Week 6 Property law notes PDF

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Week 6 8.94 Proper conduct and unconscionability ● Certainty of Title (Torrens system): usually flows from registration in the in personam exception created by the registered proprietor ●

Case: Barry v Heider & heider snd vassos v state bank of Australia ○ assume in personam right will not arise unless registered proprietors conscience is touched by the circumstances that give rise to the legal or equitable cause of action ○ Requires a party seeking to demonstrate an in personam right to establish two elements: !. Illegal or equitable course of action; and #. Unconscionable for the registered proprietor to ‘obtain or retainʼ registered interest ○

Contrary approach: concurrent unconscionability to the cause of action in self ◆ Consistent with view: In personam rights grounded in obligations arising out of both legal and equitable causes of action

8.95 Examples of rights in personal ● Indefeasibility + in personam rights = potential to create tensions Example: ◆ A = vendor, registered proprietor of Torrens Title land ◆ A Enters into a contract with B for sale of land ◆ A canʼt rely on indefeasibility of title to avoid rights and obligations created by entering contract with B ◆ A indefeasibility can't be used to defeat Bʼs claim arising out of contract ◆ A created Bʼs interest by virtue of the contract of sale ◆ Court would ensure A upheld obligations A created ●

indefeasibility + in personam rights (Trusts) Examples: ◆ A = trustee of real property ◆ A has rights and duties that must be filled ◆ Duty to hold the trust property on behalf of beneficiaries B, C, &D ◆ A not permitted to assert as registered proprietor ◆ A relies on indefeasibility of title arising from the registration to ignore obligations under the trust

8.96 Further examples where rights in personam have arisen:

8.97 Bahr v Nicolay —> leading authority on In Personam exception Facts: ● Bahrs did not have enough money to develop own land ● Bahrs sold property to Nicolay on terms that they could lease it back and later repurchase if they wish ● Nicholay sold land to Thompsons ● Clause 4 of Nicholay and Thompson contact acknowledged Bahr-Nicolay agreement ● Thompson acknowledged the Bahrsʼ right to repurchase ● Bahr sought to repurchase land & Thompson refused to sell —> Thompson relied on status as a registered proprietor and the indefeasible title attached to title ● Bahr Claimed Torrens Fraud Held: ● Bahr UNSUCCESSFUL retrieving land back on Torrens Fraud ● Bahr SUCCESSFULLY established in personam exception to Thompsonʼ indefeasible title on the basis that Thompsonsʼ conduct gave rise trust in favour of the Bahrs ● “title of a purchaser who not only has notice of an antecedent unregistered interest but who purchases on terms that he will be bound by the unregistered interest is subject to that interest equity will compel him to perform his obligations” ● Difficult to establish a clear-cut difference between: ○ The purchaser who takes with knowledge of prior interest ○ One who takes an interest agreeing to be bound by a prior interest Reggies BAULKHAUL LTD v Global minerals Australia pty ltd ● Austin J: additional ingredient —> some form of acknowledgement of the unregistered interest or an agreement or undertaking to act in accordance with it from which the registered proprietor later resiles ● Additional ingredient commonly arises in relation to leases 8.98 Mercantile Mutual Life Insurance Co Ltd v Gosper ● Findings of case have proved continuous —> one interpretation and enables the in personam exception to supplement the fraud exception Facts: ● Mrs G = so registered proprietor of the land use as security for mortgage in 1982 ● $205,000 mortgage subsequently increased amount owed by further $60,000 ● Unknown to Mrs G how husband fortunately arranged for an additional loan of $285,000 from Mercantile mutual life ● Security for Mr G's logo was provided by way of Mrs G's property ● Mercantile sort to enforce mortgage-backed arguing, except in case of fraud, registration made its interest indefeasible ● Argue it had not been a party to fraud it was not found by Mrs G interest ● Mrs G argued she had in right personam enforceable against the appellants

(Mercantile) Mahoney JA: Mercantile had only been able to register the variation of mortgage because the certificate of title was delivered to it from Mrs G's mortgage company Held: ● Mahoney JA Kirby P: variation of mortgage should be set aside ● Mrs G's interest was not burdened by a mortgage that she did not authorised ● Protection usually afforded to a mortgagee on registration was cut back ● Registered interest of the mortgagee maybe defeated despite a broad definition of an immediate indefeasibility and a narrow definition of fraud under section 42 ● Within the scope of the in the personam exception conduct that was traditionally understood to be equitable fraud -> outside the definition of fraud relied on by section 42 of the real property act ●

8.99 known causes of action revisited three ● Controversy in gosper's case = debate over whether the kind of personal equity relied on was based on a known cause of action ● Vassos v State bank of South Australia ○ Vassos —> court was not prepared to find a personal equity ○ Hayne J: “we'll could you did not act without neglect but there is my view no material which showed that the bank acted unconscionably. No misrepresentation by it's no misuse of power know in proper attempt to rely upon its legal rights no knowledge of wrong doing by any party. Evening by making reasonable inquiries the bank could have discovered the fact of forgery I do not consider that fact alone renders its conduct unconscionable” 8.100 Garafano v reliance finance corp Pty ltd ● Examine what could be included in the content of personal equity ● Meagher J & Priestly JA: cannot see what the expression personal equity is meant to cover exception known legal courses of action (for example, deceit) and no equitable causes of action (for example undue influence) 8.101 ● Lissa v Cianni ○ Has worth the mortgage or is can rely upon non test facts he does not really need to demonstrate personal equity ○ Without fraud by the registered proprietor a defence of non est factum Will not be enough to cause the title to be defeasible ◆ Earlier registered proprietor will be dependent on the in the personam exception in order to demonstrate the defeasibility of title 8.102 receipt of trust property

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Trusts and the limbs of Barnes v Addy = is circumstance got to give rise to in personam exception

8.103 Barnes v Addy ● Two limbs !. ‘Knowing receiptʼ or ‘receipt liabilityʼ #. ‘accessory liabilityʼ: Circumstances where our party knowingly assist the trustees to breach the trust and misapply the trust property ● Registered proprietor knowingly assists in breach of trust under secondly Will by nature of the assistance be participating in a dishonest or fraudulent design sufficient to constitute fraud ● Kinda concert shooting accessory liability will constitute and established exception to indefeasibility 8.104 ● Two conflicting lions of authority merged on question of the knowing receipt limb and in personam exception ○ Tara shire Council v Garner + say-dee pty ltd v fara constructions pty Ltd ◆ Held: arguable case for the existence of it in personam claim against the registered proprietor, where the registered proprietor knowingly took a transfer of trust property in breach of trust ◆ Victoria and Western Australian decisions rejected you that the knowing receipts could give rise to an in personam exception to indefeasibility ○ say-dee pty ltd v fara constructions pty Ltd: ◆ title is created by registration under the real property act. ◆ Title is not created by acts prior to registration ◆ Person acquiring property by operation of the torrens statute can not to be characterised as having received trust property from the trustee ◆ Title comes from the very act of registration ◆ Indefeasibility provided by section 42 is sufficient to defeat any such pre-existing unregistered equitable claim under the rule except in circumstances where the fraud exception applies 8.105 Jin v Yang ● Plaintiff (mr Jin) argued he held equitable interest in an apartment registered in his partners name because he had contributed to its purchase price and also to the reduction of the mortgage ● when property was transferred by partner to son = issue: whether the sons interest was indefeasible Held: ● Are no relevant dealings giving rise to personal equity that the plaintiff could have enforced against the son

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It would be insufficient for the plaintiff to show that the son acquired trust property with notice that the transfer was in breach of trust property

8.106 Adverse possession: a party possessing adversely to the registered proprietor is able to submit as S3 application to be reported as the registered proprietor pursuant ● Pt 6A ss 45B-45G, real property act ● Title of the earlier registered proprietor is defeasible in favour of the adverts possessor who fulfils the relevant statutory requirements 8.107 overriding statutes Travinto nominees pty ltd v Vlatta ares ● ‘ although the real property act is of the greatest importance in relation to land titles it is not a fundamental or organic law to which other statutes are subordinate ● Statutory arise may also be total or partial ● Overriding statute authorises the creation of the property interest without registration of interest ● Numerous statutes that have the capacity to create rights over land ○ Right of access or easements ○ Imposition of a charge 8.108 Pratten v Warringah shire Council Facts: ● Drainage reserve marked on plan for land ● Pratten interested interested in purchasing land ● P asked solicitors to make enquiries to council who owns the drainage reserve ● Council replied the land is no use to us for drainage purposes ● P are made further inquiries including an official search of the register ● P then entered contract ● In the course of attempting to facilitate registration P are Office to buy the drainage land from council if Ali information proved to be incorrect and it indeed owned the land ● Council replied are you having no interest in the easement ● Registration of Pʼs interest took place = new title issued ● Council decided to claim an interest in the drainage land ● Council successful pursuant to section 398 of the local government act 1919: drainage reserve land in the council in fee simple for drainage purposes. ●

Jackson v Cochrane [1989] 2 Qd R 23 o If the bailee has allowed the goods to be lost or destroyed, they may be liable

in conversion ● Strict liability: Jackson v Cochrane (1989) (mis-delivery is conversion even if accidental) ● Bailor does not have to prove duty/breach/damage, just act of dominion and that hye had a right to immediate possession Facts: ● Plaintiff delivered her caravan to the defendant and motor dealer ‘on consignmentʼ ● Council agreed was meant until sale all return ● Instead of selling it for returning it the defendant allowed three strangers to take it away from her sales yard ● Caravan not recovered ● Defendant allowed strangers to remove caravan after being persuaded by pokesman of the group of three —> the three were acting with the authority of the plaintiff ● Spokesmen produced to the defendants document signed by the plaintiff —> claimed to be acting on the instruction of the plaintiff in removing the caravan ● Defendant made an unsuccessful attempted to communicate with plaintiff via telephone ● Ultimately committed three strangers to toe the caravan away from her sales yard Proceedural history District court ● judgement in favour of plaintiff or the value of the caravan together with interest ◆ His honour satisfied the defendant breached contract of bailment ◆ Caravan was delivered up to a person unknown in manner not provided for the arrangement twin the parties ◆ Defendant was negligent in parting with possession of the caravan without taking reasonable steps to ensure that it was in order that this be done Appeal: ● On behalf of appellant —> now defendant ● He's honours conclusion of negligence was wrong and the documents produced by strangers were sufficient evidence of the plaintiff's authority to him to remove the caravan ● Documents why is a duplicate of previously document ○ Title: “Statement Re: trade in or purchase” ◆ Referred to the Auctioneer and Agents act 1971 - 1975 ◆ Prepared in response to Reg.29: when purchasing or when accepting on consignment a motor vehicle, to obtain from the vendor a statement in duplicate showing prescribe particulars

of the vendor and of the vehicle Macrossan J ● Appeal should be dismissed with costs McPhersons J: ● Primary duty of a bailee is top redeliver chattel bailed to the bailor as the bailor may direct ● While chattel in possession of bailor —> bound to take reasonable care of it ● Clear the defendant was not a mere gratuitous bailee ● Cannot be doubted that committing the caravan to pass out of her control and in doing so faith primarily of production of fake document defended failed in the circumstances to exercise reasonable care in the custody of the caravan ● No evidence of any authority on the part of any of the three strangers to act as the plaintiff agent in the matter of taking redelivery of the caravan ● The defendant had failed to discharge the onus providing reasonable care ● Doctrine: if true owner bales coins to defend in action subsequently brought by that owner “it is no defence to assert that the goods have been handed over to a third party, even if it should appear that, as between the owner and the third party, the latter I had a contractual right to have possession of them

Williams and Webb JJ ● Duty of bailee = simply take reasonable care to effect redelivery ● Obligation resting on the defendant in the case was to provide that it had exercised and you care to see that it delivered the goods to a person to whom it was authorised to deliver them ● Cases of conversion by missdelivery notions of care are irrelevant ● Davis v Garret ○ Bailee is liable for loss or damage resulting from his dealings with the goods bailed in a matter not authorised by the bailor

Results: ● Court delays on regarded the missdelivery as a breach of contracting mounting to a distinct and primary ground of liability on the part of the defendant ● Defendant fail to perform her duty as bailee in that she delivered the vehicle otherwise that in accordance with the plaintiffs express or implied authority or mandate ○ No justification for breach of duty ● dismissed appeal with costs ●

Clem Smith Nominees Pty Ltd v Farrelly ● M Ltd owned land at Mallala where a motor racing circuit. Had been constructed ● 1971: A ltd squired control of M Ltd and built new cite for race meetings at Virginia, 35Km from Mallala land to the defendants Farrelly ● As part of the consideration for sale, Farrelly executed an encumbrance, expressed to be for the benefit of A Ltd, over the land ● Encumbered land with payment of Annual sum of $1 if demanded and with the observance of a convenient that the encumbrancer would not use land to suffer it to be used of any form of motor sport ● 1976, Farrelly transferred the land into smith ltd, subject to the encumbrance were void or, alternatively were unenforceable against it ●

Held: Brey Cj ● Held encumbrance itself was a canid security for the payment of the rent charge $1 per year ● Encumbrance was in statutory form ○ Real property act 1886 (SA) s128 provided the registration of such encumbrance ● Liability to pay not dependent in whole or in part on the performance or non-performance of any of the covenants ● Intended to bind subsequent owners of the land ● No privity contract between the plaintiff and either of the Virginia companies ● Common Law: inly between landlord and tenant that the burden of covenants ran with the land ● Equity: Tulk v Moxhay ○ The limits of the rule long remained in doubt. General principle that the liability of the subsequent transferee depends simply on notice of the original covenant ● Formby v Barker ○ Court appeal held: ◆ Covenant in conveyancing, by which the purchaser undertook not to carry on certain trades on the land taking with notice of the covenantL ● London County Council v Allen ○ Court of appeal held: ◆ Subsequent holder of the land, not bound by it even if he took with notice of it, if the original covenantee was not in possession of or interested in the land for the benefit of which the covenant was en tired into.. ○ Scrutton J sump up history of rule: ◆ 3 decisions of the court of appeal ◆ plaintiffs fail on the ground they never had land for the benefit of which is ‘equitable interest analogous to negative easement

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could be created ◆ Cannot sue person who bought land with knowledge of restrictive covenant to is use which he proceeds to disregard because of not being privy to contract Restrictive covenants with regard to type of building erected on land sold were contained in a registered encumbrance given by original purchaser ○ covenant for the benefit of neighbouring owners, purchasers under the same scheme No equitable interest can exist in the absence of a quasi-dominant tenement to which the benefit of the covenant is attached Virginia land cannon be a quasi-dominant tenement sufficient to attract the rule in Tulk v Moxhay Bursill Enterprises Pty Ltd v Berger Bros Trading Pty Ltd ○ Prospective purchaser of land subject to a burden should be able to find out by a search whether the covenant is a covenant in gross, which will not be binding on him if he purchases, or a covenant the benefit of which is attached to some parcel/s of land, which may be binding him

Conclusion: ● No quasi-dominant tenement sufficient to create equitable interest under rule of Tulk v Moxhay ● No intention to attach the restrictive covenants to ant land or any interest in land ● Intended to stand as covenants in gross for the protect of the business of Virginia companies where they may happen to carry it on ● Real Property Act 1886 s97 ○ Might have the effect of preventing the burden of a covenant contained in a mortgage or encumbrance from running with the land ● Hogarth & Zelling JJ judgements: ○ Covenant in gross, burden could not bind a covenanterʼs successor in title...