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Summaries of cases across the semester of learning...

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Reading Week 3 Co-ownership Overview In this week we will be discussing co-ownership of land (i.e. where two or more people own land at the same time). By the end of the week you should have an understanding of:  the main differences between joint tenants and tenants in common;  how co-ownerships arrangements can be created under the law;  how disputes between co-owners can be resolved. Introduction This week will introduce the concept of co-ownership - that is, where two or more people have ownership rights over the same parcel of land. We will talk about the differences between joint tenants and tenants in common which are both forms of co-ownership. We will discuss their rights and obligations with regards to each other and how co-ownership can be brought to an end. Prescribed reading Wallace, Weir and McCrimmon (2015):  Chapter 8 (all) Key Cases & Legislation  Property Law Act 1974 (Qld) s 37-43  Land Title Act 1994 (Qld) s 59  Re Rose Deceased [1962] QWN 4 Gibbs J held that the beneficiaries under a will took as tenants in common where the will provided that they were to take “in equal shares as joint tenants” Although, on the face of it, the words were contradictory, Gibbs J said that, in the view of the inconvenience that attends a joint tenancy, particularly during a minority the court leans in favour of a tenancy in common and in case of doubt will give effect to the slightest indications that a tenancy in common is intended. By way of contrast..

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 Re Barbour Deceased [1967] Qd R 10 It was held that a joint tenancy was created by a testator who gave his property to his sister and two brothers to “share and share alike as joint tenants”. The judge said that considering the particular facts of the case, a joint tenancy was more convenient than a tenancy in common because of the nature and use made of the property involved and because of the effect of subsequent bequests or gifts over it.

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Re Permanent Trustee Nominees (Canberra) Ltd [1989] 1 Qd R 314

Under section 38(1) the court ‘may’ appoint trustees for sale or partition. One issue arising from the provision is the scope of the discretion which is provided to the court, specifically whether the discretion is a ‘limited’ one. The Queensland Full Court confirmed that there is a residual discretion in the court to refuse to make an order under section 38 of the PLA. Agreement: “ As a separate and severable covenant, the Parties hereby agree that neither of them will (except after twelve (12) months prior notice in writing to the other of them) make application to the Court for the appointment of trustees on statutory trusts for sale or partition pursuant to the provisions of Division 2 of Part V of the Property Law Act 1974 .” The agreement was:

 Not void as ousting the jurisdiction of the Court; and  Not void as amounting to a restraint on alienation 27 in prohibiting such a covenant .” Connolly J: “For my part I cannot see that cl.6 of the management agreement affects in the slightest degree to abrogate the jurisdiction of the court. It is no more than a mutual promise by both parties not to exercise a right of a proprietary character save on twelve months notice.”

 Hall v Busst (1960) 104 CLR 206 The application of the doctrine prohibiting restraints on alienation has been extended by the decision of the HC where the majority held that where a total restrain has been entered into by way of agreement, as distinct from its imposition by conditional limitation, it is void. The relevant facts were that Busst entered into a contract to sell land (an island off the coast of Queensland) to Hall. A deed bearing the same date as the contract was also executed by the parties which provided that: 1. Hall would not transfer, assign, set over or lease the land without first obtaining Busst’s consent in writing 2. In order to obtain that consent, Hall would give Busst a month’s notice in writing of her intention to deal with the fee simple and, during that month, Busst had the first option to purchase the fee simple and improvements 3. The purchase price was to be the original sale price of the land with adjustments for improvements and depreciation

3 Hall subsequently sold the property to a TP without complying with these terms. Busst sued Hall for damages for breach of contract. - A majority of the court agreed that a total restraint on alienation imposed by way of contract is void. - Dixon CJ pointed out that if a restraint on alienation is imposed by contract, and is broken, the remedy is damages, rather than forfeiture of the estate.

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Brickwood v Young (1905) 2 CLR 387

The general principle is that the co-owner who has improved the property is entitled to obtain no more than the expenditure even though that expenditure may have substantially increased the value of the property Griffith CJ said that an inquiry should be directed to the extent to which the proceeds of resumption of the property had been increased by the expenditure, implying that the coowner who improved the property is entitled to recover the increased value resulting from the improvements Facts: Improvements made by a previous co-owner (in a tenancy in common), before his share of the property was acquired by the present co-owner. 1 The land was then resumed by a public authority, and the owner of the share sought an allowance for the improvements made by his predecessor in title. Held: Mr. Brickwood was entitled to be paid equal to ¾’s of the value of the land attributable to the improvements but this had to be set-off against the rents and improvements he had received from the property. Griffith CJ: no active right to claim compensation for improvements. But an allowance could be made for the improvements where there is a partition suit, resumption, administrative suit, or the proceeds of sale are being split up. -Improvements made by previous owner created an equitable right analogous to an equitable charge. oThe right to claim against co-owners is not merely personal to the individual coowner who makes and pays for the improvements – it gives rise to an equity attaching to the land analogous to an equitable charge that is enforceable only in the event of a partition or distribution of the benefit of the land amongst the co-owners. The equity passes with the land and can be asserted by the possessor for the time being, who can claim the benefit of the improvement effected by his/her predecessor in title. oThus value of improvements made by previous co-owner is extended to the purchaser of the co-owned share, which included in the price the value of the improvements, so that he could stand in the position of the previous co-owner. -Two points to note: o

The general common law priority principles apply

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Liability or obligation to distribute rents: the successor had agreed to set off rents/profits received by him from the property. In the absence of an agreement to the contrary, rents and profits can only be set-off only so far as they exhaust the value of the charge for improvements. There had been no obligation to account for rents and profits beyond that. Question of liability did not strictly arise

Dixon: no active right to claim compensation for repairs, but might be claimed in a suit for partition. Commentary -

If you have OST, it is a pre-existing equity/charge in the land in favour of the owner or successor in title. If another co-owner sells his interest to a stranger who takes his share as a bona fide purchaser for value without notice, then because he took without notice of the equity he/she will not be bound by that charge. oE.g. suppose you have A and B where A effects improvements. B sells his interest in the land to C and C is unaware had made these improvements w/o contribution from B and independently of B. oThe equity will be lost if the other co-owner takes his interest for value and without notice [Brutash v Lunsdan [1956] Canada SC] - C would take his/her interest free of any obligation for a reckoning if the co-ownership between C and A came to an end whether by partition or by sale.

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If you have Torrens title land, and the other co-owner sells his share and the purchaser is registered (with or without notice), the equitable interest is defeated [Squire v Rogers (1979)].

1 Person had ¼ share of property as TIC and he transferred his share to Mr. Porter who built a house on the land and improved it but was still only a ¼ owner. He took the extraordinary step of building a house on the property – a significant improvement. Mr. Porter then sold his share of the land to Mr. Brickwood who took a ¼ TIC share in the land. The land was then resumed by a public authority and Mr. Brickwood claimed that he was entitled to ¼ of the resumption value as well as ¾’s of the increased land value attributable to the improvements made by his predecessors

Reading Week 5 Dealings with Land: An Introduction Overview In this week we will be introducing you to the Torrens System of land registration in Queensland and how transactions can occur under that system. By the end of the week you should understand:  Broadly what is meant by the Torrens System and how it differs from Old System Title;

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 How interests in land can be protected under the Torrens System (i.e. through writing and registration);  What is meant by the concept of 'indefeasibility';  Some basic examples of how Torrens Land can be dealt with (leases, mortgages, easements etc);  The basic notions of caveats and priority notices. NB: this is an introdutory week intended to lay some foundations for the technical content on leases, mortgages and easements which follows. Do not try to grasp all the concepts that are raised in this week, but rather, understand how and why the Torrens system was created and what relevance it has in today's world. Introduction This begins our look at the Torrens system of land title registration, which is central to Australian real property law. In this week we introduce the Torrens system, and look at how interests in land are protected under this system. Dealings with Land: An Introduction Prescribed reading  Wallace, Weir and McCrimmon (2015) chapters 9 and 10 Key Cases & Legislation  Land Title Act 1994 (Qld) ss 62, 121-131, Part 7A (priority notices), 181, 184 (NB 'priority notices' are a recent addition, so you will need the most up to date version of the Act)  Property Law Act 1994 (Qld) ss 10,11,12, 59, 117-118  Breskvar v Wall (1971) 126 CLR 376 In the case of the Breskvars the court held that the Breskvars were deprived of their interest in the land when Alban Pty LTd signed the contract to purchase the land because it was at this point in time that Alban obtained an equitable interst which the court determined was superior to and which out-ranked the interest that the Bresjvars’ had in the land. Facts 

The Breskvars owned property as joint tenants.

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     

They borrowed some money and as security, provided the man who lent the money a blank transfer form. The man who lent the money inserted the name of his grandson, Wall. The man who registered the transfer then entered into a contract to sell the land. The purchaser inspected the register and saw the grandson was the owner. Before completed, the original owner lodged a caveat saying it was his and the document was fraudulent. He said that the indefeasibility was affected by fraud.

Issue  

Indefeasibility – whether a caveat had priority over the right to register a transfer of property where the caveat holder had provided consent to transfer. Who had priority?

Held  

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   

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The equitable interest of the new purchaser had priority. Menzies J stated that the man who inserted the name had committed fraud and this would have been an exception to the grandson (the grandson did not obtain indefeasibility) but the grandson had sold the property, which changed the situation by creating a new equitable interest. Barwick J said the Torrens system is not a system of registration by title but title by registration. Consequently, a registration from a void instrument is effective according to the terms; it does not matter why it is void. The registration was effective even though it had been created by a void instrument. Windeyer J said a doctrine of indefeasible title was seen as the very essence of the Torrens system. Barwick J referred to Frazer v Walker and its approach to indefeasibility. McTiernan and Barwick JJ held that you must look at all the factors. Their Honours noted the equitable interest was created before the equitable interest of the new purchaser whose title had not been registered. Gibbs J said the original owner lost their priority by their conduct; the owner can only get damages by fraud – they cannot recover the property.

RELEVANCE/PRINCIPLE  

An earlier equitable interest holder will lose out to a later equitable interest holder if they are bona fide and the later equitable interest allowed an assumption to be made. Even registration of a void instrument will be valid and create property rights.

 Queensland Premier Mines Pty Ltd v French (2007) 235 CLR 81 When a mortgage is transferred, the debt arising from a separate loan agreement will be transferred with it … that is a consequence of the agreement, express or implied, between the parties, not of the operation of s 62. Registration of a transfer of a mortgage does not necessarily assign the right to recover money owed under a separate loan agreement, the High Court of Australia has held. In 1989, Seventeenth Febtor Pty Ltd loaned $415,000 to Queensland Premier Mines (QPM) and Mr and Mrs Beckinsale and $560,000 to QPM. The loans were for acquiring and developing land at Yeppoon on the central Queensland coast. Interest of 24 per cent was

7 charged and the loans were collaterally secured by mortgages over specified land. The mortgages were granted by QPM in favour of Seventeenth Febtor. The Beckinsales were not a party to them. By a deed dated 18 December 1992, Seventeenth Febtor assigned its rights and interests in the mortgages and loan agreements to Mr “Rusty” French. No money was repaid. In 1999 Mr French told Mr Beckinsale he planned to sell the land covered by the mortgages. The outstanding principal and interest due under the loan agreements was $4 million. In 2000, Mr French accepted Mr Beckinsale’s offer on behalf of Marminta to buy back the mortgages for $950,000, but a dispute arose. Marminta commenced action in the Queensland Supreme Court for specific performance of the buy-back agreement. Mr French brought proceedings in the Victorian Supreme Court in 2002 to recover the money due under the loan agreements from QPM and the Beckinsales. QPM agreed to sell the development site, which included the mortgaged land, to Unison Properties for $2.44 million. Marminta was initially unsuccessful in its claim for specific performance but succeeded on appeal. The Queensland Court of Appeal ordered Mr French to do all that was necessary to enable Marminta to become the registered proprietor of the mortgages. In January 2004, a transfer of the mortgages to Marminta, Marminta’s release of mortgage, and a transfer of the estate to Unison Properties were registered. In the Victorian proceedings, which became the subject of the appeal to the High Court, Marminta contended that the right to sue upon the mortgages and to recover any debt under them vested in it when the transfer of the mortgages to it was registered which meant Marminta became the creditor of QPM and the Beckinsales of what was owed under the loan agreements. The Supreme Court made declarations sought by Marminta but the Victorian Court of Appeal unanimously gave judgment for Mr French for the balance owing by QPM and the Beckinsales under the loan agreements and for the rates and taxes he had been obliged to pay. QPM, the Beckinsales and Marminta appealed to the High Court, which unanimously dismissed the appeal. The appellants argued that the registration of a transfer of a mortgage effects an assignment of the right to recover money owed under a separate loan agreement secured by the bill of mortgage. They argued that this is so under section 62 of Queensland’s Land Title Act, which provides that, on registration of an instrument of transfer for interest in a lot, all the transferor’s rights vest in the transferee. However, the Court held that there were two separate and distinct covenants to pay: one contained in the loan agreement, which is freestanding and enforceable in its terms, and another under the mortgage. Section 62 did not justify a construction which allows the right to recovery of a debt merely collaterally secured by the mortgage. The debt sought to be recovered by Mr French arose under the loan agreements, not under the mortgage. He was assigned the right to recover the money owing under the loan agreements and Marminta was not an assignee from him. He retained the right to sue and recover that money from QPM and the Beckinsales.

 Rural View Developments Pty Ltd v Fastfort Pty Ltd [2009] QSC 244 This principle was applied in Rural View Developments Pty Ltd v Fastfort Pty Ltd [2011] 1 Qd R 35; [2009] QSC 244 where the enforceability of a covenant in an access easement against a successor in title to the grantee was questioned. The relevant covenant stated: The grantor and grantee shall each be responsible for one half the cost of any construction, repairs, maintenance or upgrading required to the roadway, drains, pipes or culverts… on the easement.

8 McMurdo J held that this section could not make the subsequent owner of the dominant tenement bound to contribute as stated because it would have meant accepting the burden of a positive covenant. His Honour distinguished Rufa Pty Ltd v Cross [1981] Qd R 365 upon the basis that the right to use an extended portion of a wall (to be constructed) in that case was conditional upon the grantee (the party taking the burden of the covenant) agreeing to contribute to its cost. The liability for the once only (and not recurring) payment was thus expressed as a condition which might be accepted or rejected. The positive covenant obliging a contribution in those circumstances could only be binding upon those successors in title who effectively chose to be bound by opting to use the extended portion of the wall. Thus, as there was no such condition in this case, McMurdo J found that the covenant requiring contribution by a successor in title to the grantee was not enforceable against that person and was of no effect.

NB: Please also have a look at the example priority notice, REIQ contract, caveat and title search all available on QUT readings Reading Week 6 Exceptions to Indefeasibility Overview In this week we will consider the exceptions to indefeasibility. In other words, we will look at in what circumstances a registered interest under the Torrens system may be made 'defeasible'. There are several exceptions we will look at but the most important are the In Personam Exception, Short Lease, Fraud, and the Careless Mortgagee Exception. The In Personam Exception is particularly important, and students should understand in what factual circumstances that exception will arise. Prescribed reading  Wallace, Weir and McCrimmon (2015) chapters 9 and 10, in particular; [10.195-10.570] (and the main exceptions listed above) Key Cases & Legislation  Land Title Act 1994 (Qld) ss 184, 185  Cassegrain v Gerard Cassegrain & Co Pty Ltd [2015] HCA 2  Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202:

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In Grgic v ANZ Banking Group Ltd20Powell JA concluded that if a person has an honest and genuine belief in the propriety of the circumstances then the conduct could not amount to a fraud but in some situations fraud might be constructed where a person has acted unreasonably  Young v Hoger [2001] QCA 453  Assets Co Ltd v Mere Roihi (1905) AC 176 ht...