In Class Problems (week 8)These may be undertaken in class. Otherwise they can be used as additional practice for exam preparation.

Discuss with reference to relevant case law how s. 184 G of the Conveyancing Act operates to alter priorities under old system title.

Vivienne is the owner of an Old System Title property known as Grandview. Last month she exchanged contracts to sell Grandview to Paula for $200,000. Paula paid a $20,000 deposit and has possession of a contract for sale of land executed by Vivienne. Yesterday Vivienne in breach of contract with Paula executed a Deed of Conveyance with respect to Grandview in favour of Richard for the sum of $220,000. Richard paid the full amount of $220,000 and has been handed a Deed of Conveyance by Vivienne. Richard is NOT AWARE (nor has any reason to be aware) of Paula. Paula has just discovered what Vivienne has done. Vivienne is unaware that Paula is aware that Vivienne has sold to Richard. Advise Paula of the consequence if:

a. Paula completed her contract with Vivienne and registered the Deed of Conveyance from Vivienne before Richard registered his Deed;

b. Paula were to register her contract for sale of land before Richard registered his Deed;

c. Paula’s contract for sale of land was actually a forgery signed by Vivienne’s husband, Harry; and

d. Richard was to register his Deed of Conveyance before Paula registered anything.

Summary of facts:1. Vivienne owns Grandview (OST)2. Vivienne exchanges to sell with Paula (for $200 000)

a. Paula pays $20 000b. Paula has possession of the contract for sale of land

3. Vivienne, in breach, executes a deed of conveyance to Richard (who pays the full amount an has no knowledge of Paula)

Summary of LawPaula has an earlier equitable interest in the land, Richard a later legal interest. Thus, if s184G of the Conveyancing act is not applicable, Richard will have priority, since he bought the estate bona fide (he had no knowledge of Paula) and for value ($200 000).

S184G will only confer priority if:

1. The first registered has taken an effective instrument (in writing, not void) (this is satisfied: the exchanged contracts are an effective instrument)

2. The person is competing with an interest created by an instrument (this is satisfied, the deed of conveyance is an effective instrument)

3. The person first registered has paid valuable consideration (this is satisfied, $20 000 was paid, alongside the promise to pay the rest of the $200 000)

4. The person first registered was bona fide

Fact Scenario “a”Here Paula completes her contract with Vivienne and registers the deed of conveyance.

Here, s184 would not protect Paula, since, at the time of the deed of conveyance, she knew of Richard, and thus, was not bona fide (Schoals v Blunt).

Fact Scenario “b”Here, Paula registers her contract for sale of land before Richard registers his deed.

S 184 will protect paula, since she was first registered, and, at the time of the creation of the contract, Richard’s interest did not exist, thus, knowledge of it was impossible (Moonking Gee v Tahos).

Fact Scenario “c”Paula’s contract was a forgery.

If it was a forgery, the instrument was void, and the first requirement of s 184 is not satisfied. The section will not protect Paula.

Fact Scenario “d”

Richard registered his interest first.

Since Richard only found out about Paula’s interest after the creation of the instrument, s 184 will protect his interest (Burrows v Crimp).

Tutorial 3 (week 9) - Mortgages1. What is a mortgage and what is its purpose? Who is the mortgagor and who is the

mortgagee in a mortgage transaction? What is the distinction between foreclosure and the mortgagee’s power of sale – which is more prevalent today and why? What steps must one take to foreclose? How are these different to the steps one must take when exercising one's power of sale?

a. A mortgage is a loan whose security is land. In old system land, this was through a conveyance with right to conveyance; in Torrens Title it is recorded in the second schedule.

b. The mortgagor is the landowner who borrows money. The mortgagee is the bank/party who is lending the money/holds the mortgage interest in land: the lender.

c. Foreclosure transfers the ownership of the land to the bank. A mortgagee’s power of sale allows for the recovery of debt through sale to a third party. The power of sale is more prevalent, since it is easier and quicker to enact, requires less action by the mortgagee (who does not then need to care for the property) and it maintains the personal covenant (the mortgagee may sue the mortgagor for any shortfall between the owed amount and the sale value of the house.

d. In order to foreclose, the following must occur:i. There must be a default

ii. There must be a statutory notice of the default (RPA s 57(2)(b)| CA s 111)

iii. There must be non-compliance with this noticeiv. There must be a properly conducted auction (RPA s 61| CA s 99A)v. The highest bid must be less than the mortgage debt (RPA s 61| CA s

99A)vi. The supreme court must make a “decree nisi” where the exact mortgage

debt is given and a time is allowed to repay it (usually 6 months (RPA s 62))

vii. The mortgagor must not pay within this timeviii. The court must order the foreclosure in absolute (RPA s 62(3))

e. In order to exercise the power of sale, only the first 3 (default, notice and non-compliance) must occur.

2. What is the difference between an old system and a Torrens title mortgage?a. A Torrens mortgage is a charge listed in the second schedule, to which anyone in

the first schedule is subject.b. An OST mortgage is a deed of conveyance subject to a right of conveyance upon

the complete payment of the mortgage debt.

3. Define in plain language the key terms used in the judgment of Street CJ in Eq in Wanner v Caruana [1974] 2 NSWLR 301 and describe the facts of this case in detail.

a. Factsi. There was a 6 year mortgage with fixed interest

ii. The bank required early repaymentiii. The bank demanded 6 years of interest, as allowed for by CA s 93

b. Held

i. Where the bank demands early repayment, interest is payable until that moment, not as a penalty until completion

4. Three years ago, Alexei borrowed $100,000 from Bianca. As security for the loan, Alexei gave Bianca a mortgage over Blackacre. The mortgage was for twelve years at an interest rate of 17.75%. Payments of the interest only are due each quarter with the principal becoming due and payable at the expiration of the twelve years.

There is no provision in the mortgage to pay off the mortgage early. Furthermore there is a provision in the mortgage to the effect that where there is a default in an interest payment, the principal together with interest owed for the balance of the term shall become immediate due and payable. After three years, Alexei receives $100,000 from his grandmother’s estate and wishes to pay Bianca. He has been told by a Real Property student that he will have to pay Bianca $100,000 plus nine times $17,750, i.e. $259,750. Advise Alexei.

a. CA s 93 allows for the early discharge of a mortgageb. However, s 93(1) requires, in the case of such early repayment, and only in the

absence of alternate terms in the contract (Steindlberger v Mistroni), the payment in full of all interest that would have been paid in the life of the mortgage, and this was held not to be unconscionable (Knightsbridge)

c. On our facts, there is no claused. However, if the mortgagor does not pay the mortgage for a period, and the

mortgagee requires payment in pull of the mortgage, the payment of subsequent interest may be waived as in Wanner v Caruana, if it amounts to a penalty. The mortgagor can prevent this by suing on the personal covenant in the local court for each month’s payment instead of requiring payment in full.

Default deliberately takes it out of s 93, is the clause in the question a penalty?e.g. higher interest on defaultdefn: imposes a penalty on default and is not a genuine pre-estimate of loss. Greater than genuine pre-estimate because onerous interest.

5. El Diwany is the owner of Blackacre and Whiteacre, both of which are under the provisions of the Real Property Act. El Diwany mortgages Blackacre and Whiteacre to Bentham to secure an advance of $1,000,000. El Diwany defaults in the payment of the loan secured by the mortgages and Bentham enters into possession of these properties as mortgagee in possession. Blackacre is a corner site and is ideal for construction of premises for the sale of ready-cooked chickens and has a value of $1,000,000. Whiteacre has a value $750,000.

Having given an appropriate notice pursuant to s.57 (2)(b) of the Real Property Act in respect of both properties, Bentham purports to enter into two contracts, one for the sale of Blackacre and the other one for the sale of Whiteacre.

Bentham's brother is the managing director of Chooks Limited, the proprietors of a chain of fast-food chicken shops and Brown has a shareholding in Chooks Limited. Bentham is also aware that Fried Chicken Limited, a competitor of Chooks Limited, is anxious to secure Blackacre for its own ready-cooked chicken outlet. Blackacre is situated in Penrith.

Bentham arranged for a public auction to be conducted in Broken Hill on Christmas Eve. The auction was advertised in a weekly newspaper circulating in and around Wollongong. A representative of Chooks Limited was the only person present at the auction and Bentham as mortgagee exercising his power of sale entered into a contract for the sale of Blackacre with Chooks Limited as purchaser after Blackacre was knocked down to Chooks Limited at the auction for $500,000.

The contract for the sale of Whiteacre was entered into with a purchaser introduced to Bentham by a real estate agent carrying on business in the area where Whiteacre is situated. The purchaser has no connection with Bentham. The price agreed was $650,000, although there is evidence that if Whiteacre had been kept on the market for several more weeks, another purchaser would have been prepared to pay $750,000. Advise El Diwany.

Summary of facts ED owns B (valued at $1,000,000) and W (valued at ($750,000) under Torrens Both properties mortgaged to Bentham (for an advance of $1,000,000) ED defaults

o Bentham takes possession of B and W Bentham gives notice pursuant to s 57(2)(b) RPA

o Enters into contracts to sell B and W Chooks limited (Bentham’s brother)

o Fried Chicken Limited, a competitor wants the place Bentham arranges for auction

o Chooks limited buys for $500,000 Bentham sells W by real estate agent

o Purchaser is unrelatedo Property bought for $650,000o If sold a few weeks later, could have sold for $750,000

The right to possessionBentham took a valid right to possession upon ED’s default (RPA s 60).

Mortgagee sale in generalThere was a default, a statutory notice was given (RPA s 57(2)(b)), and there was non-compliance (I assume). Thus, the mortgagee could, validly, sell the properties.

Sale of Black-acreThe sale of Black-acre was a sale to a related party, thus, for the sale to be valid, it must be a “truly independent bargain” (Farrah v Farrah).

Although Fried Chicken was also interested, he did not turn up to auction, even though the auction was public. Whereas M1 may claim this did not disqualify the deal, the fact that there was no-one else at auction, and the sale price was ½ the actual value of the property, it is likely that the sale will be held valid (ANZ v Bangadili; Farrah v Farrah).

After the date of sale, ED may apply to the Equity Division for an injunction to prevent the sale from being registered, whereby an urgent hearing on the propriety of the sale will take place (Allfox v Bank of Melbourne).

Sale of White-acreAfter the requirements are fulfilled, the mortgagee may sell at any time (Belton v Bass, Ratcliffe and Gretton Ltd).

However, there is also an obligation on the mortgagee when selling. There are two schools of legal thought on this issue: (1) the mortgagee must take reasonable care to obtain the best possible price (Cuckmere Brick v Mutual Finance); or, (2) that the seller must sell “in good faith” (Kennedy v De Trafford; Warner v Jacob; State Bank v Chia).

Here, it could be said that the mortgagee fails the first test, as it would have been reasonable for them to wait a few weeks for an extra $100 000 in sale price, but passes the first step, since the sale was via an external realtor, and, prima facie, in good faith.

The weight of NSW authority is on the side of the “good faith” test: the mortgagee, here, did not recklessly sacrifice the mortgagor’s interest, and, thus, the sale will be found to be valid.

Distribution of proceeds of saleFirst, the realtors and the lawyers will be paid, then the debt still owed to Bentham. All remaining moneys will be allocated back to ED, assuming there are no other stakeholders (RPA s 58).

6. What are the facts in Holland J in Matzner v Clyde [1975] 2 NSWLR 293? What is the question at law? What was the Court's answer to this question? Describe the outcome of the case in plain language.

a. Factsi. There is a property in Kogarah

1. Developer buys2. Knocks down a building to start from scratch

ii. Borrows from M11. Building costs rise, borrows more from M2

iii. When half built (and worthless), Developer goes into liquidationiv. Developer had notice of M2

1. But improves the landv. Sale: M1 is fully paid out, M2 gets a little (they would have had nothing

without M1’s improvementsb. Issue:

i. Should M2’s interest be paid out before M1’s improvements, since M1 had notice and thus could not “tack” his increased mortgage amount onto M1?

c. Heldi. There was OST authority that if M1 improves property reasonably, the

cost could be tacked onto M1 (Southwall v Roberts)ii. The court held that OST cases applied, and that indefeasibility did not

count1. Thus, since M1 had notice of M2, he was subject to M2

iii. Except that the judge created the “Matszner Exception”1. It is against conscience for M2 to prevail over M1’s further

advance since, without M1’s further advance, M2 would not have gotten a cent

7. Vicky was the registered proprietor of land under the Real Property Act 1900. She sold the land to Paul for $1,000,000.

On completion of the sale she was paid $750,000 in cash and given a mortgage over the land to secure the balance of $250,000, which was payable one year after completion. The mortgage was, in fact, a second mortgage. On completion of the purchase Paul granted a first mortgage to Michael in order to raise moneys to buy and develop the land.

Both mortgages were registered, the second mortgages with the consent of Michael.Under the first mortgage Michael advanced to Paul $500,000 on completion of his purchase and covenanted to advance a further $250,000 to Paul if and when Paul finished stage 1 of his multi-staged development on the land. The first mortgage also provided that Michael could, in his discretion, advance additional moneys from time to time.

Eighteen months after completion of his purchase Paul had still not paid out Vicky. Having finished stage 1 of his development, Paul called upon Michael to advance Paul more moneys. Michael, sensing that the land would be “worthless” if not fully developed, advanced Paul $1,000,000 (taking his total advance to $1,500,000). All this was to no avail. Paul was unable to finish all stages of his development. There was no more money. He was bankrupt.

Discuss the priorities as between the mortgagees Vicky and Michael.

Summary of facts Vicky was the registered (TT) proprietor of land under RPA Sold to Paul for $1 000 000

o On completion, she was paid $750 000o And had a $250 000 mortgage over the land

To be paid one year after Paul had an M1 from Michael for development

o $500 000 initiallyo a covenant to advance a further $250 000 when Paul finished stage one of

developmento discretion to provide further moneys

Both mortgages were registered (M2 with consent of M1) After 18 m, Vicky was still not paid out

o Michael advanced, after completion of stage one ($1 000 000) (total 1.5m advance)

o Michael believed the land worthless without this advance Paul bankrupted

Summary of LawThis question is regarding the tacking of further advances to mortgages.

Under Torrens, only actual notice of a further advance will cause M1 to be subject to M2 (Central Mortgage Registry v Doneware; Westpac v Adelaide Bank)

Except for the Matzner Exception (Holland J in Matzner v Clyde)

Application of law in generalSince M2 was registered with the consent of M1, it is clear that there is actual notice of M2, and, thus, that M1’s further advances will be subject to M2 (Central Mortgage Registry v Doneware; Westpac v Adelaide Bank).

Application of the Matzner ExceptionThe Matzner Exception was created where M1 was in possession of the property, and did not loan more, but spent money in improving the property. Thus, prima facie, it appears that this exception would not prevent M2’s priority over M1’s subsequent advances.

However, Holland J’s reasoning was in equity: that it would be unconscionable for M2 to prevail over M1 where M2 would have not gotten a cent but for M1’s further advance. Here, it appears that M1’s further advance allowed for the sale for good value of the property, which was otherwise worthless. Thus, the factual difference between this case and Matzner may be forgiven, since here, too, it would be unconscionable for M2 to have priority.

The matzner exception might increase: required to be made under contract, and improved the value. Only the first 250 000 was required …? The second 750 was discretionary

In matzner, the discretion would not tack, except allowance not based on tacking, but to perfect the security. Loan rather than improve is open rather than

Where subs. Absolute amount allowed, priority for normal and etc. Hopkins v Rolt: with notice, cannot have priority over M2. Matzner, Hopkins applies to Torrens. (here: Michael Vicky Michael). Westpac v Adelaide: Hopkins does not apply where M1 has no choice about making a further advance.

Matzner: M1.5, to increase value of the security: if so no ground for denying priority of principle + amount to continue building)

Tutorial 4 (week 10) – Co-ownership

Facts:

Mr. Ryan and Ms. Dries were Tenants in commono Ryan paid 6/7, Dries paid 1/7 (in contract) of advanceo Purchase price was $200 000o Responsibility for mortgage was split

On this, the court held that Ms. Dries was entitled to 43% of the property in equity (her input amount and half the mortgage she was responsible for)

Ryan paid off the loan ($195 000 after interest)

Held:

Ryan’s payments were considered improvements (but why? Because increased the value of the property)

He was entitled to ½ of the amount paid But there were set offs

o Such as occupation rento This set off part of the mortgage payment allowance granted in equity

1. Analyse the reasoning of the High Court in Corin v Patton (1990) 169 CLR 540.a. Facts

i. A wife executed a transfer to her brother (for no consideration) who held the property on trust for her, in an attempt at severance

b. Heldi. Severance did not occur at law, since the transfer was not registered

Skills ExerciseRead Ryan v Dries [2002]. Can mortgage payments be considered improvements? What is the reasoning behind this?

ii. There was no severance at equity, since there was no valuable consideration, and the property was held in trust (equity will not complete an incomplete gift)

iii. English authority regarding severance by conduct (e.g. Burgess v Rawnsley) is not valid in Australia

2. Discuss the relationships between A, B, C, and D. Are they joint tenants or tenants in common?A house was gifted ‘to A, B and C’ (who were three sisters) in their mothers’ will. After the mother’s death, C falls out with the other two sisters and purports to sell her share to D, who is not a relative.

a. The gift does not specify in which manner the co-ownership is to bei. At common law – there is a presumption of joint tenancy (the four

unities are present)ii. In this case, equity will follow the law (since none of the exceptions

are present)iii. CA s 26(1) presumes that the relationship is tenancy in common,

even in equity (Delehunt v Carmody), and there are no words to the contrary (which would, under CA s 26(2), make it a joint tenancy)

iv. Thus it appears that there is a relationship of tenancy in common (but, for the balance of this question, I will assume CA s 26(2) does not apply, and the common law presumption holds

b. C’s sale to D severs unity of title, thus, AB and D are in tenancy in common

3. Your client is a joint tenant of a valuable waterfront property. Your client's spouse is the other joint tenant. They are estranged. Your client, having being diagnosed as having a terminal illness, wishes to convert the joint tenancy to a tenancy in common. Advise your client

a. Conversion to tenancy in common may occur as follows:i. Unilateral act

ii. Court order/mergeriii. Unlawful killing

b. A merger requires co-operation, a court order requires the Registrar General to give notice (RPA s 97(5)), and unlawful killing will exclude the client from their property (Rasmanis v Jerewitsch; Forfeiture Act s 5).

c. Thus, a unilateral act is best:i. The client may sell a fraction of the property for value, and register

it, whereby there will be severance at law and at equity (Wright v Gibbons)

ii. The client may mortgage her interestd. I would recommend the sale of a portion (e.g. 1/50th share) to break the

unity of interest, severing at equity. The registration of which will update the rights at law.

4. You act for a finance company. Your client wishes to lend money to one of two joint tenants of land, taking a mortgage over that joint tenant's interest in the land. Advise your client on the basis that the land is: (a) Old system land; (b) Torrens title land.

a. Under OST, the mortgage is a conveyance, and it breaks the unity of title, creating severance (Re Pollard’s Estate) and giving the bank rights even after the death of the title-holder. This is a safe mortgage.

b. A Torrens mortgage is in the second schedule, and does not require a conveyance, thus, there is no severance (Lyons v Lyons), and the mortgagor’s interest is liquidated if the mortgagor predeceases the other joint tenant. This is not a safe option.

5. Max and Judy are registered proprietors of an estate in fee simple in Green Gardens, a property under the provisions of the Real Property Act, as tenants in common. Green Gardens is a residential apartment building containing six apartments. Judy has lived overseas for several years, and Max has occupied one of the apartments. He has received the rents from the remaining five apartments, and carried out maintenance work when necessary. Max has also erected at the front of the apartment building a single storey building containing two shops, from which he receives rent, and installed new plumbing in the apartments, following a statutory notice from the public health authority.

Max has just died, and Judy seeks your advice as to whether Max’s executors are now entitled to claim any amount for the money expended on the shops, the plumbing, and general maintenance. She also wants to know whether she has any claim in respect of the income from the shops and the apartments. Advise Judy. In so doing, what authorities will you rely on? Why?

Summary of Facts Max and Judy are tenants in common of GG under RPA (TT)

o GG has 6 apartments Judy lived o/s for a few years

o Max occupied one of the apartments Max received rents from 5 apartments

o Has carried out maintenanceo He installed new plumbing (following statutory notice)

Max built on the land a two story buildingo Which he receives rent

Max diedo Are Max’s executors able to claim for

Money expended on shops The plumbing The maintenance

o Does Judy have any rights to Income from: The apartments The shops

Summary of the LawEven though Max has died, the tenancy in common is still in force. The rights inter se are extremely limited, thus, either estate must apply under CA s 66G and Environmental Planning and Assessment Act Pt 4 for a sale or partition, at which point accounts may be taken.

Compensation for improvements (Brickwood v Young):

If value added is greater than cost of improvements, cost is split If it is less, value added limits the cost, which are then split Maintenance costs are not compensated for (Ryan v Dries)

This amount would be set off by his “occupation rent” (Ryan v Dries).

Entitlement to collect rent

A co-owner collecting is an agent for the group (Ryan v Dries; Strelly v Winson)

Obligation to pay profits

If:o The business was conducted on behalf of the co-ownership (Fact)o And, the profits were from the property per se (Squire v Rogers)

Then profits are to be apportioned

Max’s Executor’s claim on “improvements”The maintenance will not be apportioned (Ryan v Dries).

The money expended on creating the shops will be split, limited by the amount it improved the value of the property.

It seems that, with regards to the plumbing, it will either be thought of as “rates”, whereby it will be apportioned (s 560 Local Government Acts), or, if it did not improve the value of the land, the amount will not be apportioned.

The Occupation RentSince Judy did not live at the property, Ryan is liable to pay occupiers rent for the 1/6 of the land, only to the extent that it offsets the other amounts (i.e. this claim is not valid by itself) (Ryan v Dries).

The obligation to apportion rentThe rent collected would be equally apportioned (Ryan v Dries; Strelly v Winson)

The obligation to share profitsThe profits from the shop, if conducted on behalf of the property and were profits from the property per se, would have to be apportioned (Squire v Rogers).

It seems that the profit from the shop is in the form of rent, and, thus, it is from the property per se. As such, its profits (and costs) are to be apportioned.

Finally:The total “accounts” at equity would be as follows:

The distributed rents Add the distributed profits Less the costs of improvements (creation of shops) Add occupation rent (insofar as it offsets costs of improvements)

Tutorial 5 - Easements and Airspace (2nd lecture on Profits)1. Blackacre and Whiteacre are adjoining blocks of land, each of which is under the

Real Properly Act. Mr Black and Mr White are the respective proprietors of Blackacre and Whiteacre.

Blackacre has always had a frontage to a public road. Whiteacre also has direct access to a public road, and has had for many years. Previously the only such access it had was by means of a right of way over Blackacre. The right of way has fallen into disuse, giving Mr Black the opportunity to build a fence and plant a vegetable garden across it.

Following a disagreement with Mr Black, Mr White has pulled down the fence and driven his car across Mr Black's vegetable garden in purported exercise of his right of way.

Advise Mr Black as to what rights and remedies, if any, he has against Mr White.

What possible infringements are there?If the easement is found to be invalid, then Mr White has no right to enter the land: his entrance/destruction will count as trespass to land – Mr Black can sue for damages.

Even if the easement is valid, Mr White is attempting abatement. Even though no notice is required for this, the courts do not favour abatement (Lagan Navigation v Lumbeg). The force he used would probably constitute a breach of the peace, and criminal and/or civil actions could be laid (Perry v Fitzhowe). Nuisance?

How was the easement created (relevant?)It seems from the facts that the easement an easement by prescription created when Blackacre was OST, as a lost modern grant (Delohery v Permanent Trustee). If so the easement would remain in force even though Blackacre is now under TT (RPA s 42(1)(a1); Australian Hi Fi v Gehl).

If not, this is just a disused easement created by express grant (we have to assume it complies with RPA ss 46, 47(1)).

It may also be an easement by necessity, since at the time of the creation of the easement, Whiteacre had no other access to public roads.

Had the easement been extinguished?If the “many years” where the easement hadn’t been used because of road access is greater than 20 years (RPA s 49(2)), the Registrar General may cancel the easement (RPA s 49(1)) after giving notice (RPA s 49(4)).

If this period was less than 20 years, if there is evidence that the dominant tenement (Blackacre) intended to release the right, the easement may be removed by a court order

under CA s 89(1). Here, the first requirement (a) is satisfied: the reason for the creation of the easement, the lack of road access, is no longer an issue since alternate access is available. However, the release or implied release required by subsection (b) is less clear. Mere disuse is not sufficient to imply intention to release (Ward v Ward). The case could be made out that the intention could be made out by the long duration of disuse (Tweweeke v 36 Wolsely Rd), or, failing that, the disuse coplued with surrounding circumstances (Swan v Sinclair).

The elements that may be considered were outlined in obiter by Walsh J (dissenting) in Tweweeke:

The length of time used The obstacles at the time of the grant (there aren’t any discussed) The obstacles further created (here, the vegetable garden and the fence) and

Blackacre’s failure to respond Finally, the availability of another path

There were further obstacles created with consent, and, unlike the case in Tweweeke, there was still another path available. As such, in this case, there may be a case that the easement is void, especially considering the court’s relatively broad interpretation of the section of CA s 89 (Manly Properties v Castrisos).

Is s 89 the same as implied release less than 20 years?

2. Blackacre and Whiteacre are adjoining lots, both under Old system title. A right of way existed over Blackacre in favour of Whiteacre. The right of way was a narrow strip of land fenced on both sides and leading to a road. The improvements on Blackacre consisted of three houses, each of which had its front entrance to the strip of land through a gate. On Whiteacre there was built a processing works, which was used to kill and process chickens for sale on the open market. The business was a small family concern, and the chickens were brought to the building on Whiteacre in wooden crates along the narrow right of way.

In the course of time, Whiteacre changed hands a number of times. The present owner has conducted a market survey and found that there is more money to be made in large-scale ham production. He accordingly wants to convert the processing works into a slaughterhouse for the killing and processing of pork, and to drive large herds of swine along the right of way to Whiteacre to be slaughtered and processed.

Advise the present owner of Whiteacre whether he is entitled to use the right of way in this manner, indicating in your answer whether there would be any difference if the easement had been created by express grant; or by implication; or by prescription.

Fact summary Blackacre and Whiteacre are adjoined, and OST There is an easement of a right of way

o Blackacre is the servient tenement There were three houses fronting the right of way on this land

o Whiteacre is the dominant tenement There was a small chicken processing plant on the land: the

transport of chickens used the right of way Whiteacre (dominant tenement) was on-sold a few times Whiteacre changed the business from a chicken farm to a large industrial pork

processing planto The easement was used for driving swine

Summary of lawThe law regarding change of easements is very different depending on the types of easement.

An easement by implication may not be changed (Corporation of London v Riggs) A proscriptive easement, too, cannot be changed or extended (Wimbledon v Dixon;

RPC v Rogers) An express easement will be given the full meaning of the words in the grant (White

v Grand Hotel)

Easement by proscription/implicationWhereas easements by implication/proscription cannot be changed, an intensification of land use may be permitted, where there is no increase in burden on the servient tenement (British Railways v Glass).

In this case, the use remained agricultural processing, but the use became heavier. This seems to be in line with the purpose of the creation of the easement (British Railways), as well as in line with the authorities: the transition from a house to hotel (Lloyds Bank v Dalton) and the intensification of use of a camping ground (British Railways). Thus, it seems that the easement may be extended for this purpose.

However, there also seems to be a large increase in burden on the servient tenement: where, previously, it was used for chickens on trucks, now, pigs are being run across the land. Thus, it is unlikely, if the easement is by proscription or implication, that Whiteacre will be able to use the land as proposed.

Express easementFor a proper analysis of an express easement, the words of the grant must be given, since the court will give allow for the full use of the easement (White v Grand Hotel). Since this is not available, I will assume that the easement is a right of way “for all purposes.”

Such an easement is quite inclusive, but may still be limited if the use is so excessive so that an ordinary land may be sought to limit the use (British Railways). This is a facts and circumstances test. The increase in use is allowable by this doctrine (White v Grand hotel), it seems that that. If there was a limitation that the easement is “in common” with the other holders of right to land, then perhaps Jelbert v Davis would apply, and the easement would not be valid for the use, since the way it was exercised would interfere with Blackacres use of their land.

However, it is most likely that an express easement would allow Whiteacre to use the land as required.

Tutorial 6 (Week 12) - Covenants“Registration of a restrictive covenant under the Real Property Act, 1900, is only the first or a series of requirements which must be satisfied if the said covenant is to be enforceable. This is particularly so where the said covenant arises in New South Wales prior to 1964 from a Scheme of Development.”

Even if the covenant is registere, it still must comply with the requirements of Tulk v Moxhay (negative, notice, etc.) although notice may be satisfied by registration

It must still touch and concern, not rebut CA ss 70, 70A If there is a building scheme, extraneous evidence may be problematic before ’64:

since there would not be any CA s 88B instruments, there must be a document registered s88(1) (Re Louis) satisfying with specificity who burdened and benefited party, and who is able to release the easement.

1. Pius and John are registered proprietors of estates in fee simple in adjoining blocks of land, Greenacre and Blueacre respectively, under the Real Property Act. Blueacre, a vacant block of land, is subject to a valid and registered restrictive covenant benefiting Greenacre. The covenant restricts the height of any building, which is erected on Blueacre to a height of no greater than 40 feet. John sells Blueacre to Paul who becomes the registered proprietor. What is the question?

2. Alex was the registered proprietor of an estate in fee simple in Greenacre under the Real Property Act. In March 1962 Alex subdivided Greenacre into 10 lots subject to a covenant that any building erected upon a lot should be for residential purposes only. This covenant was referred to in all advertisements for the sale of Greenacre and, at the auction for the sale of the lots; the covenant was noted on the plan of subdivision which was prominently displayed.

Alex sold Lot 1 to Bruce. Bruce agreed to enter into the covenant and the relevant documentation was prepared. Due to an error on the part of Alex's solicitor, the dealing creating Bruce's covenant did not indicate the land benefited by the covenant.

Alex later sold Lot 2 to Cedric. Cedric agreed to enter into the covenant, and the dealing creating his covenant indicated that the benefit of the covenant was appurtenant to Lots 1, 3, 4, 5, 6, 7, 8, 9 and 10.

Alex then sold Lot 3 to Dennis. Dennis agreed to enter into the covenant, and the dealing creating his covenant indicated that the benefit of the covenant was appurtenant to Lots 1, 2, 4, 5, 6, 7, 8, 9 and 10.

Greenacre is in a very pleasant suburban area. The surrounding homes are large, expensive and have well-developed gardens. There is a small commercial centre within half a mile of Greenacre, but this has not affected the "tone" of the neighbourhood.

Advise Dennis in relation to the following:

(a) Whether the covenant touches and concerns the land;

(b) Whether Bruce can enforce the covenant against Dennis;

(c) Whether Cedric can enforce the covenant against Dennis; and

(d) Whether Dennis can rely on s 89 of the Conveyancing Act?

He brought up some Ellison issue: relevance since subdiv occurred before each covenant? Looks like there was an earlier covenant

Building Scheme – “aimed at preserving the nature of the neighbourhood” (Kerrige)

Lot 1 may be invalid because of s88(1) not being satisfied, unless the omission is remedied

Lots 2 and three are valid, since the building scheme allows the benefited parties not to all be owned by a common vendor (Elliston)

a) Does touch and concern (Rogers) since it is not a personal thing a. Covenantee owed the land (except for Alex and Cedric): building scheme

b) Yes, promise contractualluy: details are only important for proprietary interesta. Bruce’s faulty

c) As covenant is validd) It seems not, since the covenant seems valid, no change in tone, still used, etc

P 309 11.27

Tutorial 7 (Week 13) – Leases

Skills ExerciseRead Shevill v BLB (1982) 149 CLR 620 and Progressive Mailing v Tabali (1985) 157 CLR 17. What is the ratio of each case? Is the outcome the same in each? If not, why not?

Sheville (Gibbs CJ)o Failure to pay was a breach, but not enough to show intention not to

perform the contract, so there is no repudiationo Non-payment of rent is not a breach of a fundamental term

In writing, you could stipulate that a term is essentialo Failure to pay is not unimportant, it is just not enough on its own

Progressiveo Breach of rent covenant was not enough to for a fundamental breach

(because it does not evince a intention not to perform) Neither was the breach of repair Or the breach of parking Or all together

o But The careless damage, subleasing against terms and the above

showed that the lessee did not intend to perform according to the terms of the contract (fundamental)

o Thus, repudiation occurred, re-entry is the acceptance of tenant’s repudiation

These cases both proffer similar rationes: that there is no single term central enough to cause fundamental breach, and that rent alone is not enough for repudiation. However, in Progressive, there was enough evidence to show that the lessee had no intention to perform, thus, there was repudiation and damages could be sought.

Difference in approach read? Progressive allowed contractual remedies (loss of bargain damages)

Non-fundamental breach – damages for breach of a warranty

Questions1. Stuart lives in a ‘half-way house’ which is run by a non-profit organization as a way

of dealing with people with psychological or other problems but are able to live semi-independently for a few months, before being re-integrated into independent living. Every resident has a key to their door, which leads to a bedsit with an ensuite bathroom. There is a microwave and kettle, though alternatively there is a communal kitchen where meals are served, though for this the individual has to pay extra. (Stuart does not bother with this, as he just cooks with the microwave or eats at his job in a restaurant kitchen). Rooms are cleaned, and the cleaners and the managers have a key. There is also a resident manager and each resident has an emergency bell which they can ring.

The agreement for the accommodation states that there is a monthly fee to be paid, and Stuart’s family pay this for him to the managers. The agreement provides that the management retain a key, that there is to be no smoking or drinking in the rooms (there is a separate smoking, but alcohol is prohibited from the entire premises), lights are to be out by 10 pm every night. No pets are allowed. Lastly, there is a clause which says that ‘the management reserves the right to move you to a different bedsit within the house at any time for operational reasons’. “Residents must follow the behaviour code and any breaches of the code may lead to eviction”. The behaviour code is displayed all around the communal areas and in every room, and covers basic matters such as no fighting, loud music, clean up your dishes in the kitchen and no squabbling over the TV remote. Stuart has a problem that he constantly whistles Billy Joel tunes all night and his neighbour asks that Stuart be moved. They move Stuart to a different room three floors up, but there are no stairs and Stuart is scared of lifts. He demands to be moved back to his old room and claims that he has a monthly tenancy of that room. licence or lease?

Summary of lawFor a lease to be valid, it needs to have the following characteristics:

1. Exclusive right to possession of the premisesa. Substance, rather than form (Radaich v Smith)

2. For a definite period3. In the appropriate form

Here, the question would be whether exclusive right to possession was granted, and how far it had been infringed.

Comparing this to a hotel, and to the conditions of a hotel, it seems that the manager’s ability to enter, and the clause that possession may be removed at any time, seems to show that it would be a license, rather than a lease.

They can move for “operational reasons” which is broad – therefore no exclusive posession

4. Your client Landlord seeks your advice. He has rented his commercial premises to Tenants for five years. After six months Tenant has only paid 25% of the rental due and payable. Tenant has told the Landlord she is doing her best. Should the Landlord re-enter?

If the landlord re-enters, he will be able to claim the rent payable. However, he will not be able to claim a cent against the 5 years of rent payable.

Thus, he has two options. Either he should negotiate a payment plan, and allow Tenant to stay on, or he must prove a contractual claim, but it is likely that this will not occur, since the court construes it very strictly.

If, however, Tenant continues living on the land, they will accrue a larger and larger debt to the LL, all of which would be claimable.

Time might be relevant (7 defaults …)

5. Discuss, with reference to relevant case-law, in what circumstances may a tenant assert that the landlord has denied the tenant quiet enjoyment or has derogated from the grant of the lease?

Quiet EnjoymentQuiet enjoyment occurs when the landlord interferes with the tenant’s right to possession.

In Martin’s Camera Corner, it was shown that water dripping from the landlord’s apartment into the tenant’s, was a breach of this covenant.

However, in the Southwark Case, it was shown that the landlord was not responsible for the breach of enjoyment, and, had they inspected the property properly, they would have discovered this breach. (prospective in nature)

Non-Derogation from grantWhere there is an act that prejudices the successful fulfilment of the lease substantially, there may be non-derogation from the grant.

In the Nordon Case, it was held that allowing illegal acts in a building (allowing an assignment to a brothel) rendered the premises unfit for the purpose of the lease. Further, since there was consent as to the assignment, it could be imputed on the LL.