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LeasesRegulation of leasesSome protection to business tenants – Retail Leases Act 2003 (Vic):Applies to ‘retail premises’ (Defined under s 4 – leased wholly/predominantly for sale/hire of good by retail, or retail provision of services) for at least a year (s 12);Maximum of 5 years (s 21); andThe Act prevails over lease terms, will be invalid if non-compliant (s 94).Regulation of residential tenancies – Residential Tenancies Act 1997 (Vic):Applies to 5 years or less agreements (s 6) to premises used primarily for residential purposes (s 7);Exclusions: Connected to business (s 8), certain short term leases (s 9), holiday purposes (s 10), farming/grazing (s 11), contracts of employment (s 12), contracts of sale/mortgages (s 13), prescribed premises/agreements (s 14).Other lease rules:Common law rules;Provisions in Property Law Act (Note: patchy);Transfer of Land Act (Torrens System rules, in Vic rarely used since leases unregistered – see s 42(2)(e)); andLandlord and Tenant Act (Note: patchy).RTA – Duties of landlord/tenantLandlord:Premises vacant, clean upon tenant occupation (s 65), give tenant information (s 66), reasonably ensure quiet enjoyment (s 67), maintain premises in good repair (s 68), rating compliance when replacing water appliances (s 69), provide locks on house (s 70).Tenant:Cannot use premises for illegal purpose (s 59),not cause nuisance/interference (s 60), avoid damaging premises/common areas (s 61), give notice if damage does occur (s 62), keep premises clean (s 63), not install fixtures unless consent obtained (s 64).CovenantsGeneralReal property – an obligation that relates to the land.Person complying with covenant has burden, person with right to enforce the benefit.Lease covenants – rights and dutiesExpress covenants/agreementLessor/Landlord’s covenant:Allow tenant quiet enjoyment – no interference from LL/agent/anyone else.Perform structural repairs.Lessee/Tenant’s covenant:Pay rent/rates/taxes.Keep premises in good condition/repair.Permit LL entry for inspections.Restrictions on rights/assignments (e.g. sub-lease), and use premises for specific purpose only.Give up possession at end of lease, or LL has right to re-enter demised premises.Implied covenants (apply if not expressly contained in the lease contract)‘Usual’ common law covenants:Landlord:Fitness for human habitation at beginning of lease.Quiet enjoyment – test from Hawkesbury Nominees:Substantial interference – breached where ordinary/lawful enjoyment is substantially interfered with.By acts of LL/agent – both QE and ‘Derogate’ breached if LL’s actions makes premises unfit for purpose of lease.Can only complain about things occurring after lease.LL’s obligation independent of tenant’s covenant to pay rent.Implied covenants not excluded by express covenant for LL to make repairs.Not to derogate from covenant – test from Aussie Traveller:If grant of lease for a particular purpose…Has there been substantial interference with right of occupation so that the premise is unfit/less fit for the lease purpose?If yes, covenant breached.LL liable for actions of other tenants if has right to stop interference but failed to do so.Quiet enjoyment vs non-derogation:QE – Concerned with enjoyment of premises and disturbances of such enjoyment;ND – Concerned with use of leased property that makes premises less fit for purpose for which let.TenantTo use the premises in a tenant-like manner (i.e. take proper care)Not to commit wasteYield up possession (i.e. move out at the end of the tenancy)Via statute (registered leases only)Transfer of Land Act:Rent, repair, inspection, right to enter if in arrears (without formal notice), right to re-enter if covenants breached (s 67).Sub-lessee duties to do the above (s 71(4)).Residential Tenancies Act – see specifics under General section.Covenant against assignment/sublettingBusiness: Cannot sublet without consent, but consent cannot be withheld unreasonably (PLA s 144).Express provision in contract can override this.Residential: RTA s 81 has equivalent rules to PLA s 144, as per PLA s 144(15).VCAT can order subletting if unreasonable withholding of consent (s 82).AssignmentStarting PointWho are the parties?Landlord (LL), Reversioner (R), Assignee (A), Tenant/Assignor (T).What scenario has occurred? See individual sections laterAssignment by tenant to assignee;Assignment by landlord to reversioner;Assignment by tenant to sub-tenant.What definitions need to be known?Privity of contract - relationship between two contracting parties. Can enforce everything in a contract between 2 parties, everyone else misses out.Privity of estate - relationship between LL and tenant.Can enforce everything which ‘touches and concerns’ the land (Swift Investments).Privity of estate can occur under common law (if T to A - Spencer’s Case), or statute (if LL to R - PLA ss 141-2).‘Touch and concern’ the land test (Lord Oliver, Swift Investments):Does it benefit only the reversioner for the time being?If it benefits anyone else, OR benefits person even after he leaves land, then it doesn’t T&C the land.Does it affect the nature, quality, mode of use or value of the land?e.g. Obligation to repair or renovate would fall under here.Is it personal to the parties (LL and T)?If so, doesn’t T&C the land.Is there a covenant to pay money?It can T&C the land provided that the previous 3 conditions are satisfied; ANDThe covenant is connected with something to be done to or in relation to the land.Same test for ‘sufficient connection’ under PLA ss 141-2.Tenant to AssigneeAssignee’s right and liabilities:Privity of estate - can enforce any covenant that T&C land.LL’s rights and liabilities:Can choose to sue either T or A:Original tenant.Privity of contract, depending on contract wording.Implied indemnity if lease and assignment registered (TLA s 67(2)).If by deed, implied indemnity too (PLA s 77(1)(c)).Assignee.Privity of estate and subject to provisos (conditions in document).Is primary debtor because has ultimate control of premises.Landlord to ReversionerR’s rights and liabilities.LL’s rights and liabilities:LL gives up right to sue T for past breaches, unless reserved in assignment document.After assignment, cannot sue for breaches prior to assignment.LL still liable to T for breaches before and after assignment (privity of contract).Can indemnify in contract though and evade liability.T’s rights and liabilities:T can sue LL (privity of contract - LL can get contribution from R), OR R (privity of estate - R primary debtor).Original LL cannot sue T.Tenant to sub-tenantNo privity of estate: sub-tenant cannot sue landlord.EasementsStep-by-step guideDoes it fulfil the criteria of an easement?Four characteristics as per Re Ellenborough Park;Riley v Pentilla.How was the easement created?Valid creation? Express, implied or long use?Benefit of easement passes with transfer of dominant land (TLA s 54(2)).Can the easement be enforced?In Victoria always enforceable as a paramount interest (TLA s 42(2)(d)).What can the owner of the dominant land do to enforce against subsequent servient purchaser?Abatement – steps to stop interference with easement.Damages/Injunction – via claim in nuisance because of wrongful interference with use/enjoyment/rights over land.Has the easement been extinguished?Characteristics of easementsThere must be a dominant and servient tenement:If the right is granted to someone who does not own the land, more likely to be a licence.‘I give you the right to cross my land’ (license); ‘I give my neighbour the right…’ (easement).Easement must be for benefit of (‘accommodate’) the dominant tenement:Must be reasonably necessary for convenience/better enjoyment of dominant tenement (question of fact).Relevant that easement enhances property value.Don’t need to be neighbouring properties, but must be ‘close’ for servient to accommodate dominant (Todrick v Western National).Excludes easements in gross – legislation covers this, usually in favour of govt or service providers.The dominant/servient tenements not to be owned/occupied by the same person;Cannot have easement over own land.If D/S tenements enter relationship that extinguishes separate ownership, then easement is extinguished.Tenements will survive if owned, but not occupied by same person (i.e. LL on one property, tenant in possession on the other).Once leasehold ends, easement extinguished.Easement must be capable of forming subject matter of a grant (Re Ellenborough).Interest must be grantable by deed.Re Ellenborough – deed suggested right to use park attached to land, not merely a personal right).Grant cannot be expressed in terms too vague and wide in character.Must be more than mere right to recreation – requires some ‘element of benefit to dominant tenement’.Re Ellenborough – Easement enhancing land value relevant but not decisive factor; right has to be connected to normal enjoyment of land.Cannot confer exclusive possession or use – if so, lease/license and beyond scope of associated easement.Case examples:Re Ellenborough Park:Land subdivided into lots around park, when lots sold each owner had right to use park subject to maintenance fees.Affirmed: Satisfied all four elements above, particularly fourth point and sub-questions.Riley v Pentilla:Use of common reserve granted to adjacent lots for the ‘liberty to enjoy the reserve for the purpose of recreation or a garden or a park’.D wanted to build swimming pool in part of reserve fenced off from rest. Claimed that rights granted were too vague/uncertain to amount to an easement.Rejected: Purpose of was to provide lot owners with common use of a park closed to the public.Copeland v Greenhalf:For 50 years D and father used strip of neighbour’s land for parking vehicles. D argued that easement had been acquired.Rejected: Right claimed amounted to joint use of land (adverse possession claim), went ‘beyond’ any normal idea of an easement.Creation of EasementsIf already existing:Benefit of easement passes with transfer of dominant land (TLA s 54(2)).Express Grant:Agreement between parties. Can be:Legal:Torrens land – expressly created in a transfer, by deed, by registration of a plan of subdivision.Easements usually require registration (TLA s 72).However, enforceable against indefeasibility in Victoria regardless of registration (s 42(2)(d)).General Law – generally require deed (PLA s 52).Equitable:Need four characteristics of easements (above); andSpecifically enforceable contract evidence in writing or sufficient acts of part performance.Implied Grant:Requirements:Necessity of easement (e.g. landlocked land).Common intention to create easement.Rule in Wheeldon v Burrows.On subdivision/sale of land purchaser gets:All ‘continuous and apparent’ quasi-easements;Which are necessary to the reasonable enjoyment of the property granted; andWhich are at the time of the grant used by the grantor for the benefit of the land granted.Otherwise, must expressly reserve any rights intended to keep.Implied Reservation:Requirements as per Implied Grant:Necessity of mon intention to create easement.Statute:Can transfer benefit of existing easements without express words (PLA s 62).Has incidental effect of converting licenses into easements.Long use/Prescription:Use of land for more than 20 years may give rise to easement – doctrine of lost modern grant.Excludes easements of light and air (PLA ss 195-6).User must have exercise as of right (Sunshine Retail v Wulff):Without force, secrecy and permission.Owner of servient land must have known/had means of knowing about user and not stopped it.Example case:Sunshine Retail:Residents had used shortcut over property to shops for over 20 years.Developer bought property, sought to close. Residents claimed easement under doctrine of lost modern grant.Rejected: Walkway did accommodate dominant tenements so use not merely recreational. However, servient tenement unaware of users, therefore no easement.5)Extinguishing EasementsExpress release – agreement between D/S owners.Abandonment – intention to extinguish, plus non-user (Riley v Penttila).Possibly by increased and excessive burden to the servient land arising from changed use of the dominant tenement.By unity of seisin/merger – anything that results in D/S tenements joining together.Statute:Subdivision Act s 36(1) – Council may require end to easement for economical/efficiency purposes.Also see Planning & Environment Act 1987 (Vic) s 62.Types of EasementsAccepted EasementsAir or light to a defined aperture;Windbreak;Support, e.g. party wall;Drainage and sewerage;Right to maintain a wall;Use of lavatory;Parking;Transmission of noise;Miscellaneous novel easements.Not accepted EasementsRight of prospect (view);Overhanging trees;Hitting cricket balls onto the land.Profits a PrendresGeneralRight to remove natural products from piece of land not owned by person removing the products.Must be natural products (e.g. soil, rock, animals, natural produce).Clos v Easton – Products that require tending after planting are not PaPs.No need for dominant/servient tenements. – can exist in gross and give the land no benefit.Products must be capable of ownership (i.e. all water in stream can’t be removed).PaP does not extend to right of using land – only removal of what is there.Creation of Profits a PrendreAt law – deed (PLA s 52). However, can exist at equity.Can be created by implied grant/reservation, or prescription – as per easements.Can be extinguished by abandonment, unity of seisin, release – as per easements.Restrictive CovenantsMaking RCs valid for subsequent purchasersRC must be recorded on the folio of burdened land (TLA s 88(1)).RP takes land subject to ‘encumbrances’ recorded on folio (s 42(1)).If not recorded, new purchaser takes free of it on registration (TLA ss 42-3)However, RC has no greater effect than would have under instrument recording it (s 88(3)).i.e. Recording RC affects its priority, but not indefeasible.How RCs can run at equity – 4 requirementsMust be restrictive in nature (Tulk v Moxay).Covenants imposing positive obligations will not be enforceable as RCs (Austerberry v Oldham).Look at what owner has to do, not whether the words are positive/negative.There must be burdened and benefited land – not necessarily touching but sufficiently close.Usually arises via subdivision – one new lot is burdened with RC, another benefits.The RC must be intended to run with the land.This element always satisfied as written in by s 79 PLA.Must take the RC with notice.Equity’s basis for enforcing RC is that the conscience of the successor in title in bound because they have had notice of the covenant.Key case – Tulk v MoxayT owned fee simple in vacant land, sold to E with covenant in contract.Covenant – E, heirs and assignors would maintain ground and garden in an open state.After several conveyances, M bought land. Had knowledge of covenant, but argued covenant not binding, as he was not privy to contract.Court – Equity will enforce the covenant:Covenant enforceable on grounds of notice, so M must respect it.Burden attached to land and ran with it, not the covenator.Restrictive Covenant examplesBold = negative covenant:Not allow rubbish and weeds to accumulate on the lot;Use the lot for retail purposes only;Have plans approved by the developer before building on the lot;Not sell or transfer the lot until a dwelling house has been erected on it.Covenants in Torrens SystemCan record RC on folio – RP takes land subject to this burden (TLA s 42(1)).However, RC does not have greater operation than it has under instrument or Act creating it (TLA s 88(3)). i.e. If notice not given to RP – whether actual or constructive – RC will not be enforced.Restrictions under Subdivision ActCan create statutory restrictions as per easements (Subdivision Act s 24(2)(d)).Alternative by council/developers to building scheme covenants.Developers can also include such restrictions.Council cannot object, must certify plan if it complies with SA s 6(1):Inter alia: Regulations, requirements of the planning scheme, permits relating to road boundaries, lots, common property, reserves, and the form/content of the plan.Removal/Variation of RCsExpress agreement (difficult if large group of benefited lots);Passage of time (if to expire after certain period);Equitable defences (laches, acquiescence, delay);Under planning legislation;Can remove/modify in accordance with:Planning scheme amendment under s 6(2)(g) Planning and Environment Act 1987; orA permit under Pt 4 of PEA.Court order (PLA ss 84-5):Court has power to modify/discharge a covenant, and compensate for losses.When is a covenant ‘obsolete’ under s 84?Stanhill v Jackson two-limb test:(1)(a): Ought to be deemed obsolete according to ordinary meaning of term – i.e. outmoded or outdated.(1)(b): Impedes any reasonable use of the land.Also consider (1)(c): Discharge/modification should not harm anyone entitled to the benefit of the restriction.Must be of ‘real significance or importance’.Creation of Unregistered MortgagesCreation of mortgages - GeneralRP can mortgage land by instrument of mortgage in an approved, appropriate form (TLA s 74(1)).Mortgage acts as security interest over land - fee simple remains with RP (s 74(2)).Legal vs unregistered mortgage creationOnly legal if registered.Unregistered mortgages only take effect in equity.Equivalent to conveyance of fee simple to mortgagee.Mortgagor has equity of redemption to recover land upon payment of debt.Not registered doesn’t mean invalid - will simply be unregistered mortgage.How to create unregistered mortgages?To be valid in equity, minimum requirements:Be in writing, or specific part performance.Enforceable against all but bona fide purchaser for value without notice.However, is the mortgage subject to the NCC? Code applies if (NCC s 7):Secures under a credit contract/related guarantee (contract under which credit may be provided - s 4); andMortgagor is a natural person or strata (owner’s) corporation (mortgage for personal/residential/domestic/renovation for investment purposes - s 5(1)).If NCC applies...Writing must be in form of written contract document with signatures of both debtor and credit provider (s 14; 42).Copy of mortgage must be given to mortgagor (s 43).Credit provider has additional duties to provide full disclosure to debtor (ss 14-22).Includes inter alia: details of contract, info of debtor’s rights/duties, money being credited, rates of interest.Cannot contract out of Code (s 191).Court has powers under NCC as well:Can extend terms of contract/postpone payments if debtor unable to meet obligations due to illness/unemployment/other reasonable cause (ss 72-4).Can re-open unjust cases if debtor requests, can set aside/vary contracts (ss 76-7).Can review unconscionable interest, fees and charges and alter them (ss 78-9).Rights and Duties of Mortgagees - Legal Mortgages ONLYRight to Possession of LandUpon default, mortgagee can:Claim rents and profits and bring action for ejectment to recover possession (TLA s 78(1)).RTA s 268 – Tenants in mortgaged premises need 28-day notice before ejection.Also subject to and liable for rates and any covenants contained/implied in lease (s 78(2)).First mortgagee also holds same rights and remedies as legal mortgagee under the general law with the mortgagor having right of quiet enjoyment (s 81).So first mortgagee is entitled to take possession upon default without need for court proceedings for ejectment.Subsequent mortgagees do not have these rights.Power of SaleIf notice not complied with, mortgagee can sell property (s 77(1)).How is power triggered?If non-NCC:If covenant is breached or default continues for over a month (or other express period in mortgage), mortgagee can serve notice (TLA s 76).If NCC, follow Code requirements:Mortgagee must give at least 30 days from notice to remedy default (s 88(1)(a)); andDefault notice must specify information about default and steps to resolve it (s 88(3), and comply with any State law requirements (s 88(8)).Mortgagor can apply for postponement of enforcement proceedings to mortgagee (s 94) or court (s 95).Default notice considered not given if postponement agreed with mortgagee and complied with (s 95), or court order made (s 96).Rights and Duties during saleIf notice not complied with, mortgagee can sell property (s 77(1)).Can do so by public auction, private contract or mix; land together or in lots; at once or several times; subject to conditions as seen fit.Must do so:‘In good faith’; andNegative duty – cannot act fraudulently/dishonestly/wilful recklessness.‘Having regard to interests of mortgagor’.Positive duty – take reasonable precautions to obtain ‘proper price’.s 77(3): In following order, money of sale goes to (i) sales costs; (ii) mortgage dues; (iii) subsequent mortgages/charges, and (iv) mortgagor/Supreme Court.Has mortgagee breached s 77(1) requirements?Emphasis on ‘reasonable steps’, not price obtained.No actionable breach if did not follow proper process, but ‘proper price’ obtained nonetheless (Vasiliou).Failure to obtain market price not adequate for breach.Even if duty breached:If purchaser registers, fee simple title (TLA s 42(1)) cannot be set aside.Case examples:Vasiliou v WestpacNo need to advertise, so long as satisfactory price gained from sale.Possible that opposite true as well – advertising does not mean low sale price acceptable.MBF Investments v NolanDefaulting mortgagors have no home occupation interest (TLA s 81).International human rights principles irrelevant – s 77(1) balances mortgagor/mortgagee interests.Good faith = acting conscionably.See below for additional requirements of ‘good faith’MBF v Nolan at [100]a mortgagee is not a trustee of the power of sale, which is given to the mortgagee to enable the realisation of the security interest;a mortgagee must act in good faith, that is conscionably, and cannot sell for a purpose other than that for which the power of sale is conferred;a mortgagee is not required to place the interests of the mortgagor above the mortgagee’s interests in recovering the debt. For example, the mortgagee can sell the property at a time of the mortgagee’s choice, even though the property might realise a higher price if the sale were postponed;the mortgagee cannot disregard the interests of the mortgagor by simply selling for a price which will cover the amount of the loan. The mortgagee must take reasonable steps to obtain the best price consistently with its right to enforce its security interest. This requires the mortgagee to consider how the property should be advertised and to allow an appropriate time between the advertisement and the sale;the mortgagee must also have regard to the interests of subsequent security holders; andif there is no doubt that the sale of the lots preferred by the mortgagor would be sufficient to discharge the debt owed to the relevant mortgagee and of any other security holders whose interest the mortgagee is required to consider, a failure to sell the preferred lots may breach the mortgagee’s duty to sell in good faith.Scope of IndefeasibilityIndefeasibility of covenants upon registrationMercantile Credits v Shell:Mortgages and leases that create covenants will be binding upon new owners of land to the extent that the rights created are proprietary and not personal.In this case, even though the lease extension had not been registered, the original lease created a covenant granting Shell both the option to renew the lease, and the right to the new term resulting from the renewal.These covenants were therefore indefeasible even if the new lease was unregistered.Types of mortgagesTraditional mortgage – specifies the amount of the loan in the registered instrument.All monies – secures all money owing from time to time, including future borrowings.Collateral – secures a sum in an off-register loan agreement.Scope of indefeasibility of the covenant to pay in a registered mortgageIf principal sum is mentioned (i.e. traditional mortgage), mortgagor has implied covenant to pay mortgagee the monies and/or interest owed by the due date (TLA s 75(a)).Even if forged mortgage, its indefeasibility ‘plainly’ extends to the mortgagor’s covenant to pay in a forged mortgage (Pyramid Building per Hayne J).Innocent mortgagor has obligation to pay the monies owning.What does an unregistered, forged loan agreement secure?If nothing connects registered mortgage to loan agreement, then registration secures nothing (Perpetual Trustees v Tsai):PT not fraudulent so registration stands, but indefeasibility would not extend to separate, unregistered loan agreement.Accordingly, PT couldn’t enforce mortgage as it couldn’t prove the debt to which the mortgage was secured.However, Doctrine of Incorporation allows a registered mortgage to incorporate by reference obligations in an unregistered loan agreement.Mortgage may incorporate a ‘memorandum of common provisions’ (MCP) lodged with the Registrar (TLA ss 91A, 91B).Solak v Bank of WA (Victorian authority):The word ‘you’ was consistently used in both the mortgage and MCP to refer to the innocent landowner.As a result, the forged loan agreement was incorporated into the registered mortgage.Distinguished Tsai – loan agreement not incorporated.Accordingly, Solak (‘you’) was held to agree to the terms of the mortgage and pay ‘all moneys’ owed to the Bank of WA.Victorian authority has been criticised in Westpac v Clark: ‘You’ must mean the true registered owner.If an imposter has forged an agreement then his covenant to pay is not within the scope of registered documents and therefore not secured over RP’s land.Co-owners’ liability (Van den Heuval v Perpetual):Issue #1 – Did mortgage secure any debt under forged agreement?Majority: YesPT and husband intended the mortgage to secure loan agreement even without wife’s signature.Loan to P secured by mortgage, and because of indefeasibility wife’s interest in the land was bound as well.Issue #2 – Could the mortgage be reopened as an unjust transaction under the CCC?Majority: NoYoung JA – CCC only protects mortgagor who enters into mortgage. Wife was ‘statutory mortgage’ by force of indefeasibility provisions and thus not protected.Hodgson JA – Because loan was for business purposes not covered by CCC.Is the innocent landowner personally liable for the debt, beyond value of land?Pyramid – there is a covenant to pay any debt.Although obiter only, was cited with approval by Solak.No further Victorian authority on this issue.NSW decisions hold that mortgagee can charge land with debt, but not registered owner (Tsai; Grgic). Indefeasibility ExceptionsStarting PointParty A and party B have their own interests, but A has registered.B must establish that there is an exception to indefeasibility of title on registration in order to establish own interests.TLA s 42(1) – RP is indefeasible upon registration, except:(a) Registrar makes error and issues two certificates – first in time wins; or(b) Mistake by area/boundary – subsequent certificate wins, unless purchaser purchases innocently for valuable consideration.What are exceptions to indefeasibility?Fraud – by RP or agent;In personam claim;Inconsistent Legislation;Paramount Interests;Volunteers;Registrar’s Power to correct errors.FraudWhat is the exception?If fraud has occurred, TLA s 42 provides an express exception to indefeasibility.What is ‘fraud’?Actual fraud, wilful blindness or moral turpitude brought home to registered proprietor at the time or just before registration or through an agent’ (Assets Co v Mere Roihi).Wilful blindness only fraud if failure to inquire amounts to actual dishonesty (Pyramid v Scorpion).More than mere negligence (Grgic).Notice of prior interest not fraud (TLA s 43; Pyramid).When must the fraud occur?‘In the acquisition of a currently registered interest’ (TLA s 42).Before acquisition of registered interest, not after (Loke Yew).cf Mason & Dawson JJ believe that dishonest intent after registration to repudiate agreement is fraud (Bahr v Nicholay).However, no majority in case - Toohey & Wilson JJ affirmed Yoke Lew - so only talking point in exam.What parties can this exception apply to? See sub-sections:Registered proprietor - fraud against a prior interest holder.No sub-section - apply information above to the facts.Agent - fraud by agent himself.Agent - knowledge of another’s fraud, failed to communicate.Agent Fraud - is principal liable?Fraud must be made by agent for principal to be liable - fraud by another party insufficient even if principal wilfully blind to it (Pyramid).If agent alleged to commit fraud, did fraud actually occur? Specifically relevant legal principles below:Agent must act within scope of authority (Schultz).Must be a sufficiently clear connection between the fraud and the task the agent is authorised to do (Dollars and Sense).Witnessing signature is not a mere formality, falls within scope (AGC v De Jager).However, if agent genuinely believes that impersonator is the real RP, then not acting fraudulently (Grgic).This falls under ‘dishonesty’ below, but kept together for simplicity!Agent must be dishonest.Fraud is subjective - need conscious impropriety to constitute fraud (Russo).If agent knows they are (i) setting transaction on path to registration, (ii) falsely attested or (iii) acted recklessly then likely guilty, but if ignorant likely no fraud will have occurred.Russo - Clerk signed attestation despite not witnessing signature (false attestation).However, had (i) lack of knowledge of importance of witnessing; (ii) did not understand the consequences of indefeasibility and (iii) had no wilful and conscious disregard.Agent witnesses fraud - is principal liable?Agent must act within scope of authority (Schultz).Must be a sufficiently clear connection between the fraud and the task the agent is authorised to do (Dollars and Sense).Witnessing signature is not a mere formality, falls within scope (AGC v De Jager).However, if agent genuinely believes that impersonator is the real RP, then not acting fraudulently (Grgic).If in scope, presumption that agent has communicated to principal and thus has knowledge of fraud (Schultz).AGC v De Jager - Employees either knew of false witnessing, or abstained from further enquiries for fear of learning the truth.In PersonamWhat is an IP claim?Basically personal equity claims, directed at a single individual rather than the world at large.RP bound by rights arising out of conduct, therefore subject to consequences of actions.Importantly, indefeasibility doesn’t prevent in personam claims (Frazer v Walker).To bring an IP claim, two requirements:Person bringing claim must have a known legal/equitable cause of action (Grgic). COA must arise from RP/agent/employee.e.g. Breach of contract, undue influence, etc.cf Mercantile Mutual v Gosper – no clear cause of action, but successful anyway. However, criticised and not followed.Breach/enforcement of trust (Bahr v Nicolay)Mason CJ/Dawson J – Express trust, as was in writing in N-T contract.Wilson, Toohey, Brennan JJ – Either CICT or remedial constructive trust.Presence of unconscionability.Forgery alone does not allow IP claim, must be something more (Vassos).Hayne J – e.g. misrepresentation, misuse of power, improper reliance on legal rights, knowledge of other party’s wrongdoing.However, must be more than mere notice (TLA s 43).Inconsistent LegislationTLA s 42 can be overridden by later statute if both are inconsistent.Court usually attempts to read Acts together, but if not see what subsequent Act does:If subsequent Act renders instrument void – can register to cure defect.Breskvar v Wall – Instrument invalid for not complying with Stamps Act, but registration made it valid.Horvath v Cth Bank:Strong presumption that Parliament would not intend dramatic changes to legislation;s 42 deals with effect of registration rather than validity of instruments/underlying contracts;Status quo is that title indefeasible upon registration (Frazer v Walker), regardless whether instrument was void or valid.If subsequent Act renders interest void – registration cannot cure defect (Calabro v Bayside).Paramount Interests (TLA s 42(2))(a) Crown Grant land.(b) Adverse possession.(c) Public rights of way.(d) Easements.RP subject to any unregistered easements existing over property.(e) Interest of a tenant (protected without registration).Equity of rectification: If a lease, tenant hold equitable leasehold interest and entitled to specific performance of real bargain (Downie v Lockwood).In this case, first in time rule applies despite equitable interest (Perpetual v Smith).P is deprived of normal indefeasibility, priority dispute as if two unregistered interests.Registration of lease irrelevant, and in Vic no apparent limit to duration of tenancy.(f) Unpaid land tax.Discovered from certificate issued under s 387 Local Government Act 1958; s 158 Water Act 1989.VolunteersOccurs when property is passed to a party without consideration. Two scenarios:R forges a transfer of O(RP)’s land to himself and registers, then transfers to the innocent V. Can O recover land from V?R has CICT with O(RP) – like Ogilvie v Ryan – but O dies and leaves property to V in will. Can R enforce her interest against V?In Victoria, unlike most states, volunteers don’t get better title than predecessor (Rasmussen; rejected Bogdanovic v Koteff):Volunteer RP does not obtain title free from prior equities (Rasmussen).If previous RP subject to IP claim, volunteer RP also subject.If previous RP defeasible for fraud, volunteer RP’s title also defeasible.However, obiter in Farah Constructions appears to uphold Bogdanovic, so law could change in future (i.e. exam!).Registrar’s Power to correct errors – Limited UseNo provision allowing Registrar to correct an entry procured by fraud.If there is a change, and then fraud – must go to Court.Registrar must make amendment to register if Court directs (TLA s 103(1)).Registrar has discretion (‘may’) to correct errors in the register (s 103(2)).Registrar has power to cancel titles/folios, create new ones and amend register in any way to give effect to Act (s 106(e)).e.g. Correct surveying measurement errors.‘Slip rule’ only – for mistakes only, not fraud (Frazer v Walker).Equitable InterestsRecognised under the Torrens System (Barry v Heider).[Keep notes as per Unregistered Interests section in main notes]How to protect equitable interestsRestrictive CovenantsRegistrar can record restrictive covenants on folio of burdened land (TLA s 88(1)).RP takes land subject to ‘encumbrances’ recorded on folio (s 42(1)).However, RC has no greater effect than would have under instrument recording it (s 88(3)).i.e. Recording RC affects its priority, but not indefeasible.CaveatsWhat are they?Statutory injunction under TLA s 89.s 89(1): Anyone claiming an unregistered interest on land can lodge a caveat with the Registrar to prevent registration of any transferee/proprietor, or any instrument modifying the land.Step-by-step processPerson claiming unregistered interest lodges caveat against dealings - must show ‘caveatable interest’, i.e. ‘estate of interest in land; (s 89(1)).Legal (RP cannot usually caveat to protect own interests - Swanstons Mortgage v Trepan);Equitable;Personal equities.Not mere equities (Swanston). Caveat recorded on title (s 89(2)), RP is notified (s 89(3)).RP can challenge the caveat:Can request Registrar remove caveat (s 89A); orGo directly to court to challenge (s 90(3)).If caveat lodged without reasonable cause, caveator liable for compensation to RP (s 118).Priority Dispute RulesMethod to resolve priority disputesWho are the parties?What are the interests of each party?Legal:Pretty much anything that has been registered under the Torrens System.Registered land means legal. If not registered, means not legal – can still be equitable.Equitable (unregistered/unregisterable interests):Vendor’s lien (Heid v Reliance);Option to purchase (Jacobs v Platt);Charge (Moffett v Dillon);Equity of redemption (Abigail v Lapin);Lease, easement, etc. created through a specifically enforceable contract.Mere Equity:Right to have transaction set aside for fraud (Latec Investments);Equity of acquiescence/estoppel (Inwards v Baker);Equity of rectification (Downie v Lockwood).If legal vs legal:The interest first registered prevails (TLA s 42(1)).Occurs even if RP had notice of the prior interest (s 43).If legal vs equitable/equity:RP’s title is indefeasible upon registration (TLA s 42(1)).However, exceptions may apply (See Indefeasibility Exceptions section):Fraud;In personam claim (e.g. personal cause of action);RP is a volunteer;Inconsistent legislation; andParamount interests.NOTE: use equitable vs equitable rules if s 42(2)(e) applies (Perpetual v Smith).If equitable vs equitable (see detailed section below):Start with ‘notice’ test – Moffett v Dillon;Merits test (Abigail) – ‘prima facie first in time’Identify any conduct by prior holder that could justify postponing them.Failure to caveat possible factor, but not fatal (depends on circumstances).Is the above conduct sufficient to postpone the first (Heid)?Estoppel best for ‘arming’ cases (Jacobs v Platt – see discussion in case).Reasonable foreseeability best for ‘inconsistent interest’ cases (Just Holdings).Finally, ‘better equity’ test if still unresolved (Rice v Rice).If prior equity vs subsequent equitable:Is the equitable interest a bona fide purchaser for value without notice (Latec)?Cannot caveat a mere equity interest (Swanston v Trepan).Equitable vs Equitable – Additional DetailNotice Test (Moffett v Dillon):Did the subsequent interest holder have notice of the prior interest?Definition of ‘notice’ – actual, constructive or imputed (PLA s 199).If notice, then stop – prior interest holder wins.If no notice, continue.Merits Test (Abigail v Lapin):Prima facie priority in time will decide the matter.Exception: Postponing conduct has occurred (essentially means that prior interest holder has brought the situation upon themselves).Postponing Conduct – Failure to lodge caveat:Is lodging a caveat necessary?Purpose of caveating is to prevent registration of subsequent dealings – not a notice to the world regarding the interest (Barwick CJ, Just Holdings).Failure to caveat a consideration of postponing conduct, not a basis.cf Callinan J in Black v Garnock – can be both an injunction and a notice to the world.Examples:Abigail – Failure to search for caveats irrelevant, as no caveat there in the first place.Jacobs – Failure to caveat does not count as a representation (for estoppel purposes below).Postponing Conduct – Heid v Reliance tests:Estoppel/‘Arming’ (e.g. Abigail; Heid):RP ‘arms’ a third party with the ability to represent himself to the subsequent interest holder.This representation by TP leads to creation of subsequent equitable interest, and detriment were this interest revoked.Example (Heid):H signed acknowledgement that he had been paid in full for sale (though hadn’t – therefore had vendor’s lien), and gave it to CI.CI registered transfer, then mortgaged to R. H discovered fraud, claimed priority over R’s mortgage.Gibbs CJ, Murphy & Wilson JJ – because H signed document R acted in its reliance, and detriment would occur if retracted.Failure to caveat also occurred, but conduct main issue.Reasonable foreseeability/Inconsistent Interest (e.g. Just Holdings, Jacobs):RP grants an interest to A, then a subsequent inconsistent interest (normally an identical one) to B.Questions to ask:Was it reasonably foreseeable at the time of the relevant conduct that a subsequent interest would be created in the belief that the prior interest did not exist?Is it reasonably foreseeable that the first party’s action would lead to the creation of the second party’s interest?Example (Heid):Mason & Deane JJ – It was reasonably foreseeable that, at the time of the act/omission by H, a later interest would be created on the assumption that there was no prior interest.‘Better Equity’ test (Rice v Rice):Seems highly similar to Abigail, but first in time is a last resort.Probably use to back up the Abigail principle that, without any exceptions favouring one equitable interest over another, the prior interest will win.General Law LandPrior legal vs. subsequent legal:Priority = whichever interest was acquired first.Prior equitable vs. later legal:Subsequent legal unless legal titleholder had notice (actual, imputed or constructive).If notice present, interest invalid.Prior legal vs. later equitable:Prior legal unless fraud has occurred.Prior equitable vs. later equitable:If interests in all other respects equal first in time prevails (Rice v Rice per Kindersley VC).‘Better equity’ test in Rice v Rice – must evaluate:Nature and conditions of respective interest (plays little role in modern decisions);Circumstances and matter of acquisition; andWhole conduct of each party.Prior equity vs. subsequent equitable:Bona fide purchaser of equitable interest who takes for value without notice of prior equity prevails. ................
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