Exam long notes - Summary Property Law PDF

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CO-OWNERSHIP JOINT TENANCY: joint tenants own everything together, nothing is owned separately – 4 unities must be present at all times so JT remains intact (no severable share or right to a portion of land + last JT alive gets everything = survivorship rule) The four unities a) Unity of possession i) Equal possessory rights (cannot eject “ouster” – wrongfully eject other JT) ii) Chieco v Evans = for ouster to occur there had to be conduct sufficient for the court to establish that “you intended to put the other tenant out and disposes them” e.g. domestic violence cases – need to look at whether voluntarily left or threat of violence that they cannot return for the threat of their safety – (not you left and you’re ousted) iii) Biviano v Natoli = no ousting = the party had been excluded due to apprehended violence (AVO) issued by the court – by stat authority – the court saying you can’t return and can’t claim possessory rights b) Unity of interest i) mortgagee – power of sale – people can be removed from their fee simple interest, leaseholder has exclusive possession excluding the fee simple owner = easements and profits – not powerful enough to amount to possessory right – each joint tenant is sitting on the same scale c) Unity of time i) JTs obtain possession at same time via same common event ii) If one joint tenant receives their interest at a different time = no joint tenancy iii) Exception Inter vivos provision = you do it through your will – your children take the interest but all different ages and wait till their 18 (if you want them to have joint tenancy when you wait for the youngest to turn 18) – especially twins – because they cannot satisfy the unity of time – therefore exception d) Unity of title

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Means that all interest are created under the same title – can’t have two contracts or different transaction = all through one ii) Each JT derived the interest from the same document or via the same act. Survivorship rule: - Most important aspect of JT o If a JT dies then other JTs automatically equally take deceased’s share o Prevail any declaration of intent that the property owner makes o If one tenant dies the other takes everything o If JTs die together and order of death uncertain o death deemed to be in order of seniority s 65 Succession Act Terminating JT (3 ways) 1) Mutual agreement a. All JT’s agree to end the tenancy and convert to tenancy in common b. Sprott v harper – marital case – agreed on distribution of their property – they worked it out between themselves (not recorded) court said there was enough evidence that they had compiled together in equal amounts – the date of death with the husband what was the title? – if JT intact wife takes all if not husbands will prevails = evidence of intention c. Saleeba v Wilkie – friendship broke down they agreed to sever but didn’t work out all the logistics – court said there was not enough intention and hadn’t reached that concluded agreement – too many variable left to decide on 2) Alienation a. One JT disposes of interest = unilateral alienation b. To perfect severance by alienation, at law, transfer needs to be registered in Titles Office - s59 Land Title Act 1994 c. needed recognition of the severing tenancy – needs to be perfected (at law = register) d. if transferor dies before registration = Unilateral alienation by JT is only effective if it’s effective at law (i.e. Via registration of transfer) (Wright v Gibbons = three sisters, two fell out with the third – Olinda, ethel, Bessie (ganged up against Bessie) ethel transferred to Olinda and Olinda transferred to ethel

(recreated their interests at different times) and registered in titles office – that was effective severance by alienation) 3) In equity a. JT transfers share to third party by gift, but transfer not effective at law (ie, not registered) b. Corrin v Patton = corrin owned matrimonial property with mr corrin, mrs corrin had terminal cancer and didn’t want her husband inheriting her property – so she wanted to transfer to her brother mr patton and gave it to him but she didn’t contact the bank who held mortgage to the property and needed to consent in order to enable to title and she passed away before she could do that – but equity couldn’t save this transaction (she hadn’t perfected the gift) – she would have needed to done everything in her power to which she didn’t do that therefore mr corrin inherited the property c. If everything has been done except registration equity will prevail Other methods of severance - Severance following homicide = if you murder your JT for survivorship rue you will not take absolute ownership only their share on TIC on trust (conviction is predisposition) - Severance by partition = physical separation of the property (requires an application to the court) – it is expensive so not often used - Severance by court order = TENANCY IN COMMON (TIC) • Each party owns a proportionate interest • Each TIC’s share can be dealt with as they think fit – BUT it must not interfere with the interests of the other TICs • Each co-owner holds a separate share • Parties often hold unequal shares • Although separate share, land not physically divided • A TIC cannot claim a particular portion of whole land • If this were the case, would be separate ownership, not co-ownership • Each TIC entitled to physical and legal possession of whole land = unity of possession Creation of a TIC:

At common law one if: o of the unities absent o words of severence used  words indicating that co-owners are to take separate shares rather than hold the whole of the property jointly - intention to create TIC could be discerned but, now consider ss35-36 PLA (TIC) - Common Law presumption in favour of JT now altered and TIC presumed Termination of TIC • Death – TIC’s share vests in estate and is passed pursuant to Will – In case of intestacy, TIC’s share distributed according to intestacy rules • By Statute (ss37 - 43PLA) – One or more TIC apply to court for an order that the property is sold and proceeds divided proportionately among TICs – Same as partition of JT -

MORTGAGES PART 1 TERMINOLOGY

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Legal definition: o “a mortgage is … a charge over property created by contract to secure the future payment of money or monies worth, the rights of the mortgagee against the mortgaged property being extinguished on performance of the obligation, secured or enforceable against the property by appropriate means in case of default.” o English, Scottish and Australian Bank Ltd v Phillips Mortgagee = LENDER Mortgagor = BORROWER o Lien or charge over land, created through a contract, mortgage secures money borrowed to purchase or

improve land + contract usually requires repayment of principle plus interest - Registration: o s181 - Registration creates a legal interest in land o s182 - legal interest vested in registered person o Sch 2 Definitions - person entitled to the interest: Registered Owner and Registered Proprietor o s37 - registration creates “indefeasible title”  ss184-187 Indefeasibility & exceptions LEGAL MORTGAGE - mortgagee (lender) o s74 LTA - mortgage constitutes a charge on the land o no transfer of title. Mortgage is an ‘interest’ in the land and mortgagee is a ‘registered proprietor - mortgagor (registered owner) o legal and equitable title retained by mortgagor subject to encumbrance of mortgage - two components: o personal covenant (contractual promise) o interest in land  charge on the mortgagor’s interest in the land, only created upon registration (ss72 & 73 LTA) EQUITABLE MORTGAGE - Created when the legal owner of a property constituting the security enters into some instrument or does some act which, though insufficient to confer a legal estate or title in the subject matter on the mortgage nevertheless demonstrates a binding intention to create a security in favour of the mortgagee, …evidences a contract to do so” - Buckley LJ in Swiss Bank Corporation v Lloyds Bank Ltd - Arises when: o Mortgage in prescribed form but unregistered o Agreement to grant mortgage o Ineffective attempt to create legal mortgage

NATIONAL CREDIT CODE (NCC) – a protection mechanism for consumers) - Commenced 1 July 2010 - Replaces QLD consumer credit code o NCC is Schedule 1 to National Consumer Credit Protection Act 2009 (Cth) o s3 – Definition of ‘credit’ o s204 – Principal Definitions o Part 2 – Credit Contracts - NCC: application o S5 applies when:  Debtor is a natural person; AND  Credit to be used wholly or predominately for:  Personal, domestic or household purposes; OR  To buy, renovate or improve residential investment property; OR  To refinance residential investment mortgage; AND  Mortgagee charges in relation to loan AND  Mortgagee is the business of money lending in this jurisdiction - S5(4) – predominant purpose is: a. the purpose for which more than half of the credit is intended to be used; or b. if the credit is intended to be used to obtain goods or services for use for different purposes, the purpose for which the goods or services are intended to be most used - s6 – exceptions – does not apply to certain loans - s7 – NCC applies to mortgage if:  it secures obligations under a credit contract or a related guarantee; and  the mortgagor is a natural person

o If mortgage secures other obligations, then NCC only applies to the extent of the obligations secured under credit contract or related guarantee o Certain specified classes of mortgages may be excluded by Regs - NCC part 2: Credit contract - S14 – writing requirement o Written contract, signed by debtor and credit provider; OR o Written offer of finance (in contract form) signed by credit provider and accepted by debtor - S16 – pre-contractual disclosure - S17 – contents of contract document - Ss20, 43 – copy of documents to debtor - S30 NCC o Credit contract may not state that interest applicable to unpaid balance of loan will differ according to whether default exists o But, credit contract may set differing rates if higher rate is only imposed if there is default, and only until default remedied = meaning that accurate drafting is essential • Consider this….. – Clause says that interest is 5% but increases to 7.5% and stays increased if default • UNENFORCEABLE = Equates to a penalty • Contrast with a clause that says – Interest is 7.5% but if no default then decreases to 5% • ENFORCEABLE = Equates to an incentive to perform obligations Mortgagor’s default s78 LTA - In event of default, mortgagee has power to: o take possession, receive rents and profits and obtain Supreme Court Order to that effect

o foreclose o obtain Supreme Court Order for sale of the mortgaged property mortgagor’s obligation s78 PLA - Implied mortgagor obligations (subject to terms of mortgage) o pay principal and interest in accordance with the mortgage o keep all buildings and improvements in good and substantial repair as at date of mortgage o permit mortgagee to enter and view the state of repair of buildings and improvements mortgagor’s rights • Repay mortgage (s82 NCC) • Require mortgagee to transfer mortgage to 3 rd party in lieu of discharging mortgage (s94(1) PLA) • Deal with mortgaged property (ie: sell, assign, lease, grant further mortgages) • Inspect documents relating to mortgaged property (s80(1) PLA) • Sue for re-possession, trespass, recovery of rents & profits etc (s81(1) PLA) Right of redemption - Mortgagor’s right to free mortgaged property from the mortgage - Right to get property back unencumbered after mortgage has been paid - Torrens v Old System - Torrens = release charge on mortgaged property - Old System = transfer title back to mortgagor - No clogs (fetters) allowed - mortgagee cannot make mortgage irredeemable equity of redemption: - equitable right to redeem o A particular right in equity to redeem after the contractual date; OR - equity of redemption

o The sum total of the mortgagor’s interest in the land as the owner. o Arises on the date of the mortgage and is an interest the mortgagor can convey o Equity of redemption possesses value and can be used to secure subsequent mortgages Possible clogs: - undue postponement (unwarrantly/ not allowed deferring) o Fairclough v Swan Brewery Co Ltd o Knightsbridge Estates Trust v Byrne - unfair collateral advantages that continue over and above the right to repayment of principal and interest (eg: trade tie) o Noakes and Co Ltd v Rice - extinguishment o e.g mortgagee’s option to purchase the mortgaged property  Wily v Endeavour Health Care Services - increased or accelerated payments which constitute penalty o Wanner v Caruana - undue influence, (economic) duress, unconscionability o UI: is an equitable doctrine that involves one person taking advantage of a position of power over another person. This inequity in power between the parties can vitiate on party’s consent as they are unable to freely exercise their independent will. o ED: occurs where a party to a contract threatens to cancel a contract unless the other party agrees to their demands o U: describes terms that are so extremely unjust, or overwhelmingly one-side in favour of the party who has the superior bargaining power, that they are contrary to good conscience. MORTGAGES: WEEK 3 – PART 2

Mortgagor obligations - As expressly stated in loan agreement o S78(1)(a) PLA: implied term that mortgagor will pay principle & interest o S78(2): obligation takes effect as a covenant Mortgagor rights & remedies: 1) Acceleration a. A clause saying if a payment is not paid (ex. mortgagor defaults) then all monies owing will immediately (or soon) become payable (EX: if S can’t pay this month’s mortgage payment of $1500 on his $450K mortgage then the whole $450K becomes due). b. Wanner v Caruna i. PLA: s95(2) Mortgagor allowed to perform covenant or obligation 1. Pay outstanding amount & tender to mortgagee 2. If mortgagee accepts payment plus reasonable expenses, mortgagor is relieved of the consequences of default ii. S95(2) application for relief from acceleration: 1. Mortgagor must give undertaking to perform obligations & tender the payment owing iii. NCC: 1. S88: 30-day notice to remedy default 2. S88(3): contents of the notice 3. S88(5): exceptions – (fraud, abandonmentprior court order) iv. If NCC applies loan is under $500K then: s94-96 (postponement of enforcement proceedings – mechanism for negotiation applies c. Remedies:

i. NCC proves for negotiation to postpone, not relief against, acceleration ii. NCC equivalent of s95(3) PLA in s89 – mortgagor satisfaction of outstanding obligation 2) Action on personal covenant a. Dual characteristics of a mortgage = contract + interest in land b. Non-compliance = breach of K = remedies in K are available c. S88(2) NCC = 30 day default notice 3) Possession a. S78(2)(b) LTA: must account to mortgagor for rents & profits actually receive & those that would have been received but for the mortgagee’s wilful dealt in failing to collect rent & profits. (Ex. Liable for any gross lack of diligence or culpable negligence & the subsequent loss – NOT for honest & reasonable mistake) i. Liable in damage caused by its negligence ii. Mortgagee in possession may be liable for rates & land tax. b. S83 PLA: Implied mortgage powers i. To sell & grant interests in mortgages property ii. To ensure mortgages property (& recover costs from mortgagor) – iii. To appoint a receiver – iv. Whilst in possession, to cut & sell timber (or contract to do so) – v. Power to sell any interest granted in mortgaged property 4) Appointment of Receiver a. S83(1)(c) PLA: Mortgagors agent can be appointed through operation of clause in the mortgage, by the court or under s83(1)(c) PLA i. The receiver.. 1. Avoids liability in possession –

2. Deemed to be mortgagor’s agent – s92(2) PLA – 3. Only used appointed if property is generating significant income – 4. Has a duty of good faith – 5. Must act with terms of appointment & account to mortgagor at end of receivership 5) Foreclosure a. S78 LTA: Removes the mortgagor’s right of redemption – power to foreclose under s78 LTA or express clause in the mortgage b. Procedure of foreclosure: i. The Supreme Court orders nisi (the initial order) ii. 6-months later comes the order absolute (final order) iii. The Court then makes a vesting order c. Disadvantages: Expensive; Timing consuming; Uncertain (s99 PLA); Mortgagee would rather exercise power of sale to recover debt than take ownership of property 6) Power of sale a. Ask: i. Does the mortgagee have the power of sale? ii. Has the mortgagee complied with the requirements for exercising power of sale? iii. Has the mortgagee complied with its duties in exerting power of sale? iv. Can the mortgagor challenge the mortgagee’s sale? 1. 2. What remedies are available to the mortgagor? - What about an ‘innocent party’ buying from a mortgagee? - Is that title impeachable? b. A clause written into a mortgage authorising the mortgagee to sell the property in the event of default in

order to repay the mortgage debt – an express term in a mortgage document. i. S83(1)(a) PLA: implied power ii. S84 PLA or s88 NCC: before exercising power of sale – must serve default notice of mortgage; & default must continue for 30-daya after service of notice 1. S38 - Acts Interpretation Act (AIA) – time (on next business day after service) 2. S39 AIA - service (effective if delivered to last known address of the recipient) iii. S78(2)(c)(iii) LTA or s99 PLA: court order iv. S88(1) PLA: order of applying proceeds of sale: 1. Cost of sale; 2. Amount required to discharge mortgage; 3. Amount required to payout any subsequent mortgages or encumbrances; then 4. Balance (if any) to persons entitled to receive proceeds of sale (usually mortgagor) Effects of transfer after mortgagee exercises power of sale s86(2) PLA: If registered mortgage, then mortgagee has power to transfer land & all the mortgagor’s interest in land, “subject to any prior registered encumbrance” s79 LTA: Registration of transfer after mortgagee sale vests mortgagor’s interest in transferee “free from liability under the mortgage & any other mortgage registered after it” Statutory Duty: 1) Prescribed Mortgage a. S85(1A) PLA - Reg (4)(1) Property Law Regulation 2003 – Prescribed mortgage = mortgage over the mortgagor’s home Mortgagee (or receiver) must unless there is a reasonable excuse: 1) Adequately advertise the sale; &

2) Obtain reliable evidence of property’s value; & 3) Maintain the property, including any reasonable repairs; & 4) Sell the property by auction, unless it is appropriate to sell it in another way; & 5) Do anything else prescribed under a regulation 2) Reasonable care a. S85(1) PLA: The duty to take reasonable care to ensure that the property is sold at the market value. b. Emerson v Customer Credit Corp Ltd c. Cameron v Brisbane Fleet Sales COMMON LAW DUTY

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Good faith o Kennedy v De Trafford o Cuckmere Brick Co v Mutual Finance o Commercial & General Acceptance Ltd v Nixon Consideration – appointment of agent, advertising, valuation, reserve price, timing & location auction etc o Mortgagee cannot avoid the statutory duty to be delegating to agent – Commercial & General Acceptance Ltd v Nixon o Restrictions on sale to mortgagee & mortgagee’s associate – Farrar v farrar o Independent bargain or genuine sale required – latec investment Ltd v Hotel Terrigal Pty Ltd

MORTGAGOR REMEDIES:

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Must consider nature and timing of mortgagee’s improper actions to determine appropriate remedy o Before sale: before or after expiry of notice period  Injunction o After sale: post-contract or post-completion  Injunction  Caveat  Set aside sale

 S85(3) PLA – damages o After registration of sale:  Exceptions to indefeasibility  S85(3) PLA – Damages - Is mortgagor’s right to set aside sale a caveatable interest? o Consider: Re McKean’s Caveat o Cf Swanston Mortgage v Trepan Investment o Also consider Breskvar v Wall - s122(1)(c) LTA - Mortgagor can lodge caveat as registered owner o Consider: McKean v Maloney o s126(1A)(b)(ii) LTA - lapsing caveat o Mortgagee or buyer can apply for removal - s85(3) PLA – o Buyer’s title not ...