Prop-B-notes - Lecture notes 1-13 PDF

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Lectures 1-13 Prop B...

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Week 3 Read Bahr v Nicolay (No. 2) (1988) 164 CLR 604. Explain the key points of agreement and disagreement between the three judgments. Whose perspective do you most agree with, and why? - Sale and lease back - Bahr had property, sold to Nicolays, part in the contract which said that Bahr could buy back property after a certain time, Nicolays sold on to Thompsons, still including that right of Bahr’s to buy back. Thompsons offered to buy more of B’s property, but only if they also gave up interest in the property in which they had right to buy back. Thompsons lawyers wrote to Bahr’s, acknowledging the right to buy back. When Bahr’s went to buy property back off Thompsons, they refused to sell back - Everyone in the court in this case thinks in personam exception is there, because T’s have undertaken to be bound by this agreement - Differ as to where it comes from, Brennan thinks contract is enough. - T’s hold land on constructive trust for the buy back of the Bahrs. - In personam exception comes from s184, personal equities. 185 says that indefeasibility is subject to personal equities. We know from cases that Torrens system didn’t intend to destroy original causes of action, Torrens doesn’t extinguish the doctrine of in personam. Just applies ordinary equity. - Court starts to look at fraud as well, how does court divide in talking about fraud? - Brennan = only in personam, ended there. - Difference of opinion with judges was that Mason and Dawson thought there was no difference between false representation that induced the promise and repudiation after the promise, whereas Toohey though it was important that the statute intended that the conduct should only be in the lead up to the transfer/transaction itself. - Mason and Dawson = most popular opinion, because this is not an example of actual fraud Look at Mercantile Mutual Life Insurance Co Ltd v Gosper (1991) 25 NSWLR 32. Why is it considered to be a difficult case? Do you think this case would still be decided in the same way now? – BAD EXAMPLE OF LAW, THREE DIFFERENT WAYS TO ANALYSE THE FACTS, PROBABLY WOULDN’T BE DETERMINED IN THE SAME WAY NOW - Case is about fraudulent husband who forges her signature - Does bank have indefeasibility of title? - Is this in personam? To find undertaking, have to imply it. - Would it be decided same way now? Garcia – in personam exception, if bank has done something to take advantage and it would be unconscionable for the bank to hide behind s184, then equity will in the usual way restrain the bank from exercising its legal rights. Have some activity on the part of the bank, would be unconscionable for the bank to resolve, and so the bank can be estopped. Alternatively, the careless mortgagee exception, bank seemed to have gone along with the false representation, should have made sure that they have taken all reasonable steps to ensure it was Ms Gosper. If not, then the bank would have a defeasible title, then talk about competing equities/how has better claim.

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3. Keith has been the tenant of Jeanette’s small factory in Brisbane under an unregistered 4-year lease since January 2016. Jeanette decides to sell the factory and signs a standard commercial contract to sell the property to Anna in January 2017. The contract makes no mention of Keith’s lease but has the following standard condition: “The buyer has read and agreed to the lease documents provided by the seller.” While discussing the contract over coffee, Jeanette tells Anna that Keith’s lease is still unregistered but she will try and get it done before the sale, and says ‘either way, please make sure you look after him, he’s a great tenant.’ Anna left the meeting and wrote to Jeanette and Keith, stating: ‘Don’t worry, I know my law. The lease is safe.’ Just before settlement Jeanette calls Anna she has not had a chance to register Keith’s lease due to the rush to get things ready for the sale. Anna reassures Jeanette that she will ‘look after things with Keith’. Anna becomes the registered owner of the factory in February 2017. Four months after registration, Anna now decides to demolish the property and notifies Keith to vacate the premises. Advise Keith. - Significance of 4 year lease? Should have had it registered. When RP gets registered, s184 says that the RP takes free of all unregistered interests. RP should buy land, get registered, she can immediately kick out keith. EXCEPT, that a lease that takes affect for a lease not more than three years is an exception to indefeasibility, still legal and binding on the proprietor. If Keith had an unregistered 3 year lease, she could not have legally kicked him out – s185 short lease exception. - What if Anna knows Keith is in occupation? Mere notice is not enough, In order for K’s interests to be effected, Anna must have undertaken to be bound by the prior unregistered interest, then in personam exception would be present. - Is there an undertaking to be bound on the facts?

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Stating that ‘the lease is safe’ could be an implied undertaking to be bound – saying that you will ‘take care of’ means you can’t deny that you have an undertaking (Lakeview)

Frankie purchases lot 5 in Coolum Waters’ development in May 2016. Two months later, Tom purchases lot 15, but due to a data entry issue, he was registered as the owner of lot 5. Frankie decides she doesn’t like her property and in August 2016 sells to Joe. Joe becomes registered proprietor in September 2016. The error regarding Tom’s title was not discovered. Tom then does a title search and learns that he has title over lot 5. He prefers this to lot 15, and wishes to take possession of it. Advise Tom. - 185(a) (e) (g) – error in register - Esperence = general rule is that the earlier title prevails, second title is the mistaken title - BUT at what point in time are we looking at which title was earlier - Look at the time at which the error was made - No decided case on this, so need to look at textbook authors, who think that the point in time we need to look at is the time at which the mistake is made. Mistake was made in July, when Tom’s was second title which was issued. - Tom could apply for compensation, or apply to register to correct title (under equity)

Week 5 – protection of unregistered interests, caveats, priorities Register is everything. Once you have registered title, have a secured right, can only be defeated by exceptions to indefeasibility. Not much can defeat it. Under s184(2)(a) registered proprietor not affected by actual/constructive notice. Not enough to bind. Could have something over and above notice ie undertaking to be bound. If an interest isn’t registered, won’t have legal effect in Torrens, but could have impact in equity ie PLA s11, still needs to be written/signed. Or could have a mere equity, not legal but something. Could have multiple equitable interest, questions of priority. Prior to becoming registered, between signing contract and becoming registered, equitable interest, but could be challenged. Land Title Act has caveat ie holder of unregistered interest can put in a caveat, which freezes the register so that no one else can get in/take over claim. S181 – don’t have legal interest until registered at law. Otherwise, can still be enforced in equity. Transactions may not take effect in the way intended in equity, up to the court to interpret. This was the case in Chan v Cresdon – considered predecessor to LTA, involved unregistered 5 year lease to company, can only be effective in equity because leases over 3 years have to be registered. Under terms, appellants were guarantor, ie would pay money if lessor defaulted. IT was in registerable form, had the option to do so, had the intention to do so, but never did. Lessee defaulted and lessor brought proceedings against appellants. Issue for court = whether

money that was argued to be owed was money owed under the lease. Court said that agreement to lease, though not registered, is not void, can still be a source of rights. “Though the unregistered instrument is itself ineffective to create a legal or equitable estate or interest in the land, before registration, the section does not avoid contracts or render them inoperative. So an antecedent agreement will be effective, in accordance with the principles of equity, to bring into existence an equitable estate or interest in the land”: p 257. Had nothing to do with the document, was held to be an implied lease on the conduct of the parties. Common law tenancy at will was risen. You can still have an equitable estate, but up to court to interpret what that is, according to the principles of equity, what the interest should be. Tells us unregistered instruments can give rise to some interest/equitable estate between the parties, but may not take effect in the same way it was written – depends on how courts interpret by looking at conduct of parties/equitable principles rather than document itself.

Priorities 5 different circumstances 1. Legal interest followed by legal interest - Apply general principles under LTA s184 – once registered, indefeasible title - New legal interest will trump clearer legal interest – unless they can co-exist or an exception applies - If there are multiple legal interests ie mortgages, then priority is granted according to time – can have more than one mortgage/property - An unregistered right may be a legal right – ie a lease for less than 3 years, still binding at law - If B forges A’s signature to transfer to C, then C becomes registered – they have indefeasible title, later in time legal right, first right is extinguished 2. Legal interest followed by equitable interest - Legal right will prevail generally - Ie A owns fee simple, B forges signature and goes to pass on to C. If A finds out before interest is transferred and lodges a caveat to prevent, then A’s title will prevail, the later equitable interest will not bind the registered owner unless exception applies 3. Equitable interest followed by legal interest - S184(2)(a) a registered proprietor is not affected by actual or constructive notice of an unregistered interest affecting the lot – unless exception to indefeasibility applies - Legal interest will prevail - If you buy land and become registered, doesn’t matter if you knew someone else had an equitable interest - Big change to pre-torrens law. - Notice used to be really crucial, but LTA has changed that - Only bound if something in their conduct that enlivens in personum rule or is fraud 4. Equitable interest followed by equitable interest

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Both interests operate outside Torrens, equitable principles will rule Rules about notice still apply here Is there notice? Did the holder of the later in time interest take their interest with interest of the earlier in time interest? If so, they will be bound. Notice = earlier interest prevails - Lapin v Abigail (193) ‘if the holder of the subsequent entity acquired it with notice of the prior equity, his claim for priority necessarily fails’ - Moffett v Dillon – 1985, M sold profit to D for $175 000, deposit paid with full amount to be paid 3 years later. M being mortgagee for D. She defaulted, ended up executing the mortgage doc in 1985, saying that we’ve acquired a security interest in the property. Not registered, but M’s lawyers lodged caveat for interest as mortgagee. Mrs D then gave mortgage to Westpac, not registered. Westpac wrote to M, twice, saying that we note the title is subject to caveat number, wanted him to withdraw the caveat. Effectively, they knew M was claiming interest in the land. M went through court to get money, court made order to sell property, sold at $40 000 less, not enough to pay everyone back, want to be first in. Westpac then lodged mortgage for registration. When Westpac lodged, had full actual knowledge of M’s charge. This is fatal to their contention that the later equitable interest should prevail over the earlier. Bank gave mortgage with knowledge of earlier charge (caveat had not been lodged), bank had notice, therefore chargee had priority - If the later interest holder did not have notice/didn’t know about prior interest, then need to consider who has the better equity on the whole - UNLESS earlier interest holder had done something deceptive. Moffett v Dillon = ‘possessor of the prior equity is not to be postponed to the possessor of a subsequent entity unless the act or omission proved against his has conducted or contributed to a belief on the part of the holder of the subsequent equity, at the time when he acquired it, that the prior equity was not in existence’ 5. Mere equity followed by equitable interest Tute 5 Question one Bill has got a mere equity – has to have assistance of the court to bring the interest to life, needs to go to court to have the subdivision, he can’t have the state yet because it hasn’t been subdivided. If this were an ordinary situation, bill would have equity, but because this is subject to the subdivision going though, he can’t have an equity because the property can’t vest in him because it hasn’t been carved out (Re: Henderson). Perfect homes has a charge – which is an equitable interest, because the state is there (Clark v Raymore). Eastwest Bank has an equitable interest, equitable mortgagee. Three are competing. First in time, if the equities are equal. If the equities are equal, first in time prevails. Equities are not equal here, we have a mere equity and two equitable interests. Mere equity drops out of the competition. Bill is out (Double Bay). Leaves equitable charge and mortgage – same category of interest. The charge is first in time, is it going to prevail? Now looking for postponing conduct. Did Perfect Homes postpone? Caveats

freeze the register, and gives notice to everyone else. Perfect Homes didn’t do this, even though this option was open to them (s122). Eastwest has accepted a mortgage over the property, should Perfect Homes’ charge be subordinated to the mortgage? Is there disentitling conduct? On the basis of Clark v Raymore, yes. Perfect Homes has failed to take advantage of a means of giving notice to the world. Failure to lodge a caveat is not necessarily disentitling conduct, depends on the context. If Bill had lodged a caveat when he contracted, then subsequent parties would have had notice. Bill would win, because of the doctrine of notice. Subsequent equitable interests would be subordinate because of the interest, even though it’s a mere equity. Question two Developers want caveat lifted so they can be registered. Apply s127 to have caveat lifted. S122 says you need an interest for the caveat. No question to be tried about whether or not Iris has interest, she has none. The balance of convenience satisfied – if the caveat stays on, equities will compete, if caveat is lifted it doesn’t matter, Iris’s no interest will continue to be no interest and builders will win. Iris had to prove that she had reasonable cause to believe she has an interest s130(1) LTA, onus of proof is on her to demonstrate her reasonable cause s130(3). Iris will have to pay compensation for the delay. Question three Postponing conduct = Breskvar (?) – aided fraud, even unknowingly. Claim between Albin (purchasers) and Breskvars said we have an equity to have register corrected because we have equitable interest. But Albin won. Failure to make interest known was postponing conduct. Is failure to caveat invariably fatal to prior interest holder? No. Can create equitable mortgage is taking hold of the certificate of title, not possible for there to be any other dealings with the land, no need to do any more, don’t need to lodge a caveat (J and H Just v Bank of NSW). Barwick J in this case said that there’s no obligation to caveat, then failing to do it can’t automatically postpone your interest, subsequent cases agree. After that, we have to look at all the circumstances. One of the circumstances will be did prior interest holder take the steps to protect the interest, or did they allow the creation of the subsequent interests. If the only way to give notice to the world is by caveating, and you don’t do it, then interest can be subordinated by someone who searches the register and sees that there is nothing there. Settlement notice – essentially the same as a caveat, but cheaper, still freezes the register. Protects interests for settlement period. Makes process cheap and easy. Question Four Couple bought a house, borrowed money to buy it, mortgage over the house to secure loan, bank registered mortgage. They began paying it back (called the equity in your home) paid back $200 000, the amount you pay back

The couple bought a business, trading as Easyfind, to secure the purchase of the business, gave a mortgage over their company. They gave mortgage and personally, they guaranteed their own investment by giving a mortgage over the equity in their home ($200 000). Registered first mortgage for the bank. Equitable interest of easyfind to over the equitable Mortgage has to be specific, complete, have the amount it secures etc. That’s what you hand in to register interest. Mortgage was incomplete, so that when they lodged it for registration, wasn’t in registrable form and couldn’t be registered.

Easyfind = equitable mortgage. Australia Post = equitable mortgage (third mortgage) Champion printing = had a mere equity, because they didn’t fill out the mortgage properly – fails and is void for want of form. When you have a void interest, you can’t sue on it. How can court of equity help you out? Can rely on part performance, can enforce the contract by relying on the doctrine of part performance – say you can’t give me nothing, I’ve partially performed the contract I must have relief. Part performance will apply in these circumstances. Will turn a mortgage void at law into a mere equity, because a court of equity will enforce your interest. Champion had a mere equity. Prior equity is the unregistered mortgage given to Easyfind, can we see any disentitling conduct on Easyfind’s part? Did nothing for a year, didn’t caveat, didn’t register, didn’t secure the title – failed to take care of their interest. Subordinate interest. Australia post will win. If Champion had better lawyers, and registered, they would have one. Mere equity with notice will win. If Australia Post had got to land titles office and lodged third mortgage, Australia Post would have won, registered interest always trumps.

Tute 6 Question 1 - Jasmine by lodging caveat has frozen the register, R cannot lodge her interest - Rhonda has not yet been registered, she has purchasers equity - Jasmine should apply to set the sale aside - If she is after an injunction, she needs to have standing, she has to pay into court the amount that was owing to the Bank (Inglis v Commonwealth) - Mainly about exercise of power of sale - Power of sale is in s83 – mortgagee has power to sell - Comes about/power of sale crystalise s84 – default in making payment, default continued for 30 days and notice has been given

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