FINAL EXAM EASEMENTS PDF

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final exam notes for easements and mortgages ...

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Easements

Steps for answering: Factual issue: The issue in contemplation is whether__________________________________? To answer this question, we need to determine whether a valid easement exists and if so, has it been validly created.

Substantive requirements for a valid easement

In Re Ellenborough Park, it was found that in order to determine whether there is a valid easement, four substantive requirements need to be fulfilled. 1. The first requirement is whether there is a dominant tenement and a servient tenement, which in this scenario it is apparent that ……… is the servient tenement as they hold the land of which the right is exercised and ………… is the dominant tenement as the hold the land to which the benefit is attached……… (Barba v Gas & Fuel Corp of Victoria (1977). 2. The next requirement is whether the easement accommodates the dominant tenement. To determine this, you need to look at whether the easement confers a benefit upon the dominant tenement. It is evident that the right of way makes (name) land a more attractive, convenient and valuable place to live and adds a real and practical benefit to it by providing a quick and convenient means of access.  The two pieces of land should be close to each other but it is not essential that they be contiguous. Todrick v Westrern National Omnibus Co Ltd – the fact that there was an intervening field between the easement and the dominant tenement was irrelevant to its validity o OR If It a right to use the land for a benefit and not connected o The right to use a garden(or certain area) adds a real and practical benefit to (name) apartment/house. It would also add to its value. In Re Ellenborough Park the right to use a garden which was close, but not contiguous to property was held to form the basis of a valid easement. o Note, however, that rights of mere recreation have been held not to accommodate the dominant tenement. (Re Ellenborough Park [1956] 1 Ch 131). Although this particular right has been granted to (name), it would be of benefit to any subsequent owner of the apartment and so cannot be said to be merely personal. ( Riley v Penttila [1974] VR 547; Regency Villas Title Ltd v Diamond Resorts (Europe) Ltd [2017]) 3. Dominant and servient tenement must be different people; the two blocks of land need to also be separate in ownership. Although being Torrens title land common ownership would not invalidate the easement: s 47(7) Real Property Act → same for strata title. 4. The 4 substantive requirement, is that the easement must be capable of forming the subject matter of a grant. In Clos Farming Estates v Easton it was held that there were 3 aspects to this requirement; The right must not be too vague or imprecise, The right must not be frivolous or a right or mere recreation and The right must not amount to a grant of exclusive possession of the servient tenement. (Draw on the facts). th

Example It is a right of way which is well known to the law of easements and there is a defined path on which it would exist. It is not a right of mere recreation (a jus spatiandi) nor does it amount to a claim of joint ownership. Therefore, the easement would be capable of forming the subject matter of a grant. Mere recreation → Regency Villas Title Ltd v Diamond Resorts (2017). The case concerned whether or not the leisure facilities were capable of being easements or just licenses. The court of appeal said that these rights were capable of being easements as an easement in the modern world is not invalid as a mere recreation just because it is a sport; and the rights enhanced the enjoyment of the villas and therefore the land.

Exclusive possession: able to go on the land and do something eg grow vegetables it is possible that this requirement will be offered as was the case in Clos Farming. However contradicting this the case of Registrar-General of New South Wales v Jea Holdings (Aust) Pty Ltd (2015) stated that the owner of the dominant tenement had the right to park 198 vehicles on the servient tenement, covering the entire surface area of the tenement. The Court of Appeal held that it is also relevant to consider the extent of the interference with the rights of the servient tenement holder on the part of the land actually affected by the easement. As the servient tenement holder still had some ability to park and on the servient tenement, as well as the use of the subterranean land and airspace above, the Court of Appeal concluded that there was still reasonable use of the tenement and a valid easement had been granted. Would then say: It is arguable that applying the same ‘degree and proportionality’ test as that used by the New South Wales Court of Appeal in Jea that it would be found that as the purchaser of…….. land still has substantial use of the property that the easement for gardening would be found to be valid. Therefore if the easement is capable of satisfying the substantive requirements, it needs to be found if it has been validly created. Formal Requirements if the substantive requirements are not met The easement is registered as required under ss 46 & 47 Real Property Act. Does this give it indefeasibility despite the fact that it may not satisfy the substantive requirements? In Clos Farming Estates v Easton the New South Wales Court of Appeal held that a registered “Easement for Vineyard” which did not satisfy the substantive requirements was not enforceable. It may have been possible for the agreement to be created by contract but unless the new owners of Jenny’s property had also agreed or undertaken to honour the agreement it would not be enforceable against them.

Formal Requirements if substantive requirements are met First we need to determine whether the easement has been validly created at law. Under Torrens Title the easement must be registered as required under ss 46 & 47 of the Real Property Act. If this is not the case we need to determine whether the easement has been validly created in equity. Creation of equitable easements There are 4 ways this can be created; 1. Firstly if there is writing as required by s 23C Conveyancing Act 2. If there is only an oral contract are there sufficient acts of part performance to prove the existence of the agreement to grant an easement, 1. Example: The doctrine of part performance would not apply. There is no apparent concluded agreement between the parties that has been partly performed and in any event, ……. has not provided consideration (dominant). b. Will the rule in Walsh v Lonsdale apply → which requires the parties to have reached an agreement on the terms of the easement to be granted (an enforceable agreement to grant an easement will give rise to an equitable easement) → agreement to an easement in writing which does not abide by formal requirements + where the court would grant specific performance on the agreement. Example: There is no reason for the imposition of a constructive trust 4. If there an easement by estoppel. a. If an owner allows another to suffer detriment under an expectation created or encouraged by the owner that he will have an interest in the land, then a mere equity will be recognised in that person Crabb v Arun District Council

b. Example: The application of the doctrine of estoppel as Eunice’s change of mind is not an unconscionable reliance on her legal rights.

In Walton’s Stores (Interstate) v Maher, Brennan J described the elements of equitable estoppel as follows: 1. The plaintiff assumes that a particular, binding, legal relationship then existed between the plaintiff and defendant or expected that a particular legal relationship would exist between them 2. The defendant had induced the plaintiff to adopt that assumption or expectation. 3. The plaintiff acted or abstained from acting in reliance on the assumption or expectation. 4. The defendant knew or intended him to do so. 5. The plaintiff’s action/inaction will occasion detriment if the assumption is not fulfilled, and 6. The defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.

Then we need to determine if the easement is an omitted easement under s 42(1)(a1) Real Property Act TO PROVE IF AN WHEELDON V BURROWS TYPE EASEMENT EXISTS for the dominant tenement.  If the land was once held under old system title. Was the easement validly created, by deed, implication, prescription, application of the rule in Wheeldon v Burrows or by some other method while the land was under old system but the easement was not recorded when the land was brought under the Real Property Act. o If the land was originally under old system, and while it was, an implied easement was ‘validly created’ but then left off the title when the land was brought under the Torrens system, then it may qualify as an exception to indefeasibility under s 42(1)(a1) Real Property Act. o The rule in Wheeldon v Burrows: An implied easement will arise of the following 4 conditions are satisfied  There is a severance or grant of the grantor’s land  At the time of the severance, the exercise of the quasi-easement is ‘continuous and apparent’  The quasi-easement is necessary for the reasonable enjoyment of the land granted  At the time of the severance, the quasi-easement has been used by the grantor for the benefit of the land granted  Quasi-easement means rights which someone habitually exercises over his or her own land, but which, in another’s hands after a grant, become easements  ‘Apparent’ means capable of discovery from the servient land 

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Under the rule in Wheeldon v Burrows following the transfer of part of a parcel of land, whereby rights necessary to the proper enjoyment of the land transferred, or rights which were continuous and apparent, will become easements over the land retained

If the land has always been Torrens title: Was the easement at some time registered (validly created under the RPA) but through error, mistake or fraud it no longer appears on the Register. In order for an easement to qualify as an omitted easement under s42(1)(a1) the easement must have been ‘validly created’ under the Real Property Act or some other Act. Doesn’t appear on the title can be an exception to indefeasibility if it can be the subject of an in personam claim or Registered Proprietor has achieved a clean title through fraud relating to the easement. o Example: Since this easement has never been registered it has not been validly created under the Real Property Act and so it will not be enforceable as an omitted easement under s 42(1)(a1).

If none of the above is applicable can the easement be enforced as an in personam exception to indefeasibility. → needs to be an element of unconscionability in actions. McGrath v Campbell: In this case, the purchases of the servient tenements had knowledge that the driveway was used by the dominant tenement to gain access to the land of the servient tenement, and that the land was being sold in concurrent transactions – this knowledge was regarded to be sufficient to imply a term into the contract to purchase the putative servient tenement that the land was subject to an easement in favour of the putative dominant tenement. Hodgson JA accepted that this would give rise to an easement had the land been held and old system title. Due to the land being Torrens title, an unregistered easement would arise within the in personam. exception only if it were the actual intention of the registered proprietors that they take the land subject to the unregistered easement – there was no evidence of such conduct in this case. This decision and left open the possibility that on any specific facts, it is possible that can be inferred that the registered proprietor of the putative servient land had an actual intention to take the land subject to an implied easement – if this can be shown, the easement would be protected by in personam exception.

Bahr v Nicolay (No 2) (1988) → not protected from contractual promises, only defects. McGrath v Campbell [2006] → the court found that for there to be an in personam claim, the RP had to live with the consequences of the transaction that they created. → did not create the transaction it was a consequence of the presumed intentions of the vendor of the land when he sold the two pieces simultaneously. Did not register the easement when given the opportunity to. It was not on old system and was not validity registered through Torrens Title. Ryan v Starr → An expressly created, but unregistered, easement was enforced against a registered proprietor of the servient tenement who was not a party its creation – under the Bahr v Nicolay principle, the in personam exception to indefeasibility applied, in the form of a constructive trust, to protect the unregistered easement. Example: This is also unlikely as there is no element of unconscionability in …..actions. ... has not contractually agreed to create or recognise an easement and has not otherwise behaved in an objectionable way. Conclusion Example: The end result is that even though the rights are capable of forming a valid easement it has not been properly created. (name) is entitled to withdraw their permission for (name) to cross their land.

Mortgages Adam is the registered proprietor of a Torrens title property on Sydney’s north shore. He needs funds to renovate and sell the property and so he asks his mother, Sue, if she can lend him the $150,000 that he needs. She agrees but requests that he give her a letter noting the terms of their agreement. Instead of the letter, Adam hands over the Certificate of Title (the folio of the register), together with a signed, but blank, Transfer of the property saying, “Keep these safe - you’ll be able to sell the house to get the money back if anything should happen to me.” Adam quickly spends the $150,000 but has not completed his renovation. He asks his old friend David if he could make a loan of a further $150,000 so that he can get the property to market readiness. At David’s request Adam executes a mortgage in registrable form. The $150,000 is repayable in one year. The mortgage agreement also stipulates that David has an option to purchase the property at any time within the next 3 years at a price of $400,000. The mortgage remains unregistered, as Adam has told David that the Certificate of Title is with his mother for safekeeping. The property market falls and Adam is unable to sell the property or to repay either of the advances. Advise Sue and David. 1. The issues in contention regard whether or not Sue and David a Sue’s interest: Sue has an unregistered mortgage. The handing over of the Certificate of Title and the Transfer are for the purposes of security only and equity applies the maxim ‘once a mortgage always a mortgage’ to characterise the transaction: Breskvar v Wall (1971) 126 CLR 381; Gurfinkel v Bentley Pty Ltd (1966) 116 CLR 98. Handing over the Certificate of Title as security for a loan is an example of the doctrine of part performance and this obviates the need for the mortgage to be in writing. The signed Transfer is not a sufficient note or memorandum to satisfy ss 54A and 23C Conveyancing Act as it has not been properly completed. Lecture: ‘The line of authority says that if you can prove that even an oral agreement (unwritten) was made, that the property was transferred not as an outright transfer but to give effect to a mortgage to use the property as security then parol evidence can be brought to this agreement Part of the agreement between Adam and Sue was that she could sell the property if ‘anything happened to him’. The argument could be made that this is the granting of an express power of sale to Sue. If not she may not have a power of sale as the mortgage is not registered (or indeed in registrable form), and the implied power of sale in s 109 Conveyancing Act may not apply as that section refers to the ‘instrument’ in which the mortgage was created, and this mortgage has been created in the absence of an instrument. David’s interest: David also has an unregistered interest. Although he has a signed memorandum of mortgage in approved form (ss 54A and 23C Conveyancing Act are satisfied), he is unable to register this in order to gain indefeasibility of title as he does not have access to the folio of the register (the Certificate of Title). This is held by Sue. David’s agreement also contains an option to purchase the property. Although traditionally this would have been held to be void as a clog on the equity of redemption, the modern trend is to only strike down those provisions in a mortgage which are unconscionable and there is no indication that Adam entered into the agreement as a result of unconscionable conduct by David; Lift Capital Partners Pty Ltd and Others v Merrill Lynch [2009]

NSWSC 7. The option will be valid but binding only on Adam while he remains the registered proprietor of the property. Priorities: priorities between unregistered mortgages of Torrens title land are generally resolved by the application of the same rules as competing equitable interests and this requires a search for the best equity, with priority of time being applied as a last resort: Rice v Rice (1853) 2 Drew 73. Sue has done nothing to postpone her priority of time. She took possession of the Certificate of Title and this should act as a warning to later comers that another interest may be in existence; J & H Just Holdings Pty Ltd v Bank of New South Wales (1969) 90 WN (Pt 1) (NSW). She could also have lodged a caveat but is not under a duty to do so. Sue’s mortgage will take priority. She is entitled to sell the property to recoup her loan. Once she is paid she will hold any surplus funds on trust and must pay out David before returning any surplus to Adam. Say sue gets $400,000, she gets 150, 000 then david gets surplus (150,000) and adam gets the rest! 1.

Find if a mortgage exists: 1st identify if it is registered or unregistered

Registered mortgage  Must be executed in an approved form  A mortgage under Torrens title takes the form of a statutory charge.  Once registered, the mortgagee receives all the benefits of indefeasibility, despite the fact that the charge does not amount to an estate in land: Lyons v Lyons  The mortgagee does not acquire the mortgagor’s legal title to the land like with old system, but acquires a legal interest in the form of a charge – as a result the mortgagor can create a string of registered or unregistered mortgages  Subsequent mortgages can be legal or equitable Legal mortgages are governed by provisions in the Real Property Act REAL PROPERTY ACT 1900 - SECT 56  Lands under this Act: how mortgaged or encumbered  56 Lands under this Act: how mortgaged or encumbered (1) Whenever any land or estate or interest in land under the provisions of this Act is intended to be charged with, or made security for, the payment of a debt, the proprietor shall execute a mortgage in the approved form.  57 Procedure on default (1) A mortgage, charge or covenant charge under this Act has effect as a security but does not operate as a transfer of the land mortgaged or charged. Unregistered mortgage AKA Equitable (use conveyancing act) How equitable mortgages arise: 1. Mortgage of an equitable interest in the land 2. Agreement to grant a mortgage (the rule in Walsh v Lonsdale) “equity looks on that as done which ought to be done” 3. An informal written, but unregistered mortgage of Torrens title land – s 23C, 54 Conveyancing Act – as long as you have a valid contract, you will have an equitable mortgage 4. Mortgage by way of deposit of title deeds and the application of the doctrine of part performance (s23E(d) Conveyancing Act) 1. oral agreement and sufficient acts of part performance, you will have an equitable mortgage

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2. The test for part performance is that there must be an act which by its very unequivocally referable to some such contract as is alleged: Mcbride v Sandland 3. Handing over a CT is ‘unequivocally referable’, but need to prove on the facts that the reason the CT was handed over was to create a mortgage. → Breskvar v Wall (1971) 126 CLR 381; Gurfinkel v Bentley Pty ...