awards have been controversial.127 If the person entitled to the benefit of the covenant seeks to enforce the covenant against a successor in title, he or she must establish that the covenant is restrictive and that the equitable requirements for the running of the burden have been met. Since the restrictive covenant is an equitable interest, only equitable remedies, such as an injunction or equitable damages in lieu of an injunction, are available to protect it.

Modification and Extinguishment of Covenants 13.42  Covenants may be modified or extinguished in four separate ways: 1. express agreement; 2. implied agreement; 122. Wakeham v Wood (1982) 43 P & CR 40. 123. For a more detailed discussion of the case law concerning interlocutory injunctions, see G E Dal Pont, Equity and Trusts is Australia, 6th ed, Lawbook Co, Sydney, 2015, at 986-992 [31.90]-[31.125]. 124. Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287 at 322–3 per A L Smith LJ. 125. In New South Wales, see Supreme Court Act 1970 (NSW) s 68. 126. Wrotham Park Estate Co Limited v Parkside Homes Limited [1974] 1 WLR 798, Jaggard v Sawyer [1995] 1 WLR 269. 127. For an argument that such damages may be awarded, while acknowledging the difficulties, see R J Sharpe and S M Waddams, ‘Damages for Loss of Opportunity to Bargain’ (1982) 2 Oxford Journal of Legal Studies 290 at 292–93.

707

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Property Law in New South Wales

3. merger; or 4. an order of the Supreme Court under s 89(1) of the Conveyancing Act 1991 (NSW). Additionally, the operation of a covenant may be suspended pursuant to s 28(2) of the Environmental Planning and Assessment Act 1979 (NSW).

Express agreement 13.43  The holder of the benefit of a covenant may modify or extinguish the covenant by express agreement. A restrictive covenant is an equitable interest in land, so the holder of the benefit of the covenant must comply with the formalities necessary for dealing with equitable interests.128 In the case of land under the Torrens system, s 88(3)(a) of the Conveyancing Act gives the Registrar-General power to delete or amend any recording of a covenant on the Register if the parties have agreed to modify or extinguish it.

Implied agreement 13.44  The conduct of the covenantee may, by implication, release the covenantor from his or her obligations under the covenant.The covenant may be modified or extinguished if the conduct can be seen as amounting to an implied agreement to do so. An example of such conduct would be the toleration of a clear breach of the covenant over a substantial period of time so as to indicate that compliance with the covenant is no longer being insisted upon. In Chatsworth Estates Co v Fewell,129 the plaintiffs’ predecessors in title sold a house and land to the defendant’s predecessor in title, who covenanted not to use it ‘otherwise than as a private dwelling-house’. Other purchasers also bought land from the plaintiffs and their predecessors, but breached a covenant expressed in the same terms. The defendant, without consent, opened a guest house. His defence was that the covenant was not enforceable for two reasons: first, that a change in the neighbourhood had been brought about by the conduct of the plaintiffs and their predecessors in title in not enforcing the covenants, so that the covenant had not survived; and second, that they had by their conduct impliedly released the defendant from his obligation.The court held that the covenant was still enforceable. To succeed on the basis of a change in neighbourhood, the defendant had to show that the covenant was completely valueless, which it clearly was not here, given that the estate remained largely residential. As to whether there was an implied release, Farwell J did not think that a release came about simply because the plaintiffs had allowed some breaches of the covenant. It was necessary to show that the plaintiffs were ‘intending, by their acts or omissions, to permit’ the area to be turned into something other than a residential area.130 His Honour was satisfied that the plaintiffs had not shown such an intention. The doctrine is analogous to estoppel. The breaches allowed were not so extensive and widespread to amount to such a representation in this case.

128. Conveyancing Act 1919 (NSW) s 23C(1). 129. Chatsworth Estates Co v Fewell [1931] 1 Ch 224. 130. Chatsworth Estates Co v Fewell [1931] 1 Ch 224 at 230 per Farwell J.

708



Freehold Covenants

13.46

The owner of the burdened land may also seek an order of the court if the benefit is waived. By s 89(1)(b) of the Conveyancing Act, the court may make an order modifying or extinguishing a covenant where those ‘entitled … to the benefit of the restriction … by their acts or omissions may reasonably be considered to have … waived the benefit of the restriction wholly or in part’.

Merger 13.45  When ownership and possession of both the dominant and servient tenements pass to one person, the covenant will be extinguished.131 It follows that, if the land is subsequently severed, the common owner must require an incoming purchaser to enter into a new covenant to retain the original benefit. The doctrine of merger does not apply to covenants over Torrens title land that are noted on the title.132 Nor does it apply to restrictive covenants created by the registration of a s 88B plan.133 Building schemes are an exception to the general rule, so that where a person acquires both benefited and burdened land, the covenant is suspended until resale.134 The suspension does not affect the rights of holders of other lots in the scheme.135

Statutory extinguishment under s 89(1) of the Conveyancing Act 13.46  By s 89(1) of the Conveyancing Act, the Supreme Court is given power to modify or wholly or partially to extinguish a restriction as to user.The power under s 89(1) applies to easements and profits à prendre as well as restrictive covenants. The power, so far as it appears relevant to covenants, can be exercised if the court is satisfied that: • there has been a change in the user of any dominant land, or in the character of the neighbourhood, or other circumstances renders the restriction obsolete; or • the continued existence of the restriction would impede the reasonable user of the land subject to the easement, without securing practical benefit to the persons entitled to the easement; or • the persons entitled to the restriction have agreed to the easement being modified or wholly or partially extinguished, or by their acts or omissions may reasonably be considered to have abandoned the easement; or • the proposed modification or extinguishment will not substantially injure the persons entitled to the benefit of the restriction.

131. Kerridge v Foley (1964) 82 WN (NSW) (Pt 1) 293. 132. Post Investments Pty Ltd v Wilson (1990) 26 NSWLR 598. The general law position has been confirmed in relation to restrictive covenants created after the commencement of the Property Legislation Amendment Act  2005 (NSW). Section  47(7) of the Real Property Act now includes restrictive covenants among the registered interests that are not extinguished by the same person becoming the owner of both the benefited and burdened parcels of land. 133. Conveyancing Act 1919 (NSW) s 88B(3)(c)(iii). 134. Texaco Antilles Ltd v Kernochan [1973] AC 609. 135. Texaco Antilles Ltd v Kernochan [1973] AC 609 at 625–6.

709

13.46

Property Law in New South Wales

These provisions apply to both old system and Torrens title land.136 The grant of relief under s 89 grounds is discretionary. The court may look at matters such as the: history of the property; conduct of the owners of both the dominant and servient tenements; acts of a prior registered proprietor; and state of the Register.137 13.47  The court’s power to order the modification or extinguishment of covenants also extends to covenants created under s 88B of the Conveyancing Act. In Pike v Venables,138 a prohibition on installing corrugated iron roofs was imposed in an instrument registered under s 88B of the Conveyancing Act. It was held that the restriction should be modified given that parts of the roofs in question had always been of this construction and that the defendants had not objected in the past and did not stand to suffer loss as a result of the modification.

Covenants that are ‘obsolete’ 13.48  Obsolescence is established if the original purpose of the covenant is incapable of continued fulfillment, or the right of way currently serves no useful purpose.139 This involves identification of the relevant neighbourhood and an examination of the evidence in order to determine whether there has been a change between the date of the grant and the time of the application.140 ‘Neighbourhood’ has been held to mean the ‘immediately surrounding area of the dominant and servient tenements’.141 Thus, a covenant has been held to be obsolete where land originally planned to be agricultural has become residential.142 If some benefit accrues to the covenantee from continued enforcement of the covenant, the covenant is not obsolete.143 Covenants that impede reasonable use without ‘practical benefit’ 13.49  The second basis involves an assessment of whether or not the continued user would impede the reasonable user of the servient tenement without securing practical benefit to the dominant tenement. In order to establish that the covenant impedes the reasonable user, it must be shown that no reasonable use of the land is possible unless the covenant is modified or extinguished.144 Whether a covenant impedes reasonable use is 136. Conveyancing Act 1919 (NSW) s 89(8). 137. Pieper v Edwards (1982) 1 NSWLR 336 at 340 per Hutley JA; Mamfredas Investment Group Pty Ltd (formerly known as MAM Marketing Pty Ltd) v Property IT and Consulting Pty Ltd [2013] NSWSC 929 at [42] per Slattery J. 138. Pike v Venables (1984) NSW ConvR ¶55-170. 139. Chatsworth Estates Co v Fewell [1931] 1 Ch 224. 140. Mamfredas Investment Group Pty Ltd (formerly known as MAM Marketing Pty Ltd) v Property IT and Consulting Pty Ltd [2013] NSWSC 929 at [35] per Slattery J. 141. Markos v O R Autor (2007) 13 BPR 24,487 at [88]. 142. Re Truman, Hanbury, Buxton and Co Ltd’s Application [1956] 1 QB 261. 143. Re Mason and the Conveyancing Act (1960) 78 WN (NSW) 925. 144. Frasers Lorne Pty Ltd v  Joyce Goldsworthy Burke [2008] NSWSC 743 at  [14] per Brereton J; Mamfredas Investment Group Pty Ltd (formerly known as MAM Marketing Pty Ltd) v  Property IT and Consulting Pty Ltd [2013] NSWSC 929 at  [38] per Slattery J. The Victorian Supreme Court proffered a more liberal interpretation of ‘reasonable use’ in Stanhill Pty Ltd v Jackson (2005) 12 VR 224. However, this has been

710



Freehold Covenants

13.50

tested by examining the proposed use of the burdened land by reference to its situation and its surrounding land. Where a covenant restricted building to a height of 33 feet, yet the surrounding land in the central business district had multi-storey office buildings on it, any reasonable use of the land would require building beyond this height.145 A covenant will be held to be without practical benefit if there is no present benefit for the dominant owner.146 Examples of practical benefit are: the retention of privacy and seclusion (a covenant prohibiting residential development in a green-belt area);147 and the protection of a view and prevention of traffic increase (a covenant prohibiting the building of more than one single-storey house on land).148 Practical benefit can be shown even if the dominant owner who objects to the application does not directly benefit, as where the retention of a good view over a neighbouring landscape would primarily be enjoyed by others.149

Substantial injury 13.50  A separate basis for an application to the court is that the modification or discharge will not cause substantial injury to the owner of the dominant land.150 A substantial injury is one that has real and present substance, but it need not necessarily be large or considerable.151 In Webster v Bradac,152 McLelland CJ in Eq described the extent of this ground as follows: The kind of injury contemplated in para (c) is injury to the relevant person in relation to his ownership of (or interest in) the land benefited. The injury may be of an economic kind, eg reduction in the value of the land benefited, or of a physical kind, eg subjection to noise or traffic, or of an intangible kind, eg impairment of views, intrusion upon privacy, unsightliness, or alteration to the character or ambience of the neighbourhood. … [I]t is clear that a person may be “substantially injured” within the meaning of para (c) notwithstanding that the value of his land would be unaffected or even increased by the proposed modification.

In Levi v Spicer,153 the court refused to modify a covenant that prohibited the construction of a colourbond structure on a part of the burdened land visible from the street on the basis that to do so would cause substantial injury to the owner of the benefited land. Palmer J held154 that ‘[i]njurious affectation to the appearance of the streetscape in which one’s house is seen’ can come within the concept of injury as outlined in Webster v Bradac. doubted in recent cases and the interpretation of the Victorian provisions would seem to have returned to that adopted in New South Wales: Prowse v Johnstone [2012] VSC 4 at [99]; Grant v Preece [2012] VSC 55 at [67]. 145. Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14,638. 146. Frasers Lorne Pty Ltd v Joyce Goldsworthy Burke [2008] NSWSC 743 at [17] per Brereton J. 147. Re Page’s Application (1996) 71 P & CR 440. 148. Re Lee’s Application (1996) 72 P & CR 439. 149. Gilbert v Spoor [1983] Ch 27. 150. Conveyancing Act 1919 (NSW) s 89(1)(c). 151. Frasers Lorne Pty Ltd v Joyce Goldsworthy Burke [2008] NSWSC 743 at [24] per Brereton J. 152. Webster v Bradac (1993) 5 BPR 12,032 at 12,035. 153. Levi v Spicer (2003) 11 BPR 20,927. 154. Levi v Spicer (2003) 11 BPR 20,927 at [23].

711

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Property Law in New South Wales

Suspension of covenants 13.51  Section  28(2) of the Environmental Planning and Assessment Act allows covenants to be overridden by, among other things, a council’s local environmental plan or development consent (in combination with a local environmental plan) to the extent that this is necessary to allow the development of land. However, the covenant is only suspended and not extinguished in this context.155

Reform Positive covenants and freehold land 13.52  The reasons for not allowing the enforcement of positive covenants beyond the parties to the original agreement, while allowing the enforcement of negative covenants, are obscure. A partial explanation for the distinction may be that relief would be available only in equity, and equity has historically been reluctant to grant an injunction that would amount to specific performance of a contract for which specific performance would not normally be granted, such as where there would be a need for continual judicial supervision of the order.156 That said, there would appear to be no absolute rule against the award of such an injunction.The court looks at the ‘overall justice of the matter’.157 Other areas of land law disregard the distinction between positive and negative obligations. For example, under the Strata Schemes Management Act 2015 (NSW), positive obligations may be imposed under by-laws enacted by the owners’ corporation, and the Act itself imposes many positive obligations on owners of units.158 Also, as we have seen, in landlord and tenant law the burden of positive covenants passes with the land on assignment of the lease and the reversion.159 An additional consequence of the failure of the burden of positive covenants to run in either law or equity is that an asymmetry exists in relation to the running of the benefit and burden, in a way that does not happen with easements, for example. The differential regimes for the passing of benefit and burden, in law and equity, add considerable complexity to this area of law. Turano has argued that the English equivalent to s 70A(1) of the Conveyancing Act,160 should be interpreted as a substantive change in the law, so as to annex all burdens to the land — in a way analogous to the recent interpretation of s 70(1) in relation to benefit.

155. For examples of conflicts between Local Environment Plans and restrictive covenants, see  Cumerlong Holdings Pty Ltd v Dalcross Properties Pty Ltd [2011] HCA 27; Lennard v Jessica Estates Pty Ltd (2008) 71 NSWLR 306.This provision has previously been dealt with in the context of easements: see further, 12.64. 156. Dal Pont, note 123 above, at 981–82 [31.55]. 157. Dal Pont, note 123 above, at 981–82 [31.55]. 158. For an overview of this legislation generally, see Chapter 9. 159. See 11.47–11.55. 160. L Turano, ‘Intention, Interpretation, and the “Mystery” of s 79 of the Law of Property Act 1925’ [2000] Conveyancer and Property Lawyer 377.

712



Freehold Covenants

13.53

Section 36C of the Conveyancing Act 13.53  As we have seen, the doctrine of privity of contract functions to impede the enforceability of covenants after assignment. The limited and uncertain ambit of s  36C of the Conveyancing Act stands in contrast to the analogous provision in Queensland. Under s 13(1) of the Property Law Act 1974 (Qld), a successor in title may receive the benefit even if he or she was not in existence or not identifiable when the covenant was made. Section 55 of the Queensland Act is also drafted more broadly than s 36C of the Conveyancing Act. Under s 55 of the Property Law Act, as long as the covenant was made for the benefit of any other person, that person may sue on it on acceptance of the promise. It would appear that this provision potentially gives rights to successors in title of covenantees for all covenants relating to land, whether they ‘touch and concern’ the land or not.161 Another model for any legislative reform in this area is the Contracts (Rights of Third Parties) Act 1999 (UK). Section 1 of that Act provides that a person may sue on a contract ‘in his own right’ if the contract expressly provides that he or she may do so, or if it ‘purports to convey a benefit on him’. Furthermore, if the contract expressly identifies the third party either by name, or as a ‘member of a class or as answering a particular description’, he or she may sue.162 Importantly, s 1(3) of the UK Act goes well beyond s 36C of the Conveyancing Act in allowing persons so identified to sue even if they are ‘not … in existence when the contract is entered into’. One plausible objection to the more expansive protection of covenants after assignments is that this might lead to more complex conveyancing searches. A counter-argument is that with the prevalence of the Torrens system, prospective purchasers can readily examine the benefits and burdens affecting the land. Also, in the absence of fraud, they take their interests free from covenants not noted on the title, so are protected from unregistered covenants. To the extent that covenants are obsolete, cause unreasonable inconvenience to landholders or cease to have any practical effect, there are statutory mechanisms for the extinguishment and modification of those covenants.

161. For a discussion of the possible effect of s 55 of the Property Law Act (Qld), see Bradbrook and Neave, Easements and Restrictive Covenants in Australia, note 13 above, p 282. 162. Contracts (Rights of Third Parties) Act 1999 (UK) s 1(3).

713

Chapter 14

Mortgages Introduction Nature of a mortgage 14.1  A mortgage is a type of security interest. Security interests can be divided into three main categories — that is, security by way of: 1. ownership; 2. charge; and 3. possession.1 Security by way of ownership involves the security holder gaining title to the property, but promising to reconvey it when the debt is repaid. Security by way of charge results in the security holder gaining rights over the property, such as the right to sell the property, but it does not give rise to the acquisition of title. Security by way of possession involves the security holder taking possession of the property while the debtor retains title.2 An example of a security by way of ownership is a mortgage of old system title land, while a mortgage of Torrens title land is an example of a security by way of charge. Land sold by instalment reflects the indicia of security by way of possession. 14.2  The term ‘mortgage’ is commonly used to refer to security interests in land that arise, as explained above, either by transfer of ownership or by charge. Not all security interests in land are mortgages. Sometimes security interests arise by operation of law. For example, a seller of land who transfers title to the buyer without receiving the entire purchase price has an equitable lien over the land. The seller has an equitable property right in the land, but does not have title to the land. Security interests may also be created in respect of chattels. Some of these may be similar in effect to mortgages of land as described above and the name ‘mortgage’ may be used. Other names that have been used 1. E Sykes and S Walker, The Law of Securities, 5th ed, Law Book Co, Sydney, 1993, pp 14–20. 2. Note that Wappett and Allan argue that the categories of securities are not closed: C Wappett and D Allan, Securities Over Personal Property, Butterworths, Sydney, 1999, p 2. They favour a ‘functional’ view of a security. See the listing of four categories of ‘proprietary interest by way of consensual security’ in Beconwood Securities Pty Ltd v Australia and New Zealand Banking Group Ltd (2008) 246 ALR 361 at [36].

715

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Property Law in New South Wales

are ‘bill of sale’ and simply ‘charge’. Other security interests, such as pledges, hire-purchases and possessory liens do not vest property rights in the party to whom the debt is owed, and they certainly do not transfer title.3 Legal practice in relation to security interests is bedevilled by inconsistent and confusing use of terminology. There is always a need to look behind the name given to a transaction to discover the substance of the rights and obligations that have been created. 14.3  This chapter will begin by briefly examining securities over chattels, because the legislation that grew out of this area eventually came to impact on certain mortgages over land. The main focus, however, is on mortgages over land, and in that regard the chapter will deal with topics including the history and creation of mortgages, as well as the rights and remedies of the mortgagee, and priorities.

Securities over chattels, hire-purchase, consumer credit law and the Personal Property Securities Act 2009 (Cth) (PPSA) 14.4  Historically, the common law acknowledged security interests over chattels as well as land, but security interests over chattels became less common following the advent of rather complex bills of sale legislation.4 Bills of sale legislation was introduced in England in 1854. A bill of sale was analogous to a mortgage of old system title land in that it involved a transfer of title to the chattel to the lender. The legislation sought to address fraud by preventing a lender from advancing money to a party who, although purporting to own goods that could provide security, had in fact secretly transferred those goods to another.5 The legislation, therefore, required that transactions which transferred title without possession be recorded publicly. It was complex and unwieldy legislation, particularly as it related to conditional bills (ie, bills used as security).6 The requirement of a public record also led to resistance, because borrowing money against chattels was thought to indicate severe financial embarrassment and many borrowers did not wish such information to be publicly available.7 Nevertheless, despite the difficulties in dealing with security interests over goods, this type of security interest came to operate in Australia too, and legislation reflecting the English bills of sale legislation was introduced in all Australian jurisdictions. Unfortunately, the Australian legislation was both ‘cumbersome’ and ‘unworkable’ from the creditor’s point of view.8 3. In Santley v Wilde [1899] 2 Ch 474 at 474, Lord Lindley MR refers to a mortgage as a conveyance or transfer of property as security for the payment of debt or the discharge of an obligation. 4. See Sykes and Walker, The Law of Securities, note 1 above, Ch 12; WD Duncan and L Willmott, Mortgages Law in Australia, 2nd ed, The Federation Press, Sydney, 1996, Ch  9. The first relevant legislation in New South Wales of this nature was the Sale of Goods Act 1898 (NSW). See also Monsell v Team Link Management Pty Ltd (1997) 8 BPR 15,401, which discusses the bills of sale legislation. 5. A Duggan and E Lanyon, Consumer Credit Law, Butterworths, Sydney, 1999, p 5. 6. Although a bill of sale was originally a document evidencing an absolute transfer, the term came to include a transaction permitting a secured party to seize the chattel. 7. See V Corr and S Begg, ‘Legal Aspects of Credit Plans of Financiers and Retailers’ (1964) 38 Law Institute Journal 366 at 367 for a detailed account of bills of sale legislation. 8. Duggan and Lanyon, Consumer Credit Law, note 5 above, p 4, outline the legislation’s shortfalls. See also K Sutton, Sales and Consumer Law in Australia and New  Zealand, 3rd ed, Law Book Co, Sydney, 1983,

716

Mortgages

14.5

The old Bills of Sale Act 1898 (NSW) was later repealed and replaced by the Security Interests in Goods Act 2005 (NSW). This legislation regulated agricultural mortgages (in Pt 2) and also security interests in other forms of personal property, although it left in place existing schemes for registration of security interests in motor vehicles and boats.9 A major difference from the previous legislation was that it was no longer compulsory to register a security interest in goods for the security arrangement to be valid. However, registration did confer priority over unregistered interests in the same goods, or those registered later in time.10 An unregistered security interest might still take priority over one that was registered, if the holder of the unregistered security interest took possession of goods before the registered security interest was registered. Parties could also agree between themselves about priorities.11 This legislation, and much other state legislation regulating security interests in goods, was superseded by the new national PPSA.12 14.5  The PPSA, which commenced operation on 30  January  2012, is a replacement for a range of separate schemes that governed security interests over different forms of personal property.13 It was modelled, in part, on similar legislation from the United States (Article 9 of the Uniform Commercial Code (US)), Canada (mostly uniform separate provincial laws), and New Zealand (Personal Property Securities Act 1999 (NZ)).14 The PPSA is federal legislation, constitutionally supported by a reference of powers from all of

9.

10. 11. 12. 13.

14.

pp 330–53; A Moore, S Grattan, and L Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, 6th ed, Lawbook Co, Sydney, 2016, pp 401–2. See the Registration of Interests in Goods Act 1986 (NSW). Under s 3 of that Act, motor vehicles were ‘prescribed goods’, and, in combination with cl 10 of the Registration of Interests in Goods Regulation 2004 (NSW), so were boats. Section 5(3) of the Security Interests in Goods Act provided that that Act did not apply to ‘prescribed goods’ within the meaning of the 1986 legislation. Security Interests in Goods Act 2005 (NSW) s 31(1), (2). Security Interests in Goods Act 2005 (NSW) s 31(3), (4). The Security Interests in Goods Act 2005 (NSW) was repealed by s 4 of the Personal Property Securities (Commonwealth Powers) Amendment Act 2009 (NSW) with effect from 30 January 2012. For extended comment, see A Duggan and D Brown, Australian Personal Property Securities Law, 2nd ed, LexisNexis Butterworths, Australia, 2016; C Wappett, Essential Personal Property Securities Law in Australia, 3rd ed, LexisNexis Butterworths, Australia, 2015. See also V Barns-Graham and L Gullifer, ‘The Australian PPS Reforms: What Will the New System Look Like?’ (2010) 4(4) Law and Financial Markets Review 394; JGH Stumbles, ‘The PPSA: the Extended Reach of the Definition of the PPSA Security Interest’ (2011) 34(2) University of New South Wales Law Journal 448; A Bradbrook, S MacCallum, A Moore, S Grattan and L Griggs, Australian Property Law: Cases and Materials, 4th ed, Lawbook Co, Pyrmont, 2011, pp 210–16. There are detailed explanations of the system linked at Australian Financial Security Authority, About the PPSR (accessed 4 June 2017), . For a judicial overview, see the comments of Ward JA in Power Rental Op Co Australia, LLC v Forge Group Power Pty Ltd (in liq) (recs and mgrs apptd) [2017] NSWCA 8 at [41]–[56]. Hence, interpretation of provisions in similar legislation in those jurisdictions is likely to influence the Australian courts in their reading of the PPSA: see, for example, comments by Brereton J in one of the first substantial judicial comments on the legislation, Re Maiden Civil (P&E) Pty Ltd; Albarran v Queensland Excavation Services Pty Ltd (2013) 277 FLR 337 at  [32]. See  also, on interpretation of the legislation generally, S McCracken, ‘Personal Property Securities Legislation: Analysing the New Lexicon’ (2014) 35 Adelaide LR 71–95.

717

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Property Law in New South Wales

the individual states.15 It covers both tangible and intangible interests.16 It does not cover interests in land, of course, which are still regulated by the law on real property mortgages that we will be discussing in the rest of this chapter.17 Ward JA in Power Rental Op Co Australia, LLC v  Forge Group Power Pty Ltd (in liq) (recs and mgrs apptd)18 described the general nature of the legislation as follows: [T]he ‘mischief ’ that the PPSA was intended to address was the uncertainty and complexity of the various statutory and common law regimes applicable to security interests in personal property. The legislature sought to ameliorate this by providing a new national system of registration of interests of that kind and introducing a system of default rules to determine, among other things, priorities in respect of interests in personal property.19

14.6  The PPSA is challenging for the casual user, as it introduces very specific terminology that is not always consistent with prior usage. The PPSA contains a wide definition of ‘security interest’ in s 12(1) of the Act, referring to ‘a transaction that, in substance, secures payment or performance of an obligation’, although s 8 excludes certain types of interests from the operation of the Act. The party who has sought the benefit of funds, who might elsewhere be called a ‘debtor’, is usually described as the ‘grantor’ under the PPSA, as they will have ‘granted’ a security interest to the ‘secured party’ (who would previously have been called the ‘creditor’). The personal property the subject of the interest is described as ‘collateral’ when a security interest has been ‘attached’ to it. At that stage, it is enforceable as against the grantor.20 If the security interest is to be enforced against a third party, not the grantor, then the provisions of s 20 of the PPSA must be satisfied, which requires one of three things; namely, that the secured party possesses the collateral, that the security has been ‘perfected’ or that there is a security agreement that complies with s 20(2). For a security to be ‘perfected’, the requirements of s 21 have to be met. ‘Perfection’ requires that the interest has been attached, that it is enforceable against third parties, and that further steps spelt out in s  21(2) have been taken. The most common of these will be the registration of a ‘financing statement’ on the Personal Property Securities Register (PPSR).21 While the PPSA itself prescribes no time limits for registration, it should be noted that in the case of a corporation seeking to perfect a security interest, s 588FL of the Corporations Act 2001 (Cth) effectively imposes time limits on registration. If registration 15. For New  South  Wales, for example, see  the Personal Property Securities (Commonwealth Powers) Act 2009 (NSW). 16. While there is no separate definition of ‘property’ in the PPSA, various provisions of the Act assume that ‘intangible property’ can be the subject of a security arrangement. See, for example, s 6(2) of the PPSA, which defines the relevant connection with Australia required for such property. 17. See the definition of ‘personal property’ in s 10 of the PPSA: ‘property … other than (a) land’. It should also be noted that in general interests created by way of seeking equitable relief from a court will not be regulated by the Act. See National Australia Bank Ltd v Garrett [2016] FCA 714 at [32]. 18. Power Rental Op Co Australia, LLC v Forge Group Power Pty Ltd (in liq) (recs and mgrs apptd) [2017] NSWCA 8. 19. Power Rental Op Co Australia, LLC v Forge Group Power Pty Ltd (in liq) (recs and mgrs apptd) [2017] NSWCA 8 at [83]. 20. For conditions to be satisfied for attachment to occur, see s 19(2) of the PPSA. In brief, the grantor must have rights in the collateral and value must be given for the security interest, or the grantor must do an act by which it arises. 21. See Pt 5.3 of the PPSA.

718

Mortgages

14.7

does not take place within the required time, the company risks that the security interest will not be vested in the company for the purposes of insolvency.22 Another feature of the legislation is that s 55 of the PPSA sets out the priority to be afforded to competing claims in security interests, which will be relevant in cases of insolvency. In particular, under s 55(3) a ‘perfected’ interest will have priority over one that is unperfected. In Re Maiden Civil (P&E) Pty Ltd; Albarran v Queensland Excavation Services Pty Ltd,23 three large construction vehicles were being leased by Maiden Civil from Queensland Excavation Services (QES).24 In need of finance, Maiden Civil then borrowed funds from a finance company and granted it a security interest, including the vehicles. (Despite only having a leasehold interest in the property, Brereton J noted that, under s  19(5) of the PPSA, Maiden Civil had ‘rights’ to which a security interest could attach.)25 The finance company, Fast, registered its agreement in the PPSR. On Maiden Civil’s insolvency, Fast’s registered security interest was found to take priority over QES’s ownership of the goods. The fact that legal title was still with QES did not overcome the PPSA scheme for priority set out in s 55 of the Act.26 As previously noted, certain types of interests are excluded from the operation of the PPSA, so s 55 does not provide an exhaustive scheme for priority between securities in relation to personal property. Section 73 is an attempt to set out rules governing priority disputes between security interests governed by the PPSA and non-PPSA interests.27 14.7  There are a number of important features of the PPSA regime that impact on the traditional rules relating to property. Perhaps the most significant feature is that security arrangements over goods are covered by the PPSA if the granting of security is the 22. Corporations Act 2001 (Cth) s 588FL(4). For a case where these provisions operated, see Re Kaizen Global Investments Ltd v Australia New Agribusiness & Chemical Group Ltd (in liq) [2017] FCA 431. An application under s 588FM of the Corporations Act to extend the time for registration of the security interest was refused in that case — although it was accepted that the failure to register in time was due to ‘inadvertance’, the company had gone into liquidation and making an order for late registration would adversely affect the interests of unsecured creditors: see Kaizen Global Investments at [93]. See also Re Appleyard Capital Pty Ltd (2014) 101 ACSR 629, where Brereton J dealt with an earlier application under the same provision. 23. Re Maiden Civil (P&E) Pty Ltd; Albarran v Queensland Excavation Services Pty Ltd (2013) 277 FLR 337. 24. Re Maiden Civil (P&E) Pty Ltd; Albarran v  Queensland Excavation Services Pty Ltd (2013) 277 FLR 337 at [32]. 25. Re Maiden Civil (P&E) Pty Ltd; Albarran v  Queensland Excavation Services Pty Ltd (2013) 277 FLR 337 at [26]. 26. QES also argued that it had the benefit of a ‘transitional security interest’ under provisions designed to temporarily allow recognition of arrangements made prior to commencement of the PPSA. See PPSA ss 308, 311 and 320. However, it failed on this argument because Brereton J ruled that there was a prior registration scheme in place that QES could have used to record its interest, and failure to use that scheme meant that it did not have a recognised transitional interest. See PPSA s 322(3), picking up reg 9.2 of the Personal Property Securities Regulations 2010 (Cth) (noted in Re Maiden Civil (P&E) Pty Ltd; Albarran v Queensland Excavation Services Pty Ltd (2013) 277 FLR 337 at [48]). 27. For a discussion of priority disputes between PPSA security interests and non-PPSA interests and whether, in particular, the general law has been entirely superseded, see A Waldman,‘Resolving Priority Competitions between PPSA Security Interests and non-PPS Interests’ (2021) 44 University of New  South  Wales Law Journal 811.

719

14.7

Property Law in New South Wales

underlying purpose or ‘substance’ of a dealing, even if the form of the dealing does not resemble arrangements previously used for such purposes. As previously noted, the PPSA contains a wide definition of ‘security interest’. The form of the transaction or whether or not someone has ‘title’ to property is explicitly said not to be significant.28 But the Act goes even further, by deeming certain transactions to be ‘security interests’ whether or not they are even ‘in substance’ intended to function as security. In particular, under s 12(3)(c) of the PPSA, ‘the interest of a lessor or bailor of goods under a PPS lease’ is deemed to be a security interest. A ‘PPS lease’ includes, under s 13 of the PPSA, a lease or bailment of goods for a term of more than two years or an indefinite term, which actually extends beyond two years.29 (Note that there are some arrangements of this description that are deemed not to be PPS leases. These include where the lessor or bailor is not ‘regularly engaged in the business’ of leasing or bailment, under s 13(2)(a), or where the bailment is not for value, under s 13(3).) 14.8  The impact of s 12(3)(c) of the PPSA can be quite serious, when the effect of s 267 of the PPSA is taken into account. Under s 267, when the ‘grantor’ of a security interest is wound up, liquidated or becomes bankrupt, and that security interest is not ‘perfected’, it is deemed to ‘vest’ in the grantor immediately before the relevant insolvency event. The effect is that the relevant personal property will become available for distribution in the insolvency to creditors, and the secured party will lose the benefit of their security. This provides a strong incentive for the registration of interests in the PPSR. The loss of an unperfected security interest is an understandable outcome in the case of a ‘genuine’ security interest, but it seems to have operated oddly in cases where there has been a ‘deemed’ security interest created by the PPS lease provisions noted above in 14.6. In Power Rental Op Co Australia, LLC v  Forge Group Power Pty Ltd (in liq) (recs and mgrs apptd),30 the equipment leasing company GE had intended to lease some mobile gas turbines to Forge Group for a period exceeding one year (the then-relevant time limit). Power Group subsequently stepped into the shoes of GE as lessor. When Forge Group became insolvent, the operation of s 267 was to deem the turbines to have become the property of Forge, with the consequence that the successor of GE lost its security in the turbines altogether.

28. See PPSA s 12(1). See also Brereton J’s comment in Re Maiden Civil (P&E) Pty Ltd; Albarran v Queensland Excavation Services Pty Ltd (2013) 277 FLR 337 at [35], adopting similar remarks from Canadian cases: the ‘dispute cannot be resolved through the determination of who has title to the collateral, because the dispute is one of priority, not ownership’. 29. Note that, for leases or bailments entered into prior to 20 May 2017, the term that led to the arrangement being a deemed security interest was only one year. The relevant amendment was made by the Personal Property Securities Amendment (PPS Leases) Act  2017 (Cth), which commenced operation on 20 May 2017. The second reading speech for the amending legislation indicated that concerns had been raised that the shorter period created a serious burden on small equipment hire businesses, for reasons discussed below when considering the impact of s  267 of the PPSA and related provisions. See Commonwealth of Australia, Parliamentary Debates, House of Representatives, 1 March 2017, 1883–4 (Hon Michael Keenan). 30. [2017] NSWCA 8.

720

Mortgages

14.11

14.9  A number of personal property interests are excluded from the operation of the Act under s 8 of the PPSA. These include ‘fixtures’.31 The term ‘fixtures’ is defined in s 10 as ‘goods, other than crops, that are affixed to land’. In Power Rental, the New South Wales Court of Appeal had to determine whether the term as defined was intended to bear its general common law meaning (for a discussion of the general law of fixtures, see 2.16ff), or a narrower meaning simply based on some form of physical ‘affixation’. Ward JA, for the court, held that Parliament had intended to pick up the common law definition.32 As a result, applying the common law principles, it was held that the turbines in question were not ‘fixtures’; the result was that the PPSA applied to the transaction, and for the reasons noted above (in 14.7), Power Rental lost its priority in the relevant insolvency process. 14.10  One issue that has seen some confusion has been the proper identification of parties for the purposes of the PPSR. In Re OneSteel Manufacturing Pty Ltd (admins apptd),33 Brereton J held that where the registration of a security interest had been made using the ‘Australian Business Number’ (ABN) of the grantor, rather than its ‘Australian Company Number’ (ACN), the registration was ineffective. As the interest of a leasing company in expensive crushing equipment had not been ‘perfected’ (due to this defective registration), prior to the insolvency of OneSteel, the equipment vested in the liquidators and the leasing company lost its security pursuant to s 267 of the PPSA (see 14.7).34 His Honour also rejected a wider argument that this vesting amounted to an ‘acquisition of property’ on unjust terms contrary to s 51(xxxi) of the Commonwealth Constitution.35 14.11  The PPSA sets out a number of situations where a third party acquiring personal property may ‘take free of ’ any relevant security interests, in Pt 2.5 s 42ff. Some of the main situations are where a purchaser of an ‘unperfected’ security interests takes for value (s 43), where property items required to be described by a serial number are misdescribed and would not be discovered on a search (s 44), or a sale of a chattel in the ordinary course of business (s 46). Reference should also be made to the enforcement provisions of the PPSA contained in Ch 4 (ss 107–144). Enforcement mechanisms include notice provisions, seizure and disposal of chattels, or retention and purchase in appropriate cases. The enforcement mechanisms are only available in the case of ‘true’ security arrangements,

31. PPSA s 8(1)(j). 32. Power Rental Op Co Australia, LLC v Forge Group Power Pty Ltd (in liq) (recs and mgrs apptd) [2017] NSWCA 8 at [103]–[105]. 33. Re OneSteel Manufacturing Pty Ltd (admins apptd) [2017] NSWSC 21. 34. A similar result followed in Re Production Printing (Aust) Pty Ltd (in liq) [2017] NSWSC 505. Note that after the trial decision in OneSteel, and before a foreshadowed appeal could be heard, the parties settled their dispute by agreeing to enter into a new arrangement whereby the OneSteel business would re-transfer the crushing plant, take a new lease, and the leasing company would gain a new, valid, security interest. See Alleasing Pty Ltd; Re OneSteel Manufacturing Pty Ltd v OneSteel Manufacturing Pty Ltd [2017] FCA 656, where a judge of the Federal Court approved an extension of time for registration of the relevant security interest to allow these arrangements to proceed. 35. See the detailed consideration of this argument in Re OneSteel Manufacturing Pty Ltd (admins apptd) [2017] NSWSC 21 at [42]–[64]. A similar argument was rejected by Le Miere J in White v Spiers Earthworks Pty Ltd (2014) 99 ACSR 214 at [39]–[40].

721

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however, and are not applicable to PPS leases that do not actually secure payment or performance of an obligation (see s 109(1)(c)). 14.12  In the consumer credit sphere, in the early to mid-1800s, both in Europe and the United States of America, the hire-purchase agreement gained a foothold. It became the most common form of purchasing chattels for those without immediate funds to cover the total purchase price. Interestingly, however, the hire-purchase arrangement did not have its genesis in providing the opportunity for the poor to purchase goods in a more flexible way. Instead, its roots lay in the activities of the European nobility.36 14.13  The popularity of the hire-purchase arrangement spread to Australia. Hirepurchase agreements became and remained popular for the best part of a century, but their popularity declined, particularly after the introduction of discriminatory stamp duties legislation.37 The result of this legislation was to push lenders into other forms of credit, one of which was the unregistered chattel mortgage.38 Further, largely as a result of the work of the Rogerson and Molomby Committees — and inspired by the United States’ Consumer Protection Act 1968, known as the ‘Truth in Lending’ Act — changes to consumer credit law were recommended and took place.39 For example, the Credit Act 1984 (NSW) broadly incorporated many of the recommendations contained in these reports. Although the Credit Act was part of a positive attempt to develop a uniform credit code, the legislation had its weaknesses and in 1993 New South Wales, along with the other states and territories, entered into the Australian Uniform Credit Law Agreement. The aim of this agreement was to introduce uniform credit legislation based on a template. As a result, in most Australian jurisdictions, uniform consumer credit legislation was in place from 1 November 1996. In New South Wales, the relevant legislation was the Consumer Credit (New South Wales) Act 1995 (NSW). It incorporated the Consumer Credit Code contained in an appendix to the Consumer Credit (Queensland) Act 1994 (Qld) and the Regulations. More recently, however, there has been a further shift that has seen consumer credit regulated since 1 July 2010 under federal law, the National Consumer Credit Protection Act 2009 (Cth), which contains the ‘National Credit Code’ (NCC) in a Schedule. In 36. Sykes and Walker, The Law of Securities, note 1 above, pp 539–45.The origins of hire-purchase date back to country-based European nobility, who leased furniture in their town homes. By 1800, they were also given the opportunity to purchase the furniture instead of merely leasing it. This rental-purchase arrangement was the beginning of hire-purchase. See the Report of the Committee on Consumer Credit, Command 4596, OHMS, London, 1971, known as the ‘Crowther Committee Report’. 37. Duggan and Lanyon, Consumer Credit Law, note 5 above, p 10. 38. See Roberts v IAC (Finance) Pty Ltd [1967] VR 231. 39. Committee of the Adelaide Law School, Report to the Standing Committee of State and Commonwealth Attorneys-General on the Law Relating to Consumer Credit and Money Lending, South Australian Government Printer, Adelaide, 1969 (known as the ‘Rogerson Report’); Committee of the Law Council of Australia, Report to the Attorney-General for the State of Victoria on Fair Consumer Credit Laws, Victorian Government Printer, Melbourne, 1969 (known as the ‘Molomby Report’); Committee of the Law Council of Australia, Supplementary Report on Fair Consumer Credit Laws to the Attorney-General for the State of Victoria, Mineo, 1973 (known as the ‘Molomby Committee Supplementary Report’).

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particular, there are now a number of rules governing common forms of lending that have seen consumers take on obligations without properly understanding them.40 Since 1 January 2012, there are now also obligations on both credit card providers and those providing home loan mortgages to provide a ‘Key Facts Sheet’ before the transaction is entered into.41 The NCC applies to chattels and mortgages over land, where the mortgagor (the person taking out the loan) is a person or a strata corporation who is acquiring the goods wholly or predominantly for personal, domestic or household use, the mortgage secures obligations under a credit contract or guarantee, and the mortagee is in the business of providing credit.42 The loan must be made in the course of the lender’s business in order to come under the NCC, which applies where the loan is wholly or predominantly for personal, domestic or household purposes.43 Unlike the previous Code, the NCC will also apply to loans for purchase, renovation or improvement of residential investment properties.44 The NCC, therefore, will extend to the mortgage (or guarantee) for a loan if the loan is secured by a domestic residence or vacant block of land that is purchased for residential occupation, or for investment purposes. The mortgage will also need to be in writing and signed by the mortgagor if the NCC is to apply.45 Further, it is possible for it to cover both fixed mortgages and reducible loans. The NCC is applicable where the lender is a party who operates as a business, even though the consumer or borrower does not. There may be situations where the NCC applies to a ‘security interest’ covered by the PPSA. Note that arrangements previously described above as ‘hire purchase’ are now regulated as ‘security interests’ under the PPSA.46 The interaction between the NCC and the PPSA is governed by s 119 of the PPSA, which provides that the Regulations may deem certain requirements of Ch 4 of the PPSA to have been satisfied by compliance with equivalent provisions of the NCC.47 The NCC will be relevant to consumer mortgages of real estate in various ways, which will be briefly noted in the remainder of this chapter.

40. For an overview, see B Taylor, ‘New Responsible Lending Requirements’ (2011) 26(10) Australian Banking and Finance Law Bulletin 158. 41. See Pts 3-2A and 3-2B of the National Credit Code, inserted by the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Act 2011 (Cth). 42. See NCC ss 3, 7. For comment see Bradbrook, MacCallum, Moore, Grattan and Griggs, Australian Property Law: Cases and Materials, note 13 above, p 207; B Edgeworth, Butt’s Land Law, 7th ed, Lawbook Co, Sydney, 2017, p 677 [11.220]; E Webb, ‘The Response of the Australian Legislature and Courts to Predatory Lending and Other Unconscionable or Oppressive Practices Involving Real Property Mortgages’ in LB Moses, B Edgeworth and C Sherry, Property and Security: Selected Essays, Lawbook Co, Pyrmont, 2010, pp 89–126 (an overview of the previous law and comments on the then draft NCC). 43. NCC s 5(1)(b)(i), (d). 44. NCC s 5(1)(b)(ii), (iii). 45. NCC s 14(1). Although, note that under s 15 of the NCC the Regulations may provide that the Code will apply to other forms of credit agreement. If a mortgage is not signed and in writing, s 42 of the NCC means that it cannot be enforced by the mortgagee. 46. See PPSA s 12(2)(e). 47. See Personal Property Securities Regulations 2010 (Cth) Pt 4.

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Mortgages over land History 14.14  The term ‘mortgage’ derives from Old French, where ‘mort’ meant dead and ‘gage’ meant pledge. Early forms of mortgages were known as ‘pledges’ or ‘gages’.48 They pledged land to the creditor, who went into possession. Under some pledges, the creditor was obliged to use the income from the land in order to pay off the debt that was secured by the pledge. Under other pledges, the creditor in possession was entitled to retain the income as a form of interest payment. This latter method meant that the principal under the debt was never reduced, and the arrangement was known by the Latin phrase mortuum vadium. In essence, this meant a ‘dead pledge’.49 By the mid-13th century, the pledge often took the form of the creditor taking a lease of the land. If the debt were not repaid on expiration of the lease, the creditor acquired the fee simple estate. Of course, this meant that, while the lease was in operation, the creditor did not hold seisin, because he or she was merely a lessee. Without seisin, he or she did not have access to the real actions.50 This disadvantage was overcome when the mortgage was refined so that it operated as a form of conveyance that, on payment of the debt by the debtor, permitted the debtor a right of re-entry. Further refinement took place, so that, by the 17th century, the property was conveyed to the creditor but with a right to reconveyance, on repayment of the debt, on the due date. The conveyance to the creditor was defeasible by the condition subsequent relating to repayment.The mortgage had been shaped into a conveyance, with a proviso for reconveyance or a proviso for redemption. As a result, the basis for old system mortgages was formed. The old system mortgage that was popular in Australia now, in the main, has been replaced by mortgages operating under the Torrens system.51 Where land has not yet been brought under the Torrens scheme, old system mortgages may still operate. It is also vital to understand old system mortgages as part of the background to those under the Torrens system. It has been suggested, for example, that where unregistered mortgages of Torrens system land are involved, the court may need to look to the ‘practice and principles which were developed in accordance with old system land’ to find appropriate remedies.52

48. For a detailed account of the mortgage and its development from a pledge or ‘gage’ into a mortgage, see TFT Plucknett, A Concise History of the Common Law, 5th ed, Little, Brown & Co, Boston, 1956; Bracton, The Laws and Customs of England, circa 1256, cited in Edgeworth, note 42 above, p 663; Sir Thomas Littleton, Les Tenures de Monsieur Littleton, 1621; E Coke, The First Part of the Institutes of the Laws of England or A Commentary upon Littleton, 19th ed, in the possession of the Bodleian Law Library, Oxford. 49. AWB Simpson, A History of Land Law, 2nd ed, Clarendon Press, Oxford, 1986, p 141. 50. See 3.40ff for discussion of the difference between leasehold and freehold estates. 51. See Chapter 8. 52. Campbell J in King Investment Solutions v Hussain [2005] NSWSC 1076 at [44].

724

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Old System Title Mortgages Creation of legal and equitable mortgages over freehold land 14.15  A mortgage of land under old system title may be either legal or equitable. If it is an equitable mortgage, it may in turn be either an equitable mortgage of legal property or an equitable mortgage of equitable property. These different scenarios are explored below. 14.16  Under old system title, a legal mortgage involves the mortgagor (borrower) conveying his or her legal estate in land to the mortgagee (lender) as security for money borrowed. As part of the arrangement, the mortgagee agrees to reconvey the mortgagor’s title to the property when the debt is repaid in full, including any interest and charges owed. The key sections of the Conveyancing Act 1919 (NSW) are s 7 (which defines a conveyance as including ‘any assignment, appointment, lease, settlement, or other assurance by deed of any property’) and s 23B (which sets out the requirement of a deed). Section 38 (which relates to the signature and attestation of deeds) and s 46 (which provides that the word ‘grant’ is unnecessary to convey land) are also relevant. Historically, it was quite usual for the repayment date to be set very soon after the loan had been granted (eg, six months later). Not surprisingly, few mortgagors could repay so quickly and hence they fell into default. Such circumstances were advantageous to the mortgagee because, at law, the mortgagor lost the right to have his or her title reconveyed. In these circumstances, equity would intervene in order to temper the rigours of the common law. Its approach was to see the transaction as one by which security was provided to the mortgagee. Once the debt had been repaid, the security was no longer necessary, and the mortgagee had to release his or her hold over title to the mortgagor’s land. 14.17  As an old system legal mortgage requires the mortgagor to pass legal title in the property to the mortgagee, no second mortgage of the legal estate is possible, because of the principle nemo dat quod non habet: the mortgagor, having transferred his or her legal estate, has nothing left to transfer except his or her equity of redemption. Hence, that is all that can be mortgaged under a second or subsequent mortgage. The mortgagor retains an equity of redemption, subject to the first (legal) mortgage and subject to the second (equitable) mortgage.The second mortgage is an example of an equitable mortgage of equitable property. It is also possible for the mortgagor to create a third or subsequent (equitable) mortgage, because the original mortgagor retains an equity of the equity of redemption, albeit one that is diminished or charged by earlier mortgages. The earlier mortgages do not result in the complete loss of the equity of redemption. Where the conveyance of the legal interest is incomplete, the mortgagee can, at best, acquire rights in equity, also known as an ‘equitable mortgage’. For example, if a deed has not been properly executed, but writing exists in the form of an express or implied contract signed by the party to be charged, an equitable mortgage may be found, on the basis of sufficient intention to create a security over legal property.53 If there is an express agreement to create a mortgage, evidenced in writing and accompanied by consideration, 53. National Provincial and Union Bank of England v Charnley [1924] 1 KB 431.

725

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Property Law in New South Wales

equity will uphold the agreement as a mortgage — applying the Walsh v  Lonsdale54 principle, which enforced the maxim that equity looks on that as done which ought to be done.55 This situation provides an example of an equitable mortgage of legal property. A mortgage by deposit of title deeds is another example of an equitable mortgage. It can be understood as a specific application of the doctrine of part performance.56 If there is a debt and the borrower hands over title deeds to a lender, an equitable mortgage will be created, subject to evidence of any contrary intention. This is the case despite the fact that the handing over of the title deeds may well be intended as a step preliminary to the creation of a legal mortgage. The result is that the equitable mortgage secures the existing debt.57 Redemption is another concept essential to an understanding of old system mortgages. It is the right of the mortgagor to redeem his or her interest from the mortgagee. Foreclosure is a related concept and is discussed later in this chapter. It extinguishes the right of redemption.

Mortgage of leasehold 14.18  A mortgage of leasehold land may arise by virtue of an assignment of the whole unexpired term of the lease, combined with a proviso for redemption, or it may arise by virtue of a sublease. The first method has the effect of imposing restrictions on the mortgagee, because it makes the mortgagee the assignee of the mortgagor’s leasehold interest. A mortgage by this method requires a deed and binds the mortgagee to the covenants in the original lease.58 Some of the disadvantages that flow as a result of this have been tempered by the operation of s 78(1)(D) of the Conveyancing Act, which implies a series of covenants, such as those stating the lease is valid, all rents have been paid and all other covenants performed. Despite the improvements achieved by s 78(1)(D), the latter method of creating a mortgage of leasehold land (ie, by sublease) has remained more popular than a mortgage by way of assignment. 54. Walsh v Lonsdale (1882) 21 Ch D 9. 55. See, for example, Allen’s Asphalt Pty Ltd v SPM Group Pty Ltd [2010] 1 Qd R 202 per Muir JA at [47]. 56. Sporle v Whayman (1855) 20 Beav 607; 52 ER 738 suggests that a mortgagee whose mortgage has been acquired by virtue of deposit of title deeds can require that a memorandum also be created for the purposes of evidence. See Russel v Russel (1783) 1 Bro CC 269; 28 ER 1121. Section 23C of the Conveyancing Act requires writing for the creation of an equitable mortgage. An exception is where there are sufficient acts of part performance to create an equitable mortgage pursuant to ss 23E and 54A(2) of the same Act. See ANZ Banking Group Ltd v Widin (1990) 26 FCR 21; Drulroad Pty Ltd v Gibson (1992) 5 BPR 11,878 at 11,882. 57. For discussion of equitable mortgages created by deposit of title deeds, see the High Court decision in Theodore v Mistford Pty Ltd (2005) 221 CLR 612. Hepburn explores the complications involved when the title deeds are those of a third party: S Hepburn, ‘Reconsidering the Scope of the Equitable Mortgage Arising from Deposit of Title Documents’ (2006) 80 Australian Law Journal 121. It should be noted, however, that where the NCC applies, an enforceable mortgage must be in writing signed by the debtor — see s 42(4) of the NCC. The courts are yet to consider whether equity would deem there to be a mortgage contrary to the NCC. M Bransgrove and M Young, The Essential Guide to Mortgage Law in New South Wales, 2nd ed, LexisNexis Butterworths, Australia, 2014, [1.38], note that it is also not clear whether indefeasibility of a registered Torrens system mortgage would override s 42(4) of the NCC or not. 58. See the reasoning in Spencer’s Case (1583) 5 Co Rep 16a; 77 ER 72.

726

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Mortgages by sublease operate by way of grant to the mortgagee of a term, just short of the residue, of the lease. The sublease usually also contains a proviso, the effect of which is to cause a surrender by the mortgagee on repayment of the debt. The benefit of this method is that the mortgagee, in obtaining a sublease, is not liable for the covenants in the original headlease. Although there are some disadvantages as well (not the least of which is that, if the headlease is forfeited because a covenant has been breached, the sublease will fall with it), these have largely been overcome by statute. For example, s  130 of the Conveyancing Act mitigates the problems concerning forfeiture of the headlease by granting the court a discretion to grant relief, while s 112(2) overcomes another disadvantage where, in the case of breach, the mortgagee wishes to exercise the power of sale, but is impeded by his or her inability to pass the whole leasehold interest to the purchaser. This latter section allows the mortgagee to convey the reversion that is in the mortgagor’s hands.59

Torrens Title Mortgages Creation of registered and unregistered mortgages over freehold land 14.19  A mortgage under the Torrens system of land-holding operates by way of a statutory charge or security for the debt being entered into, and must be executed in an approved form.60 It does not operate as a transfer of the land mortgaged or charged. However, once registered, the mortgagee receives all the benefits of indefeasibility of title, despite the fact that the charge does not amount to an estate in land.61 A registered mortgage of Torrens title land is not the equivalent of a legal mortgage of old system land, because the mortgagee does not acquire the mortgagor’s legal title to the land, but rather acquires a legal interest in the form of a charge.62 That a mortgagor under the Torrens scheme does not transfer his or her title to the mortgagee means that there is nothing preventing him or her from creating a string of subsequent registered or unregistered mortgages. Subsequent mortgages under the Torrens scheme are not limited to mortgages of a mere equitable interest, as they are under old system title. Instead, a subsequent mortgage under the Torrens scheme operates by way of a charge over the registered interest in the same way as the original mortgage operates. However, express terms in the original mortgage may prohibit the creation of subsequent mortgages. A breach of such a prohibition would not result in the subsequent mortgage being invalid but, rather, in a breach of the terms of the original mortgage, with all the

59. Another disadvantage relating to the disclaimer of the lease in the case of bankruptcy has now been overcome by the operation of s 133(9) of the Bankruptcy Act 1966 (Cth). 60. Real Property Act 1900 (NSW) ss 56(1), 57. As to whether a Torrens title transfer in absolute form, but intended to be by way of mortgage only, is registrable, see 14.145. 61. Lyons v Lyons [1967] VR 169. 62. Real Property Act 1900 (NSW) ss 56(1), 57(1). See also E S & A Bank v Phillips (1937) 57 CLR 302; King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076 at [52]–[53].

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consequences of that breach.63 Further, it is also the case that an equitable mortgage of Torrens title land can still be created. It can be in the form of an equitable mortgage of a registered interest in property, or an equitable mortgage of equitable property. Equitable mortgages are governed by the provisions of the Conveyancing Act 1919 (NSW) while registered mortgages are governed by the Real Property Act 1900 (NSW). 14.20  Equitable mortgages of registered interests in Torrens title property may be created by various methods. Sometimes (incorrectly) called ‘equitable mortgages of legal estates’, these methods include: • the completion and execution of a mortgage instrument in statutory form that is not registered;64 • an implied agreement to give a mortgage, such as a deposit of the Folio of the Torrens Register as security for money advanced;65 and • the express but informal agreement to give a mortgage.66 An example of an equitable mortgage of an equitable interest in Torrens title property would be the mortgage of a beneficiary’s interest in Torrens title property held under a trust. An equity of redemption also exists under the Torrens system, although this is technically an incorrect use of the term imported from old system title, as the position of the Torrens title mortgagor is not really analogous to the position of the old system title mortgagor.67 For example, as noted previously, on entering into a mortgage, the mortgagor of Torrens title land does not convey his or her title, so he or she never has to redeem that title on repayment of the debt.68 Unlike the mortgagor of old system land, the Torrens mortgagor is effectively left with more than an equity of redemption. He or she is left with a title over which there is a charge. Of course, to the extent that the Torrens mortgagor is able to seek the assistance of equity in enforcing rights similar to those held by a mortgagor of

63. For a consideration of this issue in the context of tacking and advances, see Matzner v Clyde Securities Ltd [1975] 2 NSWLR 293 and Hopkinson v Rolt (1861) 9 HL Cas 514; 11 ER 829. 64. Barry v Heider (1914) 19 CLR 197; J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546; Windella (NSW) Pty Ltd v  Hughes (1999) NSW ConvR ¶55–926. Note that this type of equitable mortgage requires the mortgage to be in registrable form and any muniments of title to be handed over. 65. Generally, the Folio of the Register will be deposited with the title deeds. See New South Wales Conveyancing Law and Practice, CCH, loose-leaf, ‘Mortgages’, [32-055]. The principles applicable to old system title also apply here. 66. See New South Wales Conveyancing Law and Practice, CCH, loose-leaf, ‘Mortgages’, [32-055]. 67. The wording of s 60 of the Real Property Act (which, for the purposes of that section, equates a mortgage of a legal interest in land with a mortgage of a Torrens interest) indirectly recognises a distinction between a legal mortgage of old system land and a registered mortgage of Torrens system land.Yet it is worth noting that Kitto J in Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265 consistently uses the term throughout his judgment. 68. In Forsyth v Blundell (1973) 129 CLR 477, Walsh J discusses how the mortgagor’s rights under the Torrens scheme, although greater than an equity of redemption, can be burdened by the mortgage provisions which relate to the power of sale.

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old system title land, such as the right to redeem after the passing of the contractual date for payment, the term ‘equity of redemption’ is appropriate. 14.21  The New South Wales Torrens legislation imposes particular requirements in relation to the execution of mortgages that are to be registered. Section  56C requires mortagees to take ‘reasonable steps’ to ensure that the person who signs the mortgage document is the same person who is the registered proprietor of the land, or who is to become the registered proprietor of the land. (The latter situation would exist where a person is giving the mortgage to finance the acquisition of the land.) What amounts to ‘reasonable steps’ is provided for in a regulation made under the Act.The consequence of a mortgagee failing to take such reasonable steps are set out in s 56C(6).Where there is a failure to take the required reasonable steps and it turns out to be the case that the giving of the mortgage involved a fraud — so, for example, where the person who signs the mortgage is impersonating the registered proprietor — the Registrar-General may cancel the registration of the mortgage. The Registrar-General may also cancel the registration of the mortgage where the mortgagee had actual or constructive notice of the fraud. It should be noted that the cancellation of the mortgage is a matter for the Registrar-General’s discretion. This section does not have the effect of creating an additional exception to indefeasibility. 14.22  As is the case under old system title, it is possible to execute a registered transfer of Torrens title land with the intention of merely securing a debt. This is the case because equity looks beyond form to the intention of the parties and, where the intention to create a security, rather than an absolute transfer, is evident, equity will uphold that intention. Hence, the transaction may be held to amount to a security only; albeit a security which vests an equity of redemption in the mortgagor.69 Such a security can be protected by an injunction or caveat.70 Given that the Real Property Act requires that mortgages are executed and registered in the approved form, it is somewhat surprising that securities by way of absolute transfer of Torrens land are upheld.71 One explanation for this is that a failure to uphold them would usually serve only to disadvantage the mortgagor.

Creation of mortgage of leasehold 14.23  Although the above discussion focused on freehold land, it is possible to mortgage leasehold land under the Torrens scheme, because the definition of ‘land’ in s 3 of the Real Property Act includes ‘any estate or interest’ in land, and ‘mortgage’ is defined as ‘any charge on land … created merely for securing the payment of a debt’.72 If leasehold land

69. It would be usual for a separate agreement to re-transfer the land to be executed at the same time as the absolute transfer. The former cannot be registered, but the mortgagor’s interest can be subject to a caveat. 70. Sander v Twigg (1877) 13 VLR 765; Watson v Royal Permanent Building Society (1888) 14 VLR 283; Richmond City Local Board of Health v Victorian Permanent Building and Investment Society (1890) 16 VLR 845; Lapin v Abigail (1930) 44 CLR 166 at 193–4; Gurfinkel v Bentley Pty Ltd (1966) 116 CLR 98 at 107 and 115–16; Sykes and Walker, The Law of Securities, note 1 above, pp 236–43. 71. Real Property Act 1900 (NSW) ss 39, 39C and 57(1). See also 14.145. 72. It is possible to create an equitable mortgage of leasehold land under both the Torrens scheme and old system title. See Sykes and Walker, The Law of Securities, note 1 above, p 340.

729

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Property Law in New South Wales

is mortgaged, the mortgage takes effect as a statutory charge, and the usual remedies (such as the power of sale and foreclosure) are available to the mortgagee.73 Section 64 of the Real Property Act deals with the issue of the liability of the mortgagee in possession to the lessor. It provides that the mortgagee in receipt of rents and profits is subject to the same liabilities to the lessor as the lessee was prior to the mortgagee taking possession.74

Crown land mortgages 14.24  Crown land that has not been alienated can be held in three ways. It can be: (i) purchased; (ii) held under a lease in perpetuity; or (iii) held under a fixed-term lease. Where Crown land is purchased, it will, on completion, be regulated by the Real Property Act.75 Once a certificate of title has been issued, the land can be disposed of and mortgaged like any other land falling under the Torrens scheme; that is, pursuant to the Act.76 Where the Crown land is land that has not been the subject of a grant, the position is rather complex. Clearly, ss  145A(6A), 261A, 270(3) and 274(3) of the Crown Lands Consolidation Act 1913 (NSW) accepted that such mortgages existed, as did the case of Hayward v Smith,77 but the Act did not provide for a statutory mortgage. The result is that these non-statutory mortgages operate by way of transfer.78

Clogs on the Equity of Redemption79 Introduction 14.25  The mortgagor’s right to have his or her property returned unburdened, after the amount owing under the mortgage has been paid, is a key aspect of a mortgage. Equity will not permit this fundamental principle to be subverted. It protects the right by not tolerating clogs or fetters on the equity of redemption.80 Hence, if mortgage instruments contain terms that deny a mortgagor the right to redeem his or her property on repayment of the debt, set the redemption date so far into the future that redemption becomes illusory, 73. Real Property Act 1900 (NSW) ss 57, 64. 74. For a discussion of the operation of this section, see Tooheys Ltd v Municipal Council of Sydney (1946) 71 CLR 407 at 412 per Rich J; 416 per Starke J. 75. Real Property Act 1900 (NSW) s 13. 76. For a discussion of Crown land over which grants have not yet issued, see New South Wales Conveyancing Law and Practice, Lawbook Co, loose-leaf, [32-075]. 77. Hayward v Smith (1887) 9 LR (NSW) Eq 11. The Crown Law Consolidation Act was repealed in 1989, but its effect continues; see Sykes and Walker, The Law of Securities, note 1 above, p 342. 78. For further analysis, see Sykes and Walker, The Law of Securities, note 1 above, pp 342–54. 79. For general comment on this area, see  F Burns, ‘Clogs on the Equity of Redemption: A Story of Changing Equitable Intervention’ in J Glister and P Ridge (eds), Fault lines in Equity, Hart Publishing, Oxford, 2012, Ch 3. 80. Noakes & Co Ltd v Rice [1902] AC 24 at 30. For a general discussion of the area, suggesting the doctrine may now be redundant given the protection afforded by other remedies dealing with ‘unconscionable’ conduct, see L Willmott and B Duncan, ‘Clogging the Equity of Redemption: An Outmoded Concept?’ [2002] Queensland University of Technology Law and Justice Journal 2. For a general overview of the law on this area, see Sun North Investments Pty Ltd (as Trustee of Sun Development Trust) v Dale [2014] 1 Qd R 369 at [74]–[75] per Henry J.

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or fetter the property with oppressive collateral terms that extend beyond redemption, they will be held void.81 Such terms are known as ‘clogs on the equity of redemption’ and, where they are found, equity will ignore the formal terms of the agreement and permit the mortgagor to redeem on repayment.82 Naturally, in protecting the position of the mortgagor, equity will not disregard the rights of the mortgagee by permitting the mortgagor to repay the debt at any time. Nor will equity simply accelerate the redemption date to suit the mortgagor. For example, the right to redemption may be postponed, even for a reasonably long period, provided the essential nature of the mortgage remains intact. If, on the other hand, the mortgagee seeks to use the security to acquire a collateral advantage, such as the advantage of becoming an exclusive supplier of goods to the mortgagor, and that arrangement extends beyond the period during which the debt is to be repaid, there would be a clog on the equity of redemption.83 The following sections discuss some of the circumstances in which clogs on the equity of redemption have arisen and been held unenforceable. As is noted below, however, there has in recent years been a move in Australia away from the somewhat formalistic approach adopted in earlier cases, towards a position that ‘unconscionability’ is the essence of equity’s jurisdiction in this area.84

Extinguishment of the right to redeem 14.26  A mortgage will not be valid if it contains terms, the effect of which is to deny the mortgagor the opportunity to redeem. Neither will equity countenance a mortgage that impedes or is designed to prevent redemption.85 Hence, a term in a mortgage permitting the mortgagee the right to purchase the property before the date on which the mortgagor’s right to redeem is reached will not be valid. A term that reserves an interest in the property to the mortgagee after the exercise of the right to redeem will also be invalid.86 A phrase that is commonly used to explain this approach is ‘once a mortgage, always a mortgage’. It means that if the agreement has been construed as a mortgage, equity will not abide any provision which is inconsistent with that, particularly any provision that prevents or restricts the right to redeem.87

81. Although the instrument may be called a contract of sale, equity will construe it as a mortgage if, having regard to its intention and substance, it is found to be one. Note there are other circumstances that equity has construed as a clog on the equity of redemption; these, however, are the main ones. 82. Noakes & Co Ltd v Rice [1902] AC 24 at 30 stresses the importance that is placed on redemption. 83. In requiring that Tooheys Brewery be the sole supplier to the defendant, the case of Toohey v Gunther (1928) 41 CLR 181 offers an example of a trade tie. See 14.31 for further explanation. Such a tie might now fall foul of s 47 of the Competition and Consumer Act 2010 (Cth). 84. For an overview, see Bransgrove and Young, The Essential Guide to Mortgage Law in New South Wales, note 57 above, pp 156–57. However, as noted below, there may be a difference of approach on this matter emerging between courts in different states. 85. Fairclough v Swan Brewery Co Ltd [1912] AC 565 at 570. 86. See Samuel v Jarrah Timber and Wood Paving Corp Ltd [1904] AC 323 at 326 for a discussion of these issues. 87. Seton v Slade (1802) 7 Ves 265 at 273; 32 ER 108 at 111.

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Postponement of the right to redeem 14.27  It is acceptable for the mortgagee to impose terms denying a right of redemption before a certain date, but this date must be reasonable. Factors such as the nature of the security, the accepted practice for mortgages of the particular type and the reasonable expectation of the mortgagor all contribute to determining what is a reasonable time.88 For example, it may be unreasonable for the mortgagee to set a very early date by which the debt has to be repaid and also set a date to redeem which is a very long way into the future. However, the dates alone will not be determinate, as can be seen by comparing the cases of Morgan v Jeffreys89 and Davis v Symons.90 In the former, a preclusion of redemption for 28  years was held void; in the latter, a preclusion of redemption for 20  years was found to be valid. Knightsbridge Estates Trust Ltd v Byrne91 involved a situation in which the mortgagor was effectively required to pay off the debt over 40 years (80 half-yearly instalments).The English Court of Appeal held that a provision that attempts to postpone the contractual right for redemption is void, as a clog, only where this results in redemption becoming illusory, or it is oppressive or unconscionable to do so.92 On the facts of this case, the requirement did not amount to a clog. The 40-year period was not regarded by the court as oppressive or unreasonable. Merely postponing the right to redeem does not amount to a clog. 14.28  Where postponement of the right to redeem is so far into the future that it is illusory, equity will hold the provision invalid. In Fairclough v Swan Brewery,93 the mortgagor had a lease with 17  years to run, and entered into a mortgage which permitted only monthly instalments for the next 17 years. To all intents and purposes, the lease would expire when the mortgage did. The court found that the right to redeem was nugatory because the mortgagor had the property returned to him only when his leasehold interest in the property had all but expired. The court did not find the whole mortgage invalid. Instead, it dealt with the problem by bringing forward the date of redemption. 14.29  It should also be noted that statute law may regulate the question as to whether a mortgagor may redeem their loan before a certain date. A residential mortgage may be governed by the NCC, and Regulations made under the NCC now forbid the charging of ‘termination fees’ except in carefully defined circumstances.94

See Duncan and Willmott, Mortgages Law in Australia, note 4 above, p 69. Morgan v Jeffreys [1910] 1 Ch 620. Davis v Symons [1934] Ch 442. Knightsbridge Estates Trust Ltd v  Byrne [1939] Ch  441. Affirmed (on different grounds) in Knightsbridge Estates Trust Ltd v Byrne [1940] AC 613. 92. Knightsbridge Estates Trust Ltd v Byrne [1939] Ch 441 at 456. 93. Fairclough v Swan Brewery Co Ltd [1912] AC 565. 94. See  reg 79A of the National Consumer Credit Protection Regulations 2010 (Cth). The exceptions allowed are, broadly speaking, fees that allow the lender reasonable recovery of costs. Note that in some cases termination fees in relation to contracts entered into prior to 1 July 2011 may be subject to challenge as ‘unconscionable’ under other provisions of the NCC. See ASIC, Early Termination Fees for Residential Loans: Unconscionable Fees and Unfair Contract Terms, Regulatory Guide RG 220, August 2011. See also s 82 of the NCC. 88. 89. 90. 91.

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Collateral advantages 14.30  A collateral advantage is an advantage that is part of the mortgage but extends beyond the repayment of the loan including interest.An agreement to purchase goods from the lender as a designated supplier, or an agreement to sell only to the lender after the loan has been repaid, are examples of agreements that could amount to collateral advantages arising out of mortgages. This is because their effect is potentially to burden the property after it has been returned to the mortgagor. Historically, all collateral advantages were void, but since changes to the usury laws in the 19th century, some have been permitted.95 Noakes & Co Ltd v  Rice96 involved a holder of a leasehold ‘public house’ who had mortgaged the lease to a brewery for 26 years, and also agreed to purchase his malt from the brewer while the lease remained on foot, even if the mortgage had been repaid. The House of Lords found, in these circumstances, that a clog on the equity of redemption existed. The interest in the land the mortgagor received on repayment of the debt was fettered. In the words of Lord Halsbury, the equity of redemption was clogged: … by the continuance of an obligation which would render this [public house] less available in the hands of the [tenant] during the whole period and beyond the whole period of the term.97

Lord Macnaghten spoke similarly. He said: … when the money secured by a mortgage of land is paid off, the land itself and the owner of the land in the use and enjoyment of it, must be as free and unfettered to all intents and purposes as if the land had never been made the subject of the security.98

Where the trade tie does not endure beyond the time by which the debt is to be repaid, the trade tie will amount to a clog on redemption. Biggs v Hoddinott99 was another case of a publican mortgaging his property to a brewery.The mortgage was for a period of five years and the mortgagor was precluded from paying out the loan earlier. One of the provisions of the mortgage was that the brewery would supply all beer sold on the premises. Unlike Noakes’ case, this was not held to be a clog on the equity of redemption because the trade tie did not extend beyond the time by which the debt had to be repaid; that is, five years. 14.31  Noakes v  Rice was followed by the High  Court of Australia in Toohey v  Gunther.100 Importance was attached to the fact that the trade tie was a term of the mortgage and inseparable from it. The mortgage operated as security for the performance of the trade tie as much as for repayment of the debt. Therefore, the trade tie amounted to a clog on redemption. Where, by contrast, the mortgage and the trade tie are to be understood as separate agreements, the trade tie will not amount to a clog on redemption. Kreglinger v New Patagonia 95. On usury, see Duggan and Lanyon, Consumer Credit Law, note 5 above, p 2. 96. Noakes & Co Ltd v Rice [1902] AC 24. 97. Noakes & Co Ltd v Rice [1902] AC 24 at 29. 98. Noakes & Co Ltd v Rice [1902] AC 24 at 30. 99. Biggs v Hoddinott [1898] 2 Ch 307. 100. Toohey v Gunther (1928) 41 CLR 181.

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Meat and Cold Storage Co Ltd101 illustrates the point.The case concerned a lender (Kreglinger) agreeing to lend money to a meat company for a period of five years. The loan was repaid within two and a half years, which was permissible under the agreement, but the issue was whether a trade tie between the lender and the borrower, expressed in the agreement to extend beyond the date of repayment of the debt, was valid. The trade tie was to remain effective until the end of the stated five-year period. Under this trade tie, the borrower was to supply the lender with sheepskins at the best price offered by other potential purchasers of skins. If the lender did not wish to purchase any skins, they could be sold to others, but the lender became entitled to a commission on each sale.The borrower objected to the operation of these provisions after the debt had been repaid, but the House of Lords found that there was no clog on the equity of redemption and that the agreement pertaining to the skins was a separate agreement from the loan. Although they may have been contemporaneous, by reference to their substance rather than form they were found to be independent of each other. The relevant question was, were they ‘in substance a single and undivided contract or two distinct contracts’?102 14.32  The operation of the clog on the equity of redemption in the case of Bradley v  Carritt103 was more subtle. That case did not concern a mortgage over land, but a mortgage over shares. The mortgagor was the majority shareholder in a tea company. He mortgaged his shares, agreeing to use his best endeavours to persuade the tea company to use the mortgagee as the company’s broker for selling its tea. It was also agreed that, where the company used another broker, the mortgagor would himself pay a commission to the mortgagee in lieu of the earnings lost to the mortgagee because another broker was chosen.The House of Lords held that this amounted to a clog on the equity of redemption, and that it could not be enforced beyond the date of repayment of the debt. Clearly, the mortgagor’s obligation to use his best endeavours was a personal (ie. not a proprietary) obligation, and hence did not overtly reduce the value of the shares; but, in practical terms, the mortgagor could uphold his agreement to use his best endeavours only if he remained the majority shareholder. The effect was to limit his ability to alienate his shares freely. It seems to be established, however, that if a transaction is in substance not a mortgage, but something else, then the agreement will be upheld.104 In Wily as Administrator of Macquarie Medical Holdings Pty Ltd v Endeavour Health Care Services Pty Ltd,105 it was held that the mortgage in question was secondary to the ‘real purpose’ of a transaction, which provided an option to purchase. It was relevant that the mortgagee was not a financial

101. Kreglinger v New Patagonia Meat and Cold Storage Co Ltd [1914] AC 25 at 61. 102. Kreglinger v New Patagonia Meat and Cold Storage Co Ltd [1914] AC 25 at 39. 103. Bradley v Carritt [1903] AC 253. 104. As it is put in E Tyler, P Young and C Croft, Fisher and Lightwood’s Law of Mortgage, 2nd Aust ed, LexisNexis Butterworths, Sydney, 2005, p 710: The special rules relating to collateral advantages do not apply, and the validity of the stipulation must be determined on general principles, if the provision is contained in an agreement forming a separate transaction from the mortgage. 105. Wily as Administrator of Macquarie Medical Holdings Pty Ltd v Endeavour Health Care Services Pty Ltd (2003) 12 BPR 22,447.

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institution but a company involved in running medical practices. Hence, the option was not a ‘clog’ on the equity of redemption. 14.33  In recent years the New  South  Wales Supreme Court has moved away from strict rules about ‘clogs’ to an analysis founded on whether insistence upon the relevant provision of the mortgage is unconscionable. This trend has stemmed from obiter dicta of Young J in Westfield Holdings Ltd v Australian Capital Television Pty Ltd.106 In Lift Capital Partners Pty Ltd v  Merrill Lynch International,107 Barrett J reviewed the recent history of decisions and concluded that: It cannot be said today that a contractual provision freely assented to by a mortgagor is void or unenforceable just because it allows the mortgagee to acquire the mortgaged property or to resist that mortgagor’s attempt to redeem. The susceptibility of such a provision to equitable intervention is, however, well established. In a given case, equity will prevent reliance on the provision by the mortgagee if that reliance is unconscientious because of some factor associated with the formation of the contract or something distinct from mere changed circumstances or supervening event operative at the time of reliance.108

The ‘unconscionability’ approach has been questioned in Queensland. In Sun North Investments Pty Ltd (as Trustee of Sun Development Trust) v  Dale,109 Henry J reviewed the New South Wales decisions noted above, but took the view that there was still binding authority from the Privy Council in Fairclough v  Swan Brewery Co,110 which had not been overruled by the High  Court, requiring the courts to recognise certain types of arrangements as ‘clogs’ even in the absence of a separate examination of unconscionability. His Honour said the Westfield approach failed ‘to give determinative weight to the inherently unconscientious nature of the transaction as an automatic foundation for intervention’.111 In the Sun North case, the relevant contract, as an option to purchase given as part of a mortgage transaction, was inconsistent with the mortgagor’s equity of redemption.112 The House of Lords had, in Samuel v Jarrah Timber and Wood Paving Corporation,113 held such an option to be ‘clog’. Nevertheless, more recent New South Wales cases have continued to frame the question about the enforceability of restrictions on redemption in terms of ‘unconscionability’.114 In Bonnano v Finamore, Robb J declined to provide an exhaustive statement as to the type of conduct that would be regarded as unconscionable, but stated that the court should ‘have 106. Westfield Holdings Ltd v Australian Capital Television Pty Ltd (1992) 32 NSWLR 194. See also Re Modular Design Group Pty Ltd (1994) 35 NSWLR 96 and the decision of the Full Court of the Supreme Court of South Australia in Epic Feast Pty Ltd v Mawson KLM Holdings Pty Ltd (1998) 71 SASR 161. 107. Lift Capital Partners Pty Ltd v Merrill Lynch International (2009) 73 NSWLR 404. 108. Lift Capital Partners Pty Ltd v  Merrill Lynch International (2009) 73 NSWLR 404 at  [91]. For further comment, see L Aitken, ‘Share Trading and the “Clog” on the Equity of Redemption’ (2009) 83 Australian Law Journal 237. 109. Sun North Investments Pty Ltd (as Trustee of Sun Development Trust) v Dale [2014] 1 Qd R 369; [2013] QSC 44. 110. Fairclough v Swan Brewery Co [1912] AC 565. 111. Sun North Investments Pty Ltd (as Trustee of Sun Development Trust) v Dale [2013] QSC 44 at [71]. 112. Sun North Investments Pty Ltd (as Trustee of Sun Development Trust) v Dale [2013] QSC 44 at [84]. 113. Samuel v Jarrah Timber and Wood Paving Corporation [1904] AC 322; [1904] UKHL 2. 114. See, for example, Re Matcove Pty Ltd [2020] NSWSC 625 at [77], Bonanno v Finamore [2021] NSWSC 1538 at [357]-[361] and Yang Bai v Watson Elite Pty Ltd [2022] NSWSC 318 at [32]-[33].

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regard to the common experience that parties who would otherwise be competent and without any special disadvantage may be rendered highly susceptible if they find themselves in necessitous circumstances that will only be alleviated by access to borrowed money’.115

Other covenants 14.34  A covenant that requires the mortgagor to pay, on default, an amount greater than the usual amount (consisting of the money borrowed plus interest and other charges) is not enforceable because it is construed as a penalty.116 However, if the extra amount is not linked to a default, the court will characterise it as a bonus or a premium that remains valid.117 Agreements such as these must not be unreasonable, unfair or unconscionable.118 Further, it is acceptable to link the interest repayments to an external index, such as the consumer price index. In this way, the purchasing power of the money lent is better retained.119 It is even acceptable to require the mortgagor to repay in a foreign currency, if that has been agreed, despite the fact that alterations to the exchange rate might mean the mortgagor has to repay more than he or she expected.120 Where the amount to be repaid becomes oppressive or unreasonable, equity will intervene, but it will do so only if there is evidence of conduct that is ‘morally reprehensible’.121 Generally speaking, equity will not countenance a mortgage covenant which requires a defaulting mortgagor to repay a higher rate of interest than would usually be due.122 For example, equity will reject a covenant that attaches a higher interest rate to any late instalment. Again, this is because the additional interest is regarded as a penalty. Yet this principle seems not to be breached if the arrangement is reversed and a rate of interest is set which may be reduced on compliance with the terms of the mortgage. Presumably, this is because the arrangement is construed as an incentive rather than a penalty. For example, if a mortgagor punctually repays his or her instalments and is not in breach of any other provisions of the mortgage, the mortgagee may reduce the instalment interest rate as a reward.123 As both these methods result in the mortgagor paying a higher rate of interest if he or she is late in meeting an instalment, it is surprising that equity, a jurisdiction

115. Bonanno v Finamore [2021] NSWSC 1538 at [360]. 116. See Circuit Finance Pty Ltd v Glenauchen Pty Ltd [2001] SASC 41 for an application of this principle. In Re Funds in Court; Application of Mango Credit Pty Ltd [2016] NSWSC 199, it was held that there was an arguable case that the provisions of the mortgage in question amounted to a penalty of the relevant sort: see [84]–[97], citing the High Court decision in Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205. 117. Potter v Edwards (1875) 26 LJ Ch 468. 118. Cityland Property (Holdings) Ltd v Dabrah [1968] Ch 166. 119. Stanwell Park Hotel v Leslie (1952) 85 CLR 189 at 201. 120. Multiservice Bookbinding Ltd v Marden [1979] Ch 84. 121. Multiservice Bookbinding Ltd v Marden [1979] Ch 84. 122. Booth v The Salvation Army Building Association Ltd (1897) 14 TLR 3. 123. Strode v Parker (1694) 2 Vern 326; David Securities Pty Ltd v Commonwealth Bank of Australia (1990) 93 ALR 271; Nadrak Pty Ltd v Permanent Custodians Ltd (1994) 6 BPR 13,344 at 13,350; Smith v Miller (Bryson J, 23 April 1993, unreported, BC9301695), noted in D Moore, ‘Are High Interest Rates in Mortgages a Penalty?’ (1993) 1 Australian Property Law Journal 177.

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concerned with substance rather than form, has been prepared to tolerate these seemingly irreconcilable positions.124 14.35  Equity permits a mortgagee to impose an additional fee on a tardy mortgagor, but this fee (fashioned in terms of a higher interest rate) is calculated only from the date of default to the date when the money is paid. It is not a sum arrived at by taking the amount already owed up until the date of default and attaching an extra amount. It follows that it is not a penalty. The interest rate up until the late payment remains the same.125 Another covenant that is sometimes used is one that makes the whole amount owing due when a default occurs. If this requirement of accelerated payment results in the mortgagee being unfairly rewarded, equity will intervene.126 Finally, in dealing with late repayments, the issue of the ‘six-month rule’ sometimes arises. This simply means that, where a mortgagor wishes to redeem after the contractual date to redeem has passed, he or she must give the mortgagee six months’ notice of his or her intention to redeem.127 By contrast, sometimes a mortgagor will seek to repay his or her mortgage earlier than the due date. As noted earlier, the general position is that this is not permitted, but there are exceptions. For example, if the terms of the agreement itself (express or implied) permit early repayment, it is acceptable. It is also acceptable if the mortgagee is in breach of the general rules regarding undue suspension of the right to redeem or, more specifically, is in breach of s 93 of the Conveyancing Act. This section provides a statutory right to redeem prior to the contractual date and has in-built protections for the mortgagee who might otherwise be disadvantaged by an early repayment.128

Statutory intervention129 14.36  As can be seen from the discussion above, many of the key cases in this area of law arose in the early part of last century. Those cases often reflect equity’s attempt to temper the harshness associated with freedom of contract. Nowadays, freedom of contract has also been tempered by common law and statute, including the Competition and Consumer Act 2010 (NSW), Fair Trading Act 1987 (NSW), Contracts Review Act 1980 (NSW), Industrial Relations Act 1996 (NSW), and National Consumer Credit Protection Act 2009 (Cth) that adopts the National Credit Code (the NCC).

124. For comments to this effect, see King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076 at [138] per Campbell J, who commented, however, that ‘the law in this respect has been settled for too long for a first-instance judge to give effect to those views’. 125. For a discussion of these issues, see C J Belmore Pty Ltd v AGC (General Finance) Ltd [1976] 1 NSWLR 507 at 509. 126. Wanner v Caruana [1974] 2 NSWLR 301. 127. Smith v Smith [1934] Ch 322. This rule applies to Torrens land as well as old system title land. 128. See Edgeworth, note 42 above, pp 701–02 [11.540]. 129. For a general review of the area, see G Pearson, ‘Regarding Unfair Terms in Financial Services Contracts’ (2013) 37(1) University of Western Australia Law Review 216.

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An example of the intervention of statute into the law of mortgages is the application of Pt 2 Div 2 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).130 Section 12DA(1) prohibits a person in trade or commerce from engaging in conduct ‘in relation to financial services that is misleading or deceptive, or is likely to mislead or deceive’. If a mortgage offends this section, it may be set aside pursuant to s 12GM or varied pursuant to the reasoning in Kennard v AGC (Advances) Ltd;131 in addition, damages could flow pursuant to s 12GF. For a case where a breach of s 12CB, ‘unconscionable behaviour’ in relation to financial services, was found to have been committed in relation to a residential mortgage, see  Australian Securities and Investments Commission v Skeers [2007] FCA 1551.132 The Competition and Consumer Act 2010 (Cth) (CCA) may also have a role to play in terms of restraint of trade. This would be additional to the common law doctrine of restraint of trade and would arise by operation of ss 45 and 45B of the CCA. For example, s 45B applies to any covenant attached to or running with the land.133 Mortgages contain covenants, and hence it would appear to be applicable, but the question to bear constantly in mind is whether the undertaking has had the effect of seriously reducing competition. 14.37  The Contracts Review Act 1980 (NSW) is designed to prevent the unfairness that flows from a contract being created in unjust circumstances. A mortgage created in unjust circumstances would potentially be affected by the operation of this Act. The key sections of relevance are s 7(1), which defines ‘unjust’; s 9(1) and (4), which require the courts to have regard to the public interest and all the circumstances; and s 9(2), which delineates particular matters that the court should consider when coming to a conclusion, including inequality of bargaining power, any negotiation that took place between the parties, and whether any terms are unreasonably difficult to fulfil. It should be noted that 130. Misleading and deceptive conduct in other consumer transactions is dealt with by s 18 of the Australian Consumer Law (ACL) (now contained in Sch 2 of the Competition and Consumer Act). But by virtue of s 131A of that Act, the general consumer protection provisions of the Act are not applicable to ‘financial services’. (Nor, it would seem, by virtue of the same provision, are the provisions of Pt 2-2 of the ACL relating to ‘unconscionable conduct’ applicable to such services.) However, Pt 2-3 of the ACL prohibiting ‘unfair contract terms’ may be applicable to some ancillary provisions of mortgage agreements: see ACL s 23(3)(b), which defines ‘consumer contract’ to include one for the ‘sale or grant of an interest in land’. Still, these provisions could not be used to challenge the main provisions of principal and interest under a mortgage: see ACL s 26(1). It seems likely that mortgages of land are ‘financial products’ within the meaning of the Australian Securities and Investments Commission Act. Finkelstein J in Australian Securities & Investments Commission, Re Money for Living (Aust) Pty Ltd (admins apptd) v Money for Living (Aust) Pty Ltd (admins apptd) (No 2) (2006) 24 ACLC 1240 had some difficulty with the application of the definition. But that case involved an unusual sale and lease-back arrangement; it seems that a standard mortgage would be encompassed in s 12BAA(7)(a), which specifically declares that ‘a security’ is a financial product. If this is the case, then the provisions relating to ‘unfair contracts’ in Pt 2 Div 2 Subdiv BA of the ASIC Act are also applicable to mortgages. 131. Kennard v  AGC (Advances) Ltd (1987) V ConvR 54-210; Money v  Westpac Banking Corp (1988) ANZ ConvR 553. 132. See also Credit Connect v Carney [2010] NSWSC 910 where Macready AJ accepted (at [36]ff) that the definition of ‘financial product’ in s 12BAA of the ASIC Act included a residential mortgage. 133. See the definition of ‘covenant’ in s 4 of the Act.

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the Act operates to exclude relief for the Crown, corporations, public and local authorities, as well as any parties who have entered into a contract for the purpose of trade, business or profession. It does, however, include farming contracts within its ambit.134 The Act is clearly able to reach into some of equity’s traditional domains and extend rights and remedies to parties suffering a clog on the equity of redemption, for example. However, the underpinning principle of equity is unconscionability. This Act is anchored in the unjust nature of the contract.135 Since its inception it has been applied to mortgages on a number of occasions. At times, mortgages have been varied, as in the case of Toscano v Holland Securities Pty Ltd,136 while at other times the mortgagor’s obligations have been altered by the Act. Such a case was Perpetual Trustee Co Ltd v Khoshaba,137 where a mortgage contract was varied under the Act, despite the fact that the lender was not guilty of any conscious fraud. In circumstances where the loan was secured over the sole place of residence of parties of modest means, and no proper inquiry was made as to the purpose of the loan, the Court of Appeal found that the loan contract was unjust.138 In Provident Capital Ltd v Papa,139 the court was dealing with a similar loan arrangement, where a mother had given a mortgage over her family home and business to provide a large business loan to her son, and it was not clear how she was going to make repayments. But, in the circumstances, she had been advised to get independent advice from a lawyer, which she had done, and hence the loan was found not to be ‘unjust’. Macfarlan JA took the opportunity to suggest that ‘asset lending’ alone would not necessarily make a loan agreement unjust.140 However, Allsop P and Sackville JA did not agree with these comments.Their Honours were content to note that the circumstances of this particular loan were not unjust.141 In serious cases, the terms of the mortgage have been found to be void.142 It is worth noting, though, that the Act will probably not be applicable where it is claimed that a mortgage has been forged, as in that case there would be no ‘contract’ for it to operate upon.143 134. Contracts Review Act 1980 (NSW) s 6(1), (2). 135. See West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 611–12 and 615–31 for a discussion of remedies and relief under the Act. 136. Toscano v Holland Securities Pty Ltd (1985) 1 NSWLR 145. See also Clark v Baker (1987) 4 BPR 9476. 137. Perpetual Trustee Co Ltd v  Khoshaba (2006) 14 BPR 26,639. See  also Permanent Mortgages Pty Ltd v  Cook [2006] ASC 155-082 where, following Khoshaba, a mortgage was varied under the relevantly similar provisions of s  70 of the Consumer Credit Code (in force then under the Consumer Credit (New South Wales) Act 1995 (NSW)). The mortgage was found to be ‘unjust’ as it should have been clear from the outset that the mortgagors would not be able to keep up payments. 138. See Kowalczuk v Accom Finance (2008) 77 NSWLR 205 and Commonwealth Bank of Australia v Serobian [2009] NSWSC 302 for cases where it was (unsuccessfully) claimed that a mortgage agreement was unjust for the purposes of the Contracts Review Act. 139. Provident Capital Ltd v Papa (2013) 84 NSWLR 231. 140. Provident Capital Ltd v Papa (2013) 84 NSWLR 231 at [113]. 141. Provident Capital Ltd v Papa (2013) 84 NSWLR 231 at [8], [119]. 142. Cook v Bank of New South Wales (1982) 2 BPR 9580 at 9587; No Fuss Finance Pty Ltd v Miller [2006] NSWSC 630. See also National Australia Bank Limited v Smith [2014] NSWSC 1605. 143. Permanent Trustee Co Ltd v Frazis [1999] NSWSC 319 at [17]; noted, though not necessarily adopted, by Basten JA in dissent in Van den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171 at [75]. See also

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The problem of forged mortgages has been a major issue, especially where a forged signature of a spouse may lead to an indefeasible mortgage being registered against their property without their knowledge.144 Section 56C of the Real Property Act (discussed at 14.21) was an attempt to address this problem. 14.38  The NCC, as noted previously, also embraces mortgages by virtue of the definitions contained in ss 5 and 7.The loan may be for predominantly ‘personal, domestic or household purposes’, or to ‘purchase, renovate or improve residential property for investment purposes’, or for refinancing.145 The NCC requires that the mortgage be in writing and signed by the mortgagor, pursuant to s  42(1). If the mortgage comprises several documents and only one of these contains the mortgagor’s signature, the NCC can still operate.146 Accordingly, a registered memorandum (which would typically contain most of the mortgage covenants) would be viewed as a mortgage under this legislation. Where the NCC applies, as under the previous Consumer Credit Code, a court may provide relief to a mortgagor if it finds that the mortgage was ‘unjust’.147 An example of a case dealing with these issues under the previous legislation can be seen in Fast Funds Pty Ltd v Coppola; Coppola v Hall.148 A case where the NCC was said to be applicable at  first instance was Karamihos v  Bendigo and Adelaide Bank Ltd.149 However, on appeal the Court of Appeal held that there was no need to decide if the NCC applied, as it seemed clear that the Contracts Review Act was applicable. An evaluation of the ‘justice’ of the contract would be the same under both pieces of legislation.150 A first instance decision that the loan was unjust was overturned, on the basis that the borrowers were experienced business owners who were able to make their own decision about whether to borrow the money or not. It is not entirely clear whether, where a joint mortgage has been forged by one of the parties, the other party may rely on the NCC or not. In a case under the previous Consumer Credit Code, Credit Connect v Carney,151 Macready AJ noted that there were conflicting opinions on the question offered in the previous Court of Appeal decision in Van den Heuvel v Perpetual Trustees Victoria Ltd.152

Ford v Perpetual Trustees Victoria Ltd [2009] NSWCA 186 where the Act could not apply in a case of non est factum (where the borrower did not know the nature of the document he was signing). 144. See the cases in Chapter 8 dealing with the ‘fraud’ exception to indefeasibility under the Torrens system, and the effect of forgeries at 8.61ff. 145. NCC ss 5(1)(b), 7. 146. NCC s 42(2)(b). 147. NCC s 76. 148. Fast Funds Pty Ltd v Coppola; Coppola v Hall [2010] NSWSC 470. 149. Karamihos v Bendigo and Adelaide Bank Ltd [2013] NSWSC 172. 150. See Bendigo and Adelaide Bank Ltd v Karamihos [2014] NSWCA 17 at [32]. 151. Credit Connect v Carney [2010] NSWSC 910. 152. Van den Heuvel v Perpetual Trustees Victoria Ltd; Registrar General of NSW v Van den Heuvel [2010] NSWCA 171. For comment on Van den Heuvel and forgery issues, see  S Schroeder, ‘Forged Mortgages and Indefeasibility: A Minefield for Mortgagees’ (2011) 85 Australian Law Journal 75.

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Mortgages

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14.39  Finally, the Industrial Relations Act and its predecessors have been held to apply to mortgages in some circumstances. For example, in Morgan v  Coulson,153 a mortgage given to an employee by his employer provided for an interest-free loan if the employee remained working for the employer for more than 20 years. If the employee left before the 20 years had elapsed, he had to repay all of the advance at current bank interest rates for the whole period the mortgage had run. He also had to offer to sell the property to the employer at the price of the original purchase. Not surprisingly, the mortgage was found to be unfair and against public policy. Unfairness is one of the reasons for which s 106 of the present Act permits contracts under which people work in an industry to be varied or declared void.154 The court held that, when the mortgagor had repaid the principal that was outstanding, the mortgage had to be discharged by the employer. As employment trends change to accommodate a move towards salary packages that include the provision of company-financed home mortgages and car purchases, the impact of this Act on the law of mortgages may increase.

Relationship Debt and Mortgages 14.40  The issue of relationship debt is one that often arises in the context of mortgages.155 ‘Relationship debt’ is a term used to describe the accumulation of debt by virtue of an emotional attachment that is often, but not always, gendered. Put in the language of a recent government publication, it occurs ‘where someone becomes involved in another person’s loan or debt because of an emotional attachment rather than obtaining any benefit themselves’.156 For example, it has been used to describe the kind of debt women accrue when, as a result of their husband’s, partner’s or boyfriend’s persistence, they enter into mortgages or guarantees without proper knowledge, which in turn has the effect of encumbering them with financial liability.157 The concept of relationship debt has sometimes been known by the narrower term ‘sexually transmitted debt’, a term that had its origins in feminist discourse but subsequently gained currency more widely.158 It is more appropriate to regard ‘sexually transmitted debt’ as a subcategory of relationship debt.

153. Morgan v Coulson [1981] 2 NSWLR 801. 154. In Morgan v  Coulson [1981] 2 NSWLR 801, the relevant section  was actually s  88F of the Industrial Arbitration Act 1940 (NSW), a predecessor of s 106 of the Industrial Relations Act 1996 (NSW). 155. B Fehlberg, Sexually Transmitted Debt: Surety Experience and English Law, Oxford University Press, New York, 1997. 156. Department of Fair Trading, Love and Loans: What Every Woman Needs to Know About Relationship Debt, April 2000, p 1. 157. Department of Fair Trading, Love and Loans: What Every Woman Needs to Know About Relationship Debt, note 156 above; A Duggan, ‘International Perspectives: UCC Influences on the Development of Australian Commercial Law’ (1996) 29 Loyola of Los Angeles Law Review 991. 158. K Dunn, ‘Yakking Giants: Equality Discourse in the High  Court’ (2000) 24 Melbourne University Law Review 427; A Duggan, ‘International Perspectives: UCC Influences on the Development of Australian Commercial Law’, note 157 above; D Otto, ‘A Barren Future? Equity’s Conscience and Women’s Inequality’ (1992) 18(4) Melbourne University Law Review 808.

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Property Law in New South Wales

Typically, relationship debt involves a mortgagor’s property being burdened by a mortgage that he or she either did not intend to create at all, or intended to create under different terms. Sometimes relationship debt will relate to the mortgagor, and at other times it will relate to third-party guarantors, a topic that was the subject of a New South Wales Law Reform Commission Report.159 As the term ‘relationship’ suggests, the problem is as much related to parent–child relationships, such as where a parent is under pressure to provide a guarantee in respect of a bank loan to the child, as relationships between married persons and domestic partners.160 It may also be applicable, at times, in relation to business associates. The following discussion focuses on man–woman and parent–child relationships.161 14.41  In situations such as these, it is possible that the ill-informed or pressured mortgagor or guarantor could bring a claim of undue influence, mistake, misrepresentation or duress, or an action based on an unconscionable transaction. It is also possible that an action could be brought pursuant to the Contracts Review Act 1980 (NSW), Fair Trading Act 1987 (NSW), uniform ACL or the NCC. In all these circumstances, the clarity of the language used in the documents, as well as the nature and degree of explanation that was given to the mortgagor or guarantor before the mortgage or guarantee was signed, will have a bearing on the outcome. 14.42  The starting point of case law discussion in this area is Yerkey v Jones.162 In that case, the husband wished to purchase a house and three acres that operated as a poultry farm, but he had very little money to finance the purchase. He, therefore, signed a document in which he agreed to procure a second mortgage over another property owned by his wife.163 After the purchase of the poultry farm, the husband told his wife that he ‘might get into trouble if she did not give the mortgage over [her] Walkerville property’.164 She subsequently gave the mortgage, but in evidence claimed that she did not know that she might be called on personally to pay a share of what was owing.

159. See  New  South  Wales Law Reform Commission, Guaranteeing Someone Else’s Debts, Report No 107, November 2006. 160. New South Wales Law Reform Commission (NSWLRC), Guaranteeing Someone Else’s Debts, note 161 above. A 2003 research report carried out for the purposes of this inquiry (J Lovric and J Millbank, Darling, Please Sign This Form: A Report on the Practice of Third Party Guarantees in New South Wales, Research Report 11, NSWLRC, 2003) reported a high percentage of guarantees given by parents supporting the borrowing of adult children. In this context, it is worth noting that the granting of ‘reverse mortgages’, where equity in a home is used to provide an income stream, will raise many of the same issues as guarantees: see J Pascoe, ‘Reverse Mortgages — The “Guarantee Problem” Revisited?’ (2008) 15 Australian Property Law Journal 199. 161. Lovric and Millbank, Darling, Please Sign This Form: A Report on the Practice of Third Party Guarantees in New South Wales, note 165 above, provides important empirical research on the incidence of guarantees by related parties. 162. Yerkey v Jones (1939) 63 CLR 649. 163. Yerkey v Jones (1939) 63 CLR 649 at 650. 164. Yerkey v Jones (1939) 63 CLR 649 at 650.

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On appeal to the High  Court, Dixon J found that, in some circumstances, a wife’s guarantee of her husband’s debt could be rendered void.165 These circumstances included the situation where a husband exerted actual undue influence over his wife, causing her to execute the guarantee. In such cases, the creditor would not be able to rely on the guarantee unless it could be demonstrated that the wife had received independent legal advice that properly explained the consequences of entering into such an arrangement. Another circumstance where the surety would be set aside, according to Dixon J, was where the wife consented to becoming a surety for her husband’s debts but the bank did not deal directly with the wife, and the wife did not understand ‘the effect in essential respects’ of the instrument she executed.166 However, where the creditor had taken reasonable steps to inform the wife but she had failed to understand, according to Dixon J, an equity to have the document set aside would not exist. In some circumstances, it was regarded as enough for the creditor to ‘superintend’ the execution of the document itself by asking questions and providing explanations, but in other circumstances that perhaps would not be enough, particularly where the deception was great and the wife’s intelligence and business understanding were more limited.167 In summary, the effect of the Yerkey v Jones principle is that, where the debtor’s wife is providing security for the loan and receives no benefit from the transaction, the creditor is treated as if it had notice of the husband’s undue influence or that the wife had less than a full understanding of the transaction, as the case may be. This casts a burden on to the creditor to demonstrate that, in a case of actual undue influence, the wife had independent advice in respect of the transaction and, in other cases, the creditor had taken adequate steps to satisfy itself that the wife understood the transaction. The principle comes into play wherever the creditor is aware that the person providing the security is the principal debtor’s wife.168 14.43  Garcia v National Australia Bank Ltd169 also involved relationship debt in the form of a mortgage with an ‘all moneys’ clause.170 In 1979, the Garcias entered into a mortgage with the Commercial Banking Company of Sydney (which later merged with another bank to become National Australia Bank).The mortgage secured $5000, which was a business loan for the husband, a foreign exchange broker. Later, the mortgage secured more debt in the form of a personal loan for both the Garcias.The mortgage contained an ‘all moneys’ clause, 165. A guarantee adds another personal obligation to the debt already owed.The obligation is enforceable by an action of debt. Where a guarantor gives a mortgage, the guarantee is enforceable as a proprietary interest. 166. Yerkey v Jones (1939) 63 CLR 649 at 685. 167. Yerkey v Jones (1939) 63 CLR 649 at 685. Yerkey v Jones has been applied in Bawn v Trade Credits (1986) NSW ConvR ¶55–290; Borg-Warner Acceptance Corporation (Australia) Ltd v Diprose (1987) 4 BPR 9408; NSW ConvR ¶55–364; Broadlands International Finance Ltd v  Sly (1987) 4  BPR  9420; NSW ConvR ¶55–342; Peters v Commonwealth Bank of Australia (1992) NSW ConvR ¶55–629; (1992) ANZ ConvR 497. 168. Amtel Pty Ltd v Ah Chee [2015] WASC 341 at [256] (Pritchard J). 169. Garcia v  National Australia Bank Ltd (1998) 194 CLR 395. For a discussion of this line of cases in the context of gender, see J Gray et al, ‘Men’ in the Oxford Companion to the High Court, Oxford University Press, South Melbourne, 2001, p 474. 170. That is, a clause providing that the mortgage secured all moneys that the mortgagors might owe the mortgagee, not just the debt over the specific property the subject of the mortgage.

743

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Property Law in New South Wales

and although the loan was repaid, the mortgage was not discharged. The wife later signed four guarantees in respect of advances for her husband’s business. Almost three years after the last guarantee became effective, the bank demanded the sum of $327,189.69 from the wife. At trial,171 by applying the Yerkey v Jones principle,Young J found that the wife was not liable to repay the money, because she did not essentially understand that the guarantee was in any way linked to the ‘all moneys’ clause in the 1979 mortgage. Certainly, she understood what a mortgage was, and understood more generally what she was doing, but she did not understand the effect of the instruments she had executed.This view was ultimately upheld by the High  Court, which also restated that Mrs  Garcia was entitled to rely on Yerkey v Jones. Kirby J did, however, register his distaste for an interpretation of the law that based rights and remedies, at least partially, on the basis of marital status.172 That the principles of Garcia and Yerkey continue to be applied can be seen in the decision in Agripay Pty Ltd v Byrne,173 where a fairly well-educated and informed wife was nevertheless found not to be bound by a guarantee she had given for her husband’s debts, as she did not properly understand the nature of the obligations she was undertaking, and the lender made no effort to ensure that she did.174 Nevertheless, at least in cases in which there is no actual undue influence, the wife’s sophistication in business matters and whether the creditor has taken adequate steps to satisfy itself that the wife understood the transaction will be relevant. 14.44  A wife who takes a personal benefit from the transaction will not be able to rely upon the doctrine. This requirement is often expressed in terms of the wife being a ‘volunteer’ in respect of the transaction. Amtel Pty Ltd v Ah Chee175 involved a wife who had signed a guarantee in respect of debts owed by a company through which she and her husband conducted a business. Even though Ms Ah Chee was not a shareholder or director of the company, there was evidence that she exercised significant control in the management of the business conducted by the company.Therefore, the transaction was, in substance, for the benefit of Mr and Ms Ah Chee, so Ms Ah Chee was not a volunteer and the principle emanating from Yerkey v Jones and Garcia did not apply.176 14.45  Commercial Bank of Australia v Amadio 177 also dealt with a matter of relationship debt, where a son burdened his parents with debt. In this case, aged parents with limited English mortgaged their property and provided their son with a guarantee for a loan he was 171. Garcia v National Australia Bank Ltd (1993) 5 BPR 11,996; (1993) NSW ConvR ¶55–662. 172. As to whether the principle in Yerkey ought to be extended to relationships outside formal marriage, see  the discussion by McCallum J in Australian Regional Credit Pty Ltd v  Mula [2009] NSWSC 325 at [134]–[139]. 173. Agripay Pty Ltd v Byrne [2011] 2 Qd R 501. 174. For comment, see L Aitken, ‘The “Sophisticated Surety” and Garcia v National Australia Bank’ (2011) 27(1) Australian Banking and Finance Law Bulletin 2. 175. Amtel Pty Ltd v Ah Chee [2015] WASC 341. 176. Amtel Pty Ltd v Ah Chee [2015] WASC 341 at [275]–[276] (Pritchard J).This issue is discussed in more detail in YN Vrodos,‘Revisiting the ‘Wives’ Special Equity’:An Exploration of the Volunteer Requirement’ (2015) 40(1) University of Western Australia Law Review 244. 177. Commercial Bank of Australia v Amadio (1983) 151 CLR 447.

744

Mortgages

14.48

taking out. Unfortunately, the parents believed that the guarantee was for about six months and was for an amount of around $50,000. It turned out that the amount due under the guarantee was $239,830.85. Ultimately, the parents were held to be under a disability and were held not to understand the implications of the documents they executed.The parent’s disability should have been understood by the bank’s employees. Eventually, it was found that the bank should not have relied on the son’s word that he had explained the effect of his parents’ signatures to them, if the bank wished to rely on the guarantee. 14.46  In cases of relationship debt, the equitable doctrines of undue influence and unconscionable dealing have proved very useful in undoing transactions in which one party to a relationship has been induced to provide a security for the benefit of the other or has given a security without an adequate understanding of the effect of the transaction. By themselves, the equitable doctrines do not prevent parties being lured into mortgages or guarantees because of their emotional relationships, even if procedures whereby banks and other lenders seek to assure themselves that the parties have received independent advice protect the lenders from invalidation of the transactions.178

Rights and Remedies of the Mortgagee 14.47  The mortgagee is entitled to various rights and remedies as a result of having entered into the mortgage. Indeed, a mortgagee ‘may employ every possible remedy given him by his contract [of mortgage] and put them all in motion at the same time’.179 Put another way, the mortgagee is entitled to pursue a range of remedies at  any one time. Hence, a mortgagee in possession could have a receiver appointed180 and sue on the personal covenant as well. But it is not possible for the mortgagee to pursue a range of remedies if he or she has foreclosed. A selection of the rights and remedies regarded as particularly germane is discussed below.

Personal covenant 14.48  Although a mortgage operates to create a security interest in respect of a loan, it is also a contract between the mortgagor and mortgagee. As such, there are some fundamental covenants contained in the mortgage, one of which is the covenant to repay the sum borrowed (the principal) and the interest on that sum. This is known as the ‘personal covenant’, and the right to sue on it is an important form of recourse. Where for some reason this covenant has not been included in the mortgage, it will be implied.181 In either case, the personal covenant can be enforced by suing on the contract.182 If the 178. For further discussion, see 14.144. 179. Everett v Bayliss (1881) 2 LR (NSW) (Eq) 66 at 70. 180. Refuge Assurance Co Ltd v Pearlberg [1938] Ch 687. 181. Sutton v Sutton (1883) 22 Ch D 511; NZI Capital Corp Pty Ltd v Child (1991) 23 NSWLR 481. Subsequent mortgagors are not liable for the personal covenant because the covenant does not run with the land, and so the obligations are not passed to them. 182. A mortgagor cannot extinguish the obligations created by the personal covenant by assigning his or her equity of redemption. See West Bromwich Building Society v Bullock [1936] 1 All ER 887.

745

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Property Law in New South Wales

mortgagor dies before the sum is repaid, the mortgagee is able to claim against the estate, suing the personal representatives. In those circumstances, the maximum for which the personal representatives will be liable is the extent of the estate itself, and not beyond it.183 The mortgagee can also enforce the personal covenant against anyone joined with the mortgagor in the covenant or anyone who has given an independent covenant as surety. Section  102 of the Conveyancing Act  1919 (NSW) prevents a mortgagee who successfully sues on the personal covenant from taking the mortgagor’s interest in the property and enforcing the judgment order through a sale of the mortgagor’s interest. This ensures that there is no anomaly between the restrictions imposed on the sale of the mortgaged property by the mortgagee pursuant to an exercise of the power of sale and enforcement of the personal covenant through a judgment order.184 14.49  Another covenant usually found in a mortgage is one that deals with the date on which the sum secured must be repaid. If this is absent, payment on demand will be implied. Such an outcome may be avoided by very clear evidence to the contrary.185 The right to enforce the covenant arises on the date that the sum is not repaid, and if the covenant is one which requires payment on or after a set date, the right to enforce arises after the mortgagee has demanded payment.186 Where the mortgagor is unable to meet repayments of the principal, but is able to meet interest repayments, s 92(1) of the Conveyancing Act provides that, if the mortgagor does not pay the principal but does make the interest payments after the set date for payment, those interest payments continue for a period of greater than three  months and the mortgagee accepts the payments, the mortgagee is precluded from commencing proceedings to enforce the repayment of the principal, foreclose, enter into possession or exercise the power of sale unless three months’ notice is given. This stay is not available to the mortgagor if he or she has defaulted on any other covenants. Further, where there is an exercise of the power of sale on default, the purchaser is not required to investigate the issue of whether interest payments were accepted.187 The parties cannot opt out of these provisions by agreement.188 14.50  It is also important that, on repayment of the set sum, the mortgagee be able to return the property to the mortgagor. Hence, the mortgagee must treat the property in a way that allows this to occur; otherwise he or she will not be able to sue on the personal 183. Kennewell v Dye [1949] Ch 517. 184. As noted in P Young, T Cahill and G Newton, Annotated Conveyancing and Real Property Legislation NSW 2012–2013, LexisNexis, Australia, 2012, p 185: ‘The mortgagee must either elect to sell the land or else to foreclose, he cannot elect to take neither course, sue the mortgagor on the personal covenant and then take the equity of redemption in execution’. 185. Hopkins v Worcester and Birmingham Canal Proprietors (1869) LR 6 Eq 437. 186. Bolten v Beckenham [1981] 1 QB 278; Re Tewkesbury Gas Company [1911] 2 Ch 279. For further discussion of the mortgagee’s rights on default, see Tyler,Young and Croft, Fisher and Lightwood’s Law of Mortgage, note 104 above, pp 384–85. 187. Conveyancing Act 1919 (NSW) s 92(2). 188. Conveyancing Act 1919 (NSW) s 92(4). Section 92(3) extends this provision to mortgages governed by the Real Property Act.

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covenant.189 The exception is if the property has been sold by virtue of an exercise of the power of sale and there is a balance still owing after the proceeds of sale have been taken into account.190 In that case, there is an obligation on the mortgagor to make up the deficit. However, it is possible to contract out of this obligation, so that the mortgagor does not have to cover any shortfall.191 It is also possible to avoid the obligation to reconvey the property to the mortgagor if the mortgagor himself or herself has colluded in the alienation of the property.192 If the mortgage does not set a date for repayment but, rather, stipulates payment on demand, the mortgagor must be given a reasonable time in which to repay.193 Where mortgages are silent on the issue of interest, equity will usually imply such an obligation;194 where interest is not paid, s 43 of the Limitation Act 1969 (NSW) becomes relevant because it imposes a six-year period in which the mortgagee can bring an action. Section 42 of the same Act imposes a 12-year period for actions seeking to recover the unpaid principal, foreclose or recover possession in regard to the principal. 14.51  Section  76 of the Real Property Act  1900 (NSW) provides that, where a mortgagor conveys its interest in land subject to a mortgage to another, it is implied that the transferee covenants to pay the interest or other charges secured by the mortgage and to indemnify the transferor in respect of the principal sum secured by the mortgage.195 This section ensures, in effect, that the mortgagor cannot convey his or her equity of redemption without addressing the obligation to repay the sums owing under the personal covenant.

Possession of the mortgaged property Old system title 14.52  Possession and legal mortgages As we have seen, under old system title the mortgagee becomes the holder of the legal estate, and hence is entitled to possession of the property at common law. This right to possession exists even if the mortgagor is not in default. To use the language of Four Maids Ltd v Dudley Marshall (Properties) Ltd,196 ‘the mortgagee may go into possession before the ink is dry on the mortgage’, unless the mortgage precludes this.

189. Palmer v Hendrie (1859) 27 Beav 349; 54 ER 136; Cheah Theam Swee v Equiticorp Finance Group Ltd [1992] 1 AC 472 (PC). 190. Commonwealth Bank of Australia v Buffett (1993) 114 ALR 245 at 252. 191. Mercantile Credits Ltd v Comblas (1982) 56 ALJR 499. 192. Re Burrell (1869) LR 7 Eq 399. 193. A ‘reasonable time’ is interpreted as reasonable enough to facilitate a transfer of funds. It does not mean time enough to organise a loan: Bond v Hong Kong Bank of Australia Ltd (1991) 25 NSWLR 286 at 295, 316–19. 194. Carey v Doyne (1856) I Ch R 104; Natwest Markets Australia Ltd v Mannix (1995) NSW ConvR ¶55–743; Ingram v Mohren (1993) 10 WAR 497. 195. Application of this section reduces the privity of contract problem because an indemnity is implied from transferee to transferor. 196. Four Maids Ltd v Dudley Marshall (Properties) Ltd [1957] Ch 317 at 320.

747

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Property Law in New South Wales

In Quennell v Maltby,197 the English Court of Appeal modified this position somewhat by imposing an ethical gloss on the position taken in Four Maids. It restricted the mortgagee from ‘getting possession of a house contrary to the justice of the case’; or, put another way, from taking possession if he or she were not acting ‘bona fide and reasonably for the purpose of enforcing’ the security. Hence, if the mortgagor were not in default, it would be somewhat difficult to satisfy this restriction. It is a little uncertain if Quennell v Maltby would be followed in Australia. Butt’s Land Law suggests that it is ‘an unjustified departure from previous decisions’.198 Irrespective of whether it applies, Australian law has proceeded on the basis that, if the mortgagee takes possession, it is for the purpose of a security, so any rents and profits collected by the mortgagee must be accounted for. In some circumstances, the mortgagee will be able to terminate the tenancies and bring an action for recovery of land. The apparent imbalance in favour of the mortgagee is partially addressed by the requirement that a mortgagee must ultimately account for use of the mortgaged property; in assessing this, the court will have regard to the actual receipts of the mortgagee, as well as any moneys which the mortgagee would have received but failed to receive because of his or her wilful default.199 14.53  If the mortgagee does go into possession, he or she is neither in a position synonymous with a trustee,200 nor an owner in possession,201 with regard to the level of care he or she needs to demonstrate towards the property. For example, if the property is in need of repair, the mortgagee in possession need only repair it to the extent of the funds gained from receipt of rents and profits. There is no expectation that he or she should use his or her own funds to supplement the funds available. Where the mortgagee does make repairs, however, he or she may be reimbursed for repairs and renovation expenditure — but only in relation to reasonable spending. In regard to damage to the property caused by the mortgagee’s gross negligence, the mortgagee will be held responsible. 14.54  Possession and equitable mortgages Whether the position of an equitable mortgagee is different from that of legal mortgagees regarding the issue of possession is not entirely clear. In regard to the equitable mortgage of a legal estate, the starting point is that the equitable mortgagee does not acquire the legal interest which gives rise to a right of possession. The equitable mortgagee only acquires a right in equity and a promise of an estate in land. Sykes and Walker suggest that to leave matters there would be to take only a superficial approach, and add that ‘the point … has never been squarely decided’.202 Garfitt v Allen203 and Vacuum Oil Co Ltd v Ellis,204 the two cases on which the proposition

197. Quennell v Maltby [1979] 1 WLR 318 at 322. 198. Edgeworth, note 42 above, p 724 [11.780]. 199. See Sykes and Walker, The Law of Securities, note 1 above, p 106. 200. Deputy Commissioner of Taxation (Vic) v General Credits Ltd (1983) 82 ALR 101. 201. Kennedy v General Credits Ltd (1982) 2 BPR 9456. 202. Sykes and Walker, The Law of Securities, note 1 above, p 161. 203. Garfitt v Allen (1888) 37 Ch D 48. 204. Vacuum Oil Co Ltd v Ellis [1914] 1 KB 693.

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rests, are not exactly on point.205 According to Sykes and Walker, the problems an equitable mortgagee faces revolve around his or her having insufficient title to support an action for possession.206 They also argue, by way of analogy and in reliance on the Walsh v Lonsdale doctrine,207 that an agreement to mortgage may be likened to an agreement to lease, in so far as the equitable mortgagee holds under the same terms as if a (legal) mortgage had been granted. That being so, an equitable mortgagee, whose interest arose pursuant to an agreement to mortgage, may have a right to possession in the same way as a legal mortgagee. Against this view is one that suggests that the simple equation of a legal mortgage with an equitable one is unacceptable. Bearing the different views in mind, Sykes and Walker’s final conclusion is that an equitable mortgagee has a right to possession ‘in a passive sense’.208 Although there is some uncertainty surrounding the equitable mortgagee’s position where it is not specifically mentioned in the mortgage, there is nothing preventing the equitable mortgagee being given the power to take possession by the mortgage instrument itself. However, there is some doubt as to whether the equitable mortgagee can actually bring an action for possession.209 In King Investment Solutions Pty Ltd v Hussain,210 Campbell J held that, even if an equitable mortgagee had the benefit of a covenant for possession on default, this would not justify an order for possession as a matter of property law. 14.55  In regard to an equitable mortgage of equitable property, it would appear that the mortgagee is entitled to possession, although that possession will be limited by the degree of possession the nature of the property permits. For example, when dealing with competing equitable assignments of pure personalty, Lyndhurst LC in Dearle v  Hall211 stated that the act of giving the trustee notice was the ultimate act of equitable possession. Applying this reasoning to mortgages, it could be said that a mortgagee of an equitable interest who gave notice was a mortgagee in possession.212 Yet Re Pawson’s Settlement213 suggests that the proposition is not so easily transferred. There it was found that one became an equitable mortgagee, not when notice of the assignment was given, but rather when notice was given to pay the income over. 14.56  Attornment clauses An attornment clause is a clause whereby the mortgagor declares that he or she is a tenant of the mortgagee.By establishing a lessor–lessee arrangement, 205. Sykes and Walker state that the proposition rests on dicta in Garfitt v Allen (1888) 37 Ch D 48 at 50 and Vacuum Oil Co Ltd v Ellis [1914] 1 KB 693 at 703, but that neither case raised this specific point: Sykes and Walker, The Law of Securities, note 1 above, p 161. For example, Garfitt v Allen concerned a charge, rather than a mortgage. 206. Sykes and Walker, The Law of Securities, note 1 above, p 161. 207. Walsh v Lonsdale (1882) 21 Ch D 9 at 14. 208. Sykes and Walker, The Law of Securities, note 1 above, p 162.The authors point out that, once in possession, the equitable mortgagee’s rights as against third parties would be the same as those of an ordinary person in possession. 209. Ocean Accident and Guarantee Corporation Ltd v Ilford Gas Co [1905] 2 KB 493 at 497. 210. King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076 at [129]. For comment on this case, see  L Aitken, ‘Position of the Unregistered Mortgagee’ (2006) 44(4) Law Society Journal 49. 211. Dearle v Hall (1823) 3 Russ 1; 38 ER 475. 212. See Sykes and Walker, The Law of Securities, note 1 above, p 163. 213. Re Pawson’s Settlement [1917] 1 Ch 541.

749

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the mortgagor hopes to secure his or her possession.214 Under such an arrangement, the rent owed is usually the same as the instalments due under the mortgage. In turn, both the mortgagor and mortgagee are afforded protections; the mortgagor against the mortgagee exercising his or her right of possession, and the mortgagee against the nonpayment of instalments (or rent), for example. Further, if the mortgagor assigns the lease, the mortgagee can enforce any covenants that touch and concern the land. Whether a tenancy by estoppel can be raised is a moot point and there is no uniformity of view on the question.215 Further, if the effect of an attornment clause were construed as giving rise to distress for rent, that would be a distinct problem, because the remedy of distress is not permitted in New South Wales.216 Nevertheless, attornment clauses provide a better way of protecting the mortgagor’s interest than the inclusion of an express provision permitting the mortgagor to remain in possession until default.217 The disadvantage with possession-until-default clauses is that, while they create contractual rights and obligations, they do not override the right of entry of the mortgagee that arises from his or her holding of the legal estate. The point is that both approaches have their weaknesses.218

Torrens title 14.57  As a mortgage of Torrens title land operates by way of a charge over the land, rather than conveyance, there is no title to the land in the hands of the mortgagee on which a claim to possession can be based. At common law, this is the case even if the mortgagor defaults in payment of the principal and interest. Section  60 of the Real Property Act 1900 (NSW) alters this position, creating a statutory right to possession (by receiving the rents and profits) where there is a breach of the covenant to pay principal or interest. Section 60 cannot be invoked for breaches of other covenants. Under this section, subsequent registered mortgagees are able to seek possession if the prior mortgagees have not.219 As s 60 relates to the taking of possession, rather than an exercise of the power of sale, no notice under s 57 of the Real Property Act is required. Where there is an equitable mortgage under the Torrens scheme, the right of the mortgagee to possession is very weak. It would seem that the right is once again dependent on the application of the Walsh v Lonsdale doctrine and the kind of reasoning discussed above in reference to an equitable mortgage under old system title.220

214. See Chapter 11. 215. WN Harrison, ‘Attornment Clauses in Torrens System Mortgages’ (1942) 16 Australian Law Journal 64. 216. See Edgeworth, note 42 above, p 394, n 1192, referring to s 177A of the Conveyancing Act. 217. Birmingham Citizens Permanent Building Society v Caunt [1962] Ch 883 at 890. 218. See Australian Express Pty Ltd v Pejovic [1963] NSWR 954 in relation to another disadvantage of attornment clauses — rent instalments and the court’s jurisdictional limits. 219. Croft v Kennaugh [1945] VLR 40; Zanzoul v Westpac Banking Corp (1995) NSW ConvR ¶55–749. But compare ANZ Banking Group Ltd v Comer (1993) NSW ConvR ¶55–668. 220. See 14.54. For the weakness of an unregistered mortgagee’s right to possession, see King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076 at [127]–[129].

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14.58  Attornment clauses Attornment clauses may be used in relation to Torrens title land. The common view is that they create a tenancy by estoppel,221 although this view has its critics.222

Right to assign 14.59  It is possible for the mortgagee to assign his or her interest.That interest is usually thought to comprise the: • interest in the land; and • right to sue on the personal covenant for the debt. These two component parts are not automatically assigned together. Hence, an assignment of the interest in land does not automatically carry with it an assignment of the right to sue on the debt. Nevertheless, s  91(1) of the Conveyancing Act permits a mortgage to be assigned by a registered ‘memorandum indorsed on or annexed to the mortgage, and signed by the persons to be bound’. Such a memorandum operates ‘as a deed of assignment of the mortgage debt and as a deed of conveyance of the estate and interest of the mortgagee of and in the mortgaged property’ pursuant to s  91(4). It is possible for the mortgagee to assign under both old system and Torrens title.223 Where the mortgagee of Torrens title land assigns, the transferee is able to step into the mortgagee’s shoes and sue on the mortgage to recover the debt, pursuant to s 52 of the Real Property Act. This was the situation in PT Ltd v Maradona Pty Ltd.224 However, only rights under the mortgage are transferred under this section. Personal rights are not transferred. Hence, the benefit of a guarantee does not pass under this section.225 Section 52 does not permit the mortgagee to sue for breaches of covenants that occurred prior to the assignment — unless, of course, they are continuing breaches.226 Once the transferee registers his or her mortgage, the transferee acquires an indefeasible interest according to the relevant indefeasibility provisions of the Real Property Act.227 Those provisions make it clear that the title the transferee takes on registration will not be burdened by any personal equities or fraud that may have burdened the title of the transferor. In this sense, the indefeasibility provisions temper s  51 of the Real Property Act, which states that the transferee takes ‘all rights, powers and privileges’ of the transferor and that the transferee becomes ‘subject to and liable for all and every [one of] the same requirements 221. Paterson v McCarthy (1892) 18 VLR 133; Ex parte Wilson; Re Bannister (1925) 25 SR (NSW) 375; Ex parte Jackson; Re Australasian Catholic Assurance Co Ltd (1941) 41 SR (NSW) 285 at 289–90; Permanent Finance Corp Ltd v Flavel [1968] Qd R 84; Jellicoe v Wellington Loan Co (1886) 4 NZLR 330. 222. See Harrison, ‘Attornment Clauses in Torrens System Mortgages’, note 215 above. For further discussion of the issue, see Sykes and Walker, The Law of Securities, note 1 above, pp 250–02. 223. Conveyancing Act 1919 (NSW) s 91(6). 224. PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 at 679. 225. Consolidated Trust Co Ltd v Naylor (1936) 55 CLR 423 at 435; Long Leys Co Pty Ltd v Silkdale Pty Ltd (1991) 5 BPR 11,512. See also Queensland Premier Mines Pty Ltd v French (2007) 235 CLR 81, which held that ‘collateral’ agreements are not given the benefit of indefeasibility on transfer of a mortgage. 226. Measures v McFadyen (1910) 11 CLR 723. 227. These include s 42 of the Real Property Act. See Chapter 8.

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and liabilities to which the transferee would have been subject and liable if named in such instrument originally as mortgagee’.

Right to improve property 14.60  Having entered into a mortgage, the mortgagee will be keen to ensure that the property that provides the security for his or her loan is not diminished in value. As a result, the law permits the mortgagee to protect and maintain the property, at times even going as far as upholding a right allowing a second mortgagee to buy in and be reimbursed for a first mortgage.228 A mortgagee may also be reimbursed for expenditure made in preparation for sale.229 Naturally, this does not mean that the mortgagee is able to improve the property to the extent that an owner might. Their objectives are different. For example, it would be usual for a mortgagee wishing to sell property, pursuant to an exercise of a power of sale, to be keen to recoup the sum owed to him or her under the mortgage, whereas an owner wishing to sell property may regard the sale as a potential profit-making exercise and an opportunity to capitalise on improvements. As a result of these differences, the mortgagee is restricted in how far he or she is able to alter the nature of the property. This can also be seen as another way of saying that the mortgagor should be able to have returned to him or her essentially the same property that he or she mortgaged in the first place.230 Yet, where the mortgagee does expend excessively, he or she will not be reimbursed and the mortgagor will also have property returned to him or her which is dissimilar (by being better) to that which the mortgagor mortgaged in the first place.231

Power to lease Old system title 14.61  Mortgagee-granted leases  At common law, historically, a mortgagee could grant a lease of the mortgaged land.This was because the mortgagee held the legal estate and was, thereby, entitled to possession of the land. However, as it would have been unconscionable to make those leases binding on the mortgagor after discharge of the mortgage, equity intervened to prevent a clog on the equity of redemption.232 The common law position concerning the power to lease is affected by s 106 of the Conveyancing Act. That section provides a mortgagee of land with the power to make a

228. Re Mangan (1983) 123 ALR 633 at 640. 229. Sandon v Hooper (1843) 6 Beav 246; 49 ER 820. Note that injunctive relief is also available to prevent damage to the property: Votrubec Investments Pty Ltd v Hospital Foods and Services Pty Ltd (1981) 5 BPR 11,712. 230. Southwell v Roberts (1940) 63 CLR 581. 231. Southwell v Roberts (1940) 63 CLR 581. 232. See 14.33.

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lease of the mortgaged land, but only pursuant to the conditions imposed by the section. Basically, those conditions are that the lease: • will not exceed five years (s 106(3)); • will be at the best rent that can reasonably be obtained (s 106(6)); • must contain a condition of re-entry if the rent is not paid within a specified time (s 106(7)); and • if it is of old system title land, is registered according to the deeds registration scheme (s 106(8A)).233 The section does not extend to oral leases.234 Section 106(7) of the Conveyancing Act applies to all leases, and states that the covenants implied by s 84 of the same Act shall not be excluded.Those covenants relate to the payment of rent and the yielding up of the property in good and tenantable repair.Yet it is possible, according to s  106(11), to exclude the operation of s  106. This can be done either by incorporating an exclusion in the mortgage itself or by other writing. It is not possible to exercise the statutory leasing powers after a receiver has been appointed by the mortgagee. 14.62  Since a mortgagor of old system land does not, at common law, have a right to possession as against the mortgagee, it was impossible, in the absence of agreement, for him or her to create a lease binding on the mortgagee. As a result, where a tenant did go into possession, while he or she was estopped from denying the lessor’s title, the arrangement between the mortgagor and so-called tenant was not binding on the mortgagee. The situation was different if, as is usual, the terms of the mortgage gave the mortgagor a right to possession. In that case, the mortgagor became the mortgagee’s tenant and was able to carve out an interest from his or her own, in favour of another tenant. Such an arrangement was effectively a subtenancy. Where a mortgage created an express right to lease on the part of the mortgagor, the mortgagee’s consent was usually also required. As discussed in the next paragraph, s 106 of the Conveyancing Act modifies the common law position. 14.63  Mortgagor-granted leases  If a lessor creates a lease and later borrows money using his or her property as security for the loan, the mortgagee will be bound by the pre-existing lease in accordance with the general priority rules. This will result in  the mortgagee’s security being limited to the reversion rather than the fee simple.235 The  situation is potentially different when the lease is equitable, because then it is open to the mortgagee to demonstrate that he or she is a bona fide purchaser for value without notice of a prior equitable interest.236

233. Pursuant to s 106(8) of the Conveyancing Act, if the lease is of Torrens title land it must be registered in accordance with the provisions of the Real Property Act. 234. Daniher v Fitzgerald (1919) 19 SR (NSW) 260. 235. Although of course the mortgagee will retain a right to sue the mortgagor on the personal covenant to repay. 236. See Chapter 7 on old system and priorities.

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Historically, if a lessor mortgagor created a lease after a mortgage of the relevant property had been created, the mortgagee was not bound by the lease.237 Hence, the mortgagee could bring an action in trespass against the lessee. For a case on whether a mortgagee who has the right to immediate possession can evict a residential tenant who has taken a lease from the mortgagor, see O’Neill v Commonwealth Bank of Australia.238 Under s 106(1) of the Conveyancing Act, a mortgagor can now grant leases after the creation of a mortgage.The conditions applicable to these are the same as those applicable to a lease created by a mortgagee pursuant to s 106. Where there is non-compliance with s 106 of the Conveyancing Act, the lessor mortgagor will be bound by the lease, but not the mortgagee.

Torrens title 14.64  Mortgagee-granted leases Section  106(17) of the Conveyancing Act permits mortgagees of Torrens title land to create leases in compliance with s 106.239 The types of leases permitted by that section are dealt with above. Where there is non-compliance with s 106, it is possible for the lease to be valid if the written mortgage agreement permits the mortgagee to create leases. Further, it is also possible for the mortgagee to create a lease if the mortgagor has defaulted and the mortgagee has gone into possession. This is because the mortgagee in possession of Torrens title land is treated ‘in the same manner’ as a mortgagee of the legal estate pursuant to s 60 of the Real Property Act; a section that relates to leases of mortgaged property when the mortgagor defaults and the mortgagee enters possession. A mortgagee of old system title land could, as noted above at 14.58, grant a lease. 14.65  Mortgagor-granted leases  As we already know, the mortgagor of Torrens title land does not part with his or her title when entering into a mortgage, so continues to have a right to possession of the land as against the mortgagee. That being the case, he or she is able to enter into a lease of mortgaged land to the extent that he or she still has a title.240 However, s 106 of the Conveyancing Act extends to Torrens title land by virtue of s 106(17). Section 106(1) expressly speaks of the mortgagor’s right to create a lease, and the section operates in conjunction with the other subsections of the provision to diminish the broad right of the mortgagor to lease. For example, among other restrictions, the duration of the lease is limited by this section to a period not exceeding five years. Additionally, best rent must be reserved and the lease must take effect in possession no later than three months after its date. A lease that does not comply with s  106 of the Conveyancing Act will not bind the mortgagee, unless he or she has consented to it before it is registered,241 as Australia & New Zealand Bank Ltd v Sinclair demonstrated.242 237. Commonwealth v Orr (1981) 37 ALR 653 at 655. 238. O’Neill v Commonwealth Bank of Australia [2013] NSWSC 836. 239. Despite the fact that under the Torrens system the mortgagee does not have the fee simple in the land. 240. Commonwealth v Orr (1981) 37 ALR 653. 241. Section 53(4) of the Real Property Act, in conjunction with s 106(17) of the Conveyancing Act. 242. Australia & New Zealand Bank Ltd v Sinclair [1968] 2 NSWR 26. For a detailed treatment of this and the right to lease mortgaged property more generally, see Sykes and Walker, The Law of Securities, note 1 above, p 256.

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The rationale for the consent requirement is the achievement of a balance between the potential detrimental effect of a lease on the mortgagee’s powers, on the one hand, and the rights of the mortgagor, as owner of the property, to deal with that property in ways that benefit him or her, on the other. By contrast, if the lease is registered before the property is mortgaged, the mortgagee takes his or her interest subject to the lease. Where the pre-existing lease is unregistered, the mortgagee will still be bound by it if it is a lease for less than three years. This is because the lease would be protected by the operation of s 42(1)(d) of the Real Property Act.

Rights to fixtures 14.66  As fixtures become part of the land to which they are annexed, a mortgage over land includes the fixtures on that land.243 Hence, the mortgagee, exercising the power of sale, can sell the land including the fixtures, and he or she can restrain a party from removing fixtures if the removal would unduly reduce the value of the security.244 This position may be altered if the mortgagee has given permission for the fixtures to be removed.245 Once the mortgagee is in possession, the mortgagor’s right to remove the fixture is lost unless agreement to do so exists.246

Appointment of a receiver 14.67  What is a receiver? A receiver is a person who manages property by taking income from the property and paying off the debt, with a view to preserving the security. Most mortgages of property which generate an income contain provisions allowing the mortgagee to appoint a receiver if there is a default in payment. Appointment of a receiver relieves the mortgagee of the burdensome task of collecting money and, where the receiver is also appointed as an agent of the mortgagor (which is the usual position), there are collateral advantages to the mortgagee. For example, the mortgagee will not be liable for those rents and profits which, but for wilful neglect and default, he or she would have received. If the mortgagee interferes in the receiver’s management of the property, the position could alter dramatically, resulting in the receiver being characterised as agent of the mortgagee, not mortgagor.247 Consequently, the protection from liability described above would be lost. 14.68  Powers of receiver Statute confers a power to appoint a receiver both in relation to old system title land and Torrens title land.248 It is activated by an exercise of the statutory 243. Meux v Jacobs (1875) LR 7 HL 481; Queensland National Bank Ltd v MacBriar [1902] St R Qd 268 at 281–3. 244. Usborne v Usborne (1740) Dick 75; 21 ER 196. 245. Gough v Wood [1894] 1 QB 713. 246. Hobson v Gorringe [1897] 1 Ch 182. See this case also for a discussion of fixtures and mortgages in relation to third parties. 247. American Express International Banking Corporation v Hurley [1985] 3 All ER 564 at 568; National Bank of Greece SA v Pinios Shipping Co (No 1) [1989] 3 WLR 185 at 193–6. 248. Conveyancing Act 1919 (NSW) s 109; see especially s 109(1)(c). The powers relating to s 109 come into force only if the mortgage is in a deed. Note also that this provision operates subject to any contrary provisions in the mortgage: see s 109(3). Section 36(11) of the Real Property Act indirectly provides a

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power of sale, and an appointment under this power must be registered.249 Where there is an express power in the mortgage to appoint a receiver, there is no need to rely on statute. The right to appoint a receiver can also arise by virtue of application to the court. Such a receiver will be the agent of neither the mortgagee nor the mortgagor, but of the court. His or her duties remain much the same, but when payments are collected they are paid into the court. The powers of the receiver are set out in s 115(3), (6), (7) and (8) of the Conveyancing Act. Even a legal mortgagee, who has a power of possession, is able to invoke the right to appoint a receiver, but because the alternative of retaking possession is still available to him or her, the legal mortgagee must demonstrate good reason for the appointment of a receiver.250 An equitable mortgagee is able to appoint a receiver without application to the court if a deed or written instrument creating the mortgage exists.251 This power is like the power available to a legal mortgagee. Irrespective of a deed, the equitable mortgagee can always apply to the court to appoint a receiver.252 14.69  Liability of receiver In Expo International Pty Ltd v Chant 253 it was stated that ‘in the administration of the receivership, the receiver is not liable to answer to the mortgagor for losses caused by negligent performance of bona fide acts’. Instead, it has been held that a receiver has a duty to act in good faith. Moreover, the mortgagor has no remedy in respect of the receiver’s decisions with which he or she disagrees.254 A receiver may be liable in negligence where the mortgagor is a corporation.255

Foreclosure Introduction 14.70  Foreclosure is another of the remedies available to the mortgagee, but it is rarely used today, the use of the power of sale having become more common. Foreclosure puts a bar on redemption by the mortgagor by extinguishing the mortgagor’s rights, including the right to redeem. The right to foreclosure cannot exist until the contractual date for redemption has passed (because there is no contractual right to redeem prior to that date), so there must be a default on the part of the mortgagor, although whether this needs to be a default in repayment of the principal or merely a default in paying interest will depend upon the terms of the mortgage contract.256 Foreclosure requires an application to the court and a two-step process follows. The first stage is that an interim order is similar right where mortgages are of Torrens title land, because it causes a dealing on registration to have the same effect as a deed. Further, see s 109(5) of the Conveyancing Act. 249. Conveyancing Act 1919 (NSW) s 115A(2)(c). 250. See  Sykes and Walker, The Law of Securities, note 1 above, p 130, where examples of good reasons are discussed. 251. Sykes and Walker, The Law of Securities, note 1 above, p 160. 252. Sykes and Walker, The Law of Securities, note 1 above, p 160. 253. Expo International Pty Ltd v Chant [1979] 2 NSWLR 820 at 835. 254. Downsview Nominees Ltd v First City Corp Ltd [1993] 2 WLR 86. 255. Expo International Pty Ltd v Chant [1979] 2 NSWLR 820 at 834; MacIntosh v Lobel (1993) 30 NSWLR 441 at 466. See also L Aitken, ‘The Receiver’s Duty in Equity: The Impact of Statute and the Privy Council’ (1993) 1 Insolvency Law Journal 118; S Dukeson, ‘Receiver’s Duties: Tort or Equity’ (1993) 3 Company & Securities Law Journal 362. 256. Edgeworth, note 42 above, p 741 [11.1080]; see also 14.75 below.

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made (decree nisi). It is followed with a final order (decree absolute). The final outcome of the process is that the interest of the mortgagor is transferred to the mortgagee.257 Section  103(2) of the Conveyancing Act creates a statutory discretion for the court to order a judicial sale instead of foreclosure.

Old system title 14.71  At law, under old system title a mortgagor has a contractual right to redeem. Therefore, if a mortgagor repays his or her debt within, say, the set six-month period after the execution of the mortgage, then he or she can seek the assistance of the common law if the mortgagee refuses to reconvey title.Traditionally, enforcement of a strict time frame for repayment of the debt (such as six months) offended the court of equity and it found itself upholding the right to have title reconveyed, even when the set date for repayment had passed. This was achieved by equity recognising a right in favour of the mortgagor; a right which came to be known as the ‘equity of redemption’. Both the contractual right and the equitable right were enforced by a court exercising its equitable jurisdiction against everyone except a bona fide purchaser of the legal estate, for value, without notice.258 Ultimately, the term ‘equity of redemption’ came to embody both the contractual right to redeem and the right exercisable in equity to redeem after the date for payment had elapsed.259 Further, the equity of redemption was treated as an equitable proprietary right. 14.72  Equity’s concern to protect the interests of the borrower can be seen in its willingness to construe agreements between borrowers and lenders as securities wherever possible, which may mean that equity has to look beyond the agreement itself.260 Sometimes it is difficult to distinguish between a right to redeem and a right to repurchase. In order to differentiate, the court may look to the intention of the parties. In Gurfinkel v  Bentley Pty Ltd,261 the court examined the intention of the parties in order to discern whether the transaction was a security transaction or a transfer with an option to repurchase. The majority found that there was insufficient evidence to overturn the view that the agreement was prima facie a purchase with an option to repurchase. Barwick CJ, in dissent, said: The lands having been found to have been conveyed so as to form a security for money lent, the transfers, though absolute in form and though expressed to be executed for a price paid as distinct from money lent, will be regarded in equity as mortgages of the land. Thus, though there be no contractual right to redeem at all, the borrower will have in equity a right of redemption.262 257. Heath v Pugh (1881) 6 QBD 345 at 360; Conveyancing Act 1919 (NSW) s 100. Extinguishment also means the loss of the right to sue on the personal covenant. See Lloyds and Scottish Trust Ltd v Britten (1982) 44 P & CR 249. 258. Moore, Grattan, and Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, note 8 above, p 404. See also discussion in Sykes and Walker, The Law of Securities, note 1 above, pp 51–54. 259. Sykes and Walker, The Law of Securities, note 1 above, p 52. 260. The court will look to substance rather than form in deciding if a mortgage has been created. 261. Gurfinkel v Bentley Pty Ltd (1966) 116 CLR 98. This is a case dealing with Torrens title land, but by parity of reasoning with old system title the same principle applies. 262. Gurfinkel v Bentley Pty Ltd (1966) 116 CLR 98 at 107.

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14.73  While the equity of redemption exists, the mortgagee’s position is uncertain because title can be redeemed on repayment of the debt. Hence, it is in the mortgagee’s interest to block redemption. In theory, this can be achieved by gaining an order for foreclosure.263 Historically, once the contractual date to redeem had passed, the mortgagee could apply to the court for such an order. It was usual for the court to grant a conditional order providing an extra six months in which the mortgagor had to repay the debt. If the debt were not repaid in the extended time, the title held by the mortgagee became absolute. Yet, there is evidence that equity did all it could to forestall foreclosure, presumably being mindful of the dire consequences for the mortgagor. For example, Campbell v Holyland264 suggests that, although a foreclosure order may have been granted, such an order did not necessarily absolutely block redemption as long as the mortgagor remained innocent of unconscionable delay, the mortgagee had not acted to his or her detriment as a result of the foreclosure order, and no innocent third party had gained an interest. The decision to re-open a foreclosure was discretionary, except where the foreclosure had been obtained by fraud, in which case it would be automatic.265 14.74  Prima facie, it would appear that re-opening of foreclosure is not available in New  South  Wales. Section  100 of the Conveyancing Act appears to extinguish the mortgagor’s right to redeem permanently. The operation of s 100 means that the result of an order absolute for foreclosure is to cause the mortgage debt to be fully satisfied by the mortgagee taking the property itself. The section also has the effect of: • causing the mortgagee to lose all his or her rights to bring any actions or take proceedings to recover mortgage moneys; and • releasing all collateral forms of security. As the New South Wales statutory position is that foreclosure automatically discharges the debt under the mortgage, there is no issue around the need to keep open the right to redeem in case the mortgagee sues for the contractual debt.Yet it is perhaps possible, with the assistance of the court, for the foreclosure order to be re-opened by reliance on the personal covenant.266

263. For further discussion see Sykes and Walker, The Law of Securities, note 1 above, pp 53–54 and 130–04. Jurisdiction to grant an order for foreclosure is part of the general equitable jurisdiction exercised by the Supreme Court of New South Wales in accordance with ss 23 and 58 of the Supreme Court Act 1970 (NSW). 264. Campbell v Holyland (1877) 7 Ch D 166. The process involves an order nisi in which an extended time to repay is given; if payment is not made in that time, the order becomes absolute. Section 100 of the Conveyancing Act operates to preclude the mortgagor suing on the personal covenant once the court has made an absolute order for foreclosure. 265. Campbell v Holyland (1877) 7 Ch D 166. 266. Historically, it was possible to re-open a foreclosure even though an absolute order had been granted. Sykes and Walker suggest that in New South Wales it may still be possible to reopen a foreclosure order where it is found that it was obtained by actual fraud, or in other cases where the court chooses to exercise a discretion to re-open it: Sykes and Walker, The Law of Securities, note 1 above, pp 132–33. Butt’s Land Law states that whether a foreclosure order in New South Wales can be re-opened is ‘open to debate’: Edgeworth, note 42 above, p 743, [11.120]. See also the reasoning in Campbell v Holyland (1877) 7 Ch D 166.

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14.75  The Conveyancing Act allows the mortgagee either to sell the land or to foreclose. Under s 102 of the Act, it is not open to the mortgagee to sue on the personal covenant and take the equity of redemption in execution.267 The remedy of foreclosure is available when a mortgagor defaults. A failure to pay interest when due may, in some cases, constitute a default.268 Those are cases in which the mortgage contract makes the right to redeem conditional on payment of interest by the due date. Where that is the case, the equitable right to redeem and the right to foreclose arise on default of an interest payment, not on default of a payment of the principal.269 14.76  Foreclosure is possible in relation to both legal and equitable mortgages. If a legal interest in land is the subject of an equitable mortgage, foreclosure will result in the mortgagee acquiring a legal title. Further, where the mortgagor is not in court for the proceedings, the court can, by reliance on s 77 of the Trustee Act 1925 (NSW), make a judgment that vests the legal title in the mortgagee.

Torrens title 14.77  In some ways, it is odd that the Torrens system permits foreclosure at all when the basis of the mortgage under the Torrens system is a charge, rather than a conveyance of the fee simple.The issue of barring the re-transfer to the mortgagor of the interest in land would seem somewhat irrelevant when the interest was not transferred from the mortgagor to the mortgagee in the first place. Nevertheless, the New South Wales Torrens statute clearly contemplates that foreclosure is available in respect of Torrens system mortgages. Registered mortgagees seeking foreclosure must apply to the Registrar-General, and not the court, and the availability of foreclosure is restricted by the terms of the statute.270 The procedure whereby an application is made to the Registrar-General (along with the associated restrictions) is available to ‘a registered mortgagee’. Therefore, in the case of unregistered mortgages under the Torrens scheme, the mortgagee must apply to the court seeking foreclosure. 14.78  Applications to the Registrar-General will be accepted only where the default in payment, either of the principal or the interest, has exceeded six months.271 Prior to applying, the mortgagee must have attempted to sell the land by public auction.272 Further, the mortgagee must serve notice of intention to apply for a foreclosure order.273

267. There is a similar provision in s 97 of the Property Law Act 1974 (Qld), but, as noted by the High Court in Simpson v Forrester (1973) 132 CLR 499, there is no such protection in other jurisdictions. 268. Twentieth Century Banking Corporation Ltd v Wilkinson [1976] 2 WLR 489. 269. Twentieth Century Banking Corporation Ltd v Wilkinson [1976] 2 WLR 489. 270. Real Property Act 1900 (NSW) s 61. 271. Real Property Act 1900 (NSW) s 61(1). 272. Real Property Act s 61(2)(b). A public auction can take place only after appropriate notice is given under s 57 of the Real Property Act. The property might not be sold because there is no interested purchaser or, when the property is put to auction, the highest bid is rejected on the grounds that it is insufficient to cover the mortgage debt and costs of selling. See Real Property Act 1900 (NSW) s 61(2)(c). 273. Sections 61 and 62 of the Real Property Act set out the procedures and list all the parties on whom notice must be served. These include the mortgagor, relevant caveators, and mortgagees with lesser priority.

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The Registrar-General may then issue a foreclosure order, or alternatively may require a further attempt at sale to be made before making the order.274 The actual foreclosure occurs when the Registrar-General issues a foreclosure order and records it in the Register.275 Van den Bosch v Australian Provincial Assurance Association Ltd276 suggests that, until both these acts have been performed, the mortgagor’s right to redeem will not be extinguished. That case also establishes that the right is also exercisable by anyone claiming through the mortgagor.277 Section 100(1) of the Conveyancing Act also extends to Torrens title land by virtue of s 100(2). Further, s 62 of the Real Property Act confirms that the effect of foreclosure is to vest the property in the mortgagee. It seems doubtful whether a court would allow the re-opening of foreclosure in the absence of fraud.278

Discharge of mortgage 14.79  On payment of the mortgage and fulfilment of the provisions and covenants contained in it, the mortgagor will usually wish to hold the property free from the restrictions of the mortgage, and hence will seek a discharge (sometimes called a ‘release’) of mortgage. This applies to both old system and Torrens title land. The terms of the discharge dictate whether there is also a release from the personal covenant or whether it remains in force.279 The words used in Grundy v Ley280 serve to demonstrate this point. The discharge in that case stated that money had been received from the mortgagor in full satisfaction and discharge of the mortgage ‘so far as it affects the land’. These words were held to relate to the charge over the land and consequently the mortgage over the land was discharged; however, they were held not to relate to the personal covenant. It remained on foot. The means of discharging a mortgage under old system and Torrens title land are different, as described below.

Old system title 14.80  The reconveyance of old system title land is effected by an indorsed or annexed memorandum of discharge pursuant to s  91(1) and (3) of the Conveyancing Act. Section 91(3)(a) states that ‘upon registration’, the memorandum shall ‘vacate the mortgage

274. Real Property Act s 62(1). 275. Real Property Act 1900 (NSW) s 62(3). 276. Van den Bosch v Australian Provincial Assurance Association Ltd (1968) 88 WN (Pt 1) (NSW) 357 at 361–2. 277. Van den Bosch v Australian Provincial Assurance Association Ltd (1968) 88 WN (Pt 1) (NSW) 357 at 361–2. 278. In the Queensland case of W R Carpenter Australia v Ogle [1999] 2 Qd R 327, the court found that it could re-open a foreclosure when the mortgagor’s failure to appear was not attributable to himself or herself. It did this by exercise of its inherent jurisdiction. 279. Groongal Pastoral Co Ltd v  Falkiner (1924) 35 CLR 157 at  164–5. See  also Grundy v  Ley [1984] 2 NSWLR 467. 280. Grundy v Ley [1984] 2 NSWLR 467.

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debt’ and ‘operate as a deed of conveyance’ in favour of the mortgagor.281 If the mortgagor prefers that a formal reconveyance is executed, rather than merely a memorandum of discharge, the mortgagor may, by virtue of s 91(5), require the mortgagor to do this. Note, however, that where there are subsequent mortgagees, the effect of a discharge is to vest legal title in the subsequent mortgagee who has priority.282 If there is only one subsequent mortgagee, then legal title vests in him or her on discharge of the earlier mortgage. Where the mortgagor is seeking to discharge the mortgage for the purposes of selling the land to a third party, it may be more convenient for the mortgagor to have legal title directly conveyed to a third party, instead of requiring a discharge of mortgage, return of the title to the mortgagor and reconveyance to a third party. This is possible according to s 94(1) of the Conveyancing Act, in circumstances where the mortgagee has not taken possession of the relevant property.

Torrens title 14.81  Section 65(1) of the Real Property Act states that when a mortgage ‘is intended to be discharged’, the mortgagee ‘shall execute a discharge in the approved form’. The section does not state explicitly that the mortgagor is entitled to demand such a discharge even though the contractual date to redeem may have passed. Logic would suggest that if the contractual date to redeem has passed, the right to redeem cannot be legal, and hence is equitable. Clearly, the mortgagor under the Torrens system cannot redeem his or her interest according to the procedures and methods available to the mortgagor under old system title, because the Torrens mortgagor does not convey his or her ‘legal’ title to the mortgagee in the first place. Yet the language of old system title, as we have discovered earlier, pervades this area of law and, quirkily, we still tend to speak of an equity of redemption when we really mean discharging of the mortgage.283 Under the Torrens system, the only method of discharging a mortgage is by registration of a discharge of mortgage.This can be a total or partial discharge. In some circumstances, a discharge will have the effect of preventing a mortgagee from suing on the personal covenant. For example, in Groongal Pastoral Co Ltd v  Falkiner,284 the High  Court held that the memorandum of discharge, if registered, had the effect of a deed and, as the instrument contained an acknowledgment that the discharge was in full satisfaction of the debt, it was impossible for the mortgagee to sue on the personal covenant. Further, if the discharge has been registered there is no mechanism permitting it to be cancelled leaving the mortgage on foot.285 281. Presumably, for old system land, the ‘registration’ referred to in s 91(3)(a) is registration in the General Register of Deeds established by Pt 23 of the Conveyancing Act: see s 184D(1). Subsection 91(6) refers to registration of Torrens system land. 282. Conveyancing Act 1919 (NSW) s 91(3); Hosking v Smith (1888) 13 App Cas 582; Crosbie-Hill v Sayer [1908] 1 Ch 866 at 873–4. 283. The Real Property Act even employs the language of ‘the equity of redemption’ in s 62(3). 284. Groongal Pastoral Co Ltd v Falkiner (1924) 35 CLR 157. 285. State Bank of New South Wales v Berowra Waters Holdings Pty Ltd (1986) 4 NSWLR 398. Yet, where the discharge was registered when a caveat was supposed to prevent it from being registered, the court found it

761

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14.82  Another issue that is relevant in this context is: who has the right to discharge a Torrens title mortgage? Section 93 of the Conveyancing Act, in the referring to ‘mortgagor’ and ‘mortgagee’, suggests that neither an assignee of the mortgagor nor a subsequent mortgagee is able to redeem or discharge the mortgage. However, the reasoning in Van den Bosch v Australian Provincial Assurance Association Ltd286 suggests that, at least after default, the position is different. The court held that a purchaser of the mortgaged land, who acquires an equitable interest in the land by virtue of having entered into a contract of sale, together with the personal representatives of the mortgagor, could discharge the mortgage, but a guarantor, who acquires only a personal right, could not. Where the mortgagee is out of the jurisdiction, cannot be found or is unknown, it is still possible for the mortgagor to gain a discharge of mortgage pursuant to s 98 of the Conveyancing Act. 14.83  Finally, it is uncertain whether many of the rules pertaining to the redemption of title under old system land are applicable to the discharging of a Torrens title mortgage. For example, while it is clear under old system title that if a mortgagor does not pay the mortgage debt by the contractual date for repayment, he or she must give the mortgagee six months’ notice of his or her intention to redeem, it is less clear whether under the Torrens scheme such a rule is applicable.287

Power of sale288 Introduction 14.84  The power of sale is the most commonly used remedy where the mortgagor defaults under the mortgage. It applies equally in the commercial and domestic arenas, but it is not always the most appropriate remedy, particularly when the real estate market is in decline. At times, it might be more appropriate for the mortgagee to assist the mortgagor to refinance. At other times, the mortgagee might consider the following options: • • • •

assigning the mortgage; permitting a sub-mortgage; recouping from a guarantor, if there is a guarantor; improving the property so it might yield more rent for the mortgagor to use as instalment payments on the mortgage; • leasing; or • appointing a receiver.289 could be reversed, as the registration took place by error. See FNCB-Waltons Finance Pty Ltd v Crest Realty Pty Ltd (1987) 10 NSWLR 621. 286. Van den Bosch v Australian Provincial Assurance Association Ltd (1968) 88 WN (Pt 1) (NSW) 357. 287. Cape v  Trustees of the Savings Bank of New  South  Wales (1893) 14 LR (NSW) Eq 204; McColl v  Bright [1939] VLR 204. See also PM Fox, ‘The Redemption of Torrens System Mortgages after Default’ (1950) 24 Australian Law Journal 311, and the discussion in Sykes and Walker, The Law of Securities, note 1 above, pp 243–44. 288. For more detailed discussion, see C Croft and R Hay, The Mortgagee’s Power of Sale, 3rd ed, LexisNexis Butterworths, Sydney, 2011. 289. New South Wales Conveyancing Law and Practice, CCH, loose-leaf, ‘Mortgages’, [34–860]. Historically, even if the mortgagee was selling the property out of malice and did not actually need the property, the court

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It is possible that, in some circumstances, these alternatives might better safeguard the money lent and have less dire consequences for the mortgagor. Nevertheless, there are times when opting to use the power of sale is the most effective means of dealing with a default under the mortgage. Where the mortgagee does opt to exercise the power of sale, it is necessary for him or her to follow strictly a range of procedural requirements which are basically designed to give the mortgagor notice that he or she is about to lose the property and to ensure that a reasonable price is procured on sale. Mortgagees also have certain duties to conduct the sale in a way that is consistent with procuring a reasonable price. If the sale does not yield sufficient funds to cover the mortgage debt, the mortgagee is able to sue on the personal covenant for the remainder. This is but one way in which the power of sale differs from foreclosure. 14.85  It is usual for the mortgage itself to contain a clause permitting the mortgagee the right to sell the mortgaged property if there is a default. If the instrument is silent on this issue, a clause permitting sale arises by implication (if there is no contrary intention)290 pursuant to s 109(1) of the Conveyancing Act. It is not mandatory that the sale be by public auction, but in practice this is the most common method of exercising a power of sale, because it generally involves fewer disputes about whether due regard has been paid to the mortgagor’s interests and whether the property has been sacrificed.291 At times, the mortgagee may wish to sell the fixtures separately, and this is permissible under s  109(1)(e) of the Conveyancing Act. Section  109(1)(f) also provides that the mortgagee has a power to sell any easements, profits à prendre, rights or privileges of any kind over the mortgaged property. Section  110 of the Conveyancing Act outlines some of the powers incidental to an exercise of the power of sale, and s  110(4) specifically points out that these provisions are equally applicable to Torrens title land and old system title land. Where the land in question is subject to the Torrens legislation, s 111 of the Conveyancing Act spells out that compliance with ss 57, 58 and 58A of the Real Property Act is necessary. These latter sections in the Real Property Act set out the procedure on default and the restrictions and boundaries of the power of sale itself, as well as setting out requirements for dispensing with notice or lapse of time.

Old system title 14.86  Default by mortgagor  Pursuant to s 111(2) of the Conveyancing Act, there must be a default by the mortgagor before the mortgagee can validly exercise the power of

would not prevent the exercise of the power of sale. See Nash v Eads (1880) 25 Sol Jo 95. This approach may need to be adjusted now in light of more recent decisions on the duty owed by a mortgagee such as MBF Investments Pty Ltd v Nolan (2011) 37 VR 116, discussed below at 14.107. 290. Conveyancing Act 1919 (NSW) s 109(3). 291. Conveyancing Act 1919 (NSW) s 109(1)(a).

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sale in respect of old system land. Section 111(2)(a) provides that the power of sale can be validly exercised where the mortgagor has defaulted in: • the observance of a covenant, agreement or condition expressed or implied in the mortgage; • the payment, in accordance with the terms of the mortgage, of any part of that principal, interest or other money, the payment of which is secured by the mortgage; or • the payment, in accordance with the terms of the mortgage, of any part of that principal, interest or other money. 14.87  Notice  As the effect of an exercise of the power of sale can be quite harsh on the mortgagor, statute dictates some quite stringent notice requirements that must be satisfied before the property can be sold.292 Sections 109(2), 111(2)(a), (b1) and (c), and 113(3) of the Conveyancing Act set out the key notice requirements. 14.88  The situation is different according to whether the default under the mortgage is monetary in nature or not. In short, if the default is monetary in nature, the mortgagee cannot validly exercise the power of sale, even if the mortgagor has defaulted in the payment of the whole or part of the principal, interest or other money secured by the mortgage, unless the mortgagee serves written notice on the mortgagor requiring that the mortgagor repay the money within one month. The notice must say that a failure to pay will result in the exercise of the power of sale. In cases of monetary defaults, the written notice requirement cannot be dispensed with, nor can the duration of the notice be reduced, although it is possible to extend the period of notice beyond one month if the terms of the mortgage permit it. If the default is not monetary in nature, but arises from a failure to observe a ‘covenant, agreement or condition’, expressed or implied in the mortgage, written notice must also be served and that notice must require the mortgagor to remedy the default by compliance with the covenant, agreement or condition within one month, or otherwise the power of sale will be exercised. Only where the breach is non-monetary can the notice requirement be reduced or dispensed with if the provisions of the mortgage permit it. Commonwealth Bank of Australia v Tugvale293 demonstrates this proposition. 14.89  Section 111(2)(b) of the Conveyancing Act requires that written notice be served on the mortgagor if the default relates to the payment of money or if the fault does not relate to the payment of money but notice or lapse of time has not been dispensed with by agreement.294 The notice must state that it is a notice pursuant to s 111(2)(b),295 and 292. In Hunter v Hunter [1936] AC 222 at 247, Viscount Hailsham LC states ‘the right of sale is a very drastic remedy’. 293. Commonwealth Bank of Australia v Tugvale Pty Ltd (1993) NSW ConvR ¶55–687. See also s 109(2) of the Conveyancing Act. 294. Hoole v  Smith (1881) 17 Ch  D 434 demonstrates that notice should be served on the mortgagor, any person taking title to the equity of redemption or any person in the position to redeem. ANZ Banking Group Ltd v Devine Holdings Pty Ltd (1991) ANZ ConvR 526 demonstrates that the term ‘mortgagor’ also extends to lessees of old system title land. 295. Conveyancing Act 1919 (NSW) s 111(3)(a).

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must set out the default. This latter point is necessary in order to allow the mortgagor the opportunity to remedy the default before sale.296 The notice must also state that the mortgagor has one month (or a longer period if a longer period is spelled out in the mortgage itself) after the service of the notice to remedy the default.297 It must require the remedying of the mortgagor’s default by observation of ‘the covenant, agreement or condition’ in respect of which he or she is in default,298 or by the payment of ‘the principal, interest or other money in respect of the payment of which the mortgagor or person made default’, depending on which is relevant.299 The notice must also make it plain that, if the default is not remedied satisfactorily, the power of sale will be exercised. Further, each mortgagee or chargee ‘under a mortgage or charge to which the land is subject registered in the General Register of Deeds’ must be served with a copy of the notice.300 If the costs and expenses of preparing and serving the notice are to be claimed, the notice must set out a reasonable amount for those costs and expenses and must specify the amount.301 The situation is slightly different where the mortgagor has committed a monetary default but has complied with all other covenants, and the mortgagee has continued to accept the payment of interest for a period of not less than three months. In those circumstances, pursuant to s 92 of the Conveyancing Act, the mortgagee must give three months’ notice of his or her intention to exercise the power of sale. 14.90  Where notice is to be dispensed with validly, it must be clear that the exclusion of notice was given in relation to the operation of s 111 of the Conveyancing Act. A general notification that notice has been excluded is insufficient; but, on the other hand, it is not necessary to go as far as naming the sections of the Act to which the notice is linked. Where notice pursuant to s 111(3) of the Conveyancing Act is defective, the position is the same as if the notice were defective pursuant to s 57(3) of the Real Property Act.302 14.91  Service of notice  Section 111(2)(b) of the Conveyancing Act is relevant to the service of notice. It incorporates s 170 of the same Act by reference. The circumstances set out in s 170 can be extended, as demonstrated by Ex parte Dally-Watkins; Re Wilson303 (which widens the circumstances that amount to sufficient notice), or ignored if the mortgage instrument expresses an intention contrary to s 170. Where there is compliance with s 170 in the case of a mortgagor in possession, service of notice can be effected by leaving or sending notice by post to any occupied house or building comprised in the mortgage.304 If there is a failure to give notice, the consequences are the same for old 296. Mir Bros Projects Pty Ltd v 1924 Pty Ltd [1980] 2 NSWLR 907 at 925. Although this case is a Torrens title case, the point is equally relevant. 297. Conveyancing Act 1919 (NSW) s 111(2)(d). 298. Conveyancing Act 1919 (NSW) s 111(3)(b)(i). 299. Conveyancing Act 1919 (NSW) s 111(3)(b)(ii). 300. Conveyancing Act 1919 (NSW) s 111(2)(b1). 301. Conveyancing Act 1919 (NSW) s 111(3)(c). 302. See 14.94–14.98 for the situation in relation to Torrens title land and notice. 303. Ex parte Dally-Watkins; Re Wilson (1955) 72 WN (NSW) 454. 304. Conveyancing Act 1919 (NSW) s 170(1)(b1).

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Property Law in New South Wales

system and Torrens title, as described below.305 If the mortgagor complies with the notice requirement and remedies the default, it is as though the default never occurred.306 14.92  Where the power of sale is exercised, the source of that power is s 109(1)(a) of the Conveyancing Act, and the mortgagee, in the appropriate circumstances, is able to exercise the power in relation to the mortgaged land or any part of it. Further, it may be sold by auction or private treaty, but it is necessary that the mortgage is in the form of a deed if the power of sale is to be exercised pursuant to the statute. 14.93  Where there is no deed of mortgage, an equitable mortgage may still exist, but the conditions under which the power of sale exists and is exercisable are different. As we have noted, an equitable mortgage may arise if there is an express or implied agreement to create a security. Where the contract that has given rise to an equitable mortgage includes a power of sale, the mortgagee is able to rely on the contents of the contract to exercise that power. Where there is an equitable mortgage of a legal estate, since the mortgagee has never been in receipt of the legal title, it is unclear what interest he or she has to pass to a purchaser. In the English case of Re Hodson & Howes’ Contract,307 the court found that the mortgagee could not pass the legal estate because it remained with the mortgagor. By contrast, the court found in Re White Rose Cottage308 that the mortgagee could pass the legal estate because the ‘subject of the mortgage is the property itself [a legal interest] and not an equitable interest in it’. If an equitable mortgage is created by the deposit of title deeds, it would seem that, although the mortgagor must put the equitable mortgagee in the same position as the legal mortgagee would be in, there is no source for a valid exercise of the power of sale unless the contract underpinning the equitable mortgage and the deposit of title deeds actually spells out that the mortgagee has a power of sale.Without the inclusion of such a power, the equitable mortgagee would be thrown back on the remedy of foreclosure rather than sale.309 Where the equitable mortgage in question involves the mortgage of an equitable estate rather than a legal one, the equitable mortgagee can exercise the power of sale implied by s 109(1)(a) of the Conveyancing Act as long as the mortgage is contained in a deed. If there is no deed, but the contract on which the mortgage is based grants the mortgagee a power of sale, then the position is the same as if there were an equitable mortgagee of a legal estate seeking to exercise a power of sale pursuant to a term contained in the contract on which the mortgage is based. 305. See 14.97. 306. Conveyancing Act 1919 (NSW) s 111(4). 307. Re Hodson & Howes’ Contract (1887) 35 Ch D 668 (CA). 308. Re White Rose Cottage [1964] Ch  483 at  496 per Wilberforce J. This view has been followed by the English Court of Appeal, but is disputed by Khan in relation to New South Wales (see New South Wales Conveyancing Law and Practice, loose-leaf, CCH, [35–140]). Khan argues that the wording of s 112(1) of the Conveyancing Act leaves no room for it to extend to the property subject to the mortgage and not the nature of the security itself. Even if this were the case, the equitable mortgagee would be entitled to enforce the contract by virtue of an order for specific performance, and it is probable that a term could be implied into the contract to the effect that the mortgagor in default would do all in his or her power to vest the legal estate in the mortgagee. 309. See National Bank of Tasmania Ltd v McKenzie [1920] VLR 411 at 425; Ryan v O’Sullivan [1956] VLR 99.

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Mortgages

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Torrens title 14.94  Notice and default The exercise of the power of sale in relation to registered mortgages under Torrens title land is primarily governed by ss  57 and 58 of the Real Property Act, in conjunction with ss 109 and 110 of the Conveyancing Act. The power of sale cannot be validly exercised unless there is a default, and proper written notice is served demanding that the default be rectified. The written notice must be served on the mortgagor and a copy served on each mortgagee or chargee under a registered mortgage who has a lower priority than the mortgagee activating the power of sale. Notice also needs to be served on each caveator claiming an interest in the mortgaged property by way of an unregistered mortgage or charge.310 Clearly, the security of these parties would be affected by any sale. Section 57(2)(a) of the Real Property Act sets out the types of default that permit the mortgagee to exercise the power of sale. It states that: 57 (2)  A registered mortgagee, chargee or covenant chargee may, subject to this Act, exercise the powers conferred by section 58 if:

(a) in the case of a mortgage or charge, default has been made in the observance of any covenant, agreement or condition expressed or implied in the mortgage or charge or in the payment, in accordance with the terms of the mortgage or charge, of the principal, interest, annuity, rent-charge or other money the payment of which is secured by the mortgage or charge or of any part of that principal, interest, annuity, rent-charge or other money, …

Written notice is always required in the case of a monetary default relating to the payment of any principal, interest, annuity, rent-charge or other money in accordance with the mortgage, but it can be dispensed with under s 58A of the Real Property Act by agreement, where the default is non-monetary in nature.311 Where a provision dispensing with the need to give notice or reducing the amount of notice for a non-monetary default has been included, it must be plain that the dispensation is linked to s  57 of the Real Property Act. As the consequences of default are potentially very serious, it is important that the mortgagor is alerted to clauses that might impact upon him or her in that regard. Nevertheless, the dispensation of the notice provision does not have to go as far as actually reciting the relevant sections, but it cannot be a general dispensation provision either.312 14.95  In some circumstances, discussed below, the requirement of notice can be dispensed with.313 Where notice is either required or not dispensed with, some elements must be included in the notice for it to be valid. Section 57(3) of the Real Property Act sets out the required elements; they include specifying that the notice is given in relation 310. Real Property Act 1900 (NSW) s 57(2)(b1). 311. Real Property Act 1900 (NSW) s 57(2)(b)(ii). 312. For diverging positions on dispensation of notice provisions, see Farrow Mortgage Services Pty Ltd v Ragata Developments Pty Ltd (1993) 32 NSWLR 333 at 340–1; Topfelt Pty Ltd v State Bank of New South Wales (1993) NSW ConvR ¶55–676 (CA), noted in Edgeworth, note 42 above, p 748, n 762. 313. See Real Property Act 1900 (NSW) s 57(2)(b); Carr v Finance Corp of Australia (No 2) (1982) 150 CLR 139 at 141–52.

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Property Law in New South Wales

to s 57(2)(b).314 Generally, omission of this element renders the notice invalid,315 but if the mortgagor does not seek injunctive relief and the purchaser had no knowledge of the absent section references at the date of entering into the contract, the purchaser is able to seek the assistance of equity through an order for specific performance of the contract.316 At other times, delay by the mortgagor in objecting to the inadequacies of a notice may also cause the doctrine of laches to be invoked. This doctrine prevents the mortgagor from relying on his or her strict legal rights, because his or her own delay in objecting to the invalid notice would result in unconscionability to the mortgagee.317 Further, as Mir Bros Projects Pty Ltd v 1924 Pty Ltd318 suggests, the purpose of notice is to allow the mortgagor the opportunity to remedy the breach or default before sale and, therefore, according to the reasoning in Mediservices International Pty Ltd v Stocks and Realty (Security Finance) Pty Ltd,319 the mortgagee is required to particularise and specify the way in which default is to be remedied. A failure to particularise the breach or default will render the notice defective. Where a default is alleged to have occurred but this did not actually occur, the notice will be rendered defective. This was the position in Websdale v S & J D Investments Pty Ltd.320 However, the court did not require that the particularisation of the default extend to specifying the exact amount owed by the defaulting mortgagor. As an extension of this logic, an incorrect specification of the amount owed does not invalidate the notice either.321 Hence, the inclusion of an amount greater than that owed will not invalidate the notice, as Campbell v  Commercial Banking Co of Sydney demonstrated.322 There, it was made plain that, although the amount was overstated in the notice, that did not relieve the mortgagor from the obligation to pay the correct amount. Yet, if the overstatement of the amount in default is of ‘enormous scope’, as it was in Clarke v  Japan Machines (Australia) Pty Ltd,323 the court will disallow the notice and deviate from the position taken in Mir Bros Projects Pty Ltd v 1924 Pty Ltd and Campbell v Commercial Banking Co of Sydney.324 The court may also disallow the notice if an excessive

314. Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361. 315. In circumstances where the relevant section is not cited, the mortgagor may restrain a sale by injunction. See Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361 at 376–7. 316. Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361 at 376–7. 317. Websdale v S & J D Investments Pty Ltd (1991) 24 NSWLR 573. 318. Mir Bros Projects Pty Ltd v 1924 Pty Ltd [1980] 2 NSWLR 907 at 925. 319. Mediservices International Pty Ltd v Stocks and Realty (Security Finance) Pty Ltd [1982] 1 NSWLR 516. 320. Websdale v S & J D Investments Pty Ltd (1991) 24 NSWLR 573 at 578. 321. Mir Bros Projects Pty Ltd v  1924 Pty Ltd [1980] 2 NSWLR 907 states that a notice will be effective, notwithstanding the fact that it demands more money than is actually due. Note also that in Websdale’s case the court drew a distinction between a mistake that demands more money than that which is due (Mir Bros Projects) and a notice which, instead of merely overstating the debt, asserts wrongly that the debt is due. The latter will not be valid notice. 322. Campbell v Commercial Banking Co of Sydney (1879) 2 LR (NSW) 375. 323. Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404. 324. Mir Bros Projects Pty Ltd v 1924 Pty Ltd [1980] 2 NSWLR 907 at 925; Campbell v Commercial Banking Co of Sydney (1879) 2 LR (NSW) 375.

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sum is stated as owing and the mortgagee refuses to accept any amount less than the excessive (and wrong) amount.325 14.96  The doubts expressed about the validity of the notice in Segulin v Car Owners’ Mutual Insurance Co Ltd326 suggest that it would be prudent for the notice to separate the amount of principal from the amount of interest which is due. However, the requirements regarding the signature on the notice are relatively liberal by comparison, in that it is unnecessary for the mortgagee himself or herself to sign. It is enough that the mortgagee’s solicitor signs the notice.327 Further, the notice does not have to be executed under seal.328 If the mortgagee wishes to claim the costs and expenses involved in preparing and serving the notice, he or she must require payment of those costs and expenses in the notice. The required amount must also be reasonable and specified in the notice. Another key issue in relation to notice is the duration of the period that the mortgagor has in which to rectify the default. In that regard, the mortgagee must state in the notice that unless the requirements set out in it are adhered to within one month of service (or a period longer than one month), that the mortgagee plans to proceed in exercising the power of sale. 14.97  If notice is not given in compliance with s 57(3) of the Real Property Act, quite simply the mortgagee is not permitted to exercise the power of sale.329 The situation can be further complicated where the Real Property Act is not the only legislation that the credit provider is bound by in regard to the mortgage. If, for example, the National Credit Code (NCC) also governs the mortgage, the credit provider must first issue a default notice under s  88(2) of the Code before the power of sale is exercised. Such a notice gives the borrower 30 days in which to rectify the default. The credit provider must also comply with requirements in other provisions of the legislation but, pursuant to s 88(4) of the NCC, it is possible to combine the notice concerning the mortgage with notice concerning another debt. 14.98  Where the mortgagee waives the right to exercise his or her power of sale after proper notice has been served, new notice is needed if the mortgagee later wishes to exercise the power of sale.330 Where the mortgagor remedies the default by paying the outstanding amount in the notice, the slate is wiped clean and any new default requires new notice.331

325. See Campbell v Commercial Banking Co of Sydney (1879) 2 LR (NSW) 375; Clare Morris Ltd v Hunter BNZ Finance Ltd (1988) 4 BPR 9609; Diera Pty Ltd v Grover (1990) ASC 55-974; Krey v National Australia Bank Ltd (1992) NSW ConvR ¶55–653. 326. Segulin v Car Owners’ Mutual Insurance Co Ltd (1984) NSW ConvR ¶55–191. 327. Hallifax Property Corporation Pty Ltd v GIFC Ltd (1987) NSW ConvR ¶55–361. 328. Hallifax Property Corporation Pty Ltd v GIFC Ltd (1987) NSW ConvR ¶55–361. 329. Bevham Investments Pty Ltd v Belgot Pty Ltd (1982) NSW ConvR ¶55–088. 330. Barns v Queensland National Bank Ltd (1906) 3 CLR 925; Hallifax Property Corporation Pty Ltd v GIFC Ltd (1987) NSW ConvR ¶55–361. 331. Conveyancing Act 1919 (NSW) s 111(4). See also Morton v Suncorp Finance Ltd (1987) 8 NSWLR 325 at 335.

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It is common for a mortgage to contain a clause making the whole of the debt immediately payable on any default in payment under the mortgage.332 However, such a clause cannot be upheld until the mortgagee is able to exercise the power of sale in respect of a particular default. Further, that power of sale arises only after the mortgagee first properly satisfies the notice provisions in the Act. All of the above notice requirements are relevant only where the power of sale is exercised pursuant to statute. If the sale is the result of a mortgagee suing on the personal covenant, these notice requirements are unnecessary and the mortgagee must comply only with the notice requirements set out in the mortgage instrument.

Exercise of the power of sale 14.99  It is usual for a mortgage to contain an express provision empowering the mortgagee to sell the mortgaged property on default by the mortgagor. Alternatively, the power can be implied.333 If the mortgagee of old system or Torrens title land has complied with the prerequisites to the exercise of the power of sale, he or she is able to exercise that power by selling the property either by auction or private contract.334 The mortgagee is also able to impose whatever restrictions he or she thinks fit,335 to sever fixtures,336 and to sell any easement, profit à prendre, right or privilege over the land.337 The provisions governing the aforementioned rights are applicable to both old system and Torrens title land pursuant to ss 108(1), 109(5) and 110(4) of the Conveyancing Act.338 If the sale proceeds, the purchaser will take a title free from all interests over which the mortgage has priority, but bound by those over which the mortgage does not have priority.339 It should be noted that other interests in the property are capable of arising because the mortgagor is permitted to deal with the land after a mortgage has been created. Therefore, he or she may create further interests in that land that are subject to the mortgagee’s interest. These further interests will only be defeated if the mortgagee exercises the power of sale. Clearly, if the further interests are registered, the purchaser is not protected from them; but if they are unregistered, the situation is less certain. If the further interest holders have lodged caveats, then it seems likely that the transfer to a 332. Section 57(5) of the Real Property Act governs acceleration clauses. Turnbull v National Mutual Royal Bank (1992) 26 NSWLR 361 at 370 supports the proposition that this section applies only to an acceleration clause in the registered mortgage itself, and not one in a collateral agreement. 333. Conveyancing Act 1919 (NSW) s 109(1)(a). 334. Conveyancing Act  1919 (NSW) s  109(1)(a); Real Property Act  1900 (NSW) s  58(1). Sale by private contract, auction or a combination of both is permitted. Sales on credit are also permitted. See Wright v New Zealand Farmers Co-operative Association of Canterbury Ltd [1939] AC 439. 335. Conveyancing Act 1919 (NSW) s 109(1)(a). 336. Conveyancing Act 1919 (NSW) s 109(1)(e). However, the right to sever does not exist at common law (as opposed to statute) unless it is expressly included in the mortgage. See Kay’s Leasing Corporation Pty Ltd v CSR Provident Fund Nominees Pty Ltd [1962] VR 429. 337. Conveyancing Act 1919 (NSW) s 109(1)(f). 338. ANZ Banking Group Ltd v Bangadilly Pastoral Co Pty Ltd (1978) 139 CLR 195 at 227. 339. The exception to this is if the mortgagee sells to the mortgagor. Then, the mortgagor is still bound by the other estates or interests that have been created in the land. See 14.99.

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purchaser cannot proceed until the caveats are dealt with.340 In the light of this, and for other reasons too, it is very important to examine the conduct and manner of the sale. 14.100  Under no circumstances at common law can the mortgagee sell the property to himself or herself. This prohibition exists even if the mortgagee is prepared to pay a very generous price for the mortgaged property.341 Therefore, it is somewhat surprising to see that s 109(1)(a) of the Conveyancing Act permits the mortgagee of old system title land to ‘buy in’ the property at auction, while s 109(5) provides that the powers conferred by s  109 apply to mortgages of Torrens land. Section  58(1) of the Real Property Act expands the instances in which ‘buying in’ can occur in relation to Torrens title land by not restricting them to auctions only. Perhaps these provisions exist to prevent the property being sold at a ridiculously low price, but if that were the case it is difficult to see why the mortgagee would not simply set a sensible reserve in the first place.342 14.101  The sale must constitute a genuinely independent bargain.343 Therefore, a mortgagee in the form of a corporation cannot sell the mortgagor’s property to another corporation that is effectively controlled by the same mortgagee. Such a sale would lack the necessary independence. In that regard, Australia and New Zealand Banking Group Ltd v Bangadilly Pastoral Co Pty Ltd held that ‘the closer the association the greater the conflict and the greater the possibility of unconscious preference’.344 Hence, officers, solicitors or agents of the mortgagee have been ruled out as purchasers of the property that is being sold pursuant to an exercise of the power of sale,345 but exceptions to this position do exist.346 That the sale is independent and genuine is important, although what will constitute a genuine sale may at times appear inconsistent. For example, a sale where the mortgagee lends the purchase price to the purchaser and then arranges to buy the property from that purchaser within a specified period will not preclude it from being regarded as genuine if it is, in all other respects, genuine. In some ways this may seem anomalous with the law that prevents a corporation in which the mortgagee has shares from purchasing the relevant property. Despite this seeming inconsistency, other restrictions designed to lead to a genuine sale have been upheld. These include preventing the mortgagee from simply exchanging the property for another347 or making a gift of the property to some third party.348 14.102  Unusual as it may seem, it is possible for the mortgagee to sell to the mortgagor. One may be led to wonder why the mortgagor does not simply repay the debt owed under the mortgage, instead of purchasing the property. The answer is often because the 340. See Forster v Finance Corp of Australia Ltd [1980] VR 63. 341. Farrar v  Farrars Ltd (1888) 40 Ch  D 395 at  409; Williams v  Wellingborough Borough Council [1975] 1 WLR 1327. 342. See Wynne v Moore (1870) 1 AJR 156; Henderson v Astwood [1894] AC 150. 343. ANZ Banking Group Ltd v Bangadilly Pastoral Co Pty Ltd (1978) 139 CLR 195 at 227. 344. ANZ Banking Group Ltd v Bangadilly Pastoral Co Pty Ltd at 201–2.The position is the same regarding both old system and Torrens title mortgages on this point. 345. See Martinson v Clowes (1882) 21 Ch D 857 at 860. 346. Sewell v Agricultural Bank of Western Australia (1930) 44 CLR 104. 347. Taylor v Parkinson (1911) 31 NZLR 354. 348. Davey v Durrant (1857) 1 De G & J 535; 44 ER 830.

771

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Property Law in New South Wales

mortgagor does not have sufficient funds to repay the debt, but he or she does have the funds to cover a purchase price that is lower than the debt secured by the mortgage. Pursuing such a course of action does not relieve the mortgagor from being bound by mortgages ranking behind that of the mortgagee who is selling. Equity intervenes to ensure that mortgagees ranking behind the selling mortgagee remain protected,349 whereas, in circumstances where the purchaser is not the mortgagor, the purchaser will take free of later-ranking mortgages.

Negligence or good faith test? 14.103  When exercising the power of sale, the mortgagee must adhere to a standard of conduct that has the effect of balancing his or her own interests against those of the mortgagor. Historically, there has been judicial and academic debate about whether the correct standard was to be found through an application of the ‘reasonable care’ standard, otherwise known as the ‘negligence’ standard, or alternatively through the ‘good faith’ standard.350 The first standard clearly results in a standard that is stricter than the latter. In Australia, the issue is complicated by the existence of statutory duties that seem to be additions to, rather than replacements for, the general law duty.351 14.104  Negligence standard  McHugh v Union Bank of Canada,352 Standard Chartered Bank Ltd v Walker353 and Cuckmere Brick Co Ltd v Mutual Finance Ltd354 are all examples of the negligence standard in operation. In McHugh v Union Bank of Canada,355 Lord Moulton described the duty as one requiring the mortgagee to behave ‘as a reasonable man would behave in the realisation of his own property’, while in Standard Chartered Bank Ltd, Lord Denning stated that: This duty is only a particular application of the general duty of care to your neighbour which was stated by Lord Atkin in Donoghue v  Stevenson … and applied in many cases since.356

In Cuckmere Brick Co Ltd,357 Salmon LJ observed that the mortgagor ‘is vitally affected by the result of the sale but its preparation and conduct is left entirely in the hands of the mortgagee’.358 The mortgagor and mortgagee are accordingly ‘neighbours’.359 His 349. Otter v Lord Vaux (1856) 6 De GM & G 638. 350. P Butt, ‘The Mortgagee’s Duty on Sale’ (1979) 53 ALJ 172; E Tyler, ‘Enforcing Mortgage Securities’ (1981) 55 Australian Law Journal 559. 351. See, for example, Conveyancing Act 1919 (NSW) s 111A. For a New Zealand perspective on this issue, see P Devonshire, ‘The Mortgagee’s Power of Sale: New Perspectives on an Old Theme’ (1995) 16 New Zealand Universities Law Review 251. 352. McHugh v Union Bank of Canada [1913] AC 299 per Lord Moulton. 353. Standard Chartered Bank Ltd v Walker [1982] 1 WLR 1410. 354. Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949. 355. McHugh v Union Bank of Canada [1913] AC 299 per Lord Moulton at 311. 356. Standard Chartered Bank Ltd v Walker [1982] 1 WLR 1410 per Lord Denning at 1415, referring to Donoghue v Stevenson [1932] AC 562. 357. Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949. 358. Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949 at 965. 359. Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949 at 965.

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Mortgages

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Lordship concluded that the mortgagee has a duty ‘to take reasonable precautions to obtain the true market value of the mortgaged property at the date on which he decides to sell’360 it. On the basis of this requirement, it is easy to see why many mortgagees favour selling by public auction. That method allows them to argue that the property is worth what a willing purchaser is prepared to pay for it on the given day. It can be argued that that price constitutes the property’s market value.361 Nevertheless, if, as in Cuckmere Brick Co Ltd, the mortgagee makes errors when advertising the property with the consequence that potentially interested purchasers are not attracted to the auction and the market has not really been ‘tested’, there will have been a breach of duty on the part of the mortgagee. 14.105  Parker-Tweedale v Dunbar Bank plc,362 China and South Sea Bank Ltd v Tan Soon Gin363 and Mailman v Challenge Bank Ltd364 are cases that all represent a retreat from the negligence standard. Downsview Nominees Ltd v First City Corp Ltd365 continued the retreat by stating that the mortgagee did not owe the mortgagor a duty of care, in negligence, in the exercise of the power of sale. That meant that there was no requirement to use reasonable care in the exercise of the power of sale. In so doing, the Privy Council veered away from the common law negligence standard towards an equitable duty, and found that to rely on the common law standard would cause ‘confusion and injustice’. Yorkshire Bank plc v Hall366 and Medforth v Blake367 have followed. The equitable duty with which these cases have been concerned ‘takes account of the interest of the mortgagor and others interested in the equity of redemption’.368 14.106  Good faith standard  Kennedy v De Trafford 369 represents the ‘good faith’ line of authority. In that case, Lord Herschell LC stated that a mortgagee would not be in breach of his or her duty if the power of sale were exercised in ‘good faith, without any intention of dealing unfairly’.370 Lord Macnaghten, in the same case, stated that if a mortgagee ‘takes pains to comply with the provisions of that power and acts in good faith’, then the mortgagee would not be judged as having fallen short of the minimum standard.371 On this view, conduct that is dishonest or in deliberate disregard of the mortgagor’s interests

360. Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949 at 965. 361. Even when an auction is used, difficulties can still arise; for example, in setting the reserve price. See General Credits Ltd v Southern Goldfields Ltd (1991) ANZ ConvR 40, where the defendant received valuations for $715,000, $675,000 and $730,000, but set the reserve at $360,000. The court held the mortgagee was liable for wilfully and recklessly sacrificing the property. 362. Parker-Tweedale v Dunbar Bank plc [1991] Ch 12 concerned a mortgagee as trustee. 363. China and South Sea Bank Ltd v Tan Soon Gin [1990] 1 AC 536. 364. Mailman v Challenge Bank Ltd (1991) 5 BPR 11,721 considered whether the mortgagee owed a duty of care to the guarantor when exercising the power of sale. 365. Downsview Nominees Ltd v First City Corp [1993] 2 WLR 86.This case went to the Privy Council on appeal from New Zealand. 366. Yorkshire Bank plc v Hall [1999] 1 All ER 879. 367. Medforth v Blake [2000] Ch 86 at 98–102. 368. Medforth v Blake [2000] Ch 86 at 101–2. 369. Kennedy v De Trafford [1897] AC 180. 370. Kennedy v De Trafford [1897] AC 180 at 185. 371. Kennedy v De Trafford [1897] AC 180 at 192.

773

14.106

Property Law in New South Wales

in having the mortgage debt discharged from the proceeds of sale would breach the duty, but a mere failure to take reasonable care to get the market price would not. 14.107  Which standard in Australia? The Australian case law has not pointed unambiguously towards either the negligence or the good faith standard, although the weight of authority suggests that mere carelessness on the part of the mortgagee in obtaining the best possible price would not constitute a breach of the general law duty. An early opportunity for the High Court of Australia to consider the question arose in Pendlebury v  Colonial Mutual Life Assurance Society Ltd.372 In that case, Isaacs J said that ‘to make [the mortgagee] answerable for mere carelessness’ was ‘placing the standard too high’.373 The conduct to be avoided was conduct that was ‘reckless or wilful’, ‘reckless’ conduct being that which involves ‘a disregard of the mortgagor’s interest, ignoring his profit in the possible surplus, in short, not caring whether it’s fair and proper value was obtained or not’.374 A strong argument against a negligence or mere carelessness standard is that the mortgagee is entitled to realise its security and ought not to be required to postpone the sale simply because it is possible that a better price would be obtained by, for example, postponing the sale or engaging in further advertising. The mortgagee is not required to take reasonable care to advance the interests of the mortgagor in maximising the value of the surplus on sale. Rather, as Franklyn J said in Southern Goldfields Ltd v  General Credits Ltd,375 what is required is that the mortgagee has ‘a genuine primary desire to obtain for the mortgaged property the best price obtainable consistently with his right to realise his security, and the inquiry is directed to whether the mortgagee recklessly sacrificed the interests of the plaintiff ’.376 In that case, the mortgagor’s complaint was that the mortgagee had set the reserve price for the auction too low, but there was no evidence of fraud or collusion in setting the reserve price or that a higher price would have been obtained had the reserve price been set higher. The Full Court of the Supreme Court of Western Australia concluded that the mortgagee had not breached its duty. More recent Australian case law, while generally approving the formulations in Pendlebury and Southern Goldfields, has adopted the language of ‘unconscionability’ to describe the mortgagee’s duty. Ultimate Property Group Pty Ltd v  Lord377 and MBF Investments Pty Ltd v Nolan378 are examples of such cases. In the latter case, the question was whether a mortgagee, who had the option to sell three blocks of land to satisfy the debt, but who had chosen to sell one on which the mortgagor’s family home was located rather than, as would have been possible, two vacant blocks, had breached its duty under s 77 of the Transfer of Land Act 1958 (Vic). That section requires the mortgagee to act ‘in good faith and having regard to the interests of the mortgagor’. The Court of Appeal ruled that 372. (1912) 13 CLR 676. 373. (1912) 13 CLR 676 at 701. 374. (1912) 13 CLR 676 at 701–702. 375. (1991) 4 WAR 138; [1991] WASC 316. 376. (1991) 4 WAR 138; [1991] WASC 316 at  p 18. Malcolm CJ and Pidgeon J agreed with the reasons published by Franklyn J. 377. (2004) 60 NSWLR 646; [2004] NSWSC 114 at [38] (Young CJ in Equity). 378. (2011) 37 VR 116.

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Mortgages

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there was a broader concept of ‘unconscionability’ that provided the frame of reference for impugning a mortgagee’s exercise of a power of sale, and that, in the circumstances of the particular sale, the mortgagee had not acted unconscionably.379 Subsequently, in National Australia Bank Limited v Sayed,380 McCallum J suggested that ‘the common law duty suggested in Cuckmere has not been adopted in Australia’.381 Nevertheless, to the extent that the mortgagee’s duty is properly described as one of ‘good faith’, whether there is a breach of the duty is not merely a question of whether the mortgagee has acted dishonestly. Reckless disregard of the mortgagor’s interests in getting a fair price will constitute a breach of the mortgagee’s general law duty. How abstract concepts such as ‘good faith’ and ‘reckless disregard’ play themselves out in practice is examined in 14.110– 14.117 below. 14.108  Where the mortgagor is a corporation, the situation is governed by s 420A of the Corporations Act 2001 (Cth). That section sets a negligence-style standard when a ‘controller’ exercises a power of sale over a corporation’s property.The section requires the controller to ‘take all reasonable care’ to sell the property for not less than its market value; where no market value exists, the property is to be sold for ‘the best price that is reasonably obtainable, having regard to the circumstances existing when the property is sold’. 14.109  A more recently enacted statutory provision of more general operation is s 111A of the Conveyancing Act.382 The section provides that: 111A (1) A mortgagee or chargee, in exercising a power of sale in respect of mortgaged or charged land, must take reasonable care to ensure that the land is sold for:

(a) if the land has an ascertainable market value when it is sold — not less than its market value, or (b) in any other case — the best price that may reasonably be obtained in the circumstances.

This requirement is not one that can be waived by the mortgagor.383 It seems that s 111A does not replace the general law duty but imposes an additional statutory duty. Section 111A(6) preserves the operation of ‘any rule of law relating to the duty of the mortgagee …’. In Almona Pty Ltd v  Parklea Corporation Pty Ltd,384 Basten JA spoke of 379. MBF Investments Pty Ltd v Nolan (2011) 37 VR 116 at [86]. In the circumstances, there were ‘genuine doubts’ about whether two of the blocks would be sufficient to meet the required amount. It should be noted that the Court of Appeal also rejected the trial judge’s attempt to find that there was a ‘home occupation interest’ that should have been taken into account based on an implication from international human rights instruments: see Nolan at [93]–[99]. For comment on the trial judge’s decision, see G Taylor and M Ziemer, ‘Justice vs Certainty: International Law and the Mortgagee’s Power of Sale’ (2010) 18 Australian Property Law Journal 245. 380. [2019] NSWSC 653. 381. [2019] NSWSC 653 at [13]. 382. Inserted by the Real Property and Conveyancing Legislation Amendment Act 2009 (NSW) Sch 2 cl 4, with effect from 1 November 2011. For brief comment on the legislation when first enacted (though before its commencement), see E Hodgman, ‘New Laws in NSW to Impact on Mortgagees’ (2009) 20(2) Journal of Banking and Finance Law and Practice 168. 383. See Conveyancing Act 1919 (NSW) s 111A(5). 384. [2021] NSWCA 171.

775

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Property Law in New South Wales

s  111A as having ‘expanded’ the general law duty,385 while White JA said that statute law had ‘augmented but not supplanted the mortgagee’s equitable duty’.386 This means that mortgagees still have an obligation not to act in wilful or reckless disregard of the mortgagor’s interests, and cases may still be argued on that basis, although the duty imposed by s 111A would generally be more onerous in practice. A more significant practical question is raised by subs (4) of s  111A. That subsection provides that: (4) The title of the purchaser cannot be challenged on the ground that the mortgagee or chargee has committed a breach of any duty imposed by this section, but a person who suffers loss or damage as a result of the breach of the duty has a remedy in damages against the mortgagee or chargee exercising the power of sale or selling the land.

This question did not have to be resolved in Almona v Parklea Corporation because the majority of the court found that there had been no breach of duty on the part of the mortgagee. Since the subsection refers specifically to ‘a breach of any duty imposed by this section’, it is clear that the mortgagor would not be limited to a remedy in damages where the general law duty is breached. Even so, as acknowledged in Almona v Parklea Corporation, in particular cases where there is a breach of the general law duty, matters such as the passage of time and third party acquisition of rights in the land might make it inappropriate to set the sale aside.387

Conduct of the sale — practical aspects to consider 14.110  Even if the general standard to be applied in cases of a mortgagee’s exercise of a power of sale is unclear, there is a large body of case law that provides practical guidance as to what mortgagees must do when exercising a power of sale. The types of matters that persistently arise in the cases are discussed in the following paragraphs. 14.111  The timing of the sale For the mortgagee, the main object of the sale is to recoup as much of the debt as possible. Any sale price achieved in excess of this is helpful to the mortgagor but does not advantage the mortgagee. He or she is not a trustee for the mortgagor, but rather is ‘entitled to think of himself first’.388 This being the case, the mortgagee can usually sell the property at a time that suits him or her rather than the mortgagor.389 This is the case even if waiting until later might well produce a better financial result for the mortgagor. This approach was taken in Reliance Permanent Building Society v  Harwood-Stamper,390 Pendlebury v  Colonial Mutual Life Assurance Society Ltd391 and China and South Sea Bank Ltd v Tan Soon Gin.392 It was not followed in Dimmick 385. [2021] NSWCA 171 at [106]. 386. [2021] NSWCA 171 at [325]. 387. [2021] NSWCA 171, particularly at [264] (Basten JA) and [378] (White JA). See also, 14.138 below. 388. Reliance Permanent Building Society v Harwood-Stamper [1944] Ch 362 at 372. 389. Porter v Associated Securities Ltd (1976) 1 BPR 9279 per Needham J at 9287. 390. Reliance Permanent Building Society v Harwood-Stamper [1944] Ch 362. 391. Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676. 392. China and South Sea Bank Ltd v Tan Soon Gin [1990] 1 AC 536.

776

Mortgages

14.113

v Pearce Investments Pty Ltd,393 where it was found that a mortgagee may have to wait to sell if there is evidence that the market is clearly improving. Fine distinctions between fact situations, including the strength of the evidence as to whether a better price could be obtained by waiting, are obviously crucial. 14.112  Appointing an agent  If the mortgagee appoints an agent who is regarded as reputable, but the agent’s conduct lets the mortgagee down because it does not meet the requisite standards for the exercise of the power, the mortgagee may still be liable. The mortgagee is expected to ‘exercise some surveillance over the contractor’.394 14.113  The advertisement To ensure the mortgagee cannot be held to have wilfully and recklessly sacrificed the property, it is necessary to advertise it widely.395 In that way, the broadest number of prospective buyers can be reached. According to Griffith CJ in Pendlebury’s case: … the object of giving public notice of a sale by auction, whether by advertisement, bellman, posters or otherwise, is to bring the subject of the sale to the notice of such probable purchasers, and so to induce such competition as will be likely to secure a fair price.396

Although Griffith CJ was referring only to auctions in this case, sales by private treaty also need to be advertised properly. In all cases the property needs to be described satisfactorily so that any prospective buyer understands how the property could be used. Hence, it is important to make it clear if it could be used as a development site397 or a caravan park.398 If, as a result of a lack of care on the part of the mortgagee, there are factual errors in the advertising material, this would be a failure to comply with the negligence standard, but would not necessarily breach the mortgagee’s duty as it seems to be understood in the Australian cases. If, on the other hand, the mortgagee does not take adequate steps to correct the errors once they have been pointed out (as in Cuckmere Brick399), the mortgagee’s conduct might amount to a reckless disregard of the mortgagee’s interests in getting the best possible price.Whether the advertisement should state that it is a mortgagee sale is a moot point. If the property sells well, nothing further would be likely to come of including this information; but if it does not sell well, the sale may be criticised on the basis that the value of the property was depressed by the fact that it was known to be a mortgagee sale, prospective buyers being of the view that a sale might be completed below market value as long as the purchase price was enough to cover the debt.

393. Dimmick v Pearce Investments Pty Ltd (1980) 43 FLR 235 at 243. 394. Commercial and General Acceptance Ltd v  Nixon (1981) 152 CLR 491 per Mason J. See  also Pendlebury v Colonial Life Assurance Society Ltd (1912) 13 CLR 676 at 684. 395. This is the language of Pendlebury v Colonial Life Assurance Society Ltd (1912) 13 CLR 676 at 684. 396. Pendlebury v Colonial Life Assurance Society Ltd (1912) 13 CLR 676 at 683. 397. Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949. 398. Commercial and General Acceptance Ltd v Nixon (1980) ANZ ConvR 306 at 307–8. 399. Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949.

777

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Property Law in New South Wales

Highly valuable commercial property might be expected to be advertised interstate or even overseas, and additional marketing, beyond mere advertising, would also be expected.400 Notably, in Pendlebury’s case, advertising the property in Melbourne newspapers was not considered adequate. It should also have been advertised in the locality in which the land was situated in order to increase the pool of prospective buyers.401 Proper advertising might now be seen to include internet advertising. It is true that many newspapers are available online and internet advertising forms part of the service they offer, but perhaps it is not unreasonable to expect mortgagees to advertise on specialist real estate websites. Such websites are likely to be a first ‘port of call’ for many potential buyers. Internet advertising also has the potential to attract overseas buyers. This form of advertising would be a fairly simple and cost-effective way to increase the pool of potential purchasers in the interests of properly ‘testing’ the market. Such advertising would operate alongside traditional forms. 14.114  Requirement to spend money on the property There is no blanket requirement that demands that the mortgagee spend money on the property to prepare it for sale. However, the mortgagee must ensure that the property is presented in such a way that it will attract the best possible price. The result of this is that if the expenditure of certain funds would definitely improve the sale price obtainable, and the expenditure would be recouped in the sale itself, the mortgagee ought to spend the money.402 14.115  Setting the reserve price  In setting the reserve price for an auction sale, expert valuations of the land should be considered, but the mere fact that the reserve price is set below the valuation will not, of itself be a breach of the mortgagee’s duty, at least in the absence of evidence that higher bids could have been obtained.403 By contrast, the mortgagee cannot set the reserve unrealistically high so that the property is passed in and sold later by private treaty at a deflated price.404 14.116  Compulsion to sell  The mortgagee has a right not to sell the property when the time comes.405 This does not represent a breach of duty unless s 103(2) of the Conveyancing Act is invoked.406 That section gives the court the power to order a sale on application by certain parties. 14.117  Collusion As discussed in 14.101, the sale must be a genuinely independent bargain. Where the mortgagee sells the land to a related party or colludes with another 400. On the issue of further marketing, see Tse Kwong Lam v Wong Chit Sen [1983] 3 All ER 54; (1983) ANZ ConvR 520. 401. For other cases on the nature and extent of advertising, see ANZ Banking Group Ltd v Bangadilly Pastoral Co Pty Ltd (1978) 139 CLR 185; Commercial and General Acceptance Ltd v Nixon (1981) 152 CLR 491; McKean v Maloney (1988) ANZ ConvR 31. 402. Bourke v Beneficial Finance Corp Ltd (1991) ANZ ConvR 473. 403. Southern Goldfields Ltd v General Credits Ltd (1991) 4 WAR 138; [1991] WASC 316. 404. This occurred in Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265, where the later sale was to a wholly owned subsidiary of the mortgagee. 405. Countrywide Banking Corp v Robinson [1991] 1 NZLR 75 at 77. 406. China and South Sea Bank Ltd v Tan Soon Gin [1990] 1 AC 536.

778

Mortgages

14.119

person so as to enable that other person to buy the land at a low price, the mortgagee has failed to exercise the power for the purpose that it was conferred; namely, to discharge the debt while giving due regard to the mortgagor’s interest in maximising the surplus proceeds of sale.407

Restraining the sale 14.118  A mortgagor may obtain an injunction to restrain a threatened wrongful exercise of the power of sale.Where the mortgagor’s objection is that the power of sale is not available to the mortgagee because a pre-condition to its exercise has not been met — for example, the mortgage is invalid, there has been no default on the part of the mortgagor, or the mortgagee has not complied with the statutory formalities — it will be open to the court to grant an injunction even if the mortgagor is not able to tender the amount outstanding.408 Where, by contrast, the power of sale has arisen, the usual practice is that the mortgagor must pay into court the amount of money he or she still owes before the court will grant an injunction.409 This requirement is grounded in the idea that those who seek equity must do equity.The requirement to pay into court will not be waived simply because the amount outstanding under the mortgage is less than the amount the mortgagor seeks as unliquidated damages against the mortgagee.The possibility of a set-off does not alter the requirement to pay into court.410 In cases where the mortgagor disagrees with the amount being claimed by the mortgagee, the money must still be paid into court, but if the court regards the amount to be excessive, it may require a lesser amount to be paid in.411 These requirements are enforced because the court is concerned that the mortgagee’s power of sale should not be tampered with without some form of protection being provided as a quid pro quo.412 14.119  In cases where the mortgagor is not required to pay the amount owing into court, the mortgagor will still normally be required to give an undertaking as to damages as a condition of receiving relief by way of injunction.413 Where the court — and the mortgagee — are concerned that the damages undertaking may not be sufficient to protect the mortgagee, the mortgagor may be required to pay into court enough money to 407. Almona Pty Ltd v Parklea Corporation Pty Ltd [2021] NSWCA 171, particularly at [325] (White JA). 408. Allfox Building Pty Ltd v Bank of Melbourne Ltd (1992) NSW ConvR ¶55–634. Note, however, that Powell J, having stated the relevant principles of law, decided that this was a case in which the power of sale was presently exercisable. 409. Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 at 164; Altarama Ltd v Camp (1980) 5 ACLR 513 at 518. See S Rodrick, ‘The Response of Torrens Mortgagors to Improper Mortgagee Sales’ (1996) 22 Monash University Law Review 289; J Bryson, ‘Restraining Sales by Mortgagees and a Curial Myth’ (1993) 11 Australian Bar Review 1; P Young, ‘A Mortgagor’s Right to Approach the Court’ (1993) 1 Australian Property Law Journal 61; L Aitken, ‘Injunctive Relief to Prevent Enforcement of a Mortgage’ (1992) 30 Law Society Journal 58. See also Mattie v Edwards (1847) 16 LJ Ch 405, Allfox Building Pty Ltd v Bank of Melbourne Ltd (1992) NSW ConvR ¶55–634. 410. Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161; Cunningham v National Australia Bank Ltd (1987) ATPR ¶40–826. 411. Hickson v Darlow (1883) 23 Ch D 690; Allfox Building Pty Ltd v Bank of Melbourne Ltd (1992) NSW ConvR ¶55–634 at 59,627. 412. Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 at 165. 413. Chia v Rennie (1997) 8 BPR 15,601. See Edgeworth, note 42 above, pp 770–71 [11.1450], for elaboration of these points.

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guarantee ‘justice between the parties’.414 In other words, the mortgagee must be properly protected and, in some cases, this may mean paying into court the amount at which the property is valued.415 At other times, it may mean that nothing extra has to be paid into court.416 One of the situations in which damages may be thought to be insufficient is where the exercise of the power of sale ultimately is found to be proper.417 14.120  The situation regarding restraining the sale becomes more complicated once a purchaser enters the picture. Where pre-conditions to the exercise of the power of sale have not been met or the power has been exercised improperly, an injunction might be awarded prior to the making of the contract of sale so as to restrain the making of the contract. Of course, as is generally the case with equitable remedies, the grant of an injunction is at the discretion of the court. An injunction may also be granted where the contract has been entered into but has not been completed. Such an injunction would restrain completion of the contract and there would be no need to set the contract aside.418 Where, by contrast, a transfer has been made to the purchaser, an injunction would not be an appropriate remedy. The mortgagor’s rights could be vindicated only by an order setting the contract aside. This situation is considered at 14.137–14.140 below. 14.121  Although not at issue in Forsyth v Blundell, another method of protection open to the mortgagor who wishes to prevent a purchaser from registering (on the grounds of an improper exercise of the power of sale) is to lodge a caveat.419

Proceeds of sale 14.122  If the power of sale is exercised and there is a surplus, the mortgagee is a trustee for that surplus.420 His or her obligation goes beyond a debt.421 The following discussion examines the positions under old system and Torrens title separately. 14.123  Old system title The key provision regarding the proceeds of sale in relation to old system title land is s 112(4) of the Conveyancing Act. This section requires that the mortgagee acts as trustee of any surplus in the absence of any contract to the contrary. It also requires that the surplus be applied for the: • discharge of any prior encumbrances to which the sale is not made subject; 414. Forsyth v Blundell (1973) 129 CLR 477 at 505. 415. Harvey v McWatters (1948) 49 SR (NSW) 173. 416. Brutan Investments Pty Ltd v Underwriting and Insurance Ltd (1980) 39 ACTR 47; Ellison v Alliance Acceptance Ltd (1984) NSW ConvR ¶55–217. 417. Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd [1976] VR 309; Zeutmint Pty Ltd v Scottish Amicable Life Assurance Society [1984] 3 NSWLR 293. Note that paying money into court is not automatically required if the mortgagor is disputing the validity of the mortgage pursuant to a breach of the trade practices or fair trading legislation. See, for example, Town and Country Sports Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd (1988) ATPR ¶40–911. 418. Forsyth v Blundell (1973) 129 CLR 477. 419. Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317. 420. Prosser v Rice (1859) 28 Beav 68 at 74; 54 ER 291 at 294; Hodson v Deans [1903] 2 Ch 647 at 652; Chant v Deputy Commissioner of Taxation (1994) 15 ACSR 184 at 188. 421. Lloyds Bank NZA v National Safety Council of Australia (1993) 115 ALR 93 at 98–9 and 102–3.

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• payment of all costs, charges and expenses properly incurred by the mortgagee incidental to the sale or any attempted sale; and • discharge of any moneys secured by the mortgage. Once these payments have been made, any surplus is to be paid to the subsequent mortgagees, and then finally to the mortgagor.422 Unregistered subsequent mortgagees are included in the list of those who must be paid out before the mortgagor.423 Where the mortgagee is uncertain of the priority order of the subsequent mortgagees, he or she is at liberty to pay the surplus into court and seek a direction from the court as to the priority. Should the mortgagee simply pay the surplus to the mortgagor, and later find that some or all of it should have been paid to a subsequent mortgagee, he or she will be liable for the loss.424 On the other hand, should the money be paid to a subsequent mortgagee and it later be determined that it was not in fact owing, the earlier mortgagee will be required to account for the funds if they cannot be recovered from the subsequent mortgagee.425 If a building is incomplete on land the subject of the mortgage, it may be the case that the mortgagee is able to complete it and claim the costs as ‘costs, charges and expenses’ pursuant to s 112(4) of the Conveyancing Act.426 This is because a completed building may result in a more successful sale and, consequently, a better realisation of the security. 14.124  Torrens title  Section 112(9) of the Conveyancing Act clearly states that s 112 of that Act does not apply to Torrens title land. Instead, the application of the proceeds of sale of Torrens title land is governed by s 58(3) of the Real Property Act.That section states that the proceeds of sale must be applied in payment of: • the expenses occasioned by the sale; • the moneys due or owing to the mortgagee or chargee; and • subsequent mortgages or charges. It also states that any surplus must be paid to the mortgagor or charger but, unlike the old system legislation on the same subject, it does not first require the discharge of ‘prior incumbrances to which the sale is not made subject’.427 Where the selling mortgagee has notice of subsequent mortgagees, he or she must distribute in favour of them if there is a surplus from the sale. There has been a question as to whether or not s 58(3) of the Real Property Act applies to unregistered mortgages.428 422. West London Commercial Bank v Reliance Permanent Building Society (1885) 29 Ch D 954; Ex parte Australian Co-operative Development Society Ltd [1978] Qd 395. See also Re Thompson’s Mortgage Trusts [1920] 1 Ch 508. 423. Ex parte Australian Co-operative Development Society Ltd [1978] Qd R 395. 424. West London Commercial Bank v Reliance Permanent Building Society (1885) 29 Ch D 954; Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222 at 228. 425. This was the result in Esber v Kimberley Securities Ltd [2009] NSWSC 1422, a case under the Torrens system but where the result would clearly have been the same under the old system. 426. Matzner v Clyde Securities Ltd [1975] 2 NSWLR 293 at 306; Southwell v Roberts (1940) 63 CLR 581. 427. Conveyancing Act 1919 (NSW) s 112(4). 428. Avco Financial Services Ltd v  Commonwealth Bank (1989) 18 NSWLR 679. Compare C Croft, The Mortgagee’s Power of Sale, Butterworths, Sydney, 1980, [214]. See also M Rigotti and D Krutik, ‘Exercise of the Mortgagee’s Power of Sale’ (1999) 10(2) Journal of Banking and Finance Law and Practice 170. On the

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Re Murrell429 and Beeby v Official Assignee of Pickering430 both support the view that, once the property has been sold, the subsequent unregistered charge of a later mortgagee will be converted into an equitable charge over the surplus sale moneys that are payable to the mortgagor.431 The charge over the surplus sale moneys ranks higher than the claim by the mortgagor himself or herself to the surplus sale moneys, because the mortgagor created the (unregistered) charge over the land in the first place.432 14.125  It seems that a charge that is created to secure payment of a debt does not come within s 58(3) of the Real Property Act. The definition of ‘charge’ in s 3 of that Act excludes it. If that is the case, those kinds of charges cannot be considered when the issue of distribution is being worked out in relation to s 58(3). However, if we are able to claim that an unregistered mortgage is converted into an equitable charge over the surplus sale moneys, it must also be arguable that a chargee’s interest in land is likewise converted into an interest over the surplus sale moneys. Again it would rank higher than the mortgagor’s own interest in the surplus.433 Although the selling (first) mortgagee is permitted to deduct his or her legal costs before any surplus is applied in favour of the second mortgagee, there are some important practical limitations on this process. For example, if the amount of the surplus would not cover the amount owing to the second mortgagee if costs were deducted first, the second mortgagee can require the costs to be taxed.434

Priorities Priority between mortgages 14.126  Where there are multiple mortgages on the same land and the exercise of the power of sale by one of those mortgagees fails to raise a sum that is sufficient to pay out all the mortgagees, a question of priority arises. The usual rules of priority, which turn upon whether the mortgages amount to legal or equitable interests and the circumstances in which those interests arise, determine the result of any dispute. A different type of priority issue of notice, see Re Murrell (1984) 57 ALR 85. Hammerschlag J in Esber v Kimberley Securities Ltd [2009] NSWSC 1422 said that, in his opinion, unregistered mortgages were not covered by s 58(3). However, his Honour as a matter of judicial comity declined to depart from the Victorian decision of Re S & D International Pty Ltd (in liq) [2009] VSC 225 to the contrary. Note, however, that his Honour commented that, even if his view were correct, a court of equity would nevertheless take into account such a mortgage on general principles where it would otherwise be given priority. On later appeal, in Residential Housing Corporation v  Esber (2011) 80 NSWLR 69, the Court of Appeal confirmed Hammerschlag J’s view that s  58(3) only applied to registered mortgages: at  [99] per Campbell JA; at  [194] per Macfarlan JA (concurring); at [204] per Sackville J (declining to decide). 429. Re Murrell (1984) 57 ALR 85 at 91–2. 430. Beeby v Official Assignee of Pickering [1953] NZLR 832. 431. See also the discussion in Edgeworth, note 42 above, p 776 [11.1520]. Note, however, that this comment, in an earlier edition, was one of those with which Hammerschlag J in Esber disagreed: see Residential Housing Corporation v Esber (2011) 80 NSWLR 69 at [30]. 432. Avco Financial Services Ltd v Commonwealth Bank of Australia (1989) 17 NSWLR 679. 433. See Avco Financial Services Ltd v Commonwealth Bank of Australia (1989) 17 NSWLR 679. 434. Debney v Semerdziev [1982] 2 NSWLR 391.

782

Mortgages

14.128

dispute arises in cases in which the mortgagee has improperly exercised its power of sale so that the mortgagor has a right to set the sale aside. This latter type of priority dispute will be discussed at 14.137–14.140. 14.127  Old system title The old system rules are discussed in detail in Chapter 7. In short, they state that as between two competing legal interests, the first in time prevails;435 and as between a prior legal interest and a later equitable interest, the prior legal interest prevails.436 However, this latter rule will be overturned if it can be demonstrated that the prior legal mortgagor was responsible for fraud that led to the creation of the later equitable interest,437 or if the prior legal-interest holder was grossly negligent and his or her negligent conduct led to the creation of the later equitable interest.438 The position will be the same if the legal mortgagor committed a fraud that led to the creation of the later equitable interest. Where the competition is between a prior equitable mortgage and a later legal interest, the later legal-interest holder will prevail if he or she is a bona fide purchaser for value without notice of the prior interest.439 Registration of the prior equitable mortgage pursuant to the deeds registration scheme in the Conveyancing Act 1919 (NSW) is one way, but not the only way, by which the subsequent legal mortgagee may come to have notice of the prior equitable mortgage. Where the competition is between two competing equitable interests, the rule is that if the merits are equal, the first in time prevails.440 If the mortgage has been registered pursuant to the deeds registration scheme in the Conveyancing Act  1919 (NSW), the relevant date will not be the creation of the instrument, but rather the date of registration.441 14.128  Torrens title As between competing registered mortgages, the priority is determined according to the dates of registration. Earlier registration has priority over later registration. The date of registration is determined according to the date of lodgment of the mortgage for registration.442 Where the competition is between a registered mortgage and an unregistered mortgage, the former takes priority, because it will be indefeasible pursuant to the indefeasibility provisions of the Real Property Act 1900 (NSW).443 Where both mortgages are unregistered, it is possible for equity to recognise the interests and decide the priority issue on the basis of two competing equitable interests.444

435. One argument supporting this conclusion is the doctrine of nemo dat non quod habet: No one can give what they do not have. 436. Northern Counties of England Fire Insurance Co v Whipp (1884) 26 Ch D 482. 437. Northern Counties of England Fire Insurance Co v Whipp (1884) 26 Ch D 482. 438. Walker v Linom [1907] 2 Ch 104. 439. Pilcher v Rawlins (1872) LR 7 Ch App 259. 440. Rice v Rice (1853) 2 Drew 73 at 78; 61 ER 646. 441. Conveyancing Act 1919 (NSW) Pt 23 Div 1, especially s 184G(1). 442. Real Property Act 1900 (NSW) s 36(5), (9). 443. Real Property Act 1900 (NSW) s 42. See also 8.130. 444. Butler v Fairclough (1917) 23 CLR 78; Abigail v Lapin [1934] AC 491.

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Under the Torrens scheme, it is also possible for the holder of an unregistered interest to have a caveat placed on the relevant property that prevents the property in question being dealt with.445 In regard to equitable interests, one of the key issues is what will amount to postponing conduct as between two competing equitable mortgages.This in turn prompts the question, is the term ‘equitable mortgage’ really appropriate to a mortgage under the Torrens scheme at all, or is it more appropriate simply to speak of registered and unregistered mortgages? Some commentators, noting that the fee simple estate does not leave the hands of the mortgagor under the Torrens scheme, suggest that mortgages under that scheme should be regarded as registered or unregistered, rather than legal or equitable.446 Others claim that this distinction is merely a matter of terminology, and that the fact that different incidents attach after registration is immaterial, because ultimately both the terms ‘legal interest’ and ‘registered interest’ are referring to the same thing; that is, the fullest quality of enjoyment permitted.447 If it is possible for an equitable interest to exist under the Torrens scheme, that would be because it conforms with equitable doctrines, not merely because it is unregistered. It seems preferable to preserve the distinction by claiming that a legal title is not synonymous with a registered one; although the terms both describe the fullest quality of enjoyment available, they are different beasts. Not only do different requirements apply when they come into existence, but the fact that the Real Property Act refers to ‘legal estates’, on the one hand, and either the ‘registered proprietor of an estate’ or ‘registered dealings’, on the other, suggests that a distinction between them was intended.448

Tacking 14.129  Tacking is a principle by which the order of expected priority may be altered in special circumstances.449 Three types of tacking are discussed below: 1. tabula in naufragio; 2. tacking of advances by calling in the legal title; and 3. tacking of advances by contract.

Tabula in naufragio 14.130  One application of tacking is based on tabula in naufragio. This phrase translates as ‘a plank in a shipwreck’, and has been said to be suggestive of ‘drowning equitable owners struggling for the lifebelt of the legal estate’.450 445. See Chapter 8. 446. J Baalman, ‘Approach to the Torrens System’ (1956) 2 Sydney Law Review 87 at 89–90. 447. Sykes and Walker, The Law of Securities, note 1 above, p 225. 448. Section 43A of the Real Property Act is one of the sections that makes reference to a ‘legal estate’, while other sections, such as ss 42 and 44, refer to the ‘registered proprietor’. 449. This doctrine is also mentioned in Chapter 7. 450. Sykes and Walker, The Law of Securities, note 1 above, p 392. See  also RH Maudsley, Modern Equity, 9th ed, Stevens, London, 1969, p 583. For a literal example in ancient literature, see Acts 27:44 in the New Testament.

784

Mortgages

14.133

14.131  Old system title Application of the tabula in naufragio doctrine gives priority to an equitable mortgagee who, not knowing of any other prior equitable interests, also acquires the legal mortgage over the same property to which he or she previously held only the equitable mortgage. When in the position of holding only an equitable mortgage, this later equitable-interest holder would have been postponed in favour of any pre-existing equitable-interest holder (assuming the merits were equal); but, having later acquired the legal mortgage, the later equitable-interest holder is able to rely on the legal interest to catapult up the priority ladder and displace the other earlier equitable-interest holder. In Bailey v Barnes,451 the claimant purchased an equity of redemption, as the property was already the subject of a mortgage. At the time of purchase, he did not have notice of a prior equitable interest, but subsequently he gained notice of it. Later, the claimant approached the legal mortgagee and paid off the legal mortgage, giving him the legal estate. The court held that the claimant’s interest (now legal) defeated the prior equitable interest arising by virtue of the improper exercise of sale. 14.132  Where the grant of a subsequent mortgage is a breach of trust, the tabula in naufragio doctrine does not apply.452 The case of Mumford v  Stohwasser453 deals with the exception involving a trustee. The prior equitable interest in that case was an informal sublease. It was in competition with an informal mortgage of leasehold property. Although the mortgagee took a legal mortgage and so took in the legal title, the court found that there had been a breach of trust by the lessee and no priority was gained through acquiring  the legal mortgage and title. It is somewhat difficult to see  how these facts give rise to a trust.454 The facts suggest that if a party directly creates an equitable interest, the creator becomes a trustee in relation to the grantee of that interest, provided he or she retains the legal estate.455 This would suggest a fairly liberal interpretation of a trust. 14.133  Torrens title In Matzner v Clyde Securities Ltd,456 Holland J found that the tabula in naufragio type of tacking does not apply to Torrens title land. Commentators are divided on the correctness of this view.457 In its favour are the considerations that priority among mortgages necessarily depends on registration, and that under the Torrens system the first mortgagee does not acquire a legal interest that would permit him or her to invoke the rule favouring a good faith purchaser without notice. Against the position is the view that 451. Bailey v Barnes [1894] 1 Ch 25. 452. See 7.31–7.32. 453. Mumford v Stohwasser (1874) LR 18 Eq 556. 454. Sykes and Walker also comment that this is an ‘unsatisfactory aspect’ of the case: Sykes and Walker, The Law of Securities, note 1 above, p 392. 455. Sykes and Walker, The Law of Securities, note 1 above, p 392. 456. Matzner v Clyde Securities Ltd [1975] 2 NSWLR 293 at 304–5. 457. DJ Whalan, The Torrens Scheme in Australia, Law Book Co, Sydney, 1982, p 170 (argues against the tacking of subsequent mortgages in the Torrens scheme on the basis that priority is determined by registration); Edgeworth, note 42 above, [11.1760] pp 788–89 (describes how tacking of subsequent Torrens mortgages could be possible, but notes that Davidson v Registrar of Titles [2002] WASC 168 seems to decide to the contrary); Moore, Grattan and Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law, note 8 above, pp 410–11.

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where there are second and third mortgages that are created informally and not registered, in principle the tabula in naufragio type of tacking would be possible under the Torrens scheme. There is, however, no case law to support this proposition.458

Tacking of advances by calling in the legal title 14.134  Old system Another application of tacking relates to further advances.459 This kind of tacking permits a first legal mortgagee to gain priority for subsequent advances over later equitable mortgagees of which the legal mortgagee has no notice.460 The subsequent advances, although being made after the formation of the equitable mortgage, are tacked on to the prior legal mortgage, and it is from that attachment that they gain their priority. It is the possession of the legal estate that permits the right to tack by this method. The effect is that the advance catapults its way up the priority line, displacing the equitable mortgages. 14.135  Torrens title Tacking of further advances is permitted in regard to mortgages under the Torrens system.461 Further, the rule against tacking of further advances after knowledge of a later mortgage does apply. At first blush this may seem a little unusual, because an earlier registered mortgage containing provisions for further advances is granted priority by virtue of s 36(9) of the Real Property Act, and indefeasibility is established on registration by virtue of s 42 of the Real Property Act. This is because the rule takes account of what would be fair and just as between the competing mortgagees.462 On one analysis, knowledge of a later mortgage should not affect the rights (to further advances) contained in an earlier registered mortgage. In Matzner v Clyde Securities Ltd, Holland J found that exceptions to the above rule were possible and that priority for any further advances could be maintained if those advances were to improve the property or enhance the value of the property. Such advances are sometimes said to arise under a ‘building mortgage’. The same approach concerning exceptions for building mortgages was taken in Central Mortgage Registry of Australia Ltd v Donemore Pty Ltd.463 There it was also held that actual, rather than constructive, notice was necessary. This position was taken, in part, because of the commercial hardship that would be suffered if companies were forced to investigate constructive notice. In contrast, the dicta in Sibbles v Highfern464 suggested that constructive notice was sufficient.

458. For discussion of the issues, see Olympic Holdings Pty Ltd v Windslow Corp Pty Ltd (in liq) (2008) 36 WAR 342. 459. Part 23 Div 1 of the Conveyancing Act may affect tacking and advances in some situations. 460. West v Williams [1899] 1 Ch 132 requires that the legal mortgagee must have notice of the subsequent equitable mortgagee. Chase Corporation (Australia) Pty Ltd v North Sydney Brick and Tile Co Ltd (1994) 35 NSWLR 1 at 17 found that an equitable mortgagee has no similar right. See J Gray, ‘Chase Corporation (Australia) Pty Ltd v North Sydney Brick and Tile Co Ltd’ (1996) 4(2) Australian Property Law Journal 146. 461. Matzner v Clyde Securities Ltd [1975] 2 NSWLR 293. 462. Matzner v Clyde Securities Ltd [1975] 2 NSWLR 293 at 299 and 305. 463. Central Mortgage Registry of Australia Ltd v Donemore Pty Ltd [1984] 2 NSWLR 128. 464. Sibbles v Highfern (1987) 164 CLR 214.

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Mortgages

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Tacking of advances by contract 14.136  Old system title Yet another form of tacking relates to contract and advances. This form permits a prior mortgagee (without notice of a subsequent mortgage) who has a contract that specifically provides for special advances, to tack those advances onto the prior mortgage.465 The effect is to displace the priority of the subsequent mortgagee. As the basis of this type of tacking is contract and not the holding of the prior legal title, this kind of tacking is applicable to both prior legal and equitable mortgages.466 If the prior mortgagee receives notice of the subsequent mortgagee, he or she is given the option to pay further advances.467 Finally, the rule permitting the tacking of further advances by contract will be subject to Pt 23 Div 1 of the Conveyancing Act. This Division is relevant in relation to notice of later mortgages and express clauses in the earlier mortgage securing present and future advances.468

Mortgagors and Purchasers 14.137  Where a mortgagee exercises its power of sale correctly and title has been transferred to a purchaser, the mortgagor’s equity of redemption is extinguished and a new interest in the land is vested in the purchaser. Where the mortgagee has exercised its power of sale improperly, the mortgagor has a right in equity to set aside the exercise of the power of sale, which is usually described as a ‘mere equity’. It should be noted that the sale is voidable rather than void, so whether the mortgagor can get its equity of redemption back depends upon a court making an order that the sale be set aside. The nature of the mortgagor’s ‘mere equity’ was discussed by the High  Court of Australia in Latec Investments Limited v Hotel Terrigal.469 While the members of the court disagreed about the precise nature of a mere equity, they agreed that such a mortgagor’s interest could not take priority over subsequent equitable interests that were created bona fide and without notice of the mortgagor’s interest.470 A significant fact in the case was that, while the mortgagee’s conduct of the sale had clearly been improper and the purchaser was implicated in that impropriety, the mortgagor had waited five years before taking any proceedings to set the mortgagee’s sale aside. In the meantime, the purchaser had created

465. The provision for advances may give the mortgagee a discretion to advance, or it may compel him or her to do so. It seems that this type of tacking is not applicable to a bill facility. See R Edwards and Young, ‘Bill Rollovers and Tacking’ (1995) 3 Australian Property Law Journal 113. 466. The prior mortgagee can also tack the interest that accrues on the advances. See Philos Pty Ltd v National Bank of Australasia Ltd (1976) 5 BPR 11,810 at 11,815. 467. Hopkinson v Rolt (1861) 9 HL Cas 514 at 535 and 553; 11 ER 829 at 838 and 845; Bradford Banking Co Ltd v Henry Briggs, Son & Co Ltd (1886) 12 App Cas 29 at 37. Note that the right to tack is affected by actual knowledge. 468. For consideration of all moneys clauses and tacking, see J Kang, ‘All Moneys Clause Lives Again’ (1996) 10(4) Com LQ 4. 469. (1965) 113 CLR 265. 470. (1965) 113 CLR 265 at 278 (Kitto J), 286 (Taylor J) and 291 (Menzies J).

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Property Law in New South Wales

a charge over all of its assets, including the land, the chargee having taken that interest in good faith and without notice of the mortgagor’s right to set the sale aside.471 14.138  In New  South  Wales, s  112(3)(b) of the Conveyancing Act would appear to provide some additional protection to a purchaser. The provision states that: … the title of the purchaser shall not be impeachable on the ground that no case had arisen to authorise the sale, or that due notice was not given, or that the power was otherwise improperly or irregularly exercised, but any person damnified by an unauthorised or improper or irregular exercise of the power shall have a remedy in  damages  against the person exercising the power.

While this protection appears to be very broad, the scope of its operation is limited in two important respects. First, the opening words of subsection (3) limit its applicability to ‘where a conveyance is made in professed exercise of the power of sale’. Second, s 112 does not apply to mortgages of Torrens land.472 In Forsyth v Blundell,473 which was a case in which the mortgagee had made a contract to sell to a particular purchaser but the contract had not been completed, a similarly worded Australian Capital Territory statutory provision474 was found not to prevent the award of an injunction restraining the completion of the sale.475 14.139  Where the mortgage is of Torrens title land and the purchaser at the mortgagee’s sale has become registered as transferee, the only basis on which the mortgagor will be able to assert a right to set aside the sale is to rely upon such exceptions to indefeasibility as arise on the facts.The most obvious type of scenario is one involving collusion between the mortgagee and purchaser, in which event the mortgagor could rely upon the fraud exception. Where the transfer to the purchaser has not yet been registered, so that the mortgagor remains the registered proprietor of the fee simple, the legal position is less clear. If the status of the mortgagor as registered proprietor is the relevant interest of the mortgagor for the purposes of a dispute with a purchaser, the mortgagor would have the benefit of indefeasibility and the mortgagor’s title would be subject only to other registered interests, which do not include the interest of the purchaser. In Forsyth v Blundell, Walsh J (with whom Mason J agreed) seemed to prefer this characterisation of the mortgagor’s interest.476 A possible criticism of this line of reasoning stems from the observation that, in a situation where the power has been exercised properly, the mortgagor’s registered title would not provide any basis for defeating the interest of the purchaser. What distinguishes a situation where the mortgagor is in breach of duty from the situation in which it is not is surely that, in the former situation, the mortgagor has a right in equity to rescind the transaction.477 If this were the correct characterisation 471. As to the significance of delay and acquisition of rights by third parties, see obiter remarks by Basten JA in Almona Pty Ltd v Parklea Corporation Pty Ltd [2021] NSWCA 171 at [264]. 472. Conveyancing Act 1919 (NSW) s 112(9). 473. (1973) 129 CLR 477; [1973] HCA 20. 474. Real Property Ordinance 1925 (ACT) s 94(5). 475. [1973] HCA 20, particularly Walsh J at [36]. See also 14.120 above. 476. [1973] HCA 20, [27] (Walsh J), Mason J agreeing at [17]. 477. Butt’s Land Law describes the mortgagor’s equitable interest as ‘the right to seek equity’s aid in enforcing rights analogous to those enjoyed by a mortgage of old system title land, including the right to redeem after

788

Mortgages

14.140

of the interest of the mortgagor in Forsyth v  Blundell, the mortgagor would still have prevailed over the purchaser because, as Walsh J explained, the mortgagor’s conduct ‘did not contribute … to any false assumption or belief upon which Shell acted in entering into the transaction … nor did it affect [the purchaser] in any other way which would make it inequitable to assert against [the purchaser the interest of [the mortgagor]’.478 In other words, in the particular circumstances of the case, the mortgagor’s equitable interest would have prevailed in a priority dispute with the purchaser’s equitable interest. In any event, Forsyth v Blundell was a case in which the contract of sale had not been completed, so it was still possible to restrain the completion of the sale by injunction. There had been no transfer to the purchaser that needed to be set aside. Forsyth v Blundell was a case in which settlement had not yet occurred.Where settlement has taken place but the transfer to the purchaser has not yet been registered, there are additional complexities and uncertainties. Section  43A of the Real Property Act may, depending on the circumstances of the case, protect the purchaser.479 To the extent that s  43A does not apply, arguably, the law as stated in Latec Investments v  Hotel Terrigal is applicable.480 Since the crucial issue would then be whether the purchaser had notice of the mortgagor’s interest, this would never lead to a different result to that which would follow from the application of s 43A. Alternatively, since both interests are unregistered, the interest that is first in time (ie, that of the mortgagor) would not be postponed unless the mortgagor’s conduct contributed to the purchaser acquiring its interest without notice of the mortgagor’s interest. In other words, the second strand of the reasoning of Walsh J in Forsyth v Blundell (mentioned above) would be applicable. 14.140  In regard to Torrens title land, the position of the purchaser after completion but before registration may be affected by s 58(2) of the Real Property Act. The wording of s 58(2) is narrower in scope than of s 112(3) of the Conveyancing Act: No such purchaser shall be answerable for the loss, misapplication, or non-application, or be obliged to see to the application of the purchase money by the purchaser paid, nor shall the purchaser be concerned to inquire as to the fact of any default or notice having been made or served as referred to in section 57 (2)

In particular, it will be noted that s 58(2) does not state that the purchaser’s title is unimpeachable. Therefore, s 58(2) of the Real Property Act appears to do little more than absolve the purchaser from constructive notice regarding any failure on the

the contractual date of payment has passed’. The significance of the mortgagor remaining the registered proprietor of the fee simple is that a Torrens title mortgagor can pass legal title to a purchaser and can grant subsequent mortgages that are not merely mortgages of equitable interests, but ‘the totality of the rights that constitute the fee simple interest in the land are effectively diminished by registration of the mortgage’ (Edgeworth, note 42 above, p 675 [11.180]). 478. [1973] HCA 20, [29]. 479. See 14.140 below. 480. See 14.137 above.

789

14.140

Property Law in New South Wales

mortgagee’s part to comply with notice requirements or any misapplication of the proceeds of sale.481 Further, it may be the case that in some circumstances protection is afforded to the purchaser by other, more effective provisions. For example, in the interval between completion and registration, it may be possible for the purchaser taking from a mortgagee to invoke the protection of s 43A of the Real Property Act. Whether such protection is available depends on whether the transfer from the mortgagee is registrable. Registrability, in turn, is determined by compliance with s  57(2). Section  57(2) needs to be read in conjunction with s 58(1) and, most significantly, s 59 of the Real Property Act. Where either the power of sale has not arisen because there is no default triggering the power or because there has been a failure to comply with s 57(2), then the dealing is simply not registrable. Thus, the purchaser will not be granted protection pursuant to s 43A of the Real Property Act. It would seem that s 58(2) cannot cure this difficulty. In cases where the power of sale has arisen, but has been improperly exercised, by contrast, the purchaser has the protection of s 43A from this equity. After registration, the purchaser is able to rely on s 42, which offers indefeasibility of title on registration in the absence of the purchaser’s fraud or other applicable exceptions to indefeasibility.482

Death and Mortgages 14.141  The death of the mortgagor does not bring the mortgage to an end. Further, the mortgaged property of the deceased can be passed by virtue of testamentary disposition or on intestacy. On the mortgagor’s death, the property is first passed into the hands of the executor or administrator pursuant to s  44 of the Probate and Administration Act 1898 (NSW).483

Reform Accurate nomenclature 14.142  The law of mortgages is steeped in historical understandings, often reflected in terminology and nomenclature. Where modern concepts are not simply derivative of traditional ones, it is suggested that attempts be made to jettison terminology that does not truly represent the concept it labels. For example, the terms ‘equity of redemption’ and ‘redemption suit’, fitting as they are to mortgages of old system land, are not really appropriate for mortgages of Torrens title land where the mortgage operates by way of a 481. Butt’s Land Law doubts whether s 58(2) provides purchasers with any additional protection where there the power of sale has not arisen (eg, there has been no default) or where the power has been exercised improperly. See Edgeworth, note 42 above p 774 [11.1490]. 482. Real Property Act 1900 (NSW) s 42. 483. See Sykes and Walker, The Law of Securities, note 1 above, p 140. The Probate and Administration Act was previously known as the Wills, Probate and Administration 1898, but was renamed by the Succession Act 2006 (NSW). Section 44 was, however, not otherwise amended.

790

Mortgages

14.144

charge and there is no interest to redeem from the mortgagee. Latec Investments Ltd v Hotel Terrigal Pty Ltd484 provides an example where the term ‘equity of redemption’ was used inappropriately, while Fullagar J in Perry v Rolfe485 embarked on a discussion about why an old system rule relating to costs of a suit of redemption was not applicable in regard to a mortgage under Torrens title. It is suggested that those drafting legislation, the judiciary, academics and practitioners would all assist clarity if they made conscious efforts to use accurate terminology and, in particular, confined terms such as those mentioned above to discussion of old system title.

Internet advertising 14.143  As discussed in 14.113, what might be regarded as proper advertising of a mortgagee’s sale is sensitive to technological changes and the extent to which these have been embraced by the real estate industry. Accordingly, a failure to advertise on appropriate internet sites may, in many cases, amount to a breach of the mortgagee’s duty in exercising the power of sale. This conclusion could be reached by interpretation of the existing case law and, unless it were believed that a blanket rule in favour of internet advertising would be desirable, no legislative reform is necessary.

Sureties and sexually transmitted debt 14.144  The problem of relationship debt is still great because, although banks and other lending agencies are now in the habit of asking guarantors and mortgagors if they have sought independent legal advice before entering into such agreements, the lending agencies do not necessarily verify the validity of the answers.486 While it is not being suggested that banks assume the role of interrogators, it does seem important to acknowledge that the party taking on debt because of emotional attachment might possibly fabricate an affirmative answer to the question of whether he or she has sought legal advice, if failing to do so would result in domestic disharmony and the proposed borrowing or guarantee not going ahead.487 Placing the onus on the weaker party (whoever that is) and requiring the weaker party simply to confirm that independent legal advice has been received may not yield the desired result.488 It may simply result in absolution of responsibility by the lender. By requiring a solicitor’s letter confirming that the mortgagor (or other provider of 484. See Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265. 485. Perry v Rolfe [1948] VLR 297. Note that an alternative view about what could constitute a suit to redeem was taken in Re Forrest Trust;Trustees, Executors and Agency Co Ltd v Anson [1953] VLR 246 at 268–9. 486. See Australian Banking Industry Ombudsman Ltd, Report on Relationship Debt, Bulletin No 22, 1999, p 3. For an international comparison, see I Ramsay, ‘Results of Recent Canadian Empirical Studies: Individual Bankruptcy; Preliminary Findings of a Socio-Legal Analysis’ (1999) 37 Osgoode Hall Law Journal 15. 487. New  South  Wales Law Reform Commission, Guaranteeing Someone Else’s Debts, note 160 above, p  6, comments that:‘The emotional relationship between the borrower and guarantor means that the guarantor is vulnerable to unfair conduct on the part of the borrower and/or lender’. See also the Research Report on this topic: Lovric and Millbank, Darling, Please Sign This Form: A Report on the Practice of Third Party Guarantees in New South Wales, note 161 above. 488. For an exploration of socio-legal issues related to this topic, see  F Ryan, ‘Law at  the Margins: The Displacement of Law as a Framework of Governance’ (2001) 19 Dickinson Journal of International Law 407.

791

14.144

Property Law in New South Wales

security) had received independent legal advice, the lender may merely be shifting the cost of that advice to the mortgagor and the potential legal liability to the solicitor. An alternative approach is to prevent lenders from enforcing the guarantee if the terms of the guarantee are unfair and shifts the onus away from the individual, weaker party to take proceedings to set the transaction aside. The European Community Directive on Unfair Terms in Consumer Contracts (EC Directive 93/13) is an example of such an approach.489 This approach may well be an appropriate course for New South Wales to take. The 2006 Report on this subject by the New South Wales Law Reform Commission (NSWLRC), Guaranteeing Someone Else’s Debts, made a number of sensible recommendations on this topic. These recommendations note that many of the provisions that currently protect debtors in relation to lending, should also be applied to guarantors. However, the NCC currently does not apply to many guarantors, as the majority of ‘domestic’ guarantees are given by relatives for the purposes of a small business operated by the borrower.490 While Pt 3 Div 2 of the NCC provides some protection for guarantors, it does so only in relation to a guarantee given for a credit contract. The word ‘credit’ is defined in s 5 of the NCC to exclude small business purposes. The NSWLRC recommended model legislation that could be enacted on the topic of guarantors by the various jurisdictions (Recommendation 4.1). While initially it may seem that the recommendations could be implemented by amendment to the NCC, that may not be possible due to the limited nature of the reference of powers contained in the Credit (Commonwealth Powers) Act 2010 (NSW), which allowed the NCC to be enacted as Commonwealth law.491 It is recommended that state and territory governments develop model laws in line with the NSWLRC recommendation to deal with this important issue that, in times of economic constraint, is likely to impact on more and more families.

Transfers as mortgages 14.145  Another area ripe for reform is where a transfer is entered into solely for the purposes of security.492 In such circumstances, it might be advantageous to have the Registrar-General deny registration of an absolute transfer where it is evident that the transfer is intended to act as a security only. In the Victorian jurisdiction, registration of a transfer designed to operate as a mortgage was denied in Putz v Registrar of Titles.493 There it was found that if the transfer were absolute, it did not comply with the statutory requirements that dealt with transfers because the true consideration was not spelled out, 489. This directive is cited in New South Wales Law Reform Commission, Guaranteeing Someone Else’s Debts, note 160 above. 490. See  New  South  Wales Law Reform Commission, Guaranteeing Someone Else’s Debts, note 160 above, [4.23], p 69. 491. The legislative powers referred were limited to credit to which the NCC applied at the time (see the definition of ‘referred credit matter’ in s 3(1) of the Credit (Commonwealth Powers) Act 2010 (NSW)). It seems that guarantees for small business purposes would not be covered. 492. Breskvar v Wall (1971) 126 CLR 376 is an example of this. 493. Putz v Registrar of Titles [1928] VLR 348.

792

Mortgages

14.145

while if it were a mortgage, it did not comply with the requirements for registration either.494 Central to the discussion, however, is the issue of whether the mortgage has been created by way of absolute transfer accompanied by a separate instrument providing for reconveyance on repayment, or whether the transfer itself has made it plain that it is operating by way of mortgage. (An example of the latter might be a transfer that includes a recital that states that the consideration is the money lent.495) The Victorian, Queensland and Tasmanian titles offices apparently refuse to register a transfer that, on the face of it, reveals the arrangement is actually one of mortgage rather than transfer.496 These states seem to take the approach that the titles offices are not expected to go beyond the instruments in deciding whether to register but, where the instrument actually flaunts its non-compliance, the offices will act accordingly. It is suggested that New South Wales should follow the lead of these states in order to prevent some of the problems that potentially arise from the misuse of transfers. Perhaps it would also be prudent to extend this practice of denying registration to transfers intended to act as mortgages, to cases where — although there is nothing on the face of the transfer itself to suggest this is the position — the Registrar has knowledge that the transfer is to act as a mortgage.497 In this way, substance, not form, would be emphasised.

494. Sykes and Walker, The Law of Securities, note 1 above, p 235. 495. Sykes and Walker, The Law of Securities, note 1 above, pp 235–36. 496. Sykes and Walker, The Law of Securities, note 1 above, p 235. 497. Such a case could arise where a transfer and reconveyance were simultaneously lodged.

793

Index References are to paragraph numbers

A

common law source .... 5.68 conflicting views on .... 5.160–5.163 consecutive periods of .... 5.138–5.140 continuity .... 5.140 successive possessors .... 5.139, 5.140 Torrens land .... 5.154 co-ownership and .... 5.120–5.122 covenants .... 11.49 no privity of estate .... 11.49 criteria for .... 5.86 factual possession .... 5.86–5.101, 5.134 intention to possess .... 5.102–5.112, 5.134 Crown land .... 5.70–5.72, 5.151, 5.155 citizen possessing against Crown .... 5.71 Crown possessing against citizen .... 5.72 limitation period .... 5.70 deed transfer title .... 6.6 definition .... 5.49–5.51 disability documentary owner under .... 5.79, 5.80 suspension of limitation period .... 5.79, 5.80 documentary (true) owner acknowledgment of title of .... 5.81–5.84 disability, under .... 5.79, 5.80 extinguishment of interest .... 5.52 inconsistent with intended use of .... 5.113, 5.114 intention to exclude .... 5.106, 5.108, 5.134 interest statute-barred .... 5.50 no present use for property .... 5.114 paper dealings .... 5.158 possession inconsistent with title of .... 5.96 predecessors in title .... 5.112 protection against .... 5.49 recovery by .... 5.141–5.144, 5.158 time limit to recover possession .... 5.50 documentation, without .... 5.2, 6.6 drainage reserve .... 5.129 ‘dunny lanes’ .... 5.150, 5.151 easements .... 5.146, 12.32 prescriptive .... 5.50 right similar to .... 5.129 unaffected by claim .... 5.146 effect of doctrine .... 5.50

Abandonment adverse possession .... 5.74, 5.135–5.137 complete vacation of land .... 5.135 effect on possessor’s rights .... 5.137 qualified or modified abandonment .... 5.140 recovery by true owner .... 5.136 easements .... 12.56, 12.62 conduct of predecessor in title .... 12.62 extinguishment by .... 12.56, 12.62 Abatement easements .... 12.44 profits à prendre .... 12.71 Aboriginal rights see Indigenous Australians; Native title Access to neighbouring land .... 12.74 Accretion land boundaries .... 2.14 Administrative tribunal see NSW Civil and Administrative Tribunal (NCAT) Adverse possession abandonment .... 5.74, 5.135–5.137 complete vacation of land .... 5.135 effect on possessor’s rights .... 5.137 qualified or modified .... 5.140 recovery by true owner .... 5.136 abolition .... 5.160–5.163 case against .... 5.161, 5.162 case for .... 5.160, 5.161 competing views on .... 5.163 accrual of cause of action .... 5.74–5.78 beneficiary under will or intestacy .... 5.78 discontinuance .... 5.74 dispossession .... 5.74 remainder falling into possession .... 5.75, 5.76 tenant under lease .... 5.77 animus possidendi .... 5.2, 5.86, 5.102–5.112, 5.134 application, lodgment of .... 5.56 Australian law of .... 5.7 blocking access to land .... 5.131 caveat against .... 5.153, 8.154 chain of .... 5.140

795

Property Law in New South Wales Adverse possession — cont’d enclosure of land .... 5.105, 5.110, 5.111, 5.127, 5.131 examples .... 5.124–5.133 factual possession .... 5.51, 5.86–5.101, 5.134 buildings as evidence .... 5.90, 5.131 considerations .... 5.88, 5.89 dealing with land as owner .... 5.90 evidence of .... 5.90–5.101, 5.131 improvements as evidence .... 5.90 inconsistent use of land .... 5.113, 5.114 indefeasibility exception .... 8.106 open, not secret .... 5.92, 5.93 ordinary possession .... 5.87 peaceful .... 5.92, 5.94, 5.95 permission .... 5.96–5.101 physical control .... 5.89, 5.91, 5.134 recreational shooting .... 5.126 sections of land .... 5.128, 5.130 summary of requirements .... 5.134 use of force .... 5.94 fencing .... 5.105, 5.110, 5.111, 5.127, 5.131 removal by owner .... 5.144 homelessness and .... 2.35, 5.162 human rights .... 5.52, 5.58–5.67, 5.160 defeating claims .... 5.59 divergent policy considerations .... 5.66 International Covenant on Economic, Social and Cultural Rights .... 5.63 Pye’s case .... 5.60–5.62, 5.65, 5.67 implied licence doctrine .... 5.115–5.119 Australia not adopting .... 5.119 UK rejection of .... 5.115–5.119 indefeasibility exception .... 8.106 intention to possess .... 5.51, 5.86, 5.102–5.112, 5.134 acknowledging another’s ownership not precluding .... 5.107 cases finding lack of .... 5.132 consecutive periods .... 5.138–5.140 cultivation of land .... 5.111 deprivation of benefits from land distinguished .... 5.107 enclosure .... 5.105, 5.110, 5.111, 5.127 equivocal acts .... 5.102, 5.103, 5.134 examples .... 5.124–5.133 excluding documentary owner .... 5.106, 5.108, 5.134 excluding world at large .... 5.102, 5.108, 5.134 exclusively .... 5.107 living on land .... 5.111, 5.131 manifestation of intention .... 5.105 physical acts of possession .... 5.109 possess, not own .... 5.105, 5.106

796

possessor, not owner .... 5.104 proof of actual intention .... 5.102 rates and taxes, payment of .... 5.111, 5.131 statement of .... 5.134 subjective intention .... 5.102 summary of requirements .... 5.134 unequivocal acts .... 5.102 joint tenancy and .... 5.122 large area, part of .... 5.128, 5.130 lessee .... 5.77, 5.123 tenancy by estoppel .... 11.17 life tenants, against .... 5.75, 5.76 limitation period .... 5.50, 5.69, 5.73–5.85 accrual of cause of action .... 5.74–5.78 commencement .... 5.73 Crown land .... 5.70 Limitation Act 1969 (NSW) .... 5.69 owner re-asserting right before expiry of .... 5.141 suspension or cancellation .... 5.79–5.84 true owner, for recovery by .... 5.50 ultimate time limit .... 5.85 litigation vs negotiation .... 5.142, 5.152 living on land .... 5.111, 5.131 maintaining trees and garden .... 5.131 mortgage .... 5.38, 5.122, 5.144 NSW legislation .... 5.56 old system title .... 5.55 onus of proof .... 5.132 openness .... 5.92, 5.93 overview .... 5.2, 5.49–5.51 peaceful possession .... 5.92, 5.94, 5.95 permission to possess .... 5.96–5.101 before expiry of limitation period .... 5.100 examples .... 5.124–5.133 exception where .... 5.96 family members .... 5.96–5.98 lease or licence .... 5.96 offer to lease, licence or buy land .... 5.101 potential purchaser .... 5.100 revocation .... 5.99 time not running .... 5.96 possession, concept of see Possession predecessors in title, against .... 5.112 prescriptive easements and profits à prendre .... 5.50 rates and taxes, payment of .... 5.111, 5.131 rationale for doctrine .... 5.52–5.67 acknowledgment of reality .... 5.55 active use of rights .... 5.53 encouraging stability .... 5.55 exploitation of land .... 5.53, 5.54 hardship .... 5.57 human rights .... 5.52, 5.58–5.67

Index sleeping on rights .... 5.53, 5.54 sustainability, and .... 5.54 recovery by owner .... 5.50, 5.141–5.144 asserting right before end of limitation period .... 5.141, 5.142 commencement of court proceedings .... 5.142 paper dealings .... 5.158 physical entry to land .... 5.144 removal of fences .... 5.144 retaking possession .... 5.143 stay of writ of possession .... 2.35 summons for possession .... 5.143 reform .... 5.158 abolition of doctrine .... 5.160–5.163 paper dealings .... 5.158 rights of possessor .... 5.159 remainder interests .... 5.75, 5.76 rights arising from .... 5.145, 5.146 sections of land .... 5.128, 5.130 service lanes .... 5.150, 5.151 source of rights .... 5.68, 5.69 standard of proof .... 5.132 statutory source of rights .... 5.69 successive possessors .... 5.139, 5.140 suspension of limitation period .... 5.79–5.85 acknowledgment of owner’s title .... 5.81–5.84 disability .... 5.79, 5.80 fraud .... 5.81 ultimate time limit .... 5.85 tenant .... 5.77, 5.123 terminology .... 5.2 Torrens title land .... 5.55, 5.56, 5.145–5.157 application for conversion .... 8.6 caveats against .... 5.153, 8.154 common law principles applicable .... 5.147 consecutive periods .... 5.154 Crown land .... 5.151, 5.155 ‘dunny lanes’ .... 5.150, 5.151 exceptions to ‘whole parcel’ .... 5.149–5.151 indefeasibility exception .... 8.106 joint tenants .... 5.146 occupational boundaries .... 5.149 paramountcy of Register .... 5.147 possessor’s title .... 5.145 possessory applications .... 5.147, 5.148, 5.151 possessory title .... 5.2, 5.147 preserving integrity of Register .... 5.157 recording possessor’s title .... 5.145, 5.148, 5.157 residue lots .... 5.150 rights of adverse possessor .... 5.145, 5.156 service lanes .... 5.150, 5.151 small areas of land .... 5.152 spite strips .... 5.150 whole parcel of land .... 5.149

uninterrupted, continuous period of .... 5.138 unoccupied building land .... 5.126 Agricultural fixtures agricultural tenancies .... 2.28 part of land .... 2.16 Airspace aircraft .... 2.7, 2.8 land owners’ rights .... 2.7 land, part of .... 2.2, 2.6–2.8 native title .... 4.78 right of way .... 8.81 trespass .... 2.7, 2.8 Allodial land absolute/allodial title .... 3.12, 3.19 Australia, in .... 3.31 common law not recognising .... 3.34 definition .... 3.31 English tenure doctrine and .... 3.31–3.38 native title, and .... 3.33–3.38, 3.119, 4.9 NSW property law .... 3.20 tenurial land distinguished .... 3.19, 3.31–3.38 Alternative dispute resolution Torrens Assurance Fund .... 8.200 Assignment freehold covenant, benefit of common law .... 13.8, 13.9 enforceability after see Freehold covenants equity .... 13.29 lease see Assignment of leases mortgagee’s right .... 14.59 reversion .... 11.2, 11.86 benefit of covenants .... 11.51 burden of covenants .... 11.52–11.54 past breaches .... 11.55 Assignment of leases continuing liability .... 11.43, 11.86 covenants against .... 11.40 absolute covenants .... 11.41 enforceability .... 11.43 qualified covenants .... 11.42 right to sue surviving assignment .... 11.43 strict construction against landlord .... 11.40 enforcement of covenants adverse possession .... 11.49 benefit of .... 11.46 burden of .... 11.47, 11.48 informal lease or assignment .... 11.50 past breaches .... 11.55 privity of estate exceptions .... 11.49, 11.50 meaning .... 11.40 past breaches, liability for .... 11.55 landlord breaches, tenant assigns .... 11.55 landlord breaches, then assigns .... 11.55

797

Property Law in New South Wales Assignment of leases — cont’d tenant breaches, landlord assigns .... 11.55 tenant breaches, then assigns .... 11.55 privity of contract .... 11.43, 11.44 privity of estate .... 11.44, 11.86 exceptions .... 11.49, 11.50 reform .... 11.86 residential tenancies .... 11.113 right to new tenancy .... 11.114 retail leases .... 11.141 tenancy at will unassignable .... 11.16 Attornment clauses mortgages old system title .... 14.56 tenancy by estoppel .... 14.56, 14.58 Torrens title .... 14.58 Auction sale of land by .... 6.9

B Bailment at will .... 2.45, 2.46 bailee’s rights .... 2.60, 2.61 conversion .... 2.49, 2.61, 2.62 fixed-term .... 2.45 gratuitous .... 2.46 overview .... 2.41, 2.44 possession of chattels .... 2.44, 2.45 prohibited sub-bailment .... 2.57, 2.58 reversionary interests.... 2.57–2.59 action on the case .... 2.59 permanent loss or damage .... 2.58 right to future possession .... 2.45, 2.57 right to immediate possession .... 2.45, 2.47 trespass and .... 2.47, 2.48 types .... 2.44 wrongful interference .... 2.61, 2.62 Bankruptcy joint tenancy, severance of .... 9.27, 9.52, 9.53 Beneficiaries equitable interests .... 3.108, 6.3 priority of interests .... 7.30 Bentham’s theory of property .... 1.7, 1.29, 1.30, 1.32 Blackstone, Sir William definition of property .... 1.4 easements, nature of .... 12.2 settlement/occupation doctrine .... 3.5 theory of property .... 1.4, 1.8, 1.13–1.19, 1.22 Boarders and lodgers definition .... 11.92 disputes between .... 11.134

Residential Tenancies Act exclusion .... 11.92 reforms .... 11.134 Body parts Doodeward v Spence .... 1.63 excised cells .... 1.60, 1.61 hair .... 1.65 human sperm .... 1.64, 1.65 human tissue .... 1.62 lawful exercise of work or skill on .... 1.63 preserved body .... 1.63 property rights in .... 1.60–1.65 Broadcasting rights property in spectacle .... 1.66–1.69 United States .... 1.66, 1.67 Building schemes freehold covenants .... 13.30–13.35 Conveyancing Act, applicability .... 13.35 identifiable land .... 13.31 intention of development .... 13.32 lay out in lots before sale .... 13.33 mutuality principle .... 13.31, 13.34 requirements for .... 13.31–13.35 restrictive covenants .... 13.30, 13.35 Torrens title .... 13.37 unity of ownership extinguishing .... 13.34 Bundle of rights feminist view .... 1.46 native title as .... 4.54, 4.55 extinguishment and .... 4.58 property as .... 1.6, 1.20, 1.21, 1.46, 1.52 By-laws strata schemes .... 9.68, 9.104–9.111 amendment .... 9.107–9.110 enforcement .... 9.111 harsh, unconscionable or oppressive .... 9.108 negative prohibitions .... 9.105 new by-laws .... 9.107–9.110 persons bound by .... 9.106 reform .... 9.134 repeal .... 9.107–9.110 restrictions .... 9.108, 9.109 special resolutions .... 9.110 special use of common property .... 9.110 validity .... 9.104, 9.105 warning notice where breach .... 9.111

C Caveats adverse possession, against .... 5.153, 8.154 categories of .... 8.131 caveatable interests .... 8.142–8.145 capable of being recorded in Register .... 8.143

798

Index examples .... 8.145 intention to create .... 8.144 proprietary interest .... 8.142 statute defining .... 8.142 circumstances for use .... 8.153 dealings, against .... 8.131, 8.135–8.137 approved form .... 8.136 provisions governing .... 8.135 unregistered interests, protecting .... 8.136 delimitation plans .... 8.155 duration .... 8.136 effect of .... 8.138, 8.139 equitable interest, notice of .... 8.138 extension .... 8.150–8.152 balance of convenience .... 8.151, 8.152 considerations .... 8.151 court order .... 8.147, 8.150 ‘serious question’ test .... 8.151 failure to lodge .... 8.140, 8.141 competing unregistered interests .... 8.164–8.168 postponement .... 8.166 priority consideration .... 8.164–8.168 freezing registration of dealings .... 8.131, 8.138 exceptions .... 8.139 lapsing notice .... 8.136, 8.147 lodgment private caveats .... 8.136, 8.137 Registrar-General, by .... 8.132, 8.133 without reasonable cause .... 8.152 mortgagee, protecting .... 8.132 mortgagee sale, in relation to .... 8.137, 14.121 native title .... 8.156 nature of .... 8.131 no obligation to lodge .... 8.140, 8.165 non-caveatable interests .... 8.146 noting on Register .... 8.136, 8.137 overview .... 8.131, 8.153 possessory applications .... 5.153, 8.154 prevention of dealings .... 8.135–8.137 primary applications, against .... 8.131, 8.134 priority disputes .... 8.164–8.168 private caveats .... 8.136 purpose .... 8.138–8.141 reasonable cause, lodgment without .... 8.152 reference number .... 8.137 Registrar-General, lodged by .... 8.132, 8.133 removal of .... 8.136, 8.147–8.151 caveator, by .... 8.148 court order .... 8.136, 8.148, 8.149 instrument awaiting registration .... 8.149 lapsing notice .... 8.136, 8.147 restrictions on who can lodge .... 8.137 strata unit, in relation to .... 9.78

Torrens system .... 8.128, 8.131–8.156 land already brought under .... 8.131 preventing land being brought under .... 8.131, 8.134 priority disputes .... 8.164–8.168 trust, over instrument creating .... 8.128 unregistered interests in Torrens land .... 8.128 competing interests .... 8.164–8.168 no obligation to lodge caveat .... 8.140, 8.165 preventing dealings in .... 8.135–8.137 Certificate of title electronic .... 8.16, 8.18 paper, abolition of .... 8.16, 8.18 removal of references in Act to .... 8.16 Torrens system .... 8.16, 8.18 priority notices replacing paper .... 8.158, 8.182 Charge security by way of .... 14.1, 14.2 Chattels see also Personal property bailment see Bailment contractual rights .... 2.56 conversion see Conversion co-ownership .... 9.24 court order to divide .... 9.65 detinue .... 2.50, 2.52 finders of see Lost and found chattels fixtures, as .... 2.18–2.21 see also Fixtures hire-purchase agreements .... 14.12, 14.13 possession .... 2.41 jus tertii defence .... 2.53–2.55 availability .... 2.54, 2.55 lost and found chattels .... 2.63 ownership and .... 2.44 rights of third parties .... 2.44, 2.53, 2.55 lost see Lost and found chattels mortgagees and fixtures .... 2.19 negligence .... 2.51 overview .... 2.39 ownership .... 2.44 possession actual .... 2.40, 2.41 bailment .... 2.41, 2.45, 2.46 constructive .... 2.41 custody distinguished .... 2.41 future right to .... 2.43 hire-purchase .... 2.41 immediate right to .... 2.42, 2.45 lost chattels .... 2.41 ownership and .... 2.41, 2.44 seisin .... 5.15 proprietary interests in .... 2.39 actual possession .... 2.40, 2.41

799

Property Law in New South Wales Chattels — cont’d contractual rights distinguished .... 2.56 custody of goods .... 2.41 ownership .... 2.44 right to future possession .... 2.43 right to immediate possession .... 2.42, 2.45 reversionary interests .... 2.43, 2.57 bailments .... 2.57–2.59 permanent loss or damage .... 2.57–2.59 security interests .... 14.2, 14.3, 14.4 hire-purchase agreements .... 14.12, 14.13 historical background .... 14.4, 14.12 National Credit Code .... 14.13 PPSA, under see Personal property securities unregistered .... 14.4 torts in relation to conversion see Conversion detinue .... 2.50, 2.52 negligence .... 2.51 overlapping torts .... 2.52 recaption remedy .... 2.62 self-help .... 2.62 trespass see Trespass Choses in action .... 2.5 Choses in possession .... 2.4 Civil and Administrative Tribunal see NSW Civil and Administrative Tribunal (NCAT) Civil rights property rights and .... 1.5, 1.74 determination of boundaries .... 1.5 Co-ownership adverse possession and .... 5.120–5.122 chattels .... 9.24 court order to divide .... 9.65 company title .... 9.1, 9.66, 9.67 creation .... 9.11 chattels .... 9.24 common law, at .... 9.12, 9.13, 9.22 co-owners’ differing contributions to purchase price .... 9.15–9.17 equitable interests .... 9.11, 9.22 equity, in .... 9.11, 9.14–9.19, 9.22 express words .... 9.12 legal interests .... 9.11, 9.22 money advanced on mortgage .... 9.18 partnership assets .... 9.19 statutory reform .... 9.20–9.24 Torrens title .... 9.23 words of severance .... 9.13 equitable interest .... 9.11, 9.22 equity, creation in .... 9.11, 9.14, 9.22 chattels .... 9.24 contributions to purchase price .... 9.15–9.17

money advanced on mortgage .... 9.18 partnership assets .... 9.19 statutory reform .... 9.21, 9.22 tenancy in common .... 9.11, 9.14–9.19 improvements .... 9.55–9.57 contributions from co-owners .... 9.55 limits to claims .... 9.56 reform .... 9.132 joint tenancy see Joint tenancies land, co-owners ordered to sell or partition .... 9.63, 9.64 legal interests .... 9.11, 9.22 mortgage, co-owners advancing money on .... 9.18 overview .... 9.1, 9.2 rents and profits .... 9.60 reform .... 9.132, 9.133 repairs .... 9.57 rights and obligations of co-owners improvements .... 9.55–9.57 occupation fees .... 9.58, 9.59 possession right .... 9.54 rents and profits .... 9.60 strata schemes see Strata schemes tenancy in common see Tenancy in common termination .... 9.61–9.65 action of parties .... 9.62 court orders .... 9.63–9.65 division of chattels .... 9.65 sale or partition of land .... 9.63, 9.64 Torrens title system .... 9.23 Common law acquisition of land .... 3.4, 3.5, 4.9 cession .... 3.4, 3.5 conquest .... 3.4, 3.5 occupation .... 3.4, 3.5, 4.9 reception of law .... 3.4–3.7 settlement principle .... 3.5 applicability of English law .... 3.6, 3.7 estates doctrine see Doctrine of estates leases see Leases legal interests see Legal interests; Old system title merger of equity and .... 3.83 NSW law diverging from .... 3.20–3.29 old system title see Old system title priority rules see Priority of interests property doctrines .... 3.1, 3.3 reception principle .... 3.4–3.7 rule against perpetuities see Rule against perpetuities tenure doctrine see Doctrine of tenure Common property see also Co-ownership company title see Company title scheme

800

Index joint tenancy see Joint tenancies overview .... 9.1 strata scheme see Strata schemes tenancy in common see Tenancy in common Company title scheme establishment .... 9.66 overview .... 9.67 problems with .... 9.1, 9.66 tenancy under .... 11.98 Residential Tenancies Act not applicable .... 11.98 Compensation compulsory acquisition of land Australian Constitution .... 1.59, 4.70 ‘just terms’ .... 4.33, 4.50, 4.51, 4.70 native title .... 1.59, 4.33, 4.50, 4.51, 4.70 US Constitution .... 1.15 native title, loss of .... 4.25, 4.33, 4.87 common law, not payable at .... 4.25, 4.33 constitutional right .... 4.33, 4.50, 4.51, 4.70 past acts .... 4.70, 4.79 prior extinguishment .... 4.25 proprietary analysis, and .... 4.50–4.52 Racial Discrimination Act .... 4.33 reform .... 4.87 restriction on quantum .... 4.79 statutory regime .... 4.70 Torrens Assurance Fund see Torrens Assurance Fund Compulsory acquisition compensation on just terms Australian Constitution .... 1.59, 4.70 native title .... 1.59, 4.33, 4.50, 4.51, 4.70 US Constitution .... 1.15 due process (US) .... 1.15, 1.16 native title .... 1.59, 4.59 compensation .... 1.59, 4.33, 4.50, 4.51, 4.70 extinguishment by .... 4.23, 4.59, 4.70 past acts .... 4.70 right to negotiate .... 4.80 privately owned land .... 1.2 Conditional fee see Fee simple Constructive trusts Baumgartner .... 6.35, 6.36, 6.55, 7.20 common-intention .... 6.31, 6.32, 6.33 contract for land sale analogous to .... 6.15–6.19 creation and transfer .... 6.31 equitable interests .... 6.31–6.36 failure to pool earnings .... 6.36 formalities not required .... 6.25 institutional .... 6.31 Lysaght, rule in .... 6.15–6.17 remedial .... 6.31

unconscionable use of title .... 6.31, 6.34–6.36, 6.55 Contracts part performance .... 6.10–6.13 acts constituting .... 6.11, 6.12 test in Maddison .... 6.11–6.13 unequivocal referability .... 6.12, 6.13 remedy for breach .... 1.56, 2.56 rights conferred by .... 1.56 enforceability .... 1.3, 1.56–1.58 licence .... 1.58 property rights compared .... 1.3, 1.56–1.58 proprietary, whether .... 1.56 sale of land .... 6.8 auctions .... 6.9 constructive trust analogy .... 6.15–6.19 fixtures .... 2.15, 2.22 part performance .... 6.10–6.13 specific performance .... 6.14–6.18 specific performance see Specific performance Contributory negligence Torrens Assurance Fund and .... 8.195 Conversion bailments .... 2.49, 2.60, 2.61 chattels .... 2.48, 2.49 overlapping torts .... 2.52 contractual rights, and .... 2.56 multiplicity of actions .... 2.68 overview .... 2.48 possession at heart of .... 5.1 possession, right to .... 2.44, 2.49 recaption remedy .... 2.62 reform .... 2.68 right of action .... 2.44, 2.49, 2.56 bailee .... 2.60, 2.61 strict liability tort .... 2.48 third party, right to implead .... 2.68 trespass, distinction .... 2.49 trover .... 2.48 Conveyancing contactless transactions .... 8.208 electronic .... 8.17, 8.18, 8.208 legal executory interests .... 3.109, 3.110 Conveyancing Act 1919 (NSW) deeds .... 6.5 difficulties of interpretation .... 6.53 executory interests .... 3.112–3.115 freehold covenants .... 13.12, 13.22 building schemes .... 13.35 implied easements .... 12.27 leases .... 6.6 trusts .... 6.22–6.24, 6.53

801

Property Law in New South Wales Copyhold tenure .... 3.16 Copyright property right .... 1.8 Covenants building schemes see Building schemes freehold see Freehold covenants implied see Implied covenants leases see Covenants in leases mortgages .... 14.34, 14.35, 14.48–14.51 clogs on equity of redemption .... 14.34, 14.35 date for repayment .... 14.49 deficit on sale, making up .... 14.50 enforcement .... 14.48 interest rate .... 14.34 payment on default .... 14.34 personal .... 14.47–14.51 repayment of sum borrowed .... 14.48 right to sue on .... 14.59 transferee, with .... 14.51 restrictive .... 13.2 building schemes .... 13.30–13.35 caveatable interest .... 8.145 easements, distinction .... 12.13 freehold covenants .... 13.2 owners corporation creating .... 9.77 Torrens system .... 13.36 Covenants in leases assignment of lease absolute covenant against .... 11.41 benefit of covenants .... 11.46 burden of covenants .... 11.47, 11.48 continuing liability .... 11.43, 11.86 covenant against .... 11.40–11.42 enforcement of covenants .... 11.46–11.50 informal lease or assignment .... 11.50 no privity of estate .... 11.49, 11.50 past breaches .... 11.55 qualified covenant against .... 11.42 strict construction against landlord .... 11.40 assignment of reversion benefit of covenants .... 11.51 burden of covenants .... 11.52–11.54 past breaches .... 11.55 benefit of assignment of lease .... 11.46 assignment of reversion .... 11.51 breach .... 11.58–11.82 assignment, action after .... 11.55 damages .... 11.79 forfeiture of lease .... 11.58, 11.62–11.74 fundamental breach .... 11.58–11.61, 11.65 injunctions .... 11.79 loss of bargain damages .... 11.59 past breaches .... 11.55

re-entry following .... 11.34, 11.63–11.65 remedies .... 11.78–11.82 repudiation .... 11.58–11.61, 11.65 set-off .... 11.80–11.82 termination of lease .... 11.58–11.74 burden of assignment of lease .... 11.47, 11.48 assignment of reversion .... 11.52–11.54 enforceability .... 11.43–11.55 adverse possession .... 11.49 assignment of lease .... 11.46–11.50 assignment of reversion .... 11.51–11.54 no privity of estate .... 11.40, 11.50 past breaches .... 11.55 privity of contract .... 11.43, 11.44 privity of estate .... 11.44, 11.86 touching and concerning land .... 11.44, 11.45 examples .... 3.92 express covenants .... 3.92 assignment, against .... 11.40–11.42 repairs .... 11.38, 11.39 subletting, against .... 11.40–11.42 implied see Implied covenants indefeasibility .... 8.40–8.46 necessary implication, by .... 11.34 option to renew .... 8.40–8.43 overview .... 3.92, 11.20 privity of contract .... 11.43, 11.44 privity of estate .... 11.44, 11.86 exceptions .... 11.49, 11.50 rental covenants .... 3.92, 11.30 breach of .... 11.32, 11.63, 11.71 repairs good and tenantable repair .... 11.29 implied covenants .... 11.29, 11.31 landlord’s duty .... 11.39 landlord’s right to inspect .... 11.31 re-entry where breach of covenant .... 11.33 tenant-like use .... 11.25 tenant’s duty .... 11.29, 11.38 repudiation .... 11.58–11.61, 11.65 subletting, against .... 11.40 absolute covenants .... 11.41 qualified covenants .... 11.42 strict construction against landlord .... 11.40 touching and concerning land .... 8.41, 11.44 enforceability requirement .... 11.44, 11.45 COVID-19 pandemic contactless transactions .... 8.208 electronic conveyancing .... 8.208 human rights issues .... 1.77 property rights and .... 1.1 strata scheme reform .... 9.135 tenants impacted by .... 1.1

802

Index Creation of interests see Equitable interests; Legal interests Critiques and theories see Theories of property Crown land adverse possession .... 5.70–5.72 citizen possessing against Crown .... 5.71 Crown possessing against citizen .... 5.72 limitation period .... 5.70 Torrens title .... 5.151, 5.155 colonial New South Wales .... 3.25, 3.26 Crown leaseholds .... 3.26 grant of .... 5.2 lease or licence fixed-term lease .... 14.24 lease in perpetuity .... 14.24 Residential Tenancies Act not applicable .... 11.94 mortgages .... 14.24 old system title .... 5.2 pastoral leases .... 3.24–3.26 possession of .... 5.2 Torrens title adverse possession .... 5.151, 5.155 mortgages .... 14.24 ways of holding .... 14.24 Curtain principle .... 8.22, 8.23 Curtesy abolition in NSW .... 3.63 doctrine of waste and .... 3.64 life estate .... 3.63

D Damages breach of contract .... 1.56 written and signed contract required .... 6.8 breach of covenant .... 11.79 easements, interference with .... 12.45 freehold covenants, breach of .... 13.41 property ownership rule .... 1.9, 1.10 De facto relationships see Domestic relationships Deeds easements .... 12.16, 12.19 General Register of Deeds .... 7.37 interests in land created by .... 6.5 leases .... 11.6 overview .... 6.5 profits à prendre .... 12.67 registration of .... 7.36–7.41 bona fide requirement .... 7.39 not guarantee of title .... 7.36 priorities .... 7.37–7.41 Torrens compared .... 7.36, 7.37

valuable consideration .... 7.40 void instruments .... 7.41 requirements for validity .... 6.5 sealing .... 6.5 Determinable fee see Fee simple Detinue overlapping torts .... 2.52 overview .... 2.50 possession at heart of .... 5.1 recaption remedy .... 2.62 right of action .... 2.44, 2.50 Disability adverse possession documentary owner under .... 5.79, 5.80 suspension of limitation period .... 5.79, 5.80 Doctrine of estates categories of estate .... 3.40, 3.42 colonial Australia .... 3.7 doctrine of estates .... 3.39 establishment .... 3.11 estate, definition .... 3.39 fee simple see Fee simple freehold see Freehold estates future interests .... 3.96, 3.97 remainder .... 3.97, 3.99–3.107 reversion .... 3.97, 3.98 leasehold see Leaseholds; Leases legal executory interests see Legal executory interests life estates see Life estates reform .... 3.116–3.120 remainders see Remainders types of estate .... 3.40, 3.41 Doctrine of notice see Notice Doctrine of tenure abolition in Scotland and Ireland .... 3.119 allodial land, and .... 3.19, 3.31–3.38 common law not recognising .... 3.34 native title .... 3.33–3.38, 4.9 tenurial land distinguished .... 3.19, 3.31–3.38 Australian/English differences .... 3.30–3.32 fragmentation of rights .... 3.31 incidents and services .... 3.30 native title .... 3.32–3.38 colonial Australia .... 3.7 copyhold tenure .... 3.16 dependent land holding, basis for .... 3.8 divergence from English law .... 3.20–3.29 doctrine of estates distinguished .... 3.39 establishment .... 3.11 feudalism see also Feudalism basis in .... 3.9 free tenures .... 3.12–3.19

803

Property Law in New South Wales Doctrine of tenure — cont’d post-Norman redistributions .... 3.11 pre-Norman conquest .... 3.10 unfree tenures .... 3.16 free tenures .... 3.12 categories of tenure .... 3.13 fealty and homage .... 3.15 frankalmoign tenure .... 3.13 historical background .... 3.12–3.19 incidents of .... 3.14, 3.15, 3.17, 6.3 knight service .... 3.13, 3.18 serjeanty .... 3.13, 3.18 services .... 3.12, 3.13 socage tenure .... 3.13, 3.17–3.19 substitution system .... 3.17 historical background .... 3.8 applicability of English law .... 3.6, 3.7 colonial Australia .... 3.5, 3.6 copyhold tenure .... 3.16 feudalism .... 3.9–3.16 free tenures .... 3.12–3.19 New South Wales law .... 3.20–3.29 socage tenure .... 3.13, 3.17–3.19 villeinage .... 3.16 incidents .... 3.14, 3.15, 3.17, 6.3 implication that land held subject to .... 3.30 native title and .... 3.20, 3.32–3.38 acceptance of doctrine .... 3.37 allodial title .... 3.33–3.38, 4.9 application of doctrine .... 3.38 co-existence of systems .... 3.36 connection to land pre-dating .... 3.35 terra nullius doctrine .... 4.9 New South Wales law .... 3.20–3.29 colonial development .... 3.23–3.25 divergence from English law .... 3.20, 3.25–3.29 doctrine of paramount force .... 3.28 new forms of tenure .... 3.25, 3.26 pastoral leases .... 3.22–3.26 quit rents .... 3.21 overview .... 3.8, 3.20 ownership of chattels .... 2.44 pastoral leases .... 3.22–3.26 reform .... 3.119 services .... 3.12, 3.13 implication that land held subject to .... 3.30 knight service .... 3.13, 3.18 socage tenure .... 3.13, 3.17–3.19 tenure by serjeanty .... 3.13, 3.18 tenurial pyramid .... 3.15, 3.17 types of tenure .... 3.19 unfree tenures .... 3.16

Doctrine of waste see Waste doctrine Domestic relationships alteration of property interests .... 6.51, 6.52 close personal relationships .... 6.48, 6.50 constructive trusts .... 6.34–6.36, 6.55 de facto relationships .... 6.48, 6.50 definition .... 6.48, 6.50 domestic labour and unconscionability .... 6.36, 6.55 equitable doctrines .... 6.47 constructive trusts .... 6.34–6.36 preservation of .... 6.47, 6.49 replacement by statute .... 6.47–6.52 variation of rights under .... 6.51 Family Law Act 1975 (Cth) .... 6.51, 6.52 ownership, use and acquisition of property .... 6.49 Property (Relationships) Act 1984 (NSW) .... 6.48–6.50 relationship breakdown alteration of property interests .... 6.51, 6.52 constructive trusts .... 6.34–6.36, 6.55 division of property .... 6.48, 6.49 statutory reforms .... 6.47 Dominion exclusion and .... 1.7 property, element of .... 1.5, 1.6, 1.7 Dower doctrine of waste and .... 3.64 life estate .... 3.62 ‘Dunny lanes’ adverse possession .... 5.150, 5.151 Duty of care landlord .... 11.36

E Easements abandonment .... 12.56, 12.62 abatement remedy .... 12.44 adverse possession .... 5.146, 12.32 prescriptive .... 5.50 right similar to .... 5.129 unaffected by claim .... 5.146 caveatable interests .... 8.145 change of use .... 12.38 common types .... 12.35 creation of .... 12.2, 12.3, 12.15 dominant tenement .... 12.4–12.6 express grant .... 12.16–12.18 express reservation .... 12.19–12.21 formal requirements .... 12.15–12.23 identification of tenements .... 12.23 implied easements .... 12.24–12.31

804

Index implied grants .... 12.24, 12.25 implied reservations .... 12.24, 12.29, 12.30 long user .... 12.32, 12.33 prescription .... 12.32, 12.33, 12.76 servient tenement .... 12.4–12.6 statute, by .... 12.34 subdivision plan .... 12.22 subject matter of grant .... 12.7 substantive requirements .... 12.3–12.7 description of land, implied by .... 12.31, 12.54 distinction from other rights licences .... 12.14 natural rights .... 12.11 public rights .... 12.12 restrictive covenants .... 12.13 dominant tenement .... 12.4 accommodating .... 12.5 alteration .... 12.57 appurtenant to .... 12.4 identification .... 12.23 incorporeal interest, may be .... 12.4 servient tenement held/occupied by same .... 12.6 unity with servient tenement .... 12.58 easements in gross .... 12.4, 12.75 easements of necessity .... 12.29, 12.34 reasonable necessity .... 12.34 statutory provision .... 12.34 examples .... 12.8, 12.35 negative easements .... 12.10 positive easements .... 12.9 express grant old system, at law .... 12.16 old system, in equity .... 12.17 Torrens system .... 12.18 express release .... 12.55 express reservation old system, at law .... 12.19 old system, in equity .... 12.20 Torrens system .... 12.21 extinguishment .... 12.55–12.63 abandonment .... 12.56, 12.62 agreement .... 12.62 alteration to dominant tenement .... 12.57 change in character of neighbourhood .... 12.60 change in land use .... 12.60 continued existence impeding reasonable user .... 12.61 express release .... 12.55 no practical benefit .... 12.61 no substantial injury .... 12.63 obsolescence .... 12.60 statutory .... 12.59–12.62 suspension distinguished .... 12.64

805

unity of tenements .... 12.58 features .... 12.2 fencing easements .... 12.8, 12.35, 12.41 implied easements .... 12.24–12.31 common intention .... 12.30 Conveyancing Act, under .... 12.27 description of land .... 12.31, 12.54 easements of necessity .... 12.29 exercise on continuous basis .... 12.26 grants .... 12.24, 12.25 mutual cross-easements .... 12.30 non-derogation principle .... 12.26 Real Property Act, under .... 12.28 reservations .... 12.24, 12.29, 12.30 sale of tenements to different parties .... 12.26 Torrens title land .... 12.26 transfer of estate in land .... 12.28 Wheeldon v Burrows rule .... 12.26 implied grants .... 12.24, 12.25 implied reservations .... 12.24 common intention .... 12.30 easements of necessity .... 12.29 incorporeal hereditaments .... 2.1, 2.2, 12.2 indefeasibility exceptions in personam exception .... 12.51–12.53 inconsistent statutes .... 8.111 omitted or misdescribed easements .... 8.84, 12.47–12.50 licences, distinguished .... 12.14 long user .... 12.32, 12.33 without force .... 12.33 without permission .... 12.33 without secrecy .... 12.33 lost modern grant doctrine .... 12.32, 12.33 mortgagee sale .... 14.99 natural rights, distinguished .... 12.11 nature of .... 12.2 necessity for .... 12.29, 12.34 negative easements .... 12.10 nuisance action for interference in .... 12.45 natural rights, distinguished .... 12.11 rights to create .... 12.35, 12.42 omitted or misdescribed .... 8.84, 12.47–12.50 conversion process, during .... 12.49 indefeasibility exception .... 8.84, 12.47–12.50 omitted, meaning .... 12.48 statutory easements .... 12.50 overview .... 12.1, 12.2 owners corporation creating .... 9.77 party walls .... 12.40 positive easements .... 12.9 prescription .... 5.7, 12.32, 12.33 adverse possession and .... 5.50

Property Law in New South Wales Easements — cont’d doctrine of .... 5.7 reform .... 12.76 public rights, distinguished .... 12.12 reform easements in gross .... 12.75 prescription .... 12.76 remedies for infringement .... 12.43 abatement .... 12.44 damages actions .... 12.45 nuisance actions .... 12.45 removal of support, for .... 12.8, 12.11 duty of care excluded or modified by .... 12.11 natural rights distinguished .... 12.11 restrictive covenants, distinguished .... 12.13 rights of way .... 8.81, 12.2, 12.9, 12.36 change of use .... 12.38 definition .... 12.36 easements of necessity .... 12.29 extent of obligations .... 12.37 implied .... 12.26, 12.29 interference with .... 12.39 no practical benefit .... 12.61 obsolescence .... 12.60 purpose .... 12.36 rights to support .... 12.10, 12.35, 12.40 natural rights distinguished .... 12.11 party walls .... 12.40 servient tenement .... 12.4 dominant tenement held/occupied by same .... 12.6 identification .... 12.23 unity with dominant tenement .... 12.58 statutory creation .... 12.34 statutory extinguishment .... 12.59–12.62 subdivision plan .... 12.2, 12.22 suspension .... 12.64 Torrens system .... 12.46 express grant .... 12.18 express reservation .... 12.21 implied easements .... 12.26, 12.54 in personam exception and .... 12.51–12.53 indefeasibility exceptions .... 12.47–12.53 omitted or misdescribed easements .... 8.84, 12.47–12.50 East Timor land rights in .... 1.3 Ejectment see also Possessory title abolition in NSW .... 5.46 Allen v Roughley .... 5.38–5.45 Asher v Whitlock .... 5.34–5.37 better right to possession .... 5.33–5.46 breaks in chain of title .... 5.38 evidence of earlier seisin .... 5.36

hereditary squatters principle .... 5.35 historical background .... 5.26–5.28 jus tertii defence .... 5.37 leaseholder, protection of .... 5.26, 5.32 ownership, establishing .... 5.32 possession as evidence of title .... 5.43 recovery of possession .... 5.26 right to immediate possession .... 5.33 significance of possession .... 5.43 testamentary disposition of interest .... 5.38–5.42 trespassory ouster .... 5.42 writ de ejectione firmae .... 5.26 Equality and property communism .... 1.36, 1.37 gender equality/inequality .... 1.42, 1.46 passive property .... 1.39 theories of .... 1.30, 1.36–1.40, 1.49 utilitarian view .... 1.30 values .... 1.40 Equitable interests beneficiaries holding .... 3.84, 6.3 contracts for sale of land .... 6.8, 6.9 auctions .... 6.9 constructive trust analogy .... 6.15–6.19 part performance .... 6.10–6.13 specific performance .... 6.14–6.18 co-ownership .... 9.11, 9.22 creation and transfer .... 6.4, 6.53 constructive trusts .... 6.31–6.36 contracts for sale of land .... 6.8, 6.14 express trusts .... 6.20–6.24 non-express trusts .... 6.25–6.36 resulting trusts .... 6.26–6.30 trusts .... 6.20–6.36 disposition, meaning .... 6.53 domestic relationships .... 6.47 constructive trusts .... 6.34–6.36, 6.55 preservation of .... 6.47, 6.49 replacement by statute .... 6.47–6.52 variation of rights under .... 6.51 equitable estoppel .... 6.41–6.44 detriment.... 6.42 personal property .... 6.43 gifts land .... 6.46 personalty .... 6.45 historical development .... 3.108, 6.2–6.4 common law and equity .... 3.83 fragmentation of rights .... 6.2, 6.3 trusts see Trusts legal interests distinguished .... 6.1 mere equities distinguished .... 6.44, 7.33, 7.45 overview .... 6.1, 6.4 personal property .... 6.43

806

Index gifts .... 6.45 priority see Priority of interests proprietary estoppel .... 6.37 acquiescence, by .... 6.40 representation, by .... 6.38, 6.39 reform .... 6.53 rule against perpetuities .... 10.10 specific performance .... 6.4, 6.14–6.18 Torrens land priority see Priority of interests trust property, receipt of .... 8.105 unregistered interest .... 8.128, 8.129 transfer see creation and transfer above trusts see Trusts words of limitation .... 3.81–3.88 Equities see Mere equities Equity concurrent jurisdiction .... 6.4 creation of co-ownership .... 9.11, 9.14, 9.22 chattels .... 9.24 contributions to purchase price .... 9.15–9.17 money advanced on mortgage .... 9.18 partnership assets .... 9.19 statutory reform .... 9.21, 9.22 tenancy in common .... 9.11, 9.14–9.19 easements express grant .... 12.17 express reservation .... 12.20 freehold covenants, enforceability see Freehold covenants leases .... 11.7 merger of common law and .... 3.83 part performance .... 6.10–6.13 profits à prendre .... 12.68 set-off .... 11.82 specific performance see Specific performance trusts see Trusts Erosion land boundaries .... 2.14 Escheat demise on intestacy .... 3.30 incident of free tenure .... 3.4, 3.17 Estates definition .... 3.39 doctrine of see Doctrine of estates fee simple see Fee simple fee tail see Fee tail freehold see Freehold estates life estate see Life estates Estoppel equitable estoppel .... 6.41 detriment .... 6.42 equity or equitable interest .... 6.44

onus of proving detrimental reliance .... 6.41 part performance compared .... 6.41 personal property .... 6.43 unambiguous inducement .... 6.41 leases .... 11.17 proprietary estoppel .... 6.37 acquiescence, by .... 6.40 representation, by .... 6.38, 6.39 tenancy by .... 11.17 attornment clause creating .... 14.56, 14.58 Express trusts see Trusts Extinguishment easements see Easements native title see Native title profits à prendre .... 12.72

F Family Law Act 1975 (Cth) alteration of property interests .... 6.51, 6.52 domestic relationships, application to .... 6.51, 6.52 Fee simple categorisation of interest .... 3.116–3.118 conditional fee .... 3.44, 3.49–3.53 categorisation as determinable or .... 3.116–3.118 condition subsequent .... 3.49 defeasible by condition subsequent .... 3.49 determinable fee distinguished .... 3.50 discriminatory condition .... 3.118 effect of event .... 3.51 failure of condition .... 3.53 grantor’s re-entry right .... 3.51 indicative words .... 3.52 reform .... 3.116–3.118 void conditions .... 3.54–3.57, 3.116, 3.117 creation .... 3.41 defeasible fee .... 3.49, 3.116 determinable fee .... 3.44–3.48 absolute fee, becoming .... 3.46 alienability .... 3.47 boundary .... 3.45 categorisation as conditional or .... 3.116–3.118 conditional fee distinguished .... 3.50 determining event .... 3.45, 3.46, 3.50 failure of grant .... 3.47 indicative words .... 3.48 possibility of reverter .... 3.46, 3.47 reform .... 3.116–3.118 void determining event .... 3.47, 3.54–3.57 fee tail distinguished .... 3.58 free alienability .... 10.3 historical background .... 3.43

807

Property Law in New South Wales Fee simple — cont’d life estate distinguished .... 3.64 native title extinguished by grant of .... 4.61 overview .... 3.43, 5.13 reversion .... 3.98 title to .... 5.13 Torrens system folios .... 8.15 void limitations/conditions .... 3.54–3.57 against public policy .... 3.54, 3.56 denying power to alienate .... 3.54, 3.55 immorality .... 3.54, 3.116, 3.117 reform .... 3.116–3.118 uncertainty .... 3.54, 3.57 words of limitation .... 3.69–3.76 common law .... 3.70 equitable interests .... 3.85–3.88 historically .... 3.69–3.71 inter vivos dispositions .... 3.69, 3.71, 3.73–3.75 old system title .... 3.69 rule in Shelley’s Case .... 3.89 testamentary dispositions .... 3.71, 3.76 Torrens System not requiring .... 3.72 Fee tail conditions subsequent .... 3.58 determinable limitations .... 3.58 fee simple distinguished .... 3.58 historical background .... 3.58, 10.1, 10.3 lineal descendants .... 3.58, 3.77 overview .... 3.58 words of limitation historically .... 3.69–3.71 inter vivos dispositions .... 3.77 testamentary dispositions .... 3.78 Torrens System not requiring .... 3.72 Fencing easements .... 12.8, 12.35, 12.41 Feudalism commendation .... 3.9 copyhold tenure .... 3.16 Crown only holding land .... 3.12, 3.39 doctrine of tenure see also Doctrine of tenure basis of .... 3.9, 3.19 Domesday Book .... 3.11 fealty and homage .... 3.15 free tenures .... 3.12–3.19 categories of tenure .... 3.13 frankalmoign tenure .... 3.13 historical development .... 3.17 incidents .... 3.14, 3.15, 3.17, 3.30, 6.3 services .... 3.12, 3.13, 3.30 substitution system .... 3.17 gleaning rights .... 3.16 knight service .... 3.13, 3.18 livery of seisin .... 3.11

lord of the manor .... 3.16 manorial law .... 3.16 overview .... 1.18, 1.50, 3.9 possessory actions .... 5.17–5.30 possessory assizes .... 5.21–5.23 post-Norman redistributions .... 3.11 pre-Norman conquest .... 3.10 property and sovereignty .... 1.18 seisin see Seisin socage tenure .... 3.13, 3.17–3.19 Statute of Quia Emptores .... 3.17 subinfeudation .... 3.15 tenure by serjeanty .... 3.13, 3.18 tenurial pyramid .... 3.15, 3.17 types of tenure .... 3.19 unfree tenures .... 3.16 villeinage .... 3.16 writ system .... 5.17–5.20 writs of entry .... 5.25, 5.27 Fiduciary relationships native title .... 4.24, 4.35 Finders see Lost and found chattels Fixed-term tenancies common law .... 3.93, 11.9 residential tenancies .... 11.106 retail leases .... 11.141 termination .... 11.9, 11.57, 11.106 Fixtures agricultural fixtures .... 2.16 tenancies .... 2.28 air conditioners .... 2.20 annexation by mistake .... 2.29 reform .... 2.67 annexation tests .... 2.17, 2.18 degree of annexation .... 2.17, 2.18 degree of attachment .... 2.18 object of annexation .... 2.17, 2.19–2.21 annexed before contract of sale .... 2.22 chattels as .... 2.18–2.22 annexation by mistake .... 2.29, 2.67 annexation by person with no title .... 2.29 definition .... 2.15, 14.9 dishwashers .... 2.21 general principles .... 2.16 intention of parties .... 2.16 quicquid plantatur solo, solo cedit .... 2.17 intestacy .... 2.22 land, part of .... 2.2, 2.15 life tenant .... 2.15, 2.18, 2.25 lost and found chattels .... 2.65 mortgagee’s rights .... 2.19, 2.22, 2.23, 14.66 severance on sale .... 14.99 overview .... 2.15

808

Index personal property interests .... 14.9 sale of land .... 2.15, 2.22 standard social or architectural practices .... 2.20 tapestries .... 2.18 tenants see Tenant’s fixtures third parties .... 2.23 will or intestacy .... 2.22 Foreclosure decree absolute .... 14.70 decree nisi .... 14.70 equitable mortgage .... 14.76 interim order .... 14.70 leasehold mortgage .... 14.18 legal mortgage .... 14.76 mortgagee’s right .... 14.70–14.78 equity of redemption and .... 14.71–14.73 old system title .... 14.71–14.76 Torrens title .... 14.77, 14.78 procedure .... 14.70 sale of land instead of .... 14.70, 14.75 Torrens mortgage .... 14.77, 14.78 application to Registrar-General .... 14.77 attempt to sell land before .... 14.78 foreclosure order .... 14.78 Forfeiture of leases breach of covenant .... 11.58, 11.62–11.74 court proceedings .... 11.68 irremediable breaches .... 11.64 manner of forfeiture .... 11.67–11.69 non-rental covenant .... 11.64, 11.72 physical re-entry .... 11.69 relief against .... 11.70–11.74 rental covenant .... 11.63, 11.71 repudiation and notice .... 11.65 sublessees .... 11.74 time limits on relief .... 11.73 waiver by landlord .... 11.66 Found chattels see Lost and found chattels Fraud adverse possession, limitation period .... 5.81 definition .... 8.33, 8.65, 8.66 indefeasibility of title and .... 8.25–8.32, 8.47–8.57, 8.61–8.79 actual fraud .... 8.66, 8.67, 8.69, 8.74 constructive fraud excluded .... 8.65, 8.66 definition .... 8.33, 8.65, 8.66 dishonest repudiation of prior interest .... 8.75 dishonesty .... 8.66, 8.67, 8.72, 8.75 earlier transaction, in .... 8.62 equitable fraud excluded .... 8.67, 8.73–8.77 exception for .... 8.60–8.79 fictitious person .... 8.33 forgery .... 8.26, 8.27, 8.29, 8.44–8.57, 8.78

immediate indefeasibility .... 8.26–8.33, 8.203 kind of conduct .... 8.64–8.68 knowledge of fraud .... 8.69, 8.71, 8.72, 8.78 mortgagee recklessness, relief against .... 8.79 prior unregistered interest, registering .... 8.68 registered proprietor or agent, by .... 8.62, 8.63 requisite level of fraud .... 8.74 statutory fraud .... 8.64, 8.66, 8.67, 8.69–8.76 volunteers .... 8.62, 8.127 wilful blindness .... 8.69–8.72 Torrens Assurance Fund .... 8.192–8.194 deprivation of property .... 8.193, 8.194 fraud as compensation basis .... 8.188, 8.192 Free alienability fee simple .... 10.3 principle of .... 10.1, 10.3 rule against perpetuities affirming .... 10.4 Freehold covenants assignment common law .... 13.8, 13.9 equity .... 13.29 benefit of .... 13.2 benefit of, enforceability at common law .... 13.3 annexation to land .... 13.4–13.7 express assignment .... 13.8, 13.9 identifiable land .... 13.7 intention to benefit land .... 13.4 privity doctrine .... 13.10, 13.53 running with land .... 13.3–13.9 third party, by .... 13.10 touching and concerning land .... 13.5, 13.6 benefit of, enforceability in equity .... 13.23 annexation to land .... 13.24–13.28 express assignment .... 13.29 identifiable land .... 13.27 intention to annex .... 13.25 retention by covenantee .... 13.28 running with land .... 13.23 touching and concerning land .... 13.26 building schemes see Building schemes burden of .... 13.2 burden of, enforceability at common law .... 13.11 Conveyancing Act s 70A(1) .... 13.12 positive covenants .... 13.52 successors in title, against .... 13.11, 13.22 burden of, enforceability in equity .... 13.15 benefit to land .... 13.20 Conveyancing Act s 88(1) and .... 13.22 intended to run with land .... 13.21 negative covenant .... 13.16, 13.18, 13.52 notice of covenant .... 13.19 positive covenants .... 13.52 privity of estate .... 13.13 restrictive covenant .... 13.16, 13.18

809

Property Law in New South Wales Freehold covenants — cont’d ‘touch and concern land’ test .... 13.20 Tulk v Moxhay doctrine .... 13.15–13.17 covenantee .... 13.2 covenantor .... 13.2 creation Conveyancing Act s 88B .... 13.40 old system title .... 13.38 plans of subdivision .... 13.40 Torrens title .... 13.39, 13.40 damages for breach .... 13.41 enforceability benefit, common law .... 13.3–13.9 benefit, in equity .... 13.23–13.29 between parties to agreement .... 13.1 burden, common law .... 13.11–13.14 burden, in equity .... 13.15–13.21 Conveyancing Act requirements .... 13.12, 13.22 positive covenants .... 13.52 privity doctrine .... 13.10, 13.13, 13.53 extinguishment .... 13.42–13.50 court orders .... 13.46, 13.47 express agreement .... 13.43 impeding reasonable use .... 13.49 implied agreement .... 13.44 merger .... 13.45 no practical benefit .... 13.49 no substantial injury .... 13.50 obsolete covenants .... 13.48 statutory .... 13.46, 13.47 injunction against breach .... 13.41 merger .... 13.45 modification .... 13.42–13.50 court orders .... 13.46, 13.47 express agreement .... 13.43 implied agreement .... 13.44 no practical benefit .... 13.49 no substantial injury .... 13.50 overview .... 13.1, 13.2 private agreements .... 13.1 reform .... 13.52, 13.53 remedies for breach .... 13.41 restrictive covenants .... 13.2 enforceability in equity .... 13.11, 13.18 running with land .... 13.2 strata schemes .... 13.1 successors in title enforceability against .... 13.11–13.22 enforceability by .... 13.3–13.9, 13.23–13.29 privity doctrine .... 13.10, 13.13, 13.53 privity of estate .... 13.12 suspension .... 13.51 terminology .... 13.2

Torrens system land .... 13.1 building schemes .... 13.37 common law and equity rules apply .... 13.1 creation .... 13.39, 13.40 indefeasibility .... 13.36 restrictive covenants .... 13.36 Freehold estates conditional fee/interest .... 3.44, 3.49–3.53 categorisation as determinable or .... 3.116–3.118 condition subsequent .... 3.49 defeasible by condition subsequent .... 3.49 determinable fee distinguished .... 3.50 discriminatory condition .... 3.118 effect of event .... 3.51 failure of condition .... 3.53 grantor’s re-entry right .... 3.51 indicative words .... 3.52 reform .... 3.116–3.118 void conditions .... 3.54–3.57, 3.116, 3.117 creation .... 3.41 defeasible fee .... 3.49 definition .... 3.40 determinable fee/interest .... 3.44–3.48 absolute fee, becoming .... 3.46 alienability .... 3.47 boundary .... 3.45 categorisation as conditional or .... 3.116–3.118 conditional fee distinguished .... 3.50 determining event .... 3.45, 3.46, 3.50 failure of grant .... 3.47 indicative words .... 3.48 possibility of reverter .... 3.46, 3.47 reform .... 3.116–3.118 void limitations .... 3.47, 3.54–3.57 dividing up interests .... 3.41 equitable estates .... 3.82–3.88 curtesy .... 3.63 dower .... 3.62 executed trust .... 3.85, 3.86 executory trust .... 3.85, 3.87 historical background .... 3.82 holder as ‘beneficiary’ .... 3.84 merger of common law and equity .... 3.83 recognition of .... 3.82 words of limitation .... 3.85–3.88 fee simple .... 3.43 conditional fee .... 3.44, 3.49–3.53 determinable fee .... 3.44–3.48 void limitations/conditions .... 3.54–3.57 words of limitation .... 3.73–3.76 fee tail .... 3.58 words of limitation .... 3.77, 3.78 flexibility .... 3.41

810

Index historical background .... 3.40 indefinite duration .... 3.41, 3.45 life estates see Life estates; Life tenants modified fee .... 3.49 mortgages see Mortgages reform .... 3.116–3.120 Statute of Quia Emptores .... 3.43 types of estates .... 3.41, 3.42 void limitations/conditions .... 3.54–3.57 against public policy .... 3.54, 3.56 denying power to alienate .... 3.54, 3.55 immorality .... 3.54, 3.116, 3.117 reform .... 3.116–3.118 uncertainty .... 3.54, 3.57 words of limitation .... 3.69–3.89 common law .... 3.70 equitable interests .... 3.85–3.88 executed trust .... 3.85, 3.86 executory trust .... 3.85, 3.87 fee simple .... 3.73–3.76 fee tail .... 3.77, 3.78 inter vivos dispositions .... 3.69, 3.71, 3.73–3.75 life estates .... 3.79, 3.80 old system title .... 3.69 rule in Shelley’s Case .... 3.89 testamentary dispositions .... 3.71, 3.76 Torrens System not requiring .... 3.72 Frustration leases .... 11.77 residential tenancies .... 11.121 Future interests doctrine of estates .... 3.96, 3.97 legal executory interests see Legal executory interests remainder see Remainders reversion .... 3.97, 3.98 types .... 3.97

G Gifts donatio mortis causa .... 8.126 joint tenancy, severance of gifts in equity .... 9.31–9.34, 9.130 reform .... 9.130 land .... 6.46 Torrens title land gifted to volunteers .... 8.126 overview .... 6.45 perpetuities see Rule against perpetuities personal property .... 6.45 Gleaning rights .... 3.16

H Hire-purchase agreements chattels .... 14.12, 14.13 fixtures .... 2.19 Honoré’s theory of property .... 1.11, 1.12, 1.13, 1.31 Human body see Body parts Human rights adverse possession and .... 5.52, 5.58–5.67, 5.160 abolition, case for .... 5.160 defeating claims .... 5.59 divergent policy considerations .... 5.66 homelessness .... 5.162 International Covenant on Economic, Social and Cultural Rights .... 5.63 Pye’s case .... 5.60–5.62, 5.65, 5.67 COVID-19 pandemic and .... 1.77 domestic law .... 1.76, 1.78 international instruments .... 1.76 property rights, and .... 1.76–1.78 Victorian Charter .... 1.78

I Implied covenants business efficacy, giving .... 11.34 common law .... 11.21–11.27 leases, in .... 11.20–11.37 necessary implication .... 11.34 obligations of landlord common law .... 11.21–11.24 fitness for habitation .... 11.24 non-derogation from grant .... 11.23 quiet enjoyment .... 3.92, 11.22 obligations of tenant allowing inspection and repair .... 11.31 common law .... 11.21, 11.25–11.27 cultivation of agricultural land .... 11.27 good and tenantable repair .... 11.29 payment of rent .... 11.30 tenant-like use .... 11.25 vacant possession on lease expiry .... 11.26 overlapping obligations .... 11.35 duty of care .... 11.36 waste .... 11.37 overview .... 11.20 quiet enjoyment .... 3.92, 11.21, 11.22 re-entry for breach of covenant .... 11.33 re-entry for non-payment of rent .... 11.32 statute .... 11.28–11.33 Implied easements see Easements Improvements see also Repairs co-ownership .... 9.55–9.57

811

Property Law in New South Wales fraud .... 8.44–8.57, 8.61–8.79 in personam rights .... 8.92–8.105 inadequate recordings .... 8.82 other estates or interests .... 8.80–8.82 overriding statutes .... 8.107–8.114, 8.201 prior folio .... 8.83 profits omitted or misdescribed .... 8.85, 8.86, 12.70 rectification of Register .... 8.115–8.121 short-term tenancies .... 8.88–8.90 unregistered interests and .... 8.107, 8.129 void instruments .... 8.44–8.46 volunteers .... 8.123–8.127 wrong descriptions of parcels .... 8.87 fraud .... 8.25–8.32, 8.47–8.57, 8.61–8.79 actual fraud .... 8.66, 8.67, 8.69, 8.74 constructive fraud excluded .... 8.65, 8.66 definition .... 8.33, 8.65, 8.66 dishonest repudiation of prior interest .... 8.75 dishonesty .... 8.66, 8.67, 8.72, 8.75 earlier transaction, in .... 8.62 equitable fraud excluded .... 8.67, 8.73–8.77 exception for .... 8.60–8.79 failure to check mortgagor’s identity .... 8.122, 8.197 fictitious person .... 8.33 forgery .... 8.26, 8.27, 8.29, 8.44–8.57, 8.78 immediate indefeasibility .... 8.26–8.33, 8.203 kind of conduct .... 8.64–8.68 knowledge of fraud .... 8.69, 8.71, 8.72, 8.78 mortgagee recklessness, relief against .... 8.79 prior unregistered interest, registering .... 8.68 registered proprietor or agent, by .... 8.62, 8.63 requisite level of fraud .... 8.74 statutory fraud .... 8.64, 8.66, 8.67, 8.69–8.76 volunteers .... 8.62, 8.127 wilful blindness .... 8.69–8.72 immediate .... 8.26–8.35, 8.202–8.205 affirmation .... 8.29 deferred, compared .... 8.26–8.35, 8.202–8.205 fraud .... 8.26–8.33, 8.203 reform .... 8.202–8.205 in personam exception .... 8.92–8.105 ‘additional ingredient’ .... 8.97 application of exception .... 8.101 Bahr v Nicolay .... 8.97, 12.51 easements .... 12.51–12.53 examples .... 8.95–8.99 Gosper .... 8.98, 8.99 proper conduct .... 8.94 trust property, receipt of .... 8.102–8.105 unconscionability .... 8.94 inconsistent statutes .... 8.107–8.114, 8.201 amendments to resolve issue .... 8.113, 8.114

Improvements — cont’d contributions from co-owners .... 9.55 limits to claims .... 9.56 reform .... 9.132 factual possession, evidence of .... 5.90 mortgagee’s rights .... 14.60 In personam rights basis for right .... 8.92 conflict with registered interest .... 8.92 indefeasibility exception .... 8.92–8.105 ‘additional ingredient’ .... 8.97 application of exception .... 8.101 Bahr v Nicolay .... 8.97, 12.51 easements .... 12.51–12.53 examples .... 8.95–8.99 Gosper .... 8.98, 8.99 proper conduct .... 8.94 trust property, receipt of .... 8.102–8.105 unconscionability .... 8.94 known causes of action .... 8.93, 8.99–8.101 overview .... 8.92 registration .... 8.94 trust property, receipt of .... 8.102–8.105 equitable interest .... 8.105 indefeasibility exception .... 8.102–8.105 knowing receipt .... 8.102, 8.103 personal equity .... 8.105 Inclosed lands definition .... 2.38 trespass, penalty for .... 2.38 Indefeasibility of title adverse possession, exception .... 8.106 ambit of .... 8.36–8.39 collateral loan agreement .... 8.47–8.51 correction of Register .... 8.115–8.121 court, by .... 8.119, 8.120 Registrar-General, by .... 8.115–8.118 deferred .... 8.26–8.29, 8.32, 8.34, 8.35 immediate, compared .... 8.26–8.35, 8.202–8.205 reform .... 8.202–8.205 revivals of doctrine .... 8.32 definition .... 8.25 discretionary indefeasibility .... 8.205 easements .... 8.84, 12.46–12.53 in personam exception and .... 12.51–12.53 inconsistent statutes .... 8.111 omitted or misdescribed .... 8.84, 12.47–12.50 registered .... 12.46 exceptions .... 8.60–8.127 adverse possession .... 8.106 easements omitted or misdescribed .... 8.84, 12.46–12.52

812

Index creation of interest without registration .... 8.107 indefeasibility by registration prevailing .... 8.112 reading to avoid direct conflict .... 8.109 reform .... 8.201 sequential application to reconcile .... 8.110 unregistered interests, protection .... 8.107, 8.129 key provision .... 8.25 leases .... 8.39–8.43, 8.57–8.59 covenants in .... 8.40–8.43 option to purchase .... 8.43 option to renew .... 8.40–8.42, 8.88, 8.91 registration .... 8.39–8.43, 8.57, 8.58 short-term tenancy exception .... 8.88–8.90 void .... 8.57–8.59 mortgages .... 14.19, 14.21 all moneys clauses .... 8.47–8.56 assignment of .... 14.59 collateral loan agreement .... 8.47–8.51 forgery .... 8.44–8.57, 8.78 identity check requirements .... 8.79, 8.122, 8.197 joint and several liability clause .... 8.54 mortgagee recklessness, relief against .... 8.79 priority between mortgages .... 14.128 priority between mortgagor and purchaser .... 14.139, 14.140 registration .... 8.44–8.48 transferee acquiring .... 14.59 two mortgagors .... 8.49–8.56 void instrument .... 8.47 omission or misdescription, exception .... 8.25 easements .... 8.84, 12.46–12.50 profits à prendre .... 8.85, 8.86, 12.70 wrong description of parcel .... 8.87 other estates or interests, exception .... 8.80–8.82 abbreviated or inadequate recordings .... 8.82 encumbrances, liens, estates or interests .... 8.81 interest no longer current .... 8.82 other folio-recorded interests .... 8.80 right of way .... 8.81 overriding statutes .... 8.107–8.114, 8.201 amendments to resolve issue .... 8.113, 8.114 creation of interest without registration .... 8.107 indefeasibility by registration prevailing .... 8.112 reading to avoid direct conflict .... 8.109 reform .... 8.201 sequential application to reconcile .... 8.110 unregistered interests, protection .... 8.107, 8.129

overview .... 8.25 prior folio exception .... 8.83 reform deferred vs immediate indefeasibility .... 8.202–8.205 overriding statutes .... 8.201 registration covenants .... 8.40–8.46 curing voidness .... 8.26 exceptions to indefeasibility .... 8.38 forged instruments .... 8.44–8.50, 8.53–8.57 in personam rights .... 8.94 indefeasibility on .... 8.36–8.39 leases .... 8.39–8.43, 8.57, 8.58 short-term tenancies .... 8.88–8.90 unregistered interest of another .... 8.68 void or illegal instruments .... 8.44–8.46 restrictive covenants .... 13.36 short-term tenancies .... 8.88–8.90 exception .... 8.88–8.90 notice of tenant’s interest .... 8.88–8.90 options to renew .... 8.88, 8.91 registration .... 8.89 Torrens system .... 8.25 trust property, receipt of .... 8.102–8.105 in personam exception .... 8.102–8.105 trustee in bankruptcy .... 8.124 void instruments .... 8.44–8.46 void leases .... 8.57–8.59 volunteers .... 8.123–8.127, 8.206 equitable interest .... 8.126 fraud .... 8.62, 8.127 gift of Torrens land .... 8.126 not general exception .... 8.125 old system compared .... 8.123 Torrens system, no specific provision .... 8.123 Victoria .... 8.124 Indigenous Australians cultural knowledge .... 4.86 Indigenous Land Use Agreements (ILUAs) .... 4.32, 4.67, 4.71, 4.83 Indigenous rights movement .... 4.10 intellectual property .... 4.86 land rights see also Native title claims .... 4.11, 4.12 developments in recognition .... 4.8 European settlement and .... 4.4–4.9 Milirrpum v Nabalco (Gove case) .... 4.2, 4.10, 4.11 non-recognition of .... 4.6, 4.7 ownership of reserves .... 4.11 pre-existing local law .... 4.8 property rights, whether .... 1.8, 1.59 statutory .... 4.11, 4.12

813

Property Law in New South Wales money advanced on mortgage .... 9.18 partnership assets .... 9.19 statutory reform .... 9.20–9.23 Torrens title .... 9.23 death of tenant .... 9.8, 9.9 right of survivorship .... 9.8, 9.9, 9.44 four unities .... 9.4–9.7 improvements .... 9.55–9.57 contributions from co-owners .... 9.55 limits to claims .... 9.56 reform .... 9.132 occupation fees .... 9.58 calculation .... 9.59 overview .... 9.2, 9.3, 9.9 reform .... 9.130 unilateral severance .... 9.130, 9.131 release of interest .... 9.3, 9.26 rent and profits .... 9.60 reform .... 9.132, 9.133 repairs .... 9.57 right of survivorship .... 9.8, 9.9, 9.44 rights and obligations of co-owners improvements .... 9.55–9.57 occupation fees .... 9.58, 9.59 possession right .... 9.54 rents and profits .... 9.60 severance .... 9.25–9.53 agreement not to sever .... 9.35 alienation of part of interest .... 9.36 alienation to self .... 9.27, 9.40, 9.41 alienation to third party .... 9.28–9.39 bankruptcy .... 9.27, 9.52, 9.53 course of dealing among tenants .... 9.27, 9.45, 9.46 court order .... 9.27, 9.47 declaration of .... 9.131 effect .... 9.25 example .... 9.25, 9.26 forfeiture rule .... 9.48–9.51 gifts in equity .... 9.31–9.34, 9.130 inter vivos disposition .... 9.25 lease .... 9.39 means of effecting .... 9.27 mortgage .... 9.37, 9.38 mutual agreement .... 9.43, 9.44 reform .... 9.130, 9.131 subdivision of property .... 9.46 trust declaration .... 9.27, 9.42 unilateral act .... 9.27–9.42, 9.130, 9.131 unlawful killing .... 9.27, 9.48–9.51 subdivision of property .... 9.46 survivorship, right of .... 9.8, 9.9, 9.44 termination of co-ownership .... 9.61–9.65 action of parties .... 9.62

Indigenous Australians — cont’d native title see Native title relationship with land .... 4.2 users as custodians .... 4.3 traditional knowledge .... 4.3, 4.86 property in .... 1.71 secret .... 1.71, 4.3 Information property rights in .... 1.70, 1.71 Aboriginal tribal secrets .... 1.71 Foster v Mountford .... 1.71 Injunctions breach of covenant .... 11.79, 13.41 easements, infringement of .... 12.45 freehold covenants, breach of .... 13.41 mortgagee sale, against .... 14.118–14.120 improper exercise of power .... 14.119, 14.120 non-compliance with formalities .... 14.118, 14.120 purchaser, involvement of .... 14.120 undertaking as to damages .... 14.119 Insurance strata schemes .... 9.93–9.95 damage policy .... 9.93 liability for damage, death or injury .... 9.95 valuation of property for .... 9.94 workers’ compensation .... 9.95 Intangible property .... 1.8, 1.70, 2.5 Intestacy bona vacantia .... 3.19, 3.30 demise of escheat on .... 3.30 fixtures and .... 2.22 Lang’s Act (NSW) .... 3.27, 3.30 leasehold, division on .... 3.90 NSW law of inheritance on .... 3.27

J Joint tenancies see also Co-ownership; Tenancy in common adverse possession and .... 5.120–5.122 chattels .... 9.24 contributions to purchase price .... 9.15–9.17 matrimonial relationship .... 9.17 rebuttable presumptions .... 9.16 co-ownership method .... 9.2 creation of co-ownership .... 9.11 chattels .... 9.24 common law, at .... 9.12 contributions to purchase price .... 9.15–9.17 equitable interests .... 9.11, 9.22 equity, in .... 9.15–9.20 express words .... 9.12 legal interests .... 9.11, 9.22

814

Index court orders .... 9.63–9.65 division of chattels .... 9.65 sale or partition of land .... 9.63, 9.64 unities .... 9.4–9.7 interest .... 9.5 possession .... 9.4 time .... 9.7 title .... 9.6 Jus tertii defence Asher v Whitlock .... 5.37 availability .... 2.54, 2.55 better title of third party .... 2.53, 5.47 chattels .... 2.44, 2.53–2.55 lost and found .... 2.63 easements .... 12.45 land, whether applicable to .... 5.37, 5.47 overview .... 2.53, 5.47 possession of chattel .... 2.54 possessory title .... 2.33, 5.47, 5.48 profits à prendre .... 12.71 rights of third parties .... 2.44, 2.53, 2.55

L Labour theory see Locke’s labour theory Land see also Property; Real property Aboriginal rights see Indigenous Australians; Native title access to neighbouring land .... 12.74 airspace included .... 2.2, 2.6–2.8 boundaries .... 2.11–2.14 accretion and erosion .... 2.14 non-tidal waters .... 2.13 tidal waters .... 2.12 characteristics .... 2.2, 2.6 co-ownership see Co-ownership compulsory acquisition see Compulsory acquisition corporeal realty .... 2.1, 2.2 creation and transfer of interests in .... 6.1 definition .... 2.2, 2.6 deprivation remedy, historically .... 1.3 equitable interests see Equitable interests extent .... 2.6 fixtures see Fixtures gifts of .... 6.46 incorporeal realty .... 2.1, 2.2 legal interests see Legal interests mortgage see Mortgages native title see Native title natural rights .... 2.10 neighbouring land, access to .... 12.74 old system title see Old system title overlapping interests in .... 6.2

possession see Possession public aspects of ownership .... 1.3 rights in .... 1.3, 4.1, 5.4, 5.5 subsoil .... 2.6, 2.9 Torrens title see Torrens title system trespass see Trespass Leaseholds definition .... 3.40, 3.90 estates, whether .... 3.90, 3.91 historical development .... 3.90, 3.91 key aspects .... 3.92 lease see Leases mortgages old system title .... 14.18 Torrens title .... 14.23 overview .... 3.40, 3.90 personalty, categorised as .... 3.90, 3.91 protection of leaseholder .... 3.91 seisin, leaseholder not having .... 3.90, 5.26 types of leases see Leases Leases see also Residential tenancies; Retail leases adverse possession by lessee .... 5.77, 5.123 assignment see Assignment of leases assignment of reversion .... 11.2, 11.86 benefit of covenants .... 11.51 burden of covenants .... 11.52–11.54 past breaches .... 11.55 common law .... 11.1, 11.2 concurrent leases .... 11.18 covenants see Covenants in leases creation .... 6.6, 11.3 certainty of duration .... 11.4, 11.84 deeds .... 11.6, 11.8 equity, in .... 11.7 exclusive possession .... 11.5 old system title .... 11.6, 11.7 Torrens title .... 11.8 Crown Land Act, under .... 11.94 Residential Tenancies Act not applicable .... 11.94 documentation .... 6.6 duration .... 3.92, 11.4 certainty requirement .... 11.4, 11.84 equitable .... 11.7 implied periodic tenancy co-existing with .... 11.12 estoppel tenancies .... 11.17 exclusive possession .... 3.92, 11.2, 11.5 fixed-term tenancies .... 3.93, 11.9 automatic termination .... 11.9, 11.57 residential .... 11.106 forfeiture .... 11.58, 11.62–11.74 court proceedings .... 11.68

815

Property Law in New South Wales option to purchase .... 8.43 option to renew .... 8.40–8.43 rule against perpetuities not applicable .... 10.42 oral agreement .... 6.6, 8.129 overview .... 2.3, 3.92, 11.1, 11.2 periodic tenancies .... 3.94, 11.10 creation of .... 11.10 determination by notice .... 11.11 equitable lease, co-existing with .... 11.12 express agreement .... 11.10 implied .... 11.10, 11.12–11.14, 11.85 residential .... 11.106 personal property .... 3.90, 3.91 reform of common law .... 11.83 assignment of leases .... 11.86 duration requirement .... 11.84 implied tenancies .... 11.85 remedies for breach .... 11.78 damages .... 11.79 forfeiture .... 11.58, 11.62–11.74 injunctions .... 11.79 set-off .... 11.80–11.82 termination of lease .... 11.58–11.74 residential see Residential tenancies retail see Retail leases reversion .... 11.2 assignment of .... 11.2, 11.86 reversionary leases .... 11.19 set-off .... 11.80 common law .... 11.81 equitable .... 11.82 statutory see Residential tenancies; Retail leases subleases see Subletting surrender .... 11.76, 11.118 tenancy at sufferance .... 3.95, 11.16 tenancy at will .... 3.95, 11.15 tenancy by estoppel .... 11.17 tenancy for life .... 11.4 termination .... 11.56–11.77 breach of covenants .... 11.58–11.74 contractual remedies .... 11.58–11.61, 11.65 effluxion of time .... 11.57 fixed-term tenancy .... 11.9, 11.57, 11.106 forfeiture .... 11.58, 11.62–11.74 frustration .... 11.77 fundamental breach .... 11.58–11.61, 11.65 loss of bargain damages .... 11.61 merger .... 11.75 notice, by .... 11.11, 11.56, 11.64, 11.65 periodic tenancy .... 11.11 repudiation .... 11.58–11.61, 11.65 residential tenancies .... 11.106, 11.118–11.125

Leases — cont’d irremediable breaches .... 11.64 manner of .... 11.67–11.69 non-rental covenant .... 11.64, 11.72 physical re-entry .... 11.69 relief against .... 11.70–11.74 rental covenant .... 11.63, 11.71 repudiation and notice .... 11.65 sublessees .... 11.74 time limits on relief .... 11.73 waiver by landlord .... 11.66 fragmentation of interests .... 11.2 frustration .... 11.77 historical development .... 2.3, 3.90 lease as personal property .... 3.90, 3.91 leaseholder protection .... 3.91 implied covenants see Implied covenants implied obligations .... 11.35 duty of care .... 11.36 waste .... 11.37 implied periodic tenancies .... 11.10, 11.12, 11.85 alteration of law .... 11.14 enforceable agreement to grant tenancy .... 11.13 lease void but rent paid .... 11.13 statutory restrictions .... 11.14 tenant holding over .... 11.13 tenant let into occupation .... 11.13 yearly tenancies .... 11.13, 11.14 indefeasibility see also Indefeasibility of title covenants .... 8.40–8.43 option to renew .... 8.40–8.42, 8.88, 8.91 registration .... 8.39–8.43, 8.57, 8.58 short-term tenancy exception .... 8.88–8.90 void instruments .... 8.57–8.59 interest in land .... 11.2 joint tenancy, severance of .... 9.39 key aspects .... 3.92 law of .... 11.1 lessee/tenant .... 3.92, 11.2 lessor/landlord .... 3.92, 11.2 maximum duration .... 11.4 merger .... 11.75, 11.118 mortgagee-granted old system title .... 14.61, 14.62 Torrens title .... 14.63 mortgagor-granted old system title .... 14.63 Torrens title .... 14.65 native title extinguished by grant of .... 4.62 pastoral leases .... 4.58, 4.62, 4.73, 4.74 perpetual lease .... 4.62 negligence, liability in .... 11.36 no value, for .... 11.100

816

Index surrender .... 11.76 tenancy at will .... 11.16 terminology .... 11.2 Torrens title .... 11.8 deed .... 11.8 indefeasibility .... 8.39–8.43, 8.57–8.59 mortgagee-granted leases .... 14.64 mortgagor-granted leases .... 14.65 registered .... 8.39–8.43, 8.57, 8.58, 11.8 unregistered .... 8.129, 11.8 void leases .... 8.57–8.59 types of .... 3.92 concurrent leases .... 11.18 fixed-term tenancy .... 3.93, 11.9 periodic tenancy .... 3.94, 11.10–11.14 reversionary leases .... 11.19 tenancy at sufferance .... 3.95, 11.16 tenancy at will .... 3.95, 11.15 tenancy by estoppel .... 11.17 unregistered .... 8.129, 11.8 waste doctrine .... 11.37 Legal executory interests before/after 1535 .... 3.110 conveyance .... 3.109, 3.110 Conveyancing Act (NSW) .... 3.112–3.115 current position .... 3.112–3.115 equitable future interests .... 3.108 fee simple estate .... 3.108 historical development .... 3.108–3.111 legal remainder rules not applicable .... 3.109 legal remainders compared .... 3.108 overview .... 3.108 rule in Purefoy v Rogers .... 3.111 Statute of Uses 1535 .... 3.110, 3.111, 3.114 uses/trusts .... 3.108 Legal interests co-ownership .... 9.11, 9.22 creation and transfer .... 6.4 deeds .... 6.5 leases .... 6.6, 11.6 personal property .... 6.7 possessory titles .... 6.6 equitable interests distinguished .... 6.1 fragmentation of rights .... 6.2, 6.3 overview .... 6.1, 6.4 priority see Priority of interests rule against perpetuities .... 10.10 Torrens land, unregistered interests .... 8.129, 8.161 trusts .... 3.108, 6.2 trustee .... 3.108, 6.3

Licences Crown Land Act, under .... 11.94 Residential Tenancies Act not applicable .... 11.94 easements, distinction .... 12.14 exclusive possession .... 11.5 grazing licences .... 3.26 occupation licences .... 3.24 caveatable interest .... 8.145 profits à prendre, distinction .... 12.65 trespass, right to sue in .... 2.32 Liens equitable liens .... 14.2 indefeasibility exception .... 8.81 possessory liens .... 14.2 vendor’s lien caveatable interest .... 8.145 priority .... 7.28 unregistered interest .... 8.129 Life estates see also Life tenants absolute .... 3.59 adverse possession .... 5.75, 5.76 by default .... 3.70, 3.79 conditional .... 3.59 curtesy .... 3.63 determinable .... 3.59 doctrine of occupancy .... 3.61 doctrine of waste .... 3.64 dower .... 3.62 ordinary .... 3.61 overview .... 3.59, 5.13 pur autre vie .... 3.61 title .... 5.13 Torrens system folios .... 8.15 waste, doctrine of .... 3.64–3.68 words of limitation common law .... 3.70 equitable interests .... 3.85–3.88 historically .... 3.69–3.71 inter vivos dispositions .... 3.69, 3.71, 3.79 old system title .... 3.69 rule in Shelley’s Case .... 3.89 testamentary dispositions .... 3.71, 3.80 Torrens System not requiring .... 3.72 Life tenants see also Life estates adverse possession against .... 5.75, 5.76 fixtures .... 2.15, 2.18, 2.25 waste, doctrine of .... 3.64 ameliorating waste .... 3.67 equitable waste .... 3.68 permissive waste .... 3.65 types of waste .... 3.64 voluntary waste .... 3.66

817

Property Law in New South Wales Limitation period adverse possession .... 5.50, 5.69, 5.73–5.85 accrual of cause of action .... 5.74–5.78 commencement .... 5.73 Crown land .... 5.70 suspension or cancellation .... 5.79–5.84 ultimate time limit .... 5.85 Livestock commons and ownership of .... 1.33, 1.34 private ownership .... 1.34 Locke’s labour theory appropriation of property .... 1.24, 1.25 limits on .... 1.24, 1.27 basis .... 1.23 Bentham’s theory compared .... 1.29 Blackstone’s theory and .... 1.22 collective or communal use ignored .... 1.25, 1.26 difficulties .... 1.25–1.27 feminist theory and .... 1.41, 1.46 gender blindness .... 1.41 inconsistencies .... 1.26 influence .... 1.15 justification of private property .... 1.23 limits on appropriation .... 1.24, 1.27 married women, position of .... 1.27 Munzer’s theory and .... 1.49 natural rights .... 1.23 overview .... 1.23, 1.24, 1.28 persons capable of ownership .... 1.27 pluralist approach .... 1.48 traditional owners, removal of .... 1.26 ‘waste’ land .... 1.25, 1.27 women and .... 1.27, 1.41, 1.46 Lodgers see Boarders and lodgers Lost and found chattels agent as finder .... 2.64 annexation to land .... 2.65 conversion, right to sue in .... 2.63 detinue, right to sue in .... 2.63 dishonestly taking possession .... 2.66 employee as finder .... 2.64 finder’s rights .... 2.63 employer .... 2.64 occupier compared .... 2.65, 2.66 principal .... 2.64 fixtures .... 2.65 negligence, right to sue in .... 2.63 occupier’s rights .... 2.65, 2.66 trespass finding in course of .... 2.66 right to sue in .... 2.63

M Mabo (No 2) see Native title Mediation strata scheme disputes .... 9.112–9.116 process .... 9.115 reforms giving prominence to .... 9.113 requirement to attempt .... 9.114 Strata Schemes Adjudicator .... 9.116 Mere equities equitable interest, distinction .... 6.44, 7.33, 7.45 different status .... 7.33, 7.35 examples .... 7.33 priority .... 6.44, 7.1, 7.33–7.35 later equitable/legal interest .... 7.33–7.35 leading case .... 7.34 problems with status .... 7.45 right to equitable relief .... 6.44, 7.33 uncertainties around .... 7.34, 7.45 Merger freehold covenants .... 13.45 lease and reversion .... 11.75 residential tenancies .... 11.118 Mirror principle .... 8.21 Mortgagee rights and remedies assignment right .... 14.59 attornment clauses old system title .... 14.56 tenancy by estoppel .... 14.56, 14.58 Torrens title .... 14.58 caveats see also Caveats mortgagee sale, in relation to .... 8.137 protecting mortgagee .... 8.132 discharge of mortgage .... 14.79 old system title .... 14.80 Torrens title .... 14.81–14.83 fixtures .... 2.15, 2.19, 2.22, 2.23, 14.66 severance on sale .... 14.99 foreclosure .... 14.70–14.78 equity of redemption and .... 14.71–14.73 old system title .... 14.71–14.76 reopening of .... 14.74 sale of land instead of .... 14.70, 14.75 Torrens title .... 14.77, 14.78 improvements to property .... 14.60 alternative to sale .... 14.84 leases alternative to sale .... 14.84 mortgagee-granted .... 14.61, 14.62, 14.64 mortgagor-granted .... 14.63, 14.65 old system title .... 14.61–14.62 Torrens title .... 14.64, 14.65 overview .... 14.47

818

Index personal covenants .... 14.47–14.51 date for repayment .... 14.49, 14.50 deficit on sale, making up .... 14.50 enforcement .... 14.48 repayment of sum borrowed .... 14.48 right to sue on .... 14.59 transferee, with .... 14.51 possession of mortgaged property attornment clauses .... 14.56, 14.48 equitable mortgages .... 14.54, 14.55 legal mortgages .... 14.52, 14.53 old system title .... 14.52–14.56 repairs to property .... 14.53 Torrens title .... 14.57, 14.58 power of sale see Mortgagee sale receiver .... 14.67–14.69 alternative to sale .... 14.84 appointment of .... 14.67, 14.68 liability .... 14.69 powers .... 14.68 reimbursement of expenditure .... 14.60 sale of property see Mortgagee sale Mortgagee sale advertisement .... 14.113, 14.143 internet advertising .... 14.143 agent, appointment of .... 14.112 alternative remedies .... 14.84 auction or private treaty .... 14.92 caveat in relation to .... 8.137, 14.121 collusion .... 14.117 compulsion to sell .... 14.116 conduct of sale .... 14.110–14.117 advertising .... 14.113, 14.143 practical aspects .... 14.110–14.117 standard of conduct .... 14.103–14.109 timing .... 14.111 easements, sale of .... 14.99 equitable mortgage .... 14.93 exercise of power .... 14.99–14.102 express provision for .... 14.99 fixtures, severance of .... 14.99 genuinely independent bargain .... 14.101, 14.117 good faith standard .... 14.103, 14.106, 14.107 improper exercise of power .... 14.119, 14.120 injunction against .... 14.118–14.120 internet advertising .... 14.143 mortgagee ‘buying in’ at auction .... 14.100 mortgagee not to sell to self .... 14.100 mortgagor, sale to .... 14.102 negligence standard .... 14.103–14.109 notice requirements dispensing with .... 14.90, 14.95 doubts about validity .... 14.96 monetary default .... 14.88, 14.89

819

non-compliance with .... 14.97 non-monetary default .... 14.88 old system title .... 14.87–14.90 period for rectification of default .... 14.96 service of notice .... 14.91, 14.95 setting out default .... 14.89 Torrens title .... 14.94–14.97 written notice .... 14.95 old system title .... 14.86–14.93 default by mortgagor .... 14.86 equitable mortgage .... 14.93 notice .... 14.87–14.91 proceeds of sale .... 14.123 service of notice .... 14.91 power of sale .... 14.84, 14.85 alternatives to .... 14.84 default by mortgagor .... 14.86, 14.94 exercise of .... 14.99–14.102 express provision .... 14.99 mere equity .... 14.137 old system title .... 14.86–14.93 opting to use .... 14.84 priority .... 14.137–14.140 source of .... 14.92 Torrens title .... 14.94–14.98 waiver of right to exercise .... 14.98 pre-sale expenditure .... 14.114 proceeds of sale .... 14.122–14.125 old system title .... 14.123 Torrens title .... 14.124, 14.125 unregistered mortgage .... 14.125 profits à prendre, sale of .... 14.99 purchaser taking title free of interests .... 14.99 reasonable care .... 14.103, 14.109 reserve price, setting .... 14.115 restraining .... 14.118–14.121 caveat .... 14.121 improper exercise of power .... 14.119, 14.120 injunction .... 14.118–14.120 non-compliance with formalities .... 14.118, 14.120 purchaser, involvement of .... 14.120 right not to sell .... 14.116 service of notice .... 14.91, 14.95 set-off .... 14.118 spending money on property .... 14.114 standard of conduct .... 14.103–14.109 carelessness .... 14.107 good faith .... 14.103, 14.106, 14.107 negligence-style .... 14.103–14.105, 14.107–14.109 reasonable care .... 14.103, 14.109 statutory .... 14.109 unconscionability .... 14.107

Property Law in New South Wales nemo dat rule .... 14.17 equity of redemption .... 14.71, 14.142 clogs see clogs on equity of redemption above old system .... 14.17, 14.71 Torrens system .... 14.20, 14.22 vesting in mortgagor .... 14.22 fixtures .... 2.15, 2.22, 2.23 foreclosure see Foreclosure historical development .... 14.14 indefeasibility see also Indefeasibility of title all moneys clauses .... 8.47–8.56 collateral loan agreement .... 8.47–8.51 forgery .... 8.44–8.57, 8.78 identity check requirements and .... 8.79, 8.122, 8.197 joint and several liability clause .... 8.54 priority between mortgages .... 14.128 priority between mortgagor and purchaser .... 14.139, 14.140 registration .... 8.44–8.48, 14.19 transferee acquiring .... 14.59 two mortgagors .... 8.49–8.56 void instrument .... 8.47 joint tenancy, severance of .... 9.37, 9.38 leasehold land old system title .... 14.18 sublease, by .... 14.18 Torrens title .... 14.23 leases mortgagee-granted .... 14.61, 14.62, 14.64 mortgagor-granted .... 14.63, 14.65 old system title .... 14.61–14.63 Torrens title .... 14.64, 14.65 mortgagee .... 14.16 power of sale see Mortgagee sale rights and remedies see Mortgagee rights and remedies mortgagor .... 14.16 attornment clauses .... 14.56, 14.58 death of .... 14.141 identity, duty to confirm .... 8.79, 8.122, 8.197 leases granted by .... 14.63, 14.65 National Credit Code .... 14.13, 14.36, 14.38 default notice requirements .... 14.97 nature of .... 14.1 old system title .... 14.15–14.18 equitable mortgages .... 14.15, 14.17 equity of redemption .... 14.17 freehold land .... 14.15–14.17 leasehold land .... 14.18 legal mortgages .... 14.15–14.17 mortgagee rights see Mortgagee rights and remedies mortgagee sale see Mortgagee sale

Mortgagee sale — cont’d timing of sale .... 14.111 Torrens title .... 14.94–14.98 default by mortgagor .... 14.94 notice .... 14.94 proceeds of sale .... 14.124, 14.125 waiver of right .... 14.98 Mortgages accurate nomenclature .... 14.142 all moneys clauses .... 8.47–8.56 indefeasibility and .... 8.47–8.56 two mortgagors .... 8.49–8.56 attornment clauses .... 14.56, 14.58 chattels .... 14.2, 14.3 see also Security interests clogs on equity of redemption .... 14.25 collateral advantages .... 14.30–14.33 covenants .... 14.34, 14.35 extinguishment of right .... 14.26 freedom of contract and .... 14.36 Industrial Relations Act .... 14.39 leases .... 14.61 National Credit Code .... 14.36, 14.38 postponement of right .... 14.26–14.29 restraint of trade .... 14.36 statutory intervention .... 14.36–14.39 termination fees .... 14.29 unconscionability .... 14.25, 14.33 unenforceable .... 14.25–14.35 unjust contracts .... 14.37, 14.38 co-owners advancing money on mortgage .... 9.18 covenants .... 14.34, 14.35, 14.48–14.51 clogs on equity of redemption .... 14.34, 14.35 personal .... 14.47–14.51 right to sue on .... 14.59 creation of old system title .... 14.15–14.18 Torrens title .... 14.19–14.24 Crown land .... 14.24 death of mortgagor .... 14.141 definition .... 14.14 discharge .... 14.79–14.83 application of old system rules .... 14.83 memorandum of .... 14.80, 14.81 old system mortgage .... 14.80 registration of .... 14.81 right to .... 14.82 Torrens mortgage .... 14.81–14.83 equitable mortgage .... 14.15, 14.17 deposit of title deeds, by .... 14.17, 14.93 equitable property, of .... 14.15 legal property, of .... 14.15 mortgagee sale .... 14.93

820

Index priorities .... 7.7, 7.8, 14.127, 14.131, 14.134, 14.136 redemption .... 14.17 repayment date .... 14.16 second mortgages .... 14.17 overview .... 14.1 priorities see also Priority of interests advances by contract .... 14.136 calling in legal title .... 14.134, 14.135 competing mortgages .... 14.126–14.128 earlier equitable mortgage vs later legal interest .... 14.127 earlier legal vs later equitable interest .... 7.7, 7.8, 14.127 earlier vs later equitable interest .... 14.127 equitable mortgage .... 14.127, 14.128 first in time .... 14.127 mortgagor and purchaser .... 14.137–14.140 old system title .... 7.7, 7.8, 14.127, 14.131, 14.134, 14.136 registration of equitable mortgage .... 14.127 tabula in naufragio .... 7.31, 7.32, 14.130–14.133 tacking .... 14.129–14.136 Torrens title .... 14.128, 14.133, 14.135 trust, breach of .... 14.132 reform .... 14.142–14.145 accurate nomenclature .... 14.142 relationship debt .... 14.144 transfers for security .... 14.145 relationship debt .... 14.40–14.46, 14.144 case law .... 14.42–14.46 personal benefit from transaction .... 14.44 reform .... 14.144 unconscionable transactions .... 14.41, 14.46 undue influence .... 14.41, 14.46 rights of mortgagee see Mortgagee rights and remedies sale by mortgagee see Mortgagee sale security, transfers for .... 14.22, 14.145 tacking .... 14.129–14.136 advances by contract .... 14.136 calling in legal title .... 14.134, 14.135 tabula in naufragio .... 14.130–14.133 tenancies in .... 11.96 Residential Tenancies Act not applicable .... 11.96 Torrens title all moneys clauses .... 8.47–8.56 Crown land .... 14.24 discharge of mortgage .... 14.81–14.83 equitable mortgages .... 14.19, 14.20 equity of redemption .... 14.20 forged mortgages .... 8.44–8.57 freehold land .... 14.19–14.22

identity check requirements .... 8.79, 8.122, 8.197 indefeasibility see Indefeasibility of title joint and several liability clauses .... 8.54 joint tenancies .... 9.38 leasehold land .... 14.23 leases .... 14.64, 14.65 mortgagee rights see Mortgagee rights and remedies mortgagee sale see Mortgagee sale priorities .... 14.128, 14.133, 14.135 registered or unregistered .... 14.19–14.22 statutory charge or security .... 14.19 statutory requirement to register .... 14.21 subsequent mortgages .... 14.19 transfers for security .... 14.22, 14.145 unjust contracts .... 14.37, 14.38 Munzer’s theory of property .... 1.32, 1.48, 1.49

N National Credit Code mortgages, application to .... 14.13, 14.36, 14.38 default notice requirements .... 14.97 overview .... 14.13 Native title Act see Native Title Act 1993 (Cth) allodial title .... 3.33–3.38, 3.119, 4.9 availability .... 4.15 bundle of rights, as .... 4.54, 4.55 extinguishment and .... 4.58 caveats .... 8.156 common law .... 4.13 compensation .... 4.25, 4.33 connection with land .... 4.18, 4.27–4.32 continuing issues .... 4.26–4.62 Mabo (No 2) .... 4.15–4.25 communal, not individual .... 4.17 compensation for loss of .... 4.25, 4.33, 4.87 common law, not payable at .... 4.25, 4.33 constitutional right .... 4.33, 4.50, 4.51, 4.70 ‘just terms’ .... 4.33, 4.50, 4.51, 4.70 past acts .... 4.70, 4.79 prior extinguishment .... 4.25 proprietary analysis, and .... 4.50–4.52 Racial Discrimination Act .... 4.33 reforms .... 4.87 restriction on quantum .... 4.79 statutory regime .... 4.70 compulsory acquisition of land .... 1.59, 4.59 compensation .... 4.33, 4.50, 4.51, 4.70 extinguishment by .... 4.23, 4.59 right to negotiate .... 4.80

821

Property Law in New South Wales Native title — cont’d connection with land .... 3.35, 4.18, 4.27, 4.85 changes to traditional practices .... 4.28–4.31 common law .... 4.18, 4.27–4.32 continuing connection .... 4.28, 4.32 cultural knowledge .... 4.86 establishing .... 4.32 frozen rights approach .... 4.28, 4.29 normative frameworks/systems .... 4.30, 4.31 physical presence .... 4.18, 4.27 pre-dating tenurial system .... 3.35 traditional connection .... 4.18 traditional laws acknowledged by traditional customs .... 4.31 traditional practices .... 4.28–4.30 cultural knowledge .... 4.86 definition .... 4.66, 4.84, 4.85 determinations .... 4.67 doctrine of tenure, and .... 3.20, 3.33–3.38 acceptance of doctrine .... 3.37 allodial title .... 3.33–3.38, 4.9 application of doctrine .... 3.38 co-existence of systems .... 3.36 connection to land pre-dating .... 3.35 terra nullius doctrine .... 4.9 evidence of connection with land .... 4.32 external/internal aspects .... 4.38 extinguishment .... 4.20–4.23, 4.57, 4.76 ad hoc basis, by Crown .... 4.20 appropriation .... 4.23, 4.59 bundle of rights, not all affected .... 4.58 clear and plain intention .... 4.76 common law .... 4.20–4.23, 4.57 competing interests .... 4.57 compulsory acquisition .... 4.23, 4.59 fee simple grant .... 4.61 good faith act, in accordance with reservation .... 4.77 grant of freehold .... 4.76 inconsistent grant .... 4.22, 4.57, 4.58 intermediate period acts .... 4.75 leases .... 4.62 legislation .... 4.21 Native Title Act 1993 .... 4.69–4.74 Native Title Amendment Act 1998 .... 4.76–4.78 non-claimant applications .... 4.78 past acts regime .... 4.68, 4.69 pastoral lease .... 4.58, 4.62, 4.73, 4.74, 4.77 permanent adverse dominion .... 4.58 perpetual lease .... 4.62 reserved land .... 4.60, 4.77 scheduled interest .... 4.76 short-term leases .... 4.76 features .... 1.59

822

fiduciary relationship .... 4.24, 4.35 future acts .... 4.71, 4.82 right to negotiate .... 4.72 Government 10 Point Plan .... 4.74 historical background .... 4.1 European settlement .... 4.4–4.7 Gove case .... 4.10, 4.11 Indigenous land rights .... 1.59, 4.6–4.12 relationship with land .... 4.2, 4.3 Supreme Court (Qld) .... 4.14 terra nullius doctrine .... 3.5, 4.9 inalienable right .... 4.17 Indigenous Land Use Agreements (ILUAs) .... 4.32, 4.67, 4.71, 4.83 intermediate period acts .... 4.75 Mabo (No 2) .... 3.2, 4.15 allodial title .... 3.33–3.38 background .... 4.13, 4.14 continuing issues .... 4.26–4.62 findings .... 4.15–4.25 Native Title Act see Native Title Act 1993 (Cth) nature of .... 4.17, 4.36–4.53 bundle of rights .... 4.54, 4.55 different according to circumstances .... 4.38, 4.39 external aspects .... 4.38 flexibility of characterisation .... 4.39 future directions .... 4.56 internal aspects .... 4.38 judicial divergence on .... 4.36–4.40 proprietary interest, as .... 1.59, 4.36–4.52 sui generis .... 4.17, 4.43, 4.49, 4.53, 4.56 origin .... 4.17 overview .... 3.2, 4.1 ownership, concept of .... 5.12, 5.13 pastoral leases .... 4.58, 4.62, 4.73, 4.74 extinguishment by .... 4.58, 4.62, 4.73, 4.77 intermediate period acts .... 4.75 non-exclusive .... 4.69 paramountcy of .... 4.74 Wik decision .... 3.22, 3.26, 4.73, 4.74 possession of land .... 5.2, 5.29 proprietary interest, whether .... 1.59, 4.36–4.52 alienation right .... 1.59, 4.43, 4.45 compensation and .... 4.50–4.52 difficulties in approach .... 4.46–4.49 exclusion right .... 4.44 extending beyond proprietary understandings .... 4.49 indicia of property .... 4.41–4.45 judicial divergence on .... 4.36–4.40 judicial support .... 4.37 use and enjoyment right .... 1.59, 4.42 Racial Discrimination Act and .... 4.33, 4.63

Index radical/ultimate title of Crown .... 4.16, 4.20 recognition of .... 1.59, 3.2, 3.3, 4.15 reforms .... 4.82, 4.83 compensation .... 4.87 cultural knowledge .... 4.86 native title, definition .... 4.84, 4.85 right to negotiate .... 4.72, 4.80 rights and interests .... 4.66 short-term lease extinguishment by .... 4.76 revival after .... 4.76 sovereignty and .... 4.16, 4.20 sui generis .... 4.17, 4.43, 4.49, 4.53, 4.56 ‘title’ not correct term .... 5.13 Torrens Assurance Fund .... 8.207 traditional laws and customs, based in .... 4.17 validation of existing grants .... 4.65, 4.68, 4.69 intermediate period acts .... 4.75 past acts regime .... 4.68 waters, over .... 4.19, 4.34, 4.78 Wik decision .... 3.20, 3.22, 4.1, 4.58, 4.73, 4.74 Native Title Act 1993 (Cth) amendments Native Title Amendment Act 1998 .... 4.74–4.81 reaction to 1998 Act .... 4.81 recent .... 4.82, 4.83 compensation .... 4.70, 4.79, 4.87 determining native title .... 4.67 effect of Act .... 4.64 extinguishment .... 4.69, 4.76–4.78 intermediate period acts .... 4.75 past acts regime .... 4.68 pastoral leases .... 4.73, 4.74, 4.77 reserved land .... 4.77 short-term leases .... 4.76 future acts .... 4.71, 4.82 right to negotiate .... 4.72 introduction .... 4.63 native title, definition .... 4.66 overview .... 4.63 past acts regime .... 4.68, 4.69 compensation .... 4.70 preamble .... 4.64, 4.71 right to negotiate .... 4.72, 4.80 validation of grants .... 4.65, 4.68, 4.69 Natural rights easements, distinction .... 12.11 land and .... 2.10 Locke’s theory .... 1.23 utilitarianism rejecting .... 1.29 NCAT see NSW Civil and Administrative Tribunal (NCAT)

Negligence contributory .... 8.195 Torrens Assurance Fund .... 8.195 leases .... 11.36 dangerous defects .... 11.36 landlord’s duty of care .... 11.36 mortgagee sale, standard of conduct .... 14.103–14.109 overview .... 2.51 right of action .... 2.44, 2.51 Nemo dat rule equitable exception .... 7.4 equitable mortgages .... 14.17 priorities .... 7.3, 7.4, 7.5 void instruments .... 7.41 Notice actual notice .... 7.16 constructive notice .... 7.17–7.23 collateral interests .... 7.19 constructive trust, interest under .... 7.20 duty to inspect land .... 7.18–7.21 duty to inspect title .... 7.22, 7.23 earlier equitable interest .... 7.17–7.23 interest of person in possession .... 7.18, 7.20 investigation of documents .... 7.22 imputed notice .... 7.24 priorities and doctrine of .... 7.13 constructive notice .... 7.17–7.23 earlier equitable vs later equitable .... 7.29 earlier equitable vs later legal .... 7.13–7.24 ‘first in time’ rule and .... 7.29 imputed notice .... 7.24 timing of notice .... 7.14 what constitutes notice .... 7.15 NSW Civil and Administrative Tribunal (NCAT) Appeal Panel .... 11.130 informality .... 9.120, 11.126 jurisdiction .... 9.117, 9.121, 9.122, 9.124, 11.126 overview .... 9.117, 11.126 residential tenancy disputes .... 11.126 appeals .... 11.130 costs .... 11.128 dismissal .... 11.127 jurisdiction .... 11.126 orders .... 11.129 representation .... 11.127, 11.128 reservation of questions of law .... 11.130 retail lease disputes .... 11.137, 11.144 strata title disputes .... 9.117–9.126 allocation of unit entitlements .... 9.122 appeals .... 9.125, 9.127 applications .... 9.123

823

Property Law in New South Wales NSW Civil and Administrative Tribunal (NCAT) — cont’d breach of by-laws .... 9.111 building manager agreements .... 9.124 civil penalties .... 9.126 dismissal of application .... 9.119 jurisdiction .... 9.117, 9.121, 9.122, 9.124 managing agent appointments .... 9.124 orders .... 9.121–9.125 procedure .... 9.118–9.120 Nuisance action for interference with rights .... 12.45 rights to create .... 12.35, 12.42 natural rights, distinguished .... 12.11

O Oil property in .... 1.3 Old system title adverse possession see Adverse possession difficulties of system .... 7.43, 8.1 easements express grants .... 12.16, 12.17 express reservation .... 12.19, 12.20 freehold covenants .... 13.38 leases .... 11.6, 11.7 mortgagee-granted .... 14.61, 14.62 mortgagor-granted .... 14.63 mortgagee rights see Mortgagee rights and remedies mortgagee sale see Mortgagee sale mortgages .... 9.37, 14.15–14.18 discharge .... 14.80 equitable mortgages .... 14.15, 14.17 leasehold land .... 14.18 legal mortgages .... 14.15–14.17 mortgagee rights see Mortgagee rights and remedies priorities .... 7.7, 7.8, 14.127, 14.131, 14.134, 14.136 repayment date .... 14.16 second mortgages .... 14.17 overview .... 7.2 ownership of land under .... 5.2 priority see also Priority of interests earlier equitable vs later equitable .... 7.26–7.35 earlier equitable vs later legal .... 7.9–7.25 earlier legal vs later equitable .... 7.5–7.8 earlier legal vs later legal .... 7.3, 7.4 rules .... 7.1 profits à prendre .... 12.67, 12.68 reforms .... 7.42–7.45 registration of deeds .... 7.36–7.41

bona fide requirement .... 7.39 General Register of Deeds .... 7.37 legislation requiring .... 7.36 not guarantee of title .... 7.36, 7.43 priorities .... 7.37–7.41 Torrens compared .... 7.36, 7.37 valuable consideration .... 7.40 void instruments .... 7.41 seisin, based on .... 5.30 title dependent on acts of private parties .... 7.43 Torrens title and .... 7.2 comparison .... 7.36, 7.37 conversion to .... 8.6–8.11 Ownership airspace, owners’ rights .... 2.7 chattels .... 2.44 doctrine of tenure .... 2.44 possession and .... 2.44 co-ownership see Co-ownership concept .... 5.11, 5.12, 5.14 determination .... 5.12 doctrine of tenure .... 2.44 documentary owner adverse possession against see Adverse possession recovery of land by .... 5.141–5.144, 5.158 ejectment and .... 5.32 land rights based on .... 5.4, 5.5 Locke’s theory, persons capable of .... 1.27 meaning .... 5.14 possession, distinguished .... 5.10–5.13 property see also Property distinction .... 5.10 ownership rules .... 1.9 thing–ownership view .... 1.13–1.21 strata schemes see Strata schemes subsoil, landowners’ rights .... 2.6, 2.9 thing–ownership view .... 1.13–1.21 critiques .... 1.14–1.19 Torrens title system, under .... 5.2 unity of, extinguishing covenant .... 13.34

P Part performance acts constituting .... 6.11, 6.12 other motive for .... 6.13 equitable doctrine .... 6.10–6.13 equitable estoppel compared .... 6.41 overview .... 6.10 test in Maddison .... 6.11–6.13 unequivocal referability .... 6.12, 6.13 Partnership co-ownership of assets .... 9.19

824

Index Pastoral leases concept of .... 3.23, 4.73 Crown land, occupation of .... 3.24, 3.25 doctrine of tenure .... 3.22, 3.23, 3.26 English law, divergence from .... 3.24–3.26 grazing licences .... 3.26 native title and .... 4.62, 4.73, 4.74 extinguishment of .... 4.58, 4.62, 4.73, 4.74 intermediate period acts .... 4.75 non-exclusive lease .... 4.69 paramountcy over .... 4.74 Wik decision .... 3.22, 3.26, 4.73, 4.74 NSW law .... 3.22–3.26 occupation licences .... 3.24 Patents property right .... 1.8 Periodic tenancies .... 3.94, 11.10, 11.106 Perpetuities see Rule against perpetuities Personal property see also Chattels categories .... 2.1, 2.3 choses in action .... 2.5 choses in possession .... 2.4 creation of interest in .... 6.7 equitable estoppel .... 6.43 equitable interests .... 6.45 estoppel .... 6.43 gifts .... 6.45 leasehold categorised as .... 3.90, 3.91 leases see Leases overview .... 2.3 securities see Personal property securities transfer of .... 6.7 Personal property securities background .... 14.4 collateral .... 14.6 deemed security interests .... 14.7 features of regime .... 14.7 financing statement .... 14.6 registration of .... 14.6 fixtures .... 14.9 grantor .... 14.6 insolvency .... 14.8 National Credit Code, application .... 14.13 perfection of security .... 14.6 Personal Property Securities Act 2009 (Cth) background .... 14.4 exclusions from .... 14.6 overview .... 14.5 specific terminology .... 14.6 state schemes replaced by .... 14.4, 14.5 Personal Property Securities Register (PPSR) identification of parties .... 14.10 registration of interests on .... 14.6, 14.8

PPS lease .... 14.7, 14.8 registration of interests .... 14.8 ABN/ACN, using .... 14.10 financing statement .... 14.6 identification of parties .... 14.10 secured party .... 14.6 security interest .... 14.4 chattels, over .... 14.2, 14.3, 14.4 deemed .... 14.7 definition .... 14.6, 14.7 perfection .... 14.6 third party acquisition without .... 14.11 vesting .... 14.8 terminology .... 14.6 third party acquisition free of security interest .... 14.11 misdescription of items .... 14.11 unperfected security interest taken for value .... 14.11 underlying purpose or substance of dealing .... 14.7 Personal rights right to work .... 1.52, 1.72, 1.73 Personalty see Personal property Possession actions to protect .... 5.17–5.30 animus possidendi .... 5.2, 5.9, 5.10, 5.86 behavioural reality .... 5.12 better right .... 5.4 chattels actual possession .... 2.40, 2.41 bailment .... 2.41 constructive possession .... 2.41 custody distinguished .... 2.41 future right to .... 2.43 hire-purchase .... 2.41 immediate right to .... 2.42, 2.45 lost chattels .... 2.41 ownership and .... 2.41, 2.44 seisin .... 5.15 co-owners’ right of .... 9.54 common law .... 5.1, 5.4 concept .... 5.1, 5.3–5.9 definition .... 5.3, 5.8 documentary title distinguished .... 5.2, 5.14 exclusive possession .... 5.8 tenant .... 3.92, 11.2, 11.5 historical development .... 5.6–5.30 better possession .... 5.24, 5.25 ejectment see Ejectment Grand Assize .... 5.20 possessory actions .... 5.17–5.30 possessory assizes .... 5.21–5.23

825

Property Law in New South Wales Possession — cont’d seisin see Seisin writ system .... 5.17–5.20 writs of entry .... 5.25, 5.27 intention .... 5.2, 5.9, 5.10 land rights based on .... 5.4, 5.5 England .... 5.7 native title and .... 5.2, 5.29 occupation, distinguished .... 5.9 ownership, distinguished .... 5.10–5.13 property, distinguished .... 5.6, 5.10 protection of .... 5.14 question of law, not fact .... 5.9 seisin see Seisin title, distinguished .... 5.10, 5.13, 5.14 Possessory title see also Adverse possession alternative to documentary title .... 5.2 documentation, without .... 5.2, 6.6 England .... 5.7 historical development .... 5.6–5.30 better possession .... 5.24, 5.25 ejectment see Ejectment possessory actions .... 5.17–5.30 possessory assizes .... 5.21–5.23 seisin see Seisin writ system .... 5.17–5.20 jus tertii defence .... 2.33, 5.37, 5.47, 5.48 old system land .... 5.2 overview .... 2.31, 5.2 possession see also Possession concept of .... 5.1, 5.3–5.9 possessory actions .... 5.17–5.30 ejectment see Ejectment possessory assizes .... 5.21–5.23 Grand Assize .... 5.20 mort d’ancestor .... 5.23 terminology .... 5.2 Torrens title land .... 5.1, 5.145–5.148 trespass, and .... 2.31 recovery of possession .... 2.34 stay of execution of writ of possession .... 2.35 title to sue .... 2.32, 2.33 Prescription doctrine of .... 5.7 abolition, recommendation for .... 12.76 easements by .... 5.7, 12.32, 12.33, 12.76 adverse possession and .... 5.50 profits à prendre by .... 5.7, 12.68, 12.76 adverse possession and .... 5.50 omitted or misdescribed .... 8.86 reform .... 12.76 Presumption of advancement discriminatory elements .... 6.54

reform .... 6.54 resulting trust .... 6.30, 6.54 situations where arises .... 6.30 Priority notices effect .... 8.159 failure to lodge .... 8.169 lapse .... 8.160 overview .... 8.159, 8.182 preventing registration of dealing .... 8.159 dealing, definition .... 8.159 purpose .... 8.158 regime .... 8.157 removal .... 8.160 withdrawal .... 8.160 Priority of interests beneficiaries under trust .... 7.30 bona fide purchaser for value .... 7.10–7.12 bona fide requirement .... 7.12 constructive notice .... 7.17–7.23 imputed notice .... 7.24 notice .... 7.13–7.24, 7.29 purchaser requirement .... 7.10 value requirement .... 7.11 constructive notice .... 7.17–7.23 collateral interests .... 7.19 constructive trust, interest under .... 7.20 duty to inspect land .... 7.18–7.21 duty to inspect title .... 7.22, 7.23 earlier equitable interest .... 7.17–7.23 interest of person in possession .... 7.18, 7.20 investigation of documents .... 7.22 earlier equitable vs later equitable .... 7.26–7.35 ‘arming’ conduct cases .... 7.28 beneficiaries under trust .... 7.30 better equity .... 7.27 ‘first in time’ principle .... 7.26–7.28 mere equities distinguished .... 7.33–7.35 notice, relevance of .... 7.29 qui prior est tempore potior est jure .... 7.26 tabula in naufragio .... 7.31, 7.32, 7.44 Torrens system .... 8.130, 8.161–8.182 earlier equitable vs later legal .... 7.9–7.25 bona fide purchaser for value .... 7.10–7.12 mere equities distinguished .... 7.33–7.35 notice, doctrine of .... 7.13–7.24 successors in title .... 7.25 earlier legal vs later equitable .... 7.5–7.8 determining equal equities .... 7.6 failure to obtain or keep title deeds .... 7.6–7.8 negligence of trustees .... 7.6 postponement .... 7.8 earlier legal vs later legal .... 7.3, 7.4 ‘first in time’ principle .... 7.26–7.28, 8.161, 8.162 mere equities .... 7.1, 7.33–7.35, 7.45

826

Index equitable interests distinguished .... 6.44, 7.33, 7.45 examples .... 7.33 later equitable or legal interest .... 7.33–7.35 leading case .... 7.34 problems with status .... 7.45 uncertainties around .... 7.34, 7.45 mortgages .... 14.126–14.140 competing mortgages .... 14.126–14.128 earlier equitable vs later legal interest .... 14.127 earlier legal vs later equitable interest .... 7.7, 7.8, 14.127 earlier vendor’s lien .... 7.28 earlier vs later equitable interest .... 14.127 equitable mortgage .... 14.127, 14.128 first in time .... 14.127 mortgagor and purchaser .... 14.137–14.140 old system title .... 7.7, 7.8, 14.127, 14.131, 14.134, 14.136 registration of equitable mortgage .... 14.127 residential tenancies and .... 11.131 tabula in naufragio .... 7.31, 7.32, 14.130–14.133 tacking .... 14.129–14.136 Torrens title .... 14.128, 14.133, 14.135 trust, breach of .... 14.132 nemo dat rule .... 7.3, 7.4, 7.5 equitable exception .... 7.4 void instruments .... 7.41 notice doctrine .... 7.13 actual notice .... 7.16 constructive notice .... 7.17–7.23 earlier equitable vs later legal interest .... 7.13–7.24 earlier vs later equitable interest .... 7.29 ‘first in time’ rule and .... 7.29 imputed notice .... 7.24 timing of notice .... 7.14 what constitutes notice .... 7.15 old system rules .... 7.1–7.41 difficulties with .... 7.43 reforms .... 7.42–7.45 registration of deeds under old system .... 7.36–7.41 bona fide requirement .... 7.39 General Register of Deeds .... 7.37 legislation requiring .... 7.36 not guarantee of title .... 7.36, 7.43 Torrens system compared .... 7.36, 7.37 valuable consideration .... 7.40 void instruments .... 7.41 registration under Torrens system see Torrens title system residential tenancies .... 11.131 security interests .... 14.4

successors in title .... 7.25 rule in Wilkes v Spooner .... 7.25 tabula in naufragio .... 7.31, 7.32, 7.44 breach of trust exception .... 7.32 earlier vs later equitable interest .... 7.31, 7.32 mortgages .... 7.31, 7.32, 14.130–14.133 problems with doctrine .... 7.44 tacking .... 14.129–14.136 advances by contract .... 14.136 calling in legal title .... 14.134, 14.135 mortgages .... 14.129–14.136 Torrens system see also Torrens system indefeasibility see Indefeasibility of title registered vs unregistered interest .... 8.130 registration determining .... 8.23 registration not always giving .... 8.40 unregistered interests .... 8.130, 8.161–8.182 unregistered interests .... 8.161–8.182 arming conduct .... 8.163 better equity .... 8.162 between settlement and registration .... 8.171, 8.172 bona fide purchaser for value without notice .... 8.180 constructive notice .... 8.181 dealing registrable .... 8.172–8.175 equitable interests .... 8.161 failure to caveat .... 8.164–8.168 ‘first in time’ rule .... 8.161, 8.162 general law notice .... 8.181 legal estate, interpretation .... 8.178–8.180 meritorious/disentitling conduct .... 8.162 notice of prior interest .... 8.170, 8.172, 8.181 old system priority rules .... 8.161, 8.171, 8.172 priority notices .... 8.157–8.160, 8.169, 8.182 s 43A Real Property Act.... 8.171–8.182 successive effect doctrine .... 8.177 Torrens system .... 8.130, 8.161–8.182 void dealings .... 8.174 Private property conception of all property as .... 1.50 economic justification .... 1.32–1.35 common versus private .... 1.33–1.35 efficiency .... 1.32, 1.33 privatisation policy .... 1.35 wealth maximisation .... 1.32, 1.33 function-based justification .... 1.38 justice and equality .... 1.36–1.40, 1.49 communism .... 1.36, 1.37 exploitation .... 1.36 passive property .... 1.39 pluralist approach .... 1.48, 1.49 values .... 1.40 justifications see Theories of property

827

Property Law in New South Wales compensation for damage .... 1.9, 1.10 concept .... 1.4, 5.6 analytical dimension .... 1.4, 1.5–1.21 doctrinal dimension .... 1.4 historical changes .... 1.50–1.55 philosophical bases .... 1.4, 1.22–1.49 connections to .... 1.1 corporeal .... 2.1, 2.2 COVID-19 pandemic and .... 1.1 creation and transfer of interests in .... 6.1 criminals .... 1.3 damage rules .... 1.9, 1.10 definition .... 1.4, 1.5 difficulties .... 1.3 dominion or control .... 1.6, 1.7 elements of .... 1.5–1.12 equitable interests see Equitable interests historical development changes in concept .... 1.50–1.55 neo-liberal philosophy .... 1.54 welfare state .... 1.51, 1.52, 1.54 historical importance .... 1.3 ‘home’, idea of .... 1.1 importance .... 1.1, 1.3 incorporeal .... 2.1, 2.2 intangible .... 1.8, 1.70, 2.5 issues involving .... 1.1, 1.2 land see Land; Real property law, necessity to .... 1.7 legal interests see Legal interests legal relationship, as .... 1.13, 1.14 liability for damage .... 1.9 means-based approach .... 1.21 nature of .... 1.1 overview .... 1.1, 1.4 ownership rules .... 1.9 personal see Personal property philosophical bases see Theories of property physical thing, as .... 1.8, 1.13–1.21 dominion or control .... 1.6 thing–ownership view .... 1.13–1.21 political and philosophical justifications .... 1.20 possession, distinguished .... 5.6, 5.10 private property .... 1.75 justifications see Theories of property progressive property .... 1.40 protection of .... 5.14 public interest, and .... 1.13, 1.75 punishment rules .... 1.9 real property see Land; Real property relationship, as .... 1.13, 1.14 rights as .... 1.52 rights in see Property rights sovereignty and .... 1.18

Private property — cont’d overview .... 1.75 pluralist approach .... 1.48, 1.49 prioritisation over common/public property .... 1.54 privatisation .... 1.35, 1.54 public rights and .... 1.75 theories see Theories of property utilitarian justification .... 1.29–1.31 equality of distribution .... 1.30 security .... 1.29 Privity of contract covenants, enforceability .... 11.43, 11.44, 13.10 Privity of estate covenants, enforceability .... 11.44, 13.1 exceptions .... 11.49, 11.50 freehold covenants .... 13.13 reform .... 11.86 successors in title, against .... 13.13 Profits à prendre creation .... 12.66–12.70 deeds .... 12.67 equity, in .... 12.68 instrument, by .... 12.66 old system, at law .... 12.67 old system, in equity .... 12.68 prescription .... 5.7, 12.68, 12.76 Torrens system .... 12.69 examples .... 12.65 extinguishment .... 12.72 forestry rights .... 12.65 in gross .... 12.65, 12.75 incorporeal property .... 2.1, 2.2 licence, distinguished .... 12.65 mortgagee sale .... 14.99 omitted or misdescribed .... 12.70 indefeasibility exception .... 8.85, 8.86, 12.70 overview .... 12.1, 12.65 prescription .... 5.7, 12.68, 12.76 adverse possession and .... 5.50 doctrine of .... 5.7 omitted or misdescribed .... 8.86 reform .... 12.76 remedies for infringement .... 12.71 Torrens system .... 12.69 Profits à rendre .... 12.73 Progressive property .... 1.40 Property basic elements .... 1.5 bundle of rights .... 1.6, 1.20, 1.21, 1.46, 1.52 capitalism and .... 1.20 categories .... 2.1 character physical or cerebral .... 5.11

828

Index substantive elements .... 1.11 theories of see Theories of property ‘thing’ .... 1.8 thing–ownership view .... 1.13–1.21 critiques .... 1.14–1.19 revival .... 1.21 ‘thingification’ .... 1.17, 1.21 values .... 1.40 variability of meaning .... 1.3 welfare state and .... 1.51–1.54 women and see Women and property Property law codification .... 3.27 colonial development .... 3.23–3.25 common law see Common law fundamental principles .... 3.120 High Court of Australia as highest court .... 3.29 intestacy .... 3.27 Lang’s Act .... 3.27, 3.30 new forms of tenure .... 3.25, 3.26 New South Wales common law, application of, 3.29 development .... 3.23–3.25 divergence from English law .... 3.20–3.29 occupation licences .... 3.24 overview .... 1.10 ownership rules .... 1.9, 1.10 pastoral leases .... 3.22–3.26 quit rents .... 3.21 sources of law .... 3.1, 3.3 subcategory of private law .... 1.79 systems of land holding .... 4.1 title by registration .... 3.27 UK statutes, enforcement of .... 3.28 doctrine of paramount force .... 3.28 Property (Relationships) Act 1984 (NSW) domestic relationships definition .... 6.48, 6.50 division of property on breakdown of .... 6.48, 6.49 Property rights Aboriginal land rights, whether .... 1.8, 1.59 absence of term .... 1.11 alienation rights .... 1.8, 1.59, 4.41 native title .... 4.43, 4.45 basic elements .... 1.5 body parts .... 1.60–1.65 excised cells .... 1.60, 1.61 human sperm .... 1.64, 1.65 human tissue .... 1.62 preserved body .... 1.63 broadcasting .... 1.66–1.69

bundle of rights .... 1.6, 1.20, 1.21, 1.46, 1.52 capital .... 1.11 civil rights, and .... 1.74 determination of boundaries .... 1.5 compensation for damage .... 1.9, 1.10 contractual rights compared .... 1.3, 1.56–1.58 damage rules .... 1.9, 1.10 definition .... 1.5 determination of boundaries civil rights .... 1.5 spectacles .... 1.66–1.69 dominion or control .... 1.6 enforceability .... 1.3 equitable interests see Equitable interests exclusion .... 1.7, 1.52, 4.41 native title .... 4.44 right not to be excluded .... 1.52 execution .... 1.11 human rights and .... 1.76–1.78 income .... 1.11 Indigenous rights, and .... 1.59 information .... 1.70, 1.71 legal interests see Legal interests legal relations, as .... 1.14, 1.17 liability for damage .... 1.9 list .... 1.11 management .... 1.11 native title see Native title other rights distinguished .... 1.19, 1.56–1.79 overview .... 1.5, 1.11, 1.12, 4.41 political and philosophical justifications .... 1.20 possession .... 1.11 prohibition of harmful use .... 1.11 public rights, and .... 1.13, 1.75 punishment for interference with .... 1.9 remedies for breach of .... 1.3 residuary rights .... 1.11 right not to be excluded .... 1.52 right to work .... 1.52, 1.72, 1.73 security .... 1.11, 1.29 spectacle, in .... 1.66–1.69 strata scheme reform .... 9.134 substantive elements .... 1.11 transfer of rights .... 1.73 transfer right .... 1.8, 1.9, 1.11 transmissibility .... 1.11 use and enjoyment .... 1.9, 1.11, 4.41 native title .... 4.42 welfare state .... 1.53 Proprietary estoppel acquiescence, by .... 6.40 overview .... 6.37 representation, by .... 6.38, 6.39

829

Property Law in New South Wales Public rights easements, distinction .... 12.12 overview .... 1.75 private property and .... 1.13, 1.75

Q Qualified folio refusal to create, no compensation .... 8.196 Torrens system, bringing land under .... 8.7 Quicquid plantatur solo, solo cedit .... 2.17 Quiet enjoyment implied covenant in lease .... 3.92, 11.21, 11.22 meaning .... 11.22 residential tenancies .... 11.108 tenant’s right to .... 11.22, 11.108 Quit rents .... 3.21

R Real property categories .... 2.1 corporeal/incorporeal .... 2.1, 2.2 enforceability of rights in .... 1.3 importance .... 1.3 land see Land ‘real actions’ .... 1.3 remedies for breach of rights .... 1.3 right to repossession .... 2.3 Real Property Act 1900 (NSW) see Torrens title system Realty see Real property Receiver mortgagee appointment .... 14.67–14.69 alternative to sale .... 14.84 liability .... 14.69 powers .... 14.68 Refuge or crisis accommodation Residential Tenancies Act not applicable .... 11.93 Relationship debt case law .... 14.42–14.46 Amadio .... 14.43 Garcia .... 14.43 Yerkey v Jones .... 14.42, 14.43 concept .... 14.40 model legislation, recommendation for .... 14.144 mortgages and .... 14.40–14.46 parent–child relationships .... 14.40 personal benefit from transaction .... 14.44 reform .... 14.144 ‘sexually transmitted debt’ .... 14.40, 14.144 unconscionable transactions .... 14.41, 14.46 undue influence .... 14.41, 14.46 Yerkey v Jones principle .... 14.42, 14.43

Remainders adverse possession .... 5.75, 5.76 contingent remainders .... 3.102, 10.1 distinguished vested from .... 3.103–3.105 legal contingent remainder rules .... 3.106, 3.107 rule against perpetuities .... 10.10, 10.11 Conveyancing Act (NSW) .... 3.112–3.115 current position .... 3.112–3.115 definition .... 3.99 divesting .... 3.104 future interest .... 3.97 legal contingent remainder rules .... 3.106, 3.107 prior particular estate of freehold .... 3.107 remainder after fee simple estate void .... 3.107 remainder cutting short prior estate void .... 3.107 remainder leaving gap in seisin void .... 3.107 legal executory interests compared .... 3.108–3.111 overview .... 3.99 perpetuities see Rule against perpetuities possessory title .... 5.41 vested remainders .... 3.101, 3.103–3.105 courts favouring .... 3.105 distinguished from contingent .... 3.103–3.105 divesting .... 3.104 identification of tenant .... 3.103 wording .... 3.105 Rent co-ownership .... 9.60 reform .... 9.132, 9.133 covenants to pay .... 3.92, 11.30 breach of .... 11.32, 11.63, 11.71 forfeiture of lease for non-payment .... 11.63, 11.71 residential tenancies .... 11.115 increases .... 11.116 reductions .... 11.117 regulation .... 11.133 retail leases .... 11.140 Repairs see also Improvements co-ownership .... 9.57 covenants in leases good and tenantable repair .... 11.29 implied .... 11.29, 11.31 landlord’s duty .... 11.39 landlord’s right to inspect .... 11.31 re-entry where breach of .... 11.33 tenant-like use .... 11.25 tenant’s duty .... 11.29, 11.38 landlord’s duty .... 11.39, 11.109 mortgaged property .... 14.53 residential tenancies .... 11.109

830

Index urgent repairs .... 11.110 strata schemes .... 9.84 common property .... 9.78, 9.84, 9.85 owners corporation responsibility .... 9.78, 9.84, 9.85 power to enter lots for .... 9.85 Residential tenancies see also Leases Act .... 11.87 agreements .... 11.88, 11.104 definition .... 11.88 exceptions .... 11.89–11.103 express or implied .... 11.104 oral or written .... 11.104 social housing tenancy agreements .... 11.88 standard form agreement .... 11.104 assignment .... 11.113, 11.136 right to new tenancy .... 11.114 boarders and lodgers .... 11.92, 11.134 condition reports .... 11.105 creation of .... 11.104–11.106 condition reports .... 11.105 fixed-term tenancies .... 11.106 formalities .... 11.104 periodic tenancies .... 11.106 defence personnel .... 11.88 dispute resolution by NCAT .... 11.126 appeals .... 11.130 costs .... 11.128 dismissal .... 11.127 orders .... 11.129 representation .... 11.127, 11.128 reservation of questions of law .... 11.130 duties of landlord and tenant .... 11.87 contracting out not permitted .... 11.87 statutory .... 11.87 exclusions .... 11.89–11.103 aged care facilities .... 11.103 backpackers’ hostels .... 11.103 boarders and lodgers .... 11.92, 11.134 business premises .... 11.103 caravan parks .... 11.90 classes of agreements excluded .... 11.102, 11.103 club, temporary accommodation at .... 11.103 company title schemes .... 11.98 holiday purposes .... 11.97 hospitals .... 11.103 hotel or motel .... 11.103 leases for no value .... 11.100 leases or licences under Crown Land Acts .... 11.94 nursing homes .... 11.103 premises excluded .... 11.103 refuge or crisis accommodation .... 11.93

831

residential or holiday parks .... 11.90 retirement villages .... 11.91 sale or purchase agreements .... 11.95 serviced apartments .... 11.103 shared households .... 11.101, 11.134 tenancies in mortgage .... 11.96 terms of 99 years .... 11.99 fitness for habitation .... 11.24 fixed-term tenancies .... 11.9, 11.106 fixtures .... 11.111 holiday parks excluded .... 11.90 obligations of parties .... 11.107 alterations by tenant .... 11.111 assignment .... 11.113 fixtures .... 11.111 new tenancy .... 11.114 quiet enjoyment .... 11.108 repairs .... 11.109, 11.110 security and safety devices .... 11.112, 11.135 subletting .... 11.113 urgent repairs .... 11.110 overview .... 11.87, 11.131 periodic tenancies .... 11.106 priority disputes .... 11.131 reform of legislation .... 11.132 assigning and subletting .... 11.136 boarders and lodgers .... 11.134 reasonable security .... 11.135 rent regulation .... 11.133 share housing .... 11.134 rent .... 11.115 increases .... 11.116 reductions .... 11.117 regulation .... 11.133 repairs .... 11.109, 11.110 landlord’s duty .... 11.109 tenant’s responsibility .... 11.109 urgent .... 11.110 residential premises .... 11.88 Residential Tenancies Act 2010 (NSW) .... 11.87 contracting out not permitted .... 11.87 Crown bound by .... 11.88 exclusions .... 11.89–11.103 rights and duties in .... 11.87 retirement villages excluded .... 11.91 security and safety .... 11.112 landlord’s duties .... 11.112 reasonable security .... 11.135 smoke alarms .... 11.112 share housing .... 11.101, 11.134 social housing tenancy agreements .... 11.88 standard form agreement .... 11.104 subletting .... 11.113, 11.136 right to new tenancy .... 11.114

Property Law in New South Wales Residential tenancies — cont’d tenant’s fixtures .... 11.111 termination .... 11.118–11.125 abandonment of premises .... 11.118 breach of agreement .... 11.120 fixed-term tenancies .... 11.106 frustration .... 11.121 merger .... 11.118 methods of .... 11.118 notice .... 11.106, 11.119–11.122 notice not required .... 11.125 notice without grounds .... 11.119 orders for .... 11.118, 11.123, 11.124 possession order .... 11.123 recovery of possession .... 11.131 refusal of order for .... 11.124 sale of premises .... 11.122 surrender .... 11.118 suspension of order for .... 11.124 without notice .... 11.125 types .... 11.106 Restrictive covenants building schemes .... 13.30–13.35 caveatable interest .... 8.145 definition .... 13.2 easements, distinction .... 12.13 freehold see Freehold covenants leases see Covenants in leases owners corporation creating .... 9.77 Torrens system .... 13.36 Resulting trusts see Trusts Retail leases assignment .... 11.141 categories of retail shop .... 11.138 definition .... 11.138 dispute resolution .... 11.137, 11.143 NSW Civil and Administrative Tribunal .... 11.144 Registrar of Retail Tenancy Disputes .... 11.143 excluded leases .... 11.138 fixed-term lease .... 11.142 legislation .... 11.137 overview .... 11.138 pre-agreement dealings .... 11.139 rent .... 11.140 Retail Leases Act 1994 (NSW) .... 11.137 exclusion from .... 11.138 retail shop lease .... 11.138 rights and obligations .... 11.139 security bonds .... 11.139 subletting .... 11.141 termination .... 11.142 unconscionable conduct claims .... 11.144

Retirement villages Residential Tenancies Act not applicable .... 11.91 Reversionary interests bailments .... 2.57, 2.58 chattels .... 2.43, 2.44 fee simple estate .... 3.98 future interest .... 3.97 overview .... 2.43, 3.98 permanent loss or damage .... 2.58 action on the case .... 2.59 right to future possession .... 2.43, 2.57 Rights of way see Easements Rule against perpetuities abolition (SA) .... 10.62 accumulations .... 10.56 age reduction .... 10.37, 10.45 class-closing rules and .... 10.48 statutory provisions .... 10.37, 10.45 ‘wait and see’ rule and .... 10.46–10.48 alternative contingencies .... 10.32 application of rule .... 10.40, 10.59 examples .... 10.40, 10.60 explanatory diagram .... 10.59 assistance by other rules .... 10.2 breach of rule, determining .... 10.39 child in womb (en ventre sa mere) perpetuity period .... 10.26, 10.27, 10.43 class-closing rules .... 10.18–10.24, 10.48 application .... 10.22 artificially closing class .... 10.18 impact of .... 10.23, 10.24 no prior estate, contingency .... 10.20 no prior estate, no contingency .... 10.19 prior estate and contingency .... 10.22 prior estate, no contingency .... 10.21 ‘wait and see’ rule and .... 10.48 class gifts .... 10.16, 10.17 class-closing rules .... 10.18–10.24, 10.48 examples .... 10.17 exclusion of members .... 10.17 per capita grant .... 10.17 per stirpes grant .... 10.17 sub-class .... 10.17 common law .... 10.25–10.40 age reduction .... 10.37 alternative contingencies .... 10.32 application of rule .... 10.40, 10.59 breach of rule .... 10.39 conditions subsequent .... 10.38 determinable interests .... 10.38 lives in being .... 10.27–10.29 perpetuity period .... 10.15, 10.26 principles shared with statute .... 10.8–10.24

832

Index series of gifts .... 10.33–10.36 vesting, possibility of .... 10.30, 10.31 complementary rules .... 10.2 conditions subsequent .... 10.38, 10.54 contingent gifts .... 10.13, 10.14 age reduction .... 10.37 series of gifts .... 10.33–10.36 contingent or vested interest .... 10.12–10.14 contingent remainders .... 10.1 application to .... 10.10, 10.11 equitable .... 10.10 generally see Remainders legal .... 10.11 criticism of .... 10.63 determinable interests .... 10.38, 10.54, 10.55 fertile octogenarian principle .... 10.31 formulation of rule .... 10.8, 10.9 free alienability and .... 10.1, 10.3, 10.4 historical development .... 10.1, 10.3 modern rule .... 10.5, 10.6 old rule .... 10.4 principle of free alienability .... 10.3, 10.4 life in being .... 10.27–10.29 definition .... 10.5 determining who is .... 10.39 human life requirement .... 10.28 perpetuity period .... 10.5, 10.26, 10.27, 10.29 plus 21 years .... 10.5, 10.26 single life or class of lives .... 10.29 magic gravel pits principle .... 10.31 modern rule .... 10.5, 10.6, 10.7 overview .... 10.1, 10.2 Perpetuities Act 1984 (NSW) .... 10.6, 10.7, 10.41 accumulated amounts .... 10.56 age reduction .... 10.45–10.48 application of rule .... 10.59, 10.60 class gifts .... 10.16, 10.17, 10.48 common law amended by .... 10.6 common law, shared principles .... 10.8–10.24 conditions subsequent .... 10.54 determinable interests .... 10.54, 10.55 disposition, meaning .... 10.41 exclusions .... 10.42 perpetuity period .... 10.15, 10.43, 10.53, 10.64 powers of appointment .... 10.57 s 4(3) .... 10.53, 10.64 series of gifts .... 10.49–10.52 settlements, application to .... 10.41 superannuation funds .... 10.58 ‘wait and see’ rule .... 10.44, 10.46–10.48 will execution .... 10.53, 10.64 perpetuity period .... 10.15, 10.26, 10.43 child in womb .... 10.26, 10.27, 10.43 common law .... 10.15, 10.26

833

determining end of .... 10.39 estimation .... 10.9 execution of wills .... 10.53, 10.64 gestation period .... 10.26, 10.43 life in being plus 21 years .... 10.5, 10.26, 10.27 no life in being, where .... 10.29 statutory .... 10.6, 10.15, 10.43, 10.53, 10.64 vesting of interest before expiry .... 10.9 ‘wait and see’ rule .... 10.44 possibility of vesting .... 10.30, 10.31 alternative contingencies .... 10.32 breach of rule, determining .... 10.39 fertile octogenarian .... 10.31 magic gravel pits .... 10.31 precocious toddler .... 10.31 unborn widower .... 10.31 powers of appointment .... 10.57 application of Act .... 10.41 gift in default of appointment .... 10.57 instrument granting .... 10.41, 10.57 vested or contingent interest .... 10.14 precocious toddler principle .... 10.31 reform .... 10.61–10.65 abolition of rule (SA) .... 10.62 execution of wills .... 10.64 ‘wait and see’ rule .... 10.65 series of gifts .... 10.33, 10.49 common law rules .... 10.33–10.36 invalid followed by dependent but valid .... 10.35, 10.52 invalid followed by gift with vesting date .... 10.36, 10.51 statutory rules .... 10.49–10.52 valid followed by invalid .... 10.34, 10.50 sources of law .... 10.6 common law .... 10.25–10.40 Perpetuities Act 1984 (NSW) .... 10.41–10.58 shared principles .... 10.8–10.24 South Australia, abolition .... 10.62 superannuation funds .... 10.58 sustainability principles and .... 10.63 unborn widower principle .... 10.31 vested interests .... 10.12, 10.14 condition subsequent .... 10.14 possibility of vesting .... 10.30, 10.31 requirements for vesting .... 10.12 whether contingent or .... 10.12–10.14 vesting date, gift with .... 10.36, 10.51 ‘wait and see’ rule .... 10.44, 10.65 age reduction and .... 10.46–10.48 class-closing rules and .... 10.48 will difficulties in drafting .... 10.63 execution of .... 10.53, 10.64

Property Law in New South Wales S Sealing deeds .... 6.5 Security justification for private property .... 1.29 landlord’s duties .... 11.112 reasonable security .... 11.135 smoke alarms .... 11.112 object of law .... 1.29 property right .... 1.11, 1.29 Security interests bills of sale .... 14.2, 14.4 charge, by way of .... 14.1, 14.2 chattels, over .... 14.2, 14.3, 14.4 hire-purchase agreements .... 14.12, 14.13 historical background .... 14.4, 14.12 National Credit Code .... 14.13 PPSA, under see Personal property securities unregistered .... 14.4 definition under PPSA .... 14.6 equitable liens .... 14.2 hire-purchase agreements .... 14.12, 14.13 mortgages see Mortgages operation of law, arising by .... 14.2 overview .... 14.1, 4.3 ownership, by way of .... 14.1 personal property securities see Personal property securities possession, by way of .... 14.1 possessory liens .... 14.2 priorities .... 14.4 registration .... 14.4 Seisin acquisition of .... 5.26 action to protect incidents of .... 5.26 better right to .... 5.24 chattels .... 5.15 concept of .... 5.15, 5.16 ejectment action and .... 5.27, 5.28 feoffee to uses holding .... 3.109 feoffment with livery of seisin .... 3.11, 3.73, 5.16 feudal system .... 3.11, 3.14 independent of ‘right’ .... 5.16 leaseholder not having .... 3.90, 5.26 legal remainder rules .... 3.107, 3.109 meaning .... 5.15, 5.16, 5.26 native title and .... 5.29 old system title based on .... 5.30 possession distinguished .... 5.10, 5.15, 5.26 possession of freehold .... 3.40, 3.90 primer seisin .... 3.14 real property ....5.15, 5.16 title and .... 5.30 Torrens title not based on .... 5.30

unfree tenure not enjoying .... 3.16 Self-help recaption of chattels .... 2.62 trespass to chattels .... 2.62 trespass to land .... 2.36 Set-off breach of covenant .... 11.80 common law set-off .... 11.81 equitable set-off .... 11.82 Share housing disputes between tenants .... 11.134 Residential Tenancies Act exclusion .... 11.101 reforms .... 11.134 Shares as property .... 1.8 Short-term tenancies exceptions to indefeasibility .... 8.88–8.90 criteria for .... 8.88 notice of tenant’s interest .... 8.88–8.90 options to renew .... 8.88, 8.91 registration .... 8.89 Specific performance contracts for sale of land .... 6.14 effect of remedy .... 6.14 equitable interest .... 6.14–6.18 relief capable of being given by .... 6.14, 6.15 written and signed contract required .... 6.8 equitable remedy .... 6.14–6.18 legal remedy inadequate .... 6.14 overview .... 6.4 right to grant .... 6.14 Spectacle broadcasting rights .... 1.66, 1.67 property rights in .... 1.66–1.69 determination of boundaries .... 1.68 racecourse .... 1.66, 1.68 United States .... 1.66, 1.67 Squatters see also Adverse possession; Possessory title barring tenant’s title .... 11.49 hereditary squatters principle .... 5.35 pastoral leases .... 3.23 terminology .... 5.2 trespass .... 2.33 Statute of De Donis Conditionalibus .... 3.58, 3.77 Statute of Quia Emptores .... 3.17, 3.43, 10.3 Strata schemes administration sheet .... 9.73 administrative fund .... 9.87, 9.88 appeals District Court or Supreme Court .... 9.127

834

Index lots .... 9.71, 9.72 maintenance and repair common property .... 9.78, 9.84, 9.85 power to enter lots for .... 9.85 management .... 9.83–9.100 building defects bond scheme .... 9.86 finances .... 9.87–9.92 insurance .... 9.93–9.95 large schemes .... 9.100 levy of contributions .... 9.92 maintenance and repair .... 9.78, 9.84, 9.85 records and accounts .... 9.96–9.100 strata roll .... 9.96, 9.97 mediation of disputes .... 9.113–9.116 process .... 9.115 requirement to attempt .... 9.114 NSW Civil and Administrative Tribunal .... 9.117 allocation of unit entitlements .... 9.122 appeals .... 9.125, 9.127 applications .... 9.123 building manager agreements .... 9.124 civil penalties .... 9.126 dismissal of applications .... 9.119 informal procedures .... 9.120 jurisdiction .... 9.117, 9.121, 9.122, 9.124 managing agent appointments .... 9.124 orders .... 9.121–9.125 procedure .... 9.118–9.120 overview .... 9.66–9.70 owners corporation .... 9.79–9.100 borrowing money .... 9.82 building manager .... 9.81, 9.124 by-laws relating to .... 9.104 caretaker .... 9.81 common property vested in .... 9.76 delegation of functions .... 9.80 dispute resolution .... 9.112 duty of maintenance .... 9.78, 9.84, 9.85 functions and powers .... 9.80, 9.82 initial period, restrictions in .... 9.74, 9.75 management responsibilities .... 9.83–9.100 managing agent .... 9.80, 9.124 members constituting .... 9.79 sale or lease of common property .... 9.77 sustainability infrastructure resolution .... 9.77 ownership rights .... 9.68 ‘part strata’ schemes .... 9.70 property rights reform .... 9.134 records and accounts .... 9.96–9.100 common property information .... 9.97 financial statements .... 9.98 inspection .... 9.99 large schemes .... 9.100 minutes of meetings .... 9.98

NSW Civil and Administrative Tribunal .... 9.125 building defects bond scheme .... 9.86 by-laws .... 9.68, 9.104–9.111 amendment .... 9.107–9.110 enforcement .... 9.111 harsh, unconscionable or oppressive .... 9.108 negative prohibitions .... 9.105 new by-laws .... 9.107–9.110 persons bound by .... 9.106 reform .... 9.134 repeal .... 9.107–9.110 restrictions .... 9.108, 9.109 special use of common property .... 9.110 warning notice where breach .... 9.111 capital works fund .... 9.87, 9.89–9.91 10-year plan .... 9.91 exception to requirement .... 9.89 purposes for payments from .... 9.90 requirement to establish .... 9.89 caveat in relation to lot .... 9.78 common infrastructure .... 9.72 common property .... 9.76–9.78 by-laws as to use .... 9.104, 9.110 dealing or caveat affecting interest in .... 9.78 infrastructure .... 9.72 maintenance and repair .... 9.78, 9.84, 9.85 selling or leasing .... 9.77 strata roll information .... 9.97 vested in owners corporation .... 9.76 dispute resolution .... 9.69, 9.112 adjudicators .... 9.116, 9.117 mediation .... 9.113–9.116 NCAT .... 9.117–9.127 order by owners corporation .... 9.112 easements, creation of .... 9.77 financial management .... 9.87–9.92 floor plan .... 9.73 freehold covenants .... 13.1 historical background .... 9.66–9.70 company title .... 9.1, 9.66, 9.67 dispute resolution .... 9.69 introduction of legislation .... 9.68 reforms .... 9.70 initial period .... 9.74, 9.75 restrictions in .... 9.74, 9.75 right to sue .... 9.75 waiver of restrictions .... 9.121 insurance .... 9.93–9.95 key elements .... 9.68, 9.71 large strata schemes .... 9.100 legislation .... 9.68–9.70, 9.73 levy of contributions .... 9.92 location plan .... 9.73

835

Property Law in New South Wales Strata schemes — cont’d notices .... 9.98 strata roll .... 9.96, 9.97 reforms .... 9.134, 9.135 by-laws .... 9.134 COVID-19 pandemic .... 9.135 property rights .... 9.134 registration requirements .... 9.73 renewal process .... 9.129 responsibilities of owners and occupiers .... 9.101 notice of events .... 9.103 use of lots .... 9.102 restrictive covenants, creation of .... 9.77 schedule of unit entitlement .... 9.73 sinking fund .... 9.87, 9.89 staged development, allowance for .... 9.70 strata plans .... 9.73 strata roll .... 9.96, 9.97 structural cubic space .... 9.72 structure of common infrastructure .... 9.72 key elements .... 9.71 strata plans .... 9.73 sustainability infrastructure resolution .... 9.77 termination of schemes .... 9.128 Torrens system .... 9.73 unit entitlements .... 9.73, 9.122 allocation of .... 9.122 schedule of .... 9.73 Strata title see Strata schemes Subletting covenants against .... 11.40 absolute covenants .... 11.41 qualified covenants .... 11.42 strict construction against landlord .... 11.40 forfeiture of lease .... 11.74 head tenant/headlessee .... 11.2 mortgage by sublease .... 14.18 residential tenancies .... 11.113, 11.136 right to new tenancy .... 11.114 retail leases .... 11.141 sublease .... 11.2, 11.40 sublessee .... 11.2 sublessor .... 11.2 Subsoil land owners’ rights .... 2.6, 2.9 Survivorship joint tenancies .... 6.3, 9.8 right of .... 9.8, 9.9, 9.44 tenancy in common, no right of .... 9.10 Sustainability infrastructure resolution owners corporation .... 9.77

T Tabula in naufragio doctrine of .... 7.31, 7.44 priority disputes .... 7.31, 14.130 breach of trust exception .... 7.32 earlier vs later equitable interest .... 7.31, 7.32 mortgages .... 7.31, 7.32, 14.130–14.133 problems with doctrine .... 7.44 Tacking priority of mortgages .... 14.129–14.136 advances by contract .... 14.136 calling in legal title .... 14.134, 14.135 old system title .... 14.131, 14.132, 14.134, 14.136 tabula in naufragio .... 14.130–14.133 Torrens title .... 14.133, 14.135 Tenancies COVID-19 pandemic, impacted by .... 1.1 in common see Tenancy in common joint see Joint tenancies leases see Leases residential see Residential tenancies short-term tenancies .... 8.88 indefeasibility exception .... 8.88–8.90 notice of tenant’s interest .... 8.88–8.90 options to renew .... 8.88, 8.91 registration .... 8.89 types see Leases Tenancy in common see also Co-ownership; Joint tenancies chattels .... 9.24 court order to divide .... 9.65 contributions to purchase price .... 9.15–9.17 matrimonial relationship .... 9.17 rebuttable presumptions .... 9.16 co-ownership method .... 9.2 creation of co-ownership .... 9.11 chattels .... 9.24 common law, at .... 9.12, 9.13 contributions to purchase price .... 9.15–9.17 equitable interests .... 9.11, 9.22 equity, in .... 9.14–9.19 express words .... 9.12 legal interests .... 9.11, 9.22 money advanced on mortgage .... 9.18 partnership assets .... 9.19 statutory reform .... 9.20–9.23 Torrens title .... 9.23 words of severance .... 9.13 death of tenant .... 9.10 improvements .... 9.55–9.57 contributions from co-owners .... 9.55 limits to claims .... 9.56

836

Index Carter .... 1.34 Cohen, Felix .... 1.17 Cohen, Morris .... 1.18 economic .... 1.32–1.35 common vs private property .... 1.33–1.35 efficiency .... 1.32, 1.33 necessary conditions .... 1.33 privatisation .... 1.35 wealth maximisation .... 1.32, 1.33 ends-based theorists .... 1.21 equality .... 1.30, 1.36–1.40 Green .... 1.46, 1.47 Grey .... 1.20, 1.52 Heller .... 1.21 Hohfeld .... 1.14 Honoré .... 1.11, 1.12, 1.13, 1.31 justice and equality .... 1.36–1.40, 1.49 communism .... 1.36, 1.37 passive property .... 1.39 pluralist approach .... 1.48, 1.49 values .... 1.40 Kamenka and Tay .... 1.53 Keynes .... 1.16 labour theory (Locke) .... 1.15, 1.22–1.28, 1.49 see also Locke’s labour theory Macpherson .... 1.50–1.52, 1.54 Marx .... 1.36, 1.38, 1.49, 1.53 means-based theorists .... 1.21 Munzer .... 1.32, 1.48, 1.49 neo-liberal philosophy .... 1.54 Ostrom .... 1.34 overview .... 1.5 philosophical bases .... 1.22–1.49 physicalist (Blackstone) .... 1.4, 1.8, 1.15 pluralist approach .... 1.48, 1.49 private property justification economic .... 1.32–1.35 function-based theory .... 1.38 justice and equality .... 1.36–1.40 labour theory .... 1.23–1.28 pluralist approach .... 1.48, 1.49 utilitarian .... 1.29–1.31, 1.48 privatisation .... 1.35, 1.54 progressive property .... 1.40 property rights .... 1.5–1.12 Reich .... 1.51 relationship or thing .... 1.13–1.21 Snare .... 1.9, 1.13 Tawney .... 1.38, 1.39 ‘thingification’ of property .... 1.17, 1.21 thing–ownership .... 1.13–1.21 critiques .... 1.14–1.19 US Constitution and .... 1.15–1.17 utilitarian (Bentham) .... 1.29–1.31

reform .... 9.132 mortgage, money advanced on .... 9.18 occupation fees .... 9.58 calculation .... 9.59 right to .... 9.58 overview .... 9.2, 9.10 purchase price, different contributions to .... 9.15–9.17 matrimonial relationship .... 9.17 rebuttable presumptions .... 9.16 rents and profits .... 9.60 reform .... 9.132, 9.133 repairs .... 9.57 rights and obligations improvements .... 9.55–9.57 occupation fees .... 9.58, 9.59 possession right .... 9.54 rents and profits .... 9.60 survivorship, no right of .... 9.10 termination .... 9.61–9.65 action of parties .... 9.62 court orders .... 9.63–9.65 division of chattels .... 9.65 sale or partition of land .... 9.63, 9.64 unity of possession .... 9.10 Tenant’s fixtures agricultural tenancies .... 2.28 annexation by tenant .... 2.15, 2.26 consent to annex .... 2.26, 11.111 unreasonable refusal .... 2.26 domestic fixtures .... 2.25 improvements .... 2.25, 2.26 life tenants .... 2.15, 2.25 ornamental fixtures .... 2.25 overview .... 2.24 removal .... 2.28 time for .... 2.27 residential tenancies .... 2.28 statute, governed by .... 2.28 trade fixtures .... 2.25 Tenure doctrine see Doctrine of tenure Terra nullius acquisition by occupation .... 3.4, 3.5 doctrine of .... 3.5, 4.9 doctrine of tenure and .... 4.9 Indigenous land rights and .... 4.9 rejection of .... 4.9 Theories of property Alexander .... 1.21, 1.40 Baron .... 1.21 Bentham .... 1.7, 1.29, 1.30, 1.32 Blackstone .... 1.4, 1.8, 1.13, 1.15, 1.22 Carr and Wong .... 1.47

837

Property Law in New South Wales Theories of property — cont’d equality of distribution .... 1.30 Honoré’s list of rights and .... 1.31 pluralist approach .... 1.48 security .... 1.29 types of property not distinguished .... 1.30 values .... 1.40 welfare state .... 1.51, 1.52, 1.54 women and property .... 1.27 feminist approach .... 1.41–1.46, 6.55 functional approach .... 1.43 inequality .... 1.42 Locke’s labour theory .... 1.27, 1.41, 1.46 Title absolute/allodial see Allodial land documentary vs possessory .... 5.2 indefeasibility see Indefeasibility of title old system see Old system title overview .... 5.13 possession, distinguished .... 5.10, 5.13, 5.14 privatisation .... 1.2 relativity of .... 5.30 seisin and .... 5.30 Torrens system see Torrens title system Torrens Assurance Fund access to moneys .... 8.187 actions against Registrar-General .... 8.189 alternative dispute resolution .... 8.200 bases for compensation .... 8.188, 8.189, 8.191 causal connection .... 8.191 deprivation of property .... 8.193, 8.194 fraud .... 8.188, 8.192 loss from operation of Act .... 8.188, 8.191 contributory negligence .... 8.195 costs award .... 8.190 damages .... 8.195 different assurance funds over time .... 8.187 errors in administering system certainty of .... 8.185 compensation for .... 8.186 exceptions to compensation .... 8.191, 8.195–8.197 contributory negligence .... 8.195 failure to check mortgagor identity .... 8.197 refusal to cancel caution .... 8.196 refusal to create qualified folio .... 8.196 fraud .... 8.192–8.194 compensation basis .... 8.188, 8.192 deprivation of property .... 8.193, 8.194 unregistered interests .... 8.197 general purpose .... 8.183, 8.186 interest in land .... 8.194 legislation governing .... 8.187 moneys .... 8.187

native title .... 8.207 New South Wales .... 8.184, 8.187 overview .... 8.183–8.187 proceedings for recovery .... 8.198–8.200 alternative dispute resolution .... 8.200 initiating proceedings .... 8.188 limitation period .... 8.199 professional indemnity insurers .... 8.200 exception where compensable by .... 8.191, 8.193 purpose .... 8.183–8.186 Real Property Act .... 8.184 key sections .... 8.188, 8.189 loss as result of operation .... 8.188, 8.191 relationship with other sections .... 8.196 reduction of loss .... 8.195 reform .... 8.207 Registrar-General, actions against .... 8.189 Torrens, Sir Robert .... 8.1–8.4, 8.183 Torrens title system adverse possession .... 5.55, 5.56, 5.145–5.157 application for conversion .... 8.6 caveats against .... 5.153, 8.154 common law principles applicable .... 5.147 consecutive periods .... 5.154 Crown land .... 5.151, 5.155 ‘dunny lanes’ .... 5.150, 5.151 exceptions to ‘whole parcel’ .... 5.149–5.151 indefeasibility exception .... 8.106 joint tenants .... 5.146 occupational boundaries .... 5.149 paramountcy of Register .... 5.147 possessor’s title .... 5.145 possessory applications .... 5.147, 5.148, 5.151 possessory title .... 5.2, 5.147 preserving integrity of Register .... 5.157 recording possessor’s title .... 5.145, 5.148, 5.157 residue lots .... 5.150 rights of adverse possessor .... 5.145, 5.156 service lanes .... 5.150, 5.151 small areas of land .... 5.152 spite strips .... 5.150 whole parcel of land .... 5.149 assurance fund see Torrens Assurance Fund bringing land under .... 8.6, 8.7 conversion from old system .... 8.6–8.11 Crown grants of freehold land .... 8.6 ordinary folio .... 8.6 qualified folio .... 8.7 who can apply for .... 8.7 caveats see Caveats certificate of title .... 8.16 electronic .... 8.16, 8.18 priority notices replacing .... 8.158, 8.182

838

Index indefeasibility see Indefeasibility of title insurance principle .... 8.24 introduction of scheme .... 8.5 joint tenants .... 9.23 severance .... 9.38, 9.130, 9.131 leases .... 8.39–8.43, 11.8 mortgagee-granted .... 14.64 mortgagor-granted .... 14.65 registered .... 8.39–8.43, 8.57, 8.58, 11.8 unregistered .... 8.129, 11.8 void .... 8.57–8.59 mirror principle .... 8.21 mortgagee rights see Mortgagee rights and remedies mortgagee sale see Mortgagee sale mortgages see also Mortgages all moneys mortgages .... 8.47–8.56 Crown land .... 14.24 discharge .... 14.81–14.83 equitable mortgage .... 14.19, 14.20 equity of redemption .... 14.20 forged mortgages .... 8.44–8.46 freehold land .... 14.19–14.22 joint tenancies .... 9.38 leasehold land .... 14.23 leases .... 14.64, 14.65 mortgagee rights see Mortgagee rights and remedies priorities .... 14.128, 14.133, 14.135 registered and unregistered .... 14.19–14.22 statutory requirement to register .... 14.21 subsequent mortgages .... 14.19 transfers for security .... 14.22, 14.145 old system and .... 7.2 compared .... 7.36, 7.37 conversion to Torrens .... 8.6–8.11 difficulties of .... 7.43, 8.1 overview .... 8.6 ownership of land under .... 5.2 possessory title .... 5.1, 5.145–5.148 see also Adverse possession principles underpinning .... 8.20–8.24 curtain principle .... 8.22, 8.23 insurance principle .... 8.24 mirror principle .... 8.21 priority notices .... 8.157, 8.182 effect .... 8.159 failure to lodge .... 8.169 lapse .... 8.160 purpose .... 8.158 regime .... 8.157 removal .... 8.160 withdrawal .... 8.160 priority of unregistered interests .... 8.161–8.182

removal of references to .... 8.16 compensation see Torrens Assurance Fund computerisation conversion to .... 8.8, 8.11 electronic certificate of title .... 8.16, 8.18 electronic conveyancing .... 8.17, 8.208 contactless transactions .... 8.208 conversion to .... 8.6–8.11 computerisation .... 8.8, 8.11 initial .... 8.8–8.10 ordinary folio .... 8.6 qualified folio .... 8.7 statistics .... 8.9–8.11 co-ownership .... 9.23 correction of Register .... 8.115–8.121 court, by .... 8.119, 8.120 error, meaning .... 8.116 original entry not to be completely erased .... 8.117 Registrar-General’s power .... 8.115–8.118 registration erroneously cancelled .... 8.120 ‘slips’ .... 8.116 when power may be exercised .... 8.118 dealings .... 8.19, 8.159 caveats against .... 8.131, 8.135–8.137 distinctive reference .... 8.19 priority notices .... 8.157–8.160, 8.182 registration .... 8.19 easements .... 12.46 express grant .... 12.18 express reservation .... 12.21 implied easements .... 12.26, 12.54 in personam exception and .... 12.51–12.53 indefeasibility exceptions .... 12.47–12.53 omitted or misdescribed .... 8.84, 12.47–12.50 electronic certificate of title .... 8.16, 8.18 electronic conveyancing .... 8.17, 8.208 Electronic Lodgment Network (ELN) .... 8.208 folios .... 8.13–8.15 fee simple estates .... 8.15 indefeasibility and .... 8.25 land registered on creation of .... 8.14 life estates .... 8.15 ordinary folio .... 8.6 qualified folio .... 8.7 freehold covenants see also Freehold covenants building schemes .... 13.37 creation of .... 13.39, 13.40 indefeasibility .... 13.36 restrictive covenants .... 13.36 gifts to volunteers .... 8.126 historical background .... 8.1–8.5 introduction of scheme .... 8.5 Sir Robert Torrens .... 8.1–8.4

839

Property Law in New South Wales Torrens title system — cont’d arming conduct .... 8.163 better equity .... 8.162 between settlement and registration .... 8.171, 8.172 bona fide purchaser for value without notice .... 8.180 constructive notice .... 8.181 dealing registrable .... 8.172–8.175 equitable interests .... 8.161 failure to caveat .... 8.164–8.168 ‘first in time’ rule .... 8.161, 8.162 general law notice .... 8.181 legal estate, interpretation .... 8.178–8.180 meritorious/disentitling conduct .... 8.162 notice of prior interest .... 8.170, 8.172, 8.181 old system priority rules .... 8.161, 8.171, 8.172 priority notices .... 8.157–8.160, 8.169, 8.182 s 43A Real Property Act.... 8.171–8.182 successive effect doctrine .... 8.177 void dealings .... 8.174 which interest prevails .... 8.161–8.163 privatisation .... 1.2 profits à prendre .... 12.69 omitted or misdescribed .... 8.85, 8.86, 12.70 qualified folio .... 8.7 refusal to create, no compensation .... 8.196 reform .... 8.201–8.208 assurance fund .... 8.207 deferred vs immediate indefeasibility .... 8.202–8.205 electronic conveyancing .... 8.208 overriding statutes .... 8.201 volunteers .... 8.206 Register .... 8.12 adverse possession, recording on .... 5.145, 5.148, 5.157 caveats, noting on .... 8.136, 8.137 correction of .... 8.115–8.121 curtain principle .... 8.22, 8.23 mirror principle .... 8.21 paramountcy .... 5.147 registration .... 8.20, 8.23 covenants in leases .... 8.40–8.43 creation of folio, by .... 8.14 forged instruments .... 8.44–8.46 indefeasibility of title on .... 8.36–8.39 leases .... 8.39–8.43 no obligation to register .... 8.140 priority determined by .... 8.23 registrable dealings .... 8.19 short-term tenancies .... 8.89 title by .... 8.20 void instruments .... 8.44–8.46, 8.57–8.59

strata schemes see Strata schemes tenancy in common .... 9.23 unregistered interests .... 8.128–8.182 caveats see Caveats competing interests .... 8.130, 8.161–8.182 equitable interest .... 8.128, 8.161 existence and status of .... 8.128 indefeasibility exceptions .... 8.107, 8.129 leases .... 11.8 legal interest .... 8.129 no obligation to register .... 8.140 oral lease .... 8.129 priority .... 8.130, 8.161–8.182 priority notices .... 8.157–8.160, 8.169, 8.182 volunteers .... 8.123–8.127, 8.206 equitable interest .... 8.126 fraud .... 8.127 gift of Torrens land .... 8.126 indefeasibility of title .... 8.123–8.127 no specific provision for .... 8.123 old system compared .... 8.123 reform .... 8.206 Victoria .... 8.124 Torts conversion see Conversion detinue see Detinue negligence see Negligence overlapping torts .... 2.52 trespass see Trespass wrongful interference .... 2.61, 2.62 Trespass adjacent property, observing from .... 2.7 airspace above land .... 2.7, 2.8 chattels .... 2.47 bailment .... 2.47 interference with .... 2.47 lost and found .... 2.66 overlapping torts .... 2.52 ownership and .... 2.44 recaption remedy .... 2.62 contractual rights, and .... 2.56 conversion, distinction .... 2.49 establishment .... 2.30 forcible entry .... 2.37 inclosed lands .... 2.38 jus tertii defence .... 2.33 licensee, right to sue for .... 2.32 overlapping torts .... 2.52 overview .... 2.30 possession at heart of .... 5.1 possessory title .... 2.31, 2.33 see also Possessory title title to sue .... 2.32, 2.33 protecting possession of land .... 2.32

840

Index recovery of possession .... 2.34, 2.36 removal of trespasser .... 2.36 right of action .... 2.44, 2.56 self-help .... 2.36, 2.62 squatters .... 2.33 statutory penalties .... 2.37 forcible entry .... 2.37 inclosed lands .... 2.38 stay of writ of possession .... 2.35 title to sue .... 2.32, 2.33 dispossessors .... 2.33 licensee not having .... 2.32 tort of .... 2.30, 2.32 tree intrusion not .... 2.8 trespass by relation .... 2.33 wrongful interference .... 2.47 Trover see Conversion Trusts beneficiaries .... 3.84, 3.108, 6.3 equitable interest .... 3.84, 6.3 priority of interests .... 7.30 caveat over instrument creating .... 8.128 constructive see Constructive trusts creation of .... 6.20–6.24 declaration of .... 6.20–6.24, 6.53 joint tenancy, severance tenancy by .... 9.27, 9.42 domestic relationships .... 6.47 constructive trusts .... 6.34–6.36 replacement by statute .... 6.47–6.52 equitable interests .... 3.108, 6.2, 6.3 beneficiaries holding .... 3.84, 6.3 concurrent jurisdiction .... 6.4 constructive trusts .... 6.31–6.36, 6.55 express trusts .... 6.20–6.24 non-express trusts .... 6.25–3.36 reform .... 6.53 resulting trusts .... 6.26–6.30, 6.54 transfer of .... 6.21 executed trust .... 3.85, 3.86 executory trust .... 3.85, 3.87 express trusts .... 6.20–6.24 creation of equitable interests .... 6.20 failed .... 6.27 formalities .... 6.22–6.24 transfer of interests .... 6.21 historical development .... 3.82, 3.108, 6.3 cestui que use .... 3.108, 6.3 feoffee to uses .... 3.108, 3.109, 6.3 legal executory interests .... 3.108–3.111 Statute of Uses 1535 .... 3.110, 3.111, 6.3 uses .... 3.108–3.110, 6.3 in personam indefeasibility exception knowing receipt .... 8.102, 8.103

personal equity .... 8.105 receipt of trust property .... 8.102–8.105 legal interests .... 6.2 trustee holding .... 3.84, 6.3 non-express trusts .... 6.25 constructive see constructive trusts above resulting see resulting trusts below overview .... 3.84, 6.20 reform .... 6.53 constructive trusts .... 6.55 resulting trusts .... 6.54 resulting trusts .... 6.26, 6.54 contribution to purchase price .... 6.29 failed express trust .... 6.27 formalities not required .... 6.25 presumption of advancement .... 6.30, 6.54 purchase in name of another .... 6.28 settlement .... 6.20, 6.21 trustee .... 3.84, 3.108, 6.3 legal interest .... 3.84, 6.3 words of limitation .... 3.84–3.88 executed trust .... 3.85, 3.86 executory trust .... 3.85, 3.87 U United States broadcasting rights .... 1.66, 1.67 compensation for compulsory acquisition .... 1.15 Constitution, Fifth Amendment .... 1.15 due process .... 1.15, 1.16 First Nations peoples .... 1.26 property law .... 1.15 spectacle, property in .... 1.66, 1.67 Unlawful killing joint tenancy forfeiture rule .... 9.48–9.51 severance of .... 9.27, 9.48–9.51 Unregistered interests see Torrens title system

V Values and property .... 1.40 Victoria Charter of Human Rights .... 1.78 volunteers’ indefeasibility of title .... 8.124 Villeinage .... 3.16 Volunteers indefeasibility of title .... 8.123–8.127 fraud .... 8.127 not general exception .... 8.125 Victoria .... 8.124 Torrens title system .... 8.123–8.127, 8.206 equitable interest .... 8.126

841

Property Law in New South Wales Volunteers — cont’d gifts of land .... 8.126 indefeasibility .... 8.123–8.127 no specific provision for .... 8.123 old system compared .... 8.123 reform .... 8.206

W Waste doctrine leases .... 11.37 life tenants .... 3.64 ameliorating waste .... 3.67 equitable waste .... 3.68 permissive waste .... 3.65 types of waste .... 3.64 voluntary waste .... 3.66 Waters land boundaries non-tidal waters .... 2.13 tidal waters .... 2.12 native title over .... 4.19, 4.34, 4.78 property in .... 1.3 Welfare state .... 1.51–1.54 Wills fixtures .... 2.22

freehold estate, grant of see Freehold estates life estate, grant of see Life estates perpetuities see Rule against perpetuities Women and property domestic labour and unconscionability .... 6.55 feminisation of poverty .... 1.43 feminist approach .... 1.41–1.46, 6.55 Feminist Judgments Project .... 1.45 functional approach .... 1.43 inequality .... 1.42 Locke’s labour theory .... 1.27, 1.41, 1.46 married women .... 1.3, 1.27 overview .... 1.27, 1.41 relationship debt see Relationship debt sex equality .... 1.46 Writs English system .... 5.17–5.20 mandamus .... 5.47 praecipe in capite .... 5.19, 5.20 royal writ .... 5.20 writ de ejectione firmae .... 5.26 writs of entry .... 5.25, 5.27 writs of right .... 5.19

Y Yerkey v Jones principle .... 14.42, 14.43

842

Related LexisNexis Titles Anderson, Property Law: Concepts and Doctrine, 2022, ISBN 9780409354355 (print); 9780409354362 (ebk) Cameron-Dow & Cantatore, LexisNexis Questions & Answers: Property Law, 4th ed, 2020, ISBN 9780409351958 (print); 9780409351965 (ebk) Edgeworth, Quick Reference Card: Real Property Law, 3rd ed, 2020, ISBN 9780409352047 (print) Edgeworth, Rossiter, O’Connor, Godwin & Terrill, Sackville & Neave Australian Property Law, 11th ed, 2021, ISBN 9780409352092 (print); 9780409352108 (ebk). Hepburn, Australian Property Law: Cases, Materials & Analysis, 5th ed, 2021, ISBN 9780409351224 (print); 9780409351231 (ebk) Jackman & Werren, LexisNexis Study Guide: Property Law, 2nd ed, 2015, ISBN 9780409337990 (print); 9780409338102 (ebk) Newton & Cheung, LexisNexis Case Summaries: Real Property Law, 4th ed, 2015, ISBN 9780409338645 (print); 9780409338652 (ebk) Webb & Stephenson, Focus: Land Law, 5th ed, 2020, ISBN 9780409348538 (print); 9780409348545 (ebk)