Final exam cheat sheet - Summary Drugs Across Cultures PDF

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GENERAL: CONTRACT: - binding if the core elements of offer, acceptance, consideration and intention are found DOCTRINE OF CONVERSION: within the case of Lysaght v Edwards (1876) the court held that after the externge of ontracts the vendor becomes a trustee in equity FEE SIMPLE: Unrestrictedly inheritable indefinite title to land • ‘fee’ —> inheritability • ‘simple’ —> no restrictions on inheritance

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TORRENS TITLE: Title by registration rather than registration of title (Breskvar v Wall (1971)). The basic principle is ‘indefeasibility of title’ of the RP subject to a limited number of express exceptions. TS founded on the concept of indef.sibility of title, meaning the registered proprietor has a conclusive title. Indefeasibility provides a protection from other claims or interests as it makes the registered interest one that is unable to be defeated.

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Principle of Indefeasibility – RPA a) Registered certificate is conclusive evidence that person named is the Registered Proprietor (RP), no folio shall be defeasible on ground of want of notice (s40) b) No dealing is effectual, unless registered (only creates equitable interest) (s41) c) The estate of the RP is paramount i.e. free from all other unrecorded interests, except fraud, misdescription of easement/profit a prendre/boundaries, tenancy (s42) d) Ejectment: Cannot eject RP, unless (s 118): Mortgagee against mortgagor in default Chargee against charger in default (e.g. covenant) Lessor against lessee in default Person deprived of land due to fraud against fraudulent RP, or person deriving land from fraudulent RP (other than bona fide transferee for value) Person claiming misdescription of boundaries/land against RP RP under earlier folio against RP of later folio e) Injunction can stop registration if forgery is detected prior to registration by action under s 42/118 Purchaser from RP not affected by notice/duty to inquire; mere notice is not fraud (s 43) If suing for specific performance, folio is conclusive evidence that RP has good title (s 44) Innocent proprietor: bona fide purchaser/mortgagee is protected even if vendor/mortgagor was registered through fraud or error or under any void/voidable instrument (s 45) Registration of void instruments confers immediate indefeasibility in the absence of fraud (Frazer v Walker [1967]). The indefeasibility of the RP is subject to a number of express exceptions.

Deferred v Immediate Indefeasibility • Deferred • i) static - if P1 registers forged instrument, title is defeasible & set aside at suit of O • ii) Forger registering in name of fictitious person cannot acquire title in that fictitious person, but can pass valid title to bona fide 3rd parties for value (Gibbs) • iii) Notice section paramount over indefeasibility section, registration pursuant to avoid instrument does not carry the protection of the indefeasibility provision (Dixon J in Clements) • Immediate • i) Dynamic – good title conferred on P1 immediately on registration of forged instrument • ii) (Assets v Mere Roihi [1905]) took narrowest interpretation of Gibbs – deferred indefeasibility only when registered in fictitious name only, immediate defeasibility applies to other forged/void instruments • iii) Registration gives immediate indefeasibility, with exceptions e.g. in personam (Frazer) • iv) Priority goes to prior equitable interest (Rice v Rice) unless priority is lost by conduct by party with earlier interest that contributed to assumption upon which person with competing equitable interest acted (Breskvar v Wall) • v) Where conduct of O allowed P1 to register forged instrument without notice, P1 gains immediate indefeasiblity and P2 gains priority (Breskvar v Wall re s45) • • • • •

Rationale for immediate indefeasibility i) Trade off between security of title and security of transaction ii) No purchaser of Torrens system should be required to investigate history of vendor’s title iii) However, property is not fungible – security of title iv) RPA supports immediate indefeasibility (s45)

• Lift borrowed its funds from Merrill Lynch. Used shares as security An informal written, but unregistered mortgage of TT land. Conveyancing Act s 23C & s54A - if you confide in such writing for performance of its obligations to own lender. • Terms of agreement allowed lift to take share owned by clients and then equitable mortgage. (Four P’s). 4. replace with other shares. With fall of stock market the value of Mortgage by way of deposit of title deeds and the application of the doctrine of part performance (s23E(d) Conveyancing Act) shares had dropped. 5. Mortgage created by the principles of estoppel (Barry v Heida?) • Issue of terminology used in documentation between Lift and clients • Oral agreement + part performance = equitable mortgage which allowed Lift to do so. • If such clauses are to be shut down there must be element of • Mortgage by deposit of title deeds unconscionability. • Part performance • Sun North Investments Pty Ltd v Dale [2013] QSC 44 • There must be an act which by its very nature is unequivocally referable to some such contract as is alleged: McBride v Sandland • A mortgagor agreed to a mortgage of some company shares worth (1918) 25 CLR 69 at 78 per Isaacs and Rich JJ. However, deposit about 5 Million dollars and also granted a call option to the mort of title deeds does not seem to be any more unequivocal that, say, gagee which would the mortgagor to purchase the shares for 2 the payment of money and the latter has always been held insuffiMillion dollars on default. • For a loan of 500,000 dollars was able to be awarded 5 times the cient as an act of part performance to take a contract for the creation or transfer of an interest in land out of the Statute of Frauds. amount upon default. • Question: Was the option to purchase the shares given as part of (Sykes & Walker 1993) • Have to be able to show, if creating mortgage by deposit of title the mortgage transaction not in same document. But was this term deeds, that yes these things can exist on TT land and prove act on entered into by two business men with equal bargaining position, evidence that reason for handing over CofT was for security of both with extensive legal advise. Was this to be struck down purely obligation. on the basis that the law would not allow an option agreement to be part of a mortgage transaction. • Theodore v Mistford Pty Ltd [2005] 221 CLR 612 • Arguments: • s75 Land Titles Act 1994 (Qld) provides that ‘(1) An equitable • The option agreement was void from the outset because it was part mortgage of a lot may be created by leaving the certificate of title of a lending facility • The option constituted a penalty with the mortgagee’. • Theodore deposited title deeds belonging to his mother with solici- • That there should be an order for relief against forfeiture of his tors as security for the purchase price of an air conditioning busiinterest as mortgagor • Henry J declined to follow the Westfield decision. Since the mort ness. No money or property of his own. • HC held that an equitable mortgage was created. Even though Mr gage and the option were not, in truth, two separate transactions Theodore did not own the house, he was acting as agent for his the option was unenforceable. It was not necessary to find that mother, and that she has intended that the property be used as a the parties had acted unconscionably - it was sufficient that security for the advance the transaction itself would lead to an unconscionable result. • Mortgage had come into existence as Theodore with the authority of • Mortgage agreement and call option part of same transaction • Because of this call option - declared automatically void. (Samuel v his mother handed over the CofT to mortgagee. • NSW: no specific provision, reliance would be made on general law Jarah) No need to find that parties acted unconscionably. principles. The handing over of CofT with intention that property is • Intrusion on doctrine of freedom of contract - simply cannot used as security will form equitable mortgage agree or make a bad deal..If making an agreement on mortgage arrangement…If the substance of the agreement is truly a mortgage • Shulz v Turner [2008] NSWSC 24 you cannot make the deal you thought you made. • Dispute arose over the basis on which S had provided funds for the • Shayne - not up to the courts to make decisions on what is a bad purchase of property in the joint names of her de facto partner and bargain. NSW Young J people should be able to make bad deal if a company they want to. There are plenty of protective measures in place to • Nicholas J: protect mortgagor from undue influence, from unconscionable • 34 The mere deposit of the certificate of title as security for a loan conduct from undue pressure on the part of mortgagees without will create an equitable mortgage or charge over the property to intruding into freedom of contract which the document relates (Bank of New South Wales v O’Connor • Two lines of authority (1889); UTC Ltd v NZI Securities Australia Ltd (1991) Theodore) • 35 The deposit must be for the purpose of giving a security. ‘… • 1.NSW line of authority There is no need for an express agreement as to the conditions or • Led by Young J in Westfield Case purpose of the delivery of a title deed. A deposit, having regard to • Need of unconscionable conduct by the parties the circumstances, may be sufficient to infer or imply an agreement • Applied in Lift Capital Partners by Barrett J • 2.Sun North Investments Case to give a mortgage and hence support an equitable mortgage’ (Westpac Banking Corporation v Cronin (1990) 6 BPR • Henry J - No need to find anything about parties conduct if the deal 13, 105, p 13 110 per Waddell CJ in Eq.) itself would lead to an unconsciencious or unconscionable result. • Held: equitable mortgage had come into existence by way of Struck down despite being entered into by people of equal bargain agreement to grant the mortgage and also by deposit of title deeds. ing position with their eyes wide open. 3.

• CLOGS ON THE EQUITY OF REDEMPTION • Rice v Noakes [1900] 2 CH 445 • The property which comes back to the mortgagor must not be worse than it was when it was mortgaged, and the mortgagee must not either expressly or by implication reserve to himself any hold upon the property after the time for redemption has arrived and the right of redemption has been put in force’ • An equitable protective measure designed to protect mortgagors who are vulnerable. • Equity of redemption - Right of the mortgagor to have their property returned to them once they pay off their mortgage. Closely guarded by equity courts. Equity courts would strike down any provision in a mortgage which clogged the mortgagors right to redeem their property (Old system) or to clear title of statutory charge (Torrens title) • A clog on the equity of redemption is: If the property which is returned to the mortgagor once they have paid off their loan is different or altered in some way from the property that was originally mortgaged. OR anything that prevents the mortgagor from ever redeeming their property at all. • • • • •

Mortgages A conveyance or transfer of property as security of the payment of a debt or discharge of some other obligation Mortgagor - Owner of property - borrowing money Mortgagee - Person lending money 2 elements: 1. Personal obligation to pay 2. ultimate recourse to sone security usually in the form of property owned either by the mortgagor or some other person In TT - mortgagor remains the RP of the property at all times and the mortgagee is registered as a statutory charge only - Second schedule of folio. Freedom of contract vs equity - Contractual obligations were strictly enforced - If debtor did not repay by date specified then mortgagee’s possession became absolute. Equitys intervention via ‘equity of redemption’ (right to get property back and in same state it was mortgaged.) • Refusal to enforce provisions which would amount to a penalty or a ‘clog’ on the equity of redemption • National Credit Code • rise of doctrine of unconscionability in equity • introduction of statutory actions for unconscionable conduct • s20 & 21 - Schedule 2 - Competition and Consumer Act 2010 • The Code of Banking Practice: • Clause 2.2: we will act fairly and reasonably towards you in a constant and ethical manner. In so doing we will consider your conduct, our conduct and the contract before us. RPA s 56 - whenever TT land is intended to be made security for the payment of a debt the owner is to execute an approved form of mort gage RPA s57 - mortgagee acquires an interest in land, not legal estate. no legal interested until registration. • Once the terms of the mortgage contract have been complied with, the equitable right of redemption will enliven and the court will nit allow any clogs or chains on this right of redemption • It follows as a necessary consequence that then the money secured by a mortgage of land is paid off, the land itself and the owner of the land in 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.

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Equitable Mortgages 1. Mortgage of an equitable interest in the land e.g. beneficiary under a trust 2. Agreement to grant a mortgage (Walsh v Londsdale) ‘equity looks on that as done which ought to be done’. Specific performance.

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• Donnelly v Australia and New Zealand Banking Group Ltd [2014] NSWCA 145 • Mrs Donnelly was a borrower under a dual currency loan which was secured over property she owned in Sydney. • Under terms of this particular mortgage, the bank could convert the currency in which the loan was drawn from HK$ to A$ if currency fluctuations meant that the amount outstanding was more than 85% of the property. • HKD fell in value - ANZ converted the original $600,000 outstanding became about $730,000 • Mrs Donnelly argued the bank had acted unconscionably by failing to inform her that a deterioration in the value of the AUD against the HKD would adversely affect the Donnellys' interests. • Held: This was not the case. The bank had explained facility to her and their alleged failure to recommend that Mrs Donnelly gain legal advice was not unconscionable in the circumstances of the case. • Primary judge found that Mrs Donnelly was an intelligent and articulate woman and that it was her choice. She may have had an imperfect understanding on how it all work but she was not in a position of special disadvantage. • 41 ‘It is sufficient to refer to the following recent statements of principle by the HC in Kakavas v Crown Melbourne Ltd [2013] HCA Options to purchase the mortgaged property 25. Option granted to mortgagee to purchase the mortgaged property • “equitable intervention does not relieve a plaintiff from the conseBig clog on right of mortgagor to redeem property quences of improvident transactions conducted in the ordinary and Early cases in chancery division prohibited entirely the option for the mortgagee to purchase the mortgaged property. Absolute rule undistinguished course of a lawful business. A plaintiff who voluntarily engages in risky business has never been able to call upon Intrusion of freedom of contract - THEME OF EXAMINATION QUESTION equitable principles to be redeemed from the coming home of risks inherent in the business. The plaintiff must be able to point to conduct on the part of the defendant, beyond the ordinary conduct Warnborough Ltd v Garmite [2003]: Earl of Halsbury LC: of the business, which makes it just to require the defendant to Strike out clause/ declared the clause void. A perfectly fair bargain made between two parties to it, each of whom was quite sensible of restore the plaintiff to his or her previous position.’ what they were doing, it is not to be performed because at the same • First line of authority - NSW authority time a mortgage arrangement was made between them. If a day • Re Funds in Court; Application of Mango Credit Pty Ltd [2016] had intervened between the two parts of the arrangement (mortgage and option to purchase), the part of the bargain which the NSWSC 199 appellant claims to be performed (option) would have been perfectly • Applicant was an unregistered mortgagee. • Issue: Whether a contractual term giving the applicant the right to good and capable of being enforced’ interest and other charges for a period following expiry of the term Dissatisfaction with clogs of its 6 month loan was void, or unenforceable, as a penalty or clog Westfield Holdings Ltd v Australian Capital Television (1992) 32 on the equity of redemption • The interest rate was 4% per month if paid at the beginning of the NSWLR 194. (Follows same path for different reason) loan for six months in advance, defaulting to 12.5% per month if not Young J: ‘There does not appear to be any commercial reason why, in 1992, the court should invalidate any transaction merely because paid on time. a mortgagee obtains a collateral advantage or seeks to purchase a • The loan agreement specified that interest was to continue to mortgage property. Quite obviously, equity must intervene if there is accrue even after a judgement debt was handed down in favour of unconscionable conduct. Again equity must intervene in a classic the appellant. • The end result was that for a loan under which the borrower recase where it can see that a necessitous borrower is not, truly speaking, a free borrower’ ceived an amount of approximately $35,000 by the time the property was sold by the first mortgagee the amount outstanding was In a normal commercial arrangement in 1992 there is no reason why clauses such as those granting collateral advantages or opclose to $180,000. • Lindsay J - Whether particular term was a penalty or clog on equity tions to purchase should be simply declared void of redemption Lift Capital Partners Pty Ltd and Others v Merrill Lynch SCNSW • ‘if a transaction is properly characterised as a mortgage then this may ‘involve an element designed to maintain minimum standards 3 Feb 2009 of fair dealing, and a countervailing necessity for restrain in interferBarrett J - a contractual provision freely assented to by a mortgagor is void or unenforceable just because it allows the mortgagee to ing with freedom of contract. acquire the mortgaged property or to resist that mortgagor’s attempt • ‘ Equitable intervention is not available simply to rewrite a contract to redeem. The susceptibility of such a provision to equitable or merely because a contractual stipulation in the abstract is ‘unintervention is however well established. In a given case, equity will reasonable’. A burden on the mortgagor’s right to redeem is likely prevent reliance on the provision by the mortgagee if that reliance is to be ‘unreasonable’ in the current context only if it impedes reunconscientious because of some factor associated with the formademption of a security to such an extent that it bears upon charaction of the contract or something distinct from mere changed cirterisation of the parties transaction as a mortgage or otherwise cumstances or supervening event operative at the time of reliance.’ defeats the purpose of the transaction’ In this case the effect of the documentation was to remove the right • Suggesting that the Sun North Investment authority is correct • That if the transaction itself leads to an unconscionable result then it to have unencumbered title to the shares on payment. This right was replaced with a contractual claim to have those shares reis struck down. • Not done in this case because not argued. Lindsay J brought it up placed with identical shares. This was unconscionable as ‘it imposed an impermissible fetter upon the right of each client defenhimself. • Unfinished case - parties sent away. Current case. dant to redeem its mortgaged shares’ • Two lines of authority. Whether or not YOU think equity should be First of many casualties from stock market crash. able to push into this line of freedom of contract and stop people Lift capital partners ran a margin lending bus...