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Exam Summaries Land law DIFFERENT TYPES OF LAND INTERESTS: i.Legal Interests in Land (registered land) a)

Old title land: (Governed by Property Law Act 1958 (Vic) ) (pre 1862)

 Does NOT confer indefeasibility of title  Deed Requirement: o All conveyances/dispositions of legal interests in land must be by deed or else void: s 52(1) PLA o The only way legal title can be transferred from one person to another is by deed, called a ‘deed of conveyance’.1  Exception to deed requirement: o o

Oral leases of 3 years or less exception s 54(2) Section 52 exceptions PLA

 What is a Deed? o Manton v Parabolic (1985) 2 NSWLR 361: ritual/instrument to signify solemnity o Seal must be affixed, grantor and witnesses signatures also primary o s 73A PLA: if deed expressed to be sealed will operate as if it has been. o s 73(1) PLA: must sign or place mark (sealing alone insufficient). o s 40(2) TLA: Every instrument when registered shall have same effect as if were deed under seal. Note: subject to Nemo Dat prinicple b) Torrens (Governed by Transfer of Land Act 1958 (vic)). (post 1862)  Registration requirement: Requirement to transfer an estate or legal title: approved form. 2  Estates and interests can only be transferred if they are capable of registration because, title is created or transferred not by execution of instruments but by registration.3  Until registered, no instrument is able to create or pass any interest in or over land under the legislation.4  Note: Torrens confers indefeasibility of title

1 (VIC) Property Law Act 1958ss 52, 53(1)(a), 54, 55(c). 2 (VIC) Transfer of Land Act 1958 s 45 3 Abigail v Lapin (1934) 51 CLR 58 at 64; [1934] AC 491; 4 (VIC) Transfer of Land Act 1958 s 40.

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EQUITABLE INTEREST IN LAND (UNREGISTERED)

An equitable interest is an interest recognised in the equitable jurisdiction to overcome injustices An equitable interest is one that does not comply with at least one of the requirements of a legal interest (so if old title land not executed by deed or torrens not registered it falls within equity) Equity is not obliged to follow the letter of the law where it will produce injustice Nemo dat: This principle does not apply to equitable interests in land. So unlike common law legal interests where you have the nemo dat principle you can have multiple equitable interest existing over a piece of land. Legal Interest at settlement BUT equitable interest when contract entered if specifically enforceable o Settlement period necessary to organise finance; investigate title

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Specific performance available if damages inadequate and parties ready and willing and contract valid

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Constructive trust: vendor becomes trustee and purchaser holds beneficial title, vendors trusteeship qualified by vendors lien (Lysaght v Edwards)

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Tanwar dicta: purchaser holds equitable lien over deposit because description of purchaser as ‘constructive trustee’ conceals contractual relationship

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a) Formality requirements: Does not have to be executed by deed however must follow statute of fraud requirements S 126 of the Instruments Act 1958 (vic) enforces this by requiring all land interests whether legal or equitable to be in writing in order to be enforced. . Further s53 PLA (to create an equitable interest in land) requires the interests to be in writing for it to amount to an equitable interest in land. However It means that the contract creating land interest must be evidenced in writing (can initially be oral).

b) Exception to formality requirement: Doctrine of part performance: s55(d) PLA: Doesn’t apply to constructive trusts, resulting trusts or implied trusts

Statute of Frauds: •

Contracts for land must be in writing/signed to be enforceable: s 126 Instruments Act 1958 (Vic)

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No interest in land can be created/disposed of except by writing: s 53(1) PLA •

(2): exception = creation of resulting, implied or constructive trusts Page 2 of 52

Equitable Doctrine of Part Performance

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Oral contract specifically enforceable may be valid if satisfies doctrine of part performance: s 55(d)PLA •

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Allows for enforcement of oral contract for sale of interest in land where contract sufficiently relied upon

Strict test in Maddison v Alderson (endorsed Millet v Regent): must prove acts unequivocably relate to agreement alleged • •

Act relied upon must have been done on faith of agreement Must have resulted in change to P’s position in reliance such that P would be unfairly prejudiced if D were to rely on absence of writing.

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Acts of D which show a contract therefore do not count.

Acts of part performance = generally entering into CT, paying deposit sufficient SUMMARY:

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All interests whether legal or equitable must be in writing in order for it to be enforceable in court due to the statute of fraud provisions: s 53 PLA and s 126 instruments act.

IS IT REGISTERED UNDER TORRENS? 

In Victoria, s 37 of the Transfer of Land Act 1958 (Vic) sets out that interests arising under trusts may not be registered although trust documents may be deposited for safe custody with the Registrar.

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The interest can be unregistered

a) Registered interest (legal interest) b) Unregistered interest (equitable interest) c) Paramount interests(do not need to be registered)  Immediate indefensibility preferred: however not in all circumstances see notes a. Adverse possession b. Leases c. Easements See above for registration requirements. i.

What if it is unregistered: see unregistered interests

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Torrens provides protection of unregistered interests via the caveat system: caveat imposes a statutory injunction on the registration of inconsistent interest for a limited period of time

BOUNDARIES AND ENCROACHMENTS (IS THE LAND THEIRS? Who owns the land?)

a) Boundaries of land ownership 

Physical Measurements: Boundary defined according to survey lines. If survey lines removed may establish boundary lines according to adverse possession (where proven)

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If measurements incorrect: General law land will result in defective title.

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Torrens title land no indefeasibility for registered holder of land ‘wrongly described’ unless can prove are a bona fide purchaser for value You only acquire the land set out within the Certificate of Title

b) Boundaries land abutting water o according to the natural and artificial measures. o Tidal Waters: High Water mark is the boundary subject to public rights to fish and navigate o Non-tidal Waters: Middle Line approach – abrogated by statute in Vic to vest river bed in the Crown: Water Act 1989, S 327(1 Can adjoint land owners access water? Regulated by statute 

although an owner entitled to take water may exercise a right of access to that water over the Crown land: s 385 Land Act (vic) 1958.

c) accretion and avulsion Land with ‘ambulatory borders’ may acquire or lose land where there is erosion or accretion which is gradual and ‘imperceptible’ rather than sudden and dramatic: Williams v Booth → Don’t need to go into great detail on the exam d) Encroachment 

Property rights only extend to physical boundaries of land

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Any encroaching property which is affixed to the land will be owned by the adjoining land owner pursuant to doctrine of fixtures Page 4 of 52

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If encroachment not affixed, adjoining owner may claim damages for intrusion.

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Encroachment includes land and airspace.

GENERAL LAW PRIORITY RULES Priority disputes between land interests under general law. Which rights gets priority? Conflicting interests? 

The priority rules only apply to disputes involving old title land or unregistered land interests.

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Provide framework for resolving disputes between different interests in land

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For this rule to apply the formalities of land interest need to be established.

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There are priority rules for legal interest and equitable interest

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Priorities between legal estates (rights) under general law

Need to ask: is the legal right identical?(do they conflict) If yes: 

Nemo dat principle applies

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Because of the nemo dat principle priority is given to the legal interest created first in time.

Nemo dat Rule: o Person Person cannot transfer title they do not have o can only transfer the title which they actually have: therefore priority given to estate created earlier in time o NB May have contractual obligations o NB would not apply to non-identical interests in land (i.e. life estate and remainder interest

Example: The principle will be infringed where a person transfers an estate they no longer have or, where a person transfers a greater estate than that which they have.

ii.

Priorities between equitable interests

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Right based character allows for multiple creation of equitable interests against same land. •

iii.

Nemo dat not applicable to equitable interests as title and possession not conferred

Priorities between legal and equitable interests under NOTE: Need to ask which interest came first a) Prior legal estate and subsequent equitable interest (if legal estate came first) Rule: Generally Legal Es tate Hold er Wil l Alw ays Take Priority If Bona Fide And Have Not Contribut ed To The Subsequent Cre ation Of Equitable Title ( Northern Counties Fire Insurance V Whipp ) .

Northern Counties Fire Insurance v Whipp (1884) 26 Ch D 482 • C borrowed money from P in exchange for legal mortgage • P put title deed into safe to which C had keys • C removed mortgage deed and obtained further equitable mortgage from D • Held (Fry LJ): prior legal interest holder must have fraudulently contributed to creation of subsequent equity. Mere carelessness or negligence (leaving documents in the safe) not enough; fraud required

Exceptions t o rule: 

legal estate has him or herself created the subsequent equity by some assurance, declaration of trust or agreement;

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Fraudulent behaviour- see notes

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where the legal owner has given authority to another to deal with a third party and such authority has been exceeded

b) Prior equitable interest, subsequent legal interest RULE: IF SUBSEQUENT LEGAL INTEREST HOLDER IS A BONA FIDE PURCHASER FOR VALUE WITHOUT NOTICE THEY WILL TAKE PRIORITY: CB 10.15 (Pilcher v Rawlins): Page 6 of 52

Three elements to be shown: see Pilcher v Rawlins 1. Bonafide- by looking at all circumstances did they act in good faith? 2. Consideration: DOESN’T APPLY TO VOLUNTEERS consideration must be present 3. Notice: Has the subsequent legal titleholder taken title without actual or constructive notice of the existence of the prior equitable interest? S199 PLA (doctrine of notice principle applies).

DOCTRINE OF NOTICE i. •

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Effect of doctrine of notice

The doctrine of notice binds a subsequent legal titleholder to any equity that he or she actually knew of or that he or she should have known about as a result of carrying out all of the usual inspections and inquiries, which is referred to as ‘constructive awareness”. Will bind subsequent legal interest holder to any equity actually/constructively aware of s 199 PLA 1958 (Vic) reinforces both actual and constructive notice Once notice received it cannot be removed: Jared v Clements [1902] (CB527) ii.

Establishing doctrine of notice:

E1: Which type of notice is it? a) Actual notice b) Constructive notice ‘reasonable inspections and inquiries’ c) Constructive notice to third parties- ORP d) Imputed notice (agency): Reasonable inquiry exception: fraud

Actual notice = actually informed of existence of prior equitable interest Constructive notice = knowledge which would have been brought to light if performed reasonable inquiries/usual protocols: IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440 'Reasonable' inquiry for s 199 will depend on circumstances: usually must check title documents (i.e. for caveat) and physically inspect land to determine whether any equitable interests exist: IGA Distribution Page 7 of 52

STEP 2:Timing of notice: when did they receive the notice? 1. It must be established that the legal titleholder has received notice of the previous equity prior to the acquisition of that title and not afterwards. 2. where the legal titleholder acquires a pre-emptive equitable title it must be established that the notice was acquired prior to the acquisition of that preemptive equitable title (preference equitable title- the right to be offered it first). 3. If notice is acquired after the acquisition of a pre-emptive equitable title, for example after a contract for the sale has been entered into but prior to the acquisition of full legal title, the purchaser will not be affected by notice unless it can be established that the acquisition of the legal estate amounts to a breach of trust: see generally Blackwood v London Chartered Bank of Australia (1871) 4. It is, however, arguable that if the only interest that a purchaser acquires upon entering a contract of sale and paying the deposit is an equitable lien- see notes 5. In sale context: must receive notice before entering into CT and acquiring preemptive equitable title (i.e. equitable lien): Blackwood v London Chartered Bank of Australia (1871) 10 (SCR) NSW Eq 20

Kingsnorth Finance Ltd v Tizard [1986] 2 All ER 54 • T separated with wife, received $66k pursuant to mortgage from K over matrimonial home • Mrs T lived in spare room and sometimes slept at sister's home • Held: mortgagee ought to carry out such inspections as ought reasonably be made • Where do not find anyone in occupation except mortgagor, should not be fixed with notice • Imperative that reasonable physical inspection be carried out Children were in house, was at a time organised by T, K did not follow up

STEP 3) Constructive notice: recipient liability of third parties: •

Ordinary Reasonable person test: “In order to establish constructive notice it is necessary to prove that the facts known to the defendant made it imperative for him to seek an explanation, because in the absence of an explanation it was obvious that the transaction was probably improper.”: Macmillan Inc v Bishopsgate Trust plc (No 3) [1995].

STEP 4) Exceptions to doctrine of notice: a) Wikes v Spooner rule: Wilkes v Spooner [1911] CB 530 Page 8 of 52

RULE: When a legal interest holder who has taken without notice of the existence of a pre-existing equitable title passes that legal title on to a bona fide purchaser who does have notice of the equitable interest, the latter will take good title. HOWEVER The exceptions to this rule are: (1) Trustees in breach of trust and then purchases from purchaser (2) subsequent acquisition due to fraud:

COMPETING EQUITIES: PRIORITIES BETWEEN EQUITABLE INTERESTS: COMPETING EQUITABLE INTERESTS RULE: THE INTEREST WHICH IS PRIOR IN TIME WILL TAKE PRIORITY IF BOTH INTERESTS ARE EQUAL IN MERIT. ‘QUI PRIOR EST TEMPORE POTIOR EST JURE’ (Rice v Rice CB 10.22) •

‘Prior in time’ principle last resort, but will take priority if both interests equal in merit: Rice v Rice • Courts examine circumstances to determine whether both interest holders acted fairly and have done everything they can to protected interests

 Rice v Rice (1854) 2 Drew 73; 161 ER 646 •M purchased lease from G; M paid portion of price but balance outstanding •G transferred full title to M indicating full purchase moneys paid. •M then deposited title documents to secure equitable mortgage. •Competition between prior equitable lien for unpaid purchase price vs. subsequent equitable mortgage. •Held (Kindersley VC): M has better equity as holder of title deeds Vendors ‘voluntarily armed purchaser with means of dealing with estate as absolute legal and equitable owner, free from every shadow of encumbrance or adverse equity’

Dishonesty: •

Where subsequent equitable interest holder acquires pursuant to a breach of trust, interest automatically postponed if they dishonestly, procured/assisted in breach. Following Moffett, subsequent interest holder’s interest automatically postponed if takes with notice Page 9 of 52

TEST: Who has better equity? Merit Analysis • Merit assessment based upon broad and flexible assessment – not rigid principles Possession of title deeds illustrates better equity, however fraud is an exception to this. Rice. Look at:

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Has subsequent holder taken with notice

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Has subsequent holder protected their interest (i.e. retained title documents, lodged caveat: Heid v Reliance)

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Have parties followed usual practices or taken shortcuts/risks Unfairness- estoppel approach Heidi case

MERE EQUITIES V SUBSEQUENT EQUITY RULE: MERE EQUITY DEFEATED BY A BONA FIDE PURCHASER FOR VALUE WITHOUT NOTICE (Latec v Terrigal CB 10.27) Test: is the subsequent full interest holder was a bona fide purchaser for value without notice. (to determine go through steps stated above for these principles) •

Mere equity = antecedent to full equitable title

Latec v Terrigal (1965) 113 CLR 265 • L improperly exercised power of sale over property mortgaged to HT • T acquired right to rectify however waited 5 years; in meantime property had been charged to MLC • Equitable charge of MLC vs. HT to set aside improper exercise of power of sale Kitto J: priority principle based upon competition between mere vs. full = bona fide purchaser rule rather than merit rule

Ruthol v Mills CB (2003) 11 BPR 20,793 • R leased to A for 5 years with option to renew; A exercised its option but no formal lease issued • R granted option to purchase to M, then R solicitors fraudulently told them A had exercised option (even though not effective) • M thus did not exercise their option to purchase in time Page 10 of 52

• R then served notice to quit on A and granted T an equitable lease • Competition between prior mere equity of M (on breach of CT) and subsequent full equity of iT • Held (Crt of Appeal Sheller JA): Analogized with Latec – equitable interest of T acquired without notice therefore priority Awkward decision as did not categorise interest of M as mere or full equity at all

PROVING OWNERSHIP OF TITLE a) Old title: Deeds- The good root of title. The deeds registartaion system b) Torrens: Certificate of title

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i. Is it Torrens ? Torrens was introduced in 1862, so it needs to be post 1862 to be Torrens unless its been converted. All unconverted land prior to the Torrens legislation are regulated by the common law and equitable priority principles

TORRENS AND INDEFEASIBILITY •

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Once interest registered it receives full statutory protection, subject to a few exceptions – Registered proprietor only subject to encumbrances noted on title and statutory & non– statutory exceptions to indefeasibility – Does not extinguish equitable interests but prevents enforceability against registered holder Title indefeasible: registered title cured of any defects (except fraud...