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Lecture notes, lectures 1-10 - Property Law A

Property Law A (University of South Australia)

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PROPERTY A

TOPIC 1: The Concept of Property

Property

What is property?

 Property is defined as relations between persons in relation to things (Cohen).


 Therefore, because it is a set of relationships, more than one person can have property in an object.

Property rights and Contractual rights

 Proprietary rights are rights over things enforceable against the whole world (in rem).
 Contractual rights are rights enforceable only against a party to the contract (in personam).
 See King v David Allen.
 Can exist alongside one another (e.g. a contract creating property rights).

Classification of Property

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Property

Equitable & Legal

Real Personal

Incorporeal Corporeal Chattels real Chattels personal

Tangible Intangible
Chose in possession Chose in action
eg books & furniture eg shares & damages

 Real property = land.


 Corporeal hereditaments = rights of possession; tangible real property (e.g. land); and
 Incorporeal hereditaments = lesser rights over land; intangible real property (e.g. an easement).
 Personal property = chattels.
 Chattels real = e.g. leasehold interests; and
 Chattels personal = all other forms of personalty;
 Choses in possession = movable, physical objects; and
 Choses in action = intangibles.

 The origins of the dichotomy between real and personal property lie in the remedies available at common
law for the recovery of tangible objects. If a person dispossessed of an object could recover that object
(the res1) as of right it was classified as real property. Objects not so recoverable were regarded as
personal property – a person dispossessed of such objects had a ‘personal’ action for damages.
 Historically, leaseholds were regarded as personal property for the reason that the early law did not
permit the dispossessed leaseholder to recover the land itself. The lessee was limited to an action for
damages. This is because a free hold estate carried with it seisin (possession) and consequently the
protection of the actions for the recovery of land. The holder of a leasehold estate had no such remedy.

Protection of Proprietary rights

 In Australia, the Constitution confers power on the Federal parliament to make laws with respect to “the
acquisition of property on just terms from any State or person for any purpose in respect of which the
Parliament has power to make laws” (s 51(xxxi)).

1
Res = thing.

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 In Victoria, there is legislative but not constitutional protection. Upon notice of acquisition by a State
authority “every person who, immediately before the publication of a notice of acquisition, had an
interest in land that is divested or diminished by the acquisition of the interest has a claim for
compensation” (Land Acquisition and Compensation Act 1986 (Vic) s 30).
 The Charter of Human Rights and Responsibilities Act 2006 (Vic) s 20 provides that a person “must not
be deprived of his of her property other than in accordance with the law.”

 Additionally, property rights are recognised in international documents.


 For example, Art 17 of the Universal Declaration of Human Rights states that ‘(1) Everyone has the right
to own property alone as well as in association with others; (2) No-one shall be arbitrarily deprived of his
property.’
 Not incorporated into Australian law.
 However, it is persuasive authority. Per Brennan J in Mabo: “The common law does not necessarily
conform with international law, but international law is a legitimate and important influence on the
development of the common law, especially when international law declares the existence of universal
human rights.”

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Recognition of New Forms of Proprietary Interests

1. Characteristics of property

Property generally implies the right to:


1. Use or enjoy;
2. Exclude others; and
3. Alienate2,3.
(Milirrpum per Blackburn J)

As his Honour emphasises, “I do not say that all these rights must co-exist before there can be a proprietary
interest, or deny that each of them may be subject to qualifications.”

2. Theoretical justifications of property

1. Cohen’s analysis of property


 Under Cohen’s analysis, there are three fundamental characteristics of property:
(1) The right to exclude the world;
o Blackstone’s idea of property as the “sole and despotic dominion.”
o As Cohen points out, the essential factor is the power to exclude, whether exclusive or
shared with others.
(2) A realm of ‘private freedom’; and
o E.g. rights to use or enjoy and alienate;
o It is the right to do these things that is important, and not the actual doing, as there can be
“use without ownership and ownership without use” and “non-saleable property.”
(3) Endorsement by the State.
o Not mentioned by Blackburn J, but is hinted at (“each of them may be subject to
qualifications”);
o Under Cohen’s view, the state must approve of calling something ‘property’ and thus
involves policy considerations;
o This is because we must be able to count on predictable government help in enforcing rights
(e.g. in a state governed by the Mad Duchess of Alice in Wonderland, private property is
impossible because you could never tell the outcome of a dispute and therefore the support
of the state in excluding third parties);
o Per Bentham: “Property and law are born together, and die together. Before laws were made
there was no property, take away the laws, and property ceases.”
2
To alienate = to transfer to whomsoever you like.
3
As Mason J noted in R v Toohey, “It is generally correct to say that a proprietary right must be ‘capable in its
nature of assumption by 3rd parties’”.

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o According to Macpherson:
Moral right → enforceability → legal right.
If society believes property is a moral right, then there will be an enforceable claim, and
thus a legal right. What justifies this moral right?
o According to Philbrick:
Property is justifiable only in so far as it serves the public interest.

2. First occupation theory


 Finders, keepers.
 If you have possession, you have a better right to that property than most other people.

3. Locke’s labour theory


 Natural right (‘life, liberty and property’);
 A man should be entitled to reap what he has sown.
 If you put work into something, create something using your own labour, you should be entitled to get
some benefit for that labour in the form of property.
 See Evatt J’s dissent in Victoria Park.

4. Property and personality theory


 Kant and Hegel;
 An external expression of individual will and personality;
 The appropriation of things as private property is one of the important ways in which the individual
will objectifies itself and realises external freedom; hence private property is an institution essential
for the realisation of liberty;
 The act of willing was sufficient to establish title (cf. Locke).

5. Social utility theory


 Bentham’s utilitarianism;
 Greatest happiness for the greatest number.
 Private property facilitates human happiness by creating an incentive for thrift and industry. Since the
general welfare of society was enhanced by wealth creation, the advantages of private property
outweighed the suffering created by inequality.

6. Economic efficiency theory


 Posner.
 An incentive for efficient use of resources and to promote economic productivity.
 Q: Would recognising an object as property increase the efficiency of its use?
 According to Posner, there are 3 criteria for an efficient system of property rights:
(1) Universality: All resources should be owned by someone, except resources so plentiful that
everybody can consume as much without reducing consumption by anyone else (e.g. sunlight, or
air). No issue of efficient use arises in such a case;

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(2) Exclusivity: creates incentives to use resources efficiently, as it gives a reasonably assured
reward for doing so; and
(3) Transferability: resources will be shifted from less to more valuable uses through voluntary
exchange.
 However, Posner does note that in some cases the costs of affecting a transfer of property rights
(transaction costs) might be prohibitive. Or where the individual is not well placed to make
agreements that maximise efficiency (e.g. unequal bargaining power, lack of information, failure to
calculate costs/benefits). In these cases, exclusivity does not lead to the most efficient allocation of
resources.

7. Gray’s moral non-excludability


 Property has certain moral limits;
 Some resources are non-excludable because it is widely recognised that undesirable or intolerable
consequences would flow from allowing any one person or group of persons to control access to the
benefits which they confer;
 It would be “anti-social” to remove these resources from the commons;
 For example, humane, intellectual or sensory experiences (no ‘property’ in the right to listen, or to play
an instrument, or to paint pictures etc.).

3. Examples

 The courts can recognise new forms of proprietary interests (e.g. Tulk v Moxhay and Mabo);
 BUT this is rare.

Restrictive covenants

 Tulk v Moxhay
 Facts: T owned a garden block of land in the middle of Leicester Square and some surrounding houses. T
sold garden block to E. E made a contractual promise to T (a ‘covenant’) that “E, his heirs, and assigns”
would keep the garden block undeveloped. Later, M bought the garden block with notice of the covenant.
M argued that the covenant was not enforceable against him, since he was not a party to the contract
between T and E.
 Held: The covenant was binding on subsequent purchasers of the land if they had notice. It did not matter
that M was not a contractual party, as the covenant was a property interest thus enforceable (in equity)
against the whole world.

 Reasons (Lord Cottenham LC):


 The price of the original sale would be lower because of the covenant, and thus it would be
inequitable (unfair) for the original purchaser to resell it the next day without the covenant for a
greater price.

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 Practical implications: it would be impossible for an owner of land to sell part of it without
incurring the risk of rendering what he retains worthless.

Property in a spectacle

 Victoria Park
 Facts: VP was a horse racing venue. On his own land nearby, T constructed a platform overlooking the
racecourse. He allowed a radio station to install a race caller and broadcast the call. VP sought an
injunction on the basis of the tort of nuisance (interference with use, enjoyment of, and/or rights over,
land) because the broadcasting resulted in less people going to the races and paying for admission.
 Held: No property in a spectacle (narrow majority, 3:2).

 Reasons:
× Plaintiff was in a position to remedy the situation (cf. Tulk). Per Latham CJ, “the law cannot by an
injunction in effect erect fences which the plaintiff is not prepared to provide”.
× Places undue restraint on the freedoms of individuals (consequences of having rights enforceable
against the whole world). If such a proprietary right existed, then the plaintiff would have an action
against any interference, large or small (Latham CJ).
× Mere damage or expenditure of money is not enough to form a cause of action.
× No authority (Dixon J) – advocated the numerus clausus principle (claimed right must fall within a
recognised category to which legal protection arises).
× Element of ‘exclusiveness’ missing (no right to exclude others from looking, per McTiernan J).
× Not mentioned by the majority, but there are other ways to protect this interest (e.g. broadcasting
legislation, or strengthening of privacy laws). Recognising property rights is not necessary.

 Labour theory. Per Evatt J, dissenting, “it is indisputable that the defendant broadcasting company had
‘endeavoured to reap where it has not sown’.”
 Lack of authority not conclusive, because facts are new (Evatt J).
 It is an extreme application of the English precedent to say that because some overlooking is
permissible, all overlooking is necessarily lawful. Especially, as here, where D’s conduct was not
honest (D used the suburban bungalow in an “unreasonable and grotesque manner”, Evatt J). Rich
J, dissenting, also argued that this freedom to look is qualified; it has limits.

 ABC v Lenah
 Facts: L owned an abattoir. An anonymous trespasser videoed possums being killed. An animal rights
group sent the tape to the ABC. The ABC wanted to broadcast the video. Could L get an injunction?
Depends on if they had a property right in what was happening on their premises.
 Held: Again, no property in a spectacle.

 Reasons:

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× Similar to majority in Victoria Park, a cause of action does not exist simply because something
will damage business interests.
× Law of breach of confidence is adequate to protect private activities (Gleeson CJ). What is private?
An activity is not private simply because it is not done in public, nor because the owner of land
would prefer that it were unobserved. The disclosure or observation of information or conduct
must be highly offensive to a reasonable person of ordinary sensibilities. Here, activities of L were
not private.

 Policy considerations: serve as a deterrent to others who might be minded to obtain illegally, or to
use illegally obtained material for their own financial or other benefit to the detriment of people
whose rights have been infringed (Callinan J, dissenting).
 Criticised majority decision in Victoria Park as “a product of a different time” and an
“anachronism”4 (where sporting events were not worth so much money; in terms of admission
prices broadcasting deals, sponsorships and betting businesses). “It may be time for the recognition
of a form of property in a spectacle. There is no reason why the law should not, as they emerge, or
their value becomes evident, recognise new forms of property.”

Native title

 The three characteristics of property are culturally and historically specific.


 As Gray has commented, “property is a power-relation”. Subjects (those who can have rights over
objects) and objects (what things subjects can have rights over) are determined by historical power
relations. Some groups have been excluded from being ‘subjects’ (women, Aboriginals, slaves and Jews)
and some groups have even been included as ‘objects’ (slaves).

 Milirrpum
 Facts: Plaintiffs (present and past members of Gove clans) claimed D’s mining activities were wrongly
interfering with their property rights to use certain land to perform ritual ceremonies.
 Held: no proprietary interest in the land.
 Reasons:
× No right to exclude others. The greatest extent which this right can be said to exist is that the clan
could exclusively perform ritual ceremonies on some parts of the land.
× No right to alienate, since their relationship to the land was spiritual rather than solely economic.
× Right to use land present, but of little significance if others had concurrent use.
× Their usage of land did not fit with our Western notion of property (per Blackburn J, “there is so
little resemblance between property, as our law understands that term, and the claims of the
plaintiffs for their clans, that I must hold that these claims are not in the nature of proprietary
interests”).

 Mabo

4
A thing belonging to a period other than the one in which it exists.

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 Facts: The action was brought as a test case to determine the legal rights of the plaintiff Meriam people to
land on several islands, which were annexed to the state of Queensland in 1879. The Meriam people’s
usage of land was “so recognisably proprietary in nature” (cf. P’s in Milirrpum).
 Held: Australian common law recognised native title.
 Reasons:
 Test: Is the community in exclusive possession of that land? Satisfied for the Meriam people, but
not the Gove clans in Milirrpum (Brennan J).
 Inalienability is no longer a barrier.
 All justices expressly rejected any requirement that traditional rights conform to English concepts
of a proprietary interest in land - recognition of proprietary rights based on traditional law and
custom, and not common law.

 It might be concluded that the decision represents a Pyrrhic victory (achieved at excessive cost) for the
appellants for the reason that defining native title in the way the court did renders it a particularly fragile
interest, and ultimately worthless (Sackville & Neave).

Property in the human body

 Moore (1990, Supreme Court of California)


 Facts: In the course of treating the plaintiff Moore’s leukaemia, the defendant physician Golde removed
M’s spleen and other tissues and retained them for research. M not told of research. Prior to the operation
G knew that M’s spleen was likely to be valuable for research and commercial purposes. This was
because M’s white blood cells (T-lymphocyte cells) were malignant and overproduced a type of protein,
which was a special characteristic and would make it easier to identify which gene was the source of the
protein. G established a cell line from M’s cells and obtained a valuable patent (market worth $3 billion).
Upon discovering that his cells had been used for this purpose, M brought an action against D claiming
inter alia damages for conversion of his cells.
 Held: no conversion because no property in cells (5:3).5

 Reasons:
× Statutory limitations on a patient’s control over excised cells eliminate so many of the rights
ordinarily attached to property (Panelli J).
× The subject matter of the patent cannot be M’s property. The patented cell line is “both factually
and legally distinct” from M’s cells. It is the inventive effort that patent law rewards, not the
discovery of raw materials.

× Policy considerations:

5
Note, however, that Broussard J (dissenting) interprets that the majority decision is, not the broad proposition
that a removed body part is not property, but that a patient retains no ownership interest in a body part once it
has been removed from his body.

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o Hinder research. We must not threaten with disabling civil liability innocent parties who are
engaged in socially useful activities. Since conversion is a strict liability tort, the researchers
would have to investigate the consensual pedigree of each sample before use or risk litigation.
This will restrict access to necessary raw materials;
o Legislative is better placed to decide; and
o There are other causes of action that can protect a patient’s right to make autonomous medical
decisions (that is, doctrines of fiduciary duty and informed consent); it is not necessary to
distort property law.

 Other causes of action do not address M’s claim, which is the non-consensual use of his cells. M
should be able to recover the economic value of the right to control use of his body parts
(Broussard J).
 Recognising property rights in body parts does not “commodify” them (Broussard J in response to
Arabian J’s objection). It simply denies the source any proprietary protection.
 Lack of precedent and statute is not important (Mosk J).
 Property is a “bundle of rights”. Despite most rights being diminished by statute, what remains can
still be deemed in law to be a property interest. M had at least the right to do with his own tissue
whatever D did with it (Mosk J).
 Policy grounds (Mosk J):
o The fear of “hindering research” can be overcome by appropriate record-keeping (i.e.
originator of the tissue sample passes patient’s consent along with the sample).
o Promotes respect for the human body (the maj decision is analogous to slavery – both involve
“economic exploitation for the sole benefit of another person”).
o It is unfair and immoral for the source not to benefit from his tissue when other parties can.

4. Recognition by Parliament

 Legislation may step in to protect proprietary interests.


 Examples:
o Intellectual property.
o Water Act 1989 (Vic): Separates land ownership and water ownership. The right to take water from
certain waterways on property is governed by this Act. The right is a ‘water share’ and a property
right, and can be sold independently from land.
o Forestry Rights Act 1996 (Vic): Separates land ownership and tree ownership. Creates a new kind of
property right called a ‘forest property’ and includes ‘carbon sequestered by trees’.

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Doctrine of Fixtures

Fixtures

 A “fixture” is a chattel so attached to the land as to become a part of the land.


 For statutory purposes, ‘land’ includes fixtures (e.g. definitions of ‘land’ in s 18 of Property Law Act
(includes ‘corporeal hereditaments’) and s 38 of Interpretation of Legislation Act 1984 (includes buildings
and other structures permanently affixed to land)).
 Ownership of land entitles a landowner to ownership of fixtures.
 If land is sold:
o Vendor keeps the chattels (unless expressly mentioned in contract);
o BUT purchaser gets the fixtures.

Test: Is X a fixture?

 Question of objective intention – why was the item put in place?

1. Is there an enforceable contractual provision regarding X?


 If so, this applies. It shows a definite objective intention.
 Re removal of fixtures: if provision contradicts LT Act it still applies, but if it contradicts RT Act
it probably doesn’t apply considering the differences in bargaining positions between the two
parties.
 If not, go to 2.

2. Q1 Degree of annexation: How is the object attached to the land?


 If object is attached to the land at all,6 it is presumed to be a fixture. This presumption is
rebuttable and the party arguing it is a chattel bears the onus of proof to rebut the presumption.
 If object is not attached but simply resting on the land on its own weight, it is presumed to be a
chattel. This presumption is rebuttable and the party arguing it is a fixture bears the onus of
proof.
(NAB v Blacker per Conti J)
 Factors to consider when assessing strength of presumption:
o The mode and structure of annexation;
 The more securely attached the object is, the stronger the presumption that it is a
fixture (NAB v Blacker);
o Whether removal would cause damage to: the land or buildings to which the item is
attached, or the item itself (e.g. in NAB, the pumps, sprinklers and valves could be

6
However slight or indirect (see Belgrave).

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removed without damage (they were designed to be moveable and replaceable) and
thus chattels); and
o Whether it would cost more to remove it than the item is worth.

3. Q2 Object of annexation: For what purpose was the object attached to, or placed on, the land?
 Factors to consider when assessing if presumption is rebutted:
o Whether the object was attached for the better enjoyment of the object (if so, chattel),
or for the better enjoyment of the land or buildings to which it was attached (if so,
fixture). For example, in Belgrave, airconditioning plants were held to be fixtures
because they were installed for the permanent improvement of the land;
o The function to be served by the annexation of the item (e.g. printing presses were
secured to a concrete foundation by nuts and bolts in order to keep them steady when in
operation were held to be chattels in Attorney-General v RT Co);
o The nature of the property the subject of annexation; and
o Whether the item was to be in position either permanently (suggests fixture) or
temporarily (chattel).

4. Reach conclusion and state consequences.

 Examples:
NAB v Blacker
o Facts: B’s dairy farm was mortgaged to NAB. NAB’s security included all plant, machinery and other
improvements attached to the land at the date of the mortgage and subsequently attached. B defaulted
and NAB took possession of the land. NAB sought order for B to return parts of the irrigation system
(pumps, sprinklers and valves) that they had removed.
o Held:
Q1: Pumps and sprinklers were not attached to the land, so were presumed to be chattels. Valves
connected to the underground pipes were affixed to the land, so were presumed to be fixtures.
Q2: NAB argued that the irrigation system should be viewed as a whole. Conti J rejected this, saying
that the underground pipes can be distinguished from the other ancillary equipment and the removal of
the latter does not render the system inoperable. No evidence of any objective intention to make any
items part of the land. All were removable without damage, and cost of removal less than their value.

Belgrave v Barlin-Scott
o Facts: Airconditioning plants installed on the roof. Each plant stood on its own weight, was connected
to the water reticulation system and electricity. BS removed the plants and B sought delivery or
damages.
o Held (per Kaye J):
Q1: Plants were connected to water pipes by 4 bolts and nuts. This slight, indirect fixing to the land is
sufficient to raise the presumption that it is a fixture.

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Q2: Installed for permanent improvement of the land (they were an “essential part of the buildings
necessary for their use and occupancy as modern office premises”), and thus a fixture.

Removal of fixtures

 At common law, if a tenant installed fixtures onto the land, the tenant has the right to remove those
fixtures in a reasonable time provided they did not damage the property.
 Right to remove fixtures extended by legislation.

Landlord and Tenant Act 1958 (Vic) s 28(2)

 Applies to non-residential leases.


 Subject to the terms of the lease, a tenant who installs fixtures in leased premises retains the ownership of
them.
 The tenant is entitled to remove them during the time the tenant is in possession, but not afterwards
unless the landlord consents.
 The tenant must restore the premises to their original condition.

Residential Tenancies Act 1997 (Vic) s 64

 Applies to short term residential leases (see below).


 Subject to the terms of the lease, a tenant must not install fixtures without the landlord’s consent (s 64(1)
(a)).
 If the tenant has renovated or altered the premises or installed fixtures with or without the landlord’s
consent, they must restore the premises to their previous condition or compensate the landlord (s 64(2)).
This does not apply if the tenancy agreement otherwise provides or the landlord and tenant otherwise
agree (s 64(3)).

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TOPIC 2-3: Introduction to Land

Terminology

 “Title” is defined as ownership rights over property as recognised by a legal system.


 “Ownership” means the right recognised by the law, in respect of a particular piece of property (real or
personal) to exercise with respect to that property all such rights as by law are capable of being exercised
with respect to that type of property against all persons, including the right to possession of the property
and any proceeds of its sale.

 Three types of land title in Victoria:


1. Native title;
2. General Law land (in order to establish good title to GL land, it is necessary to trace an unbroken chain
of transactions, or dealings, with the land back for at least 30 years to what is known as “a good root
of title”). Governed by the Property Law Act; and
3. Torrens System land (title is proved by production of the Certificate of Title to the land). Governed by
the Transfer of Land Act and, unless expressly excepted or inconsistent, the relevant provisions of
the Property Law Act.

 Can also have legal and equitable interests.


o “Legal interests” are enforceable against the whole world; whereas
o “Equitable interests” are enforceable against a more limited range of people (a narrower sphere of
enforceability).

Fragmentation of Proprietary Interests

 The property rights in relation to a particular object may be subdivided in a number of ways.
 In the case of land, interests may be divided by reference to:
1. Time;
2. Space;
3. Nature of title;
4. Whether it is enforceable in law or equity;
5. Nature of the right or interest; or
6. Whether the interest is shared with another or others.

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TOPIC 4: Fragmentation by Reference


to Time: The Doctrine of Estates

Terminology

What is meant by an ‘estate’?

 Under the Doctrine of Tenure (see Policy), we don’t own land absolutely but only have an estate or
interest in it.
 Estate is a “right, title, claim or demand” [in land].
 An estate is an object separate from the land itself.
 The owner of an estate is not entitled to ownership of land but to seisin (right to possession at some time).
 The nature of the estate determines the extent and duration of the right to possession.
 Thus successive estates can be created in the same land.

Estates

Freehold
Uncertain Leasehold
duration Certain
duration

At
Fee simple Fee tail Life estate Fixed term Periodic At will sufferance

Freehold estate

 A freehold estate has uncertain duration.


 Fee simple:
o A right to exclusive possession that may last ‘forever’.

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o Greatest interest in land recognised by the common law.


o ‘Fee’ means inheritable and ‘simple’ means not limited to a particular class of heirs (cf. fee tail).
o Rights: use, alienate and exclude.
o Alienation
 Can be inter vivos disposition during life, or testamentary disposition by will.
 Types of alienation:
1. Absolute (“to X [and his heirs] in fee simple”); or
2. Modified.
Either:
i. Determinable fee simple; or
 For example, “To X in fee simple until Blackacre ceases to be used for
residential purposes”.
 Interest continues until occurrence (or non-occurrence) of some specified
event which is not bound to happen (that is, the event must not be bound to
occur at some time, for it is an essential characteristic of a fee simple estate
that it may last forever).
 If event occurs, fee simple automatically reverts to grantor.
 Look for words like: while; as long as; until; or, during.
ii. Conditional fee simple.
 For example, “To X in fee simple, but if Blackacre ceases to be used for
residential purposes, his estate shall thereupon cease.”
 Grant subject to a condition subsequent.
 If the condition is met, the grantor may re-enter the land. If the right of re-
entry is exercised, X’s fee simple estate will end. This right of re-entry is
alienable.
 Look for words like: on condition that; but if; or, if it happens that.

 Fee tail:
o An estate limited to a particular person and their specified descendants.
o E.g. “To X and the male heirs of his body”.
o Fee tail interest holder could alienate it but only for duration of his/her life (then it had to pass to
descendants).
o Can no longer be created in Victoria (PLA, s 249). If you try to create one, it is interpreted legally as
giving rise to a fee simple with no limitations on alienation.

 Life estate:
o An estate measured by the life of a person.
o Two types:

1. Life estate for the life of the grantee (“To A for life”). A has right to possession for the term of
his natural life; or

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2. Life estate for the life of a person other than the grantee (life estate pur autre vie; for the life
of another). “To A for the life of B”.
o If the cestui que vie (‘he who lives’) dies, the interest will revert back to the grantor (a fee simple).
o Alienation
Inter vivos disposition
 Can assign life estate (sell or give), thereby creating an estate pur autre vie.
 Can also assign an estate pur autre vie.
Testamentary disposition
 Cannot devise a life estate (it doesn’t exist after death).
 BUT can devise a life estate pur autre vie.
o Liability: must not commit waste (see below).

Future interests

 A future interest is a right to possession at a future date.


 It is a present estate and may be disposed of inter vivos or by will.
 E.g. “To X for life and Y in fee simple”. Y’s right is vested in interest (a future interest), cf. X’s right,
which is vested in possession (a present interest).
 Two types:
1. Reversions; and
o Fee simple reverts back to grantor or their estate.
o The grantor is called the reversioner, and has a fee simple reversion.
o This reversionary interest can be alienated by the grantor.
o E.g. H makes a gift of his property “to W for life.” W acquires a life estate. H has a fee simple
reversion – upon W’s death, H’s fee simple interest will vest in possession.
2. Remainders.
o Fee simple goes to a 3rd party.
o The 3rd party is called the remainderman, and has a fee simple remainder.
o This remainder interest can be alienated.
o E.g. H makes a conveyance “to W for life and then to C in fee simple.” W has a life estate. C
has a fee simple remainder – upon W’s death, C’s fee simple interest will vest in possession.
o Two types:
i. Vested remainder; or
 An interest bound to take effect in possession at some future date.
 Person entitled to interest must be identifiable/ ascertainable.
 AND there must be nothing in the way other than the determination of a prior estate.
 No conditions attached.
ii. Contingent remainder.
 An interest that may never fall into possession because there is a condition attached.
 Becomes vested only when the condition precedent is satisfied.

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 E.g. “To B for life, then to C if she should marry D”. If C marries D, she now has a
vested fee simple remainder. If B dies before C has married D, C cannot get anything
and fee simple will vest in the grantor. Note: it is uncertain whether, if C marries D
after B dies, it vests in C – presumably not, policy arguments and contingent fee
simple remainder expires on B’s death (since after B’s death condition for marriage
to occur before B’s death has lapsed).

Doctrine of Waste

 To protect the interests of future interest holders.


 Reconciles conflicting interests of life tenant and remainderman.
 Requires life estate holder to act reasonably and enables the holder of remainder the right to sue life
tenant if life tenant ruins the land/ completely destroys the land so it’s of no benefit to the person taking
possession in the future.
 Liability of life tenant depends on type of waste:
o Ameliorating waste (alterations which improve the land. It’s aimed at protecting the character of the
land. Will lead to nominal damages, if at all);
o Permissive waste (failure to keep in satisfactory state of repair [omission]. Not liable, unless obligation
to repair in instrument);
o Voluntary waste (positive act of doing injury to the land [commission]. Liable, unless instrument
creating estate makes him ‘unimpeachable for waste’); and
o Equitable waste (where life tenant ‘unimpeachable’, equity was prepared to restrain life tenants who
unconscionably exercised their legal rights at the expense of the remainderman).

Leasehold estate

 A leasehold estate has either certain duration or one which is capable of being made certain.
 Leaseholds are classified as personal property.

 What happens to the freehold when a lease is granted?


 Grant of a lease by L to T:
o T gets a leasehold estate and rights to use of property.
o L retains the fee simple vested in possession, but subject to the term of the lease. L has a leasehold
reversion (a fee simple reversion).

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TOPIC 5: Fragmentation by Reference


to Sphere of Enforceability: Legal and
Equitable Interests

How Trusts Arise

 A trust affects a split in the legal and equitable ownership of property:


o Law recognises one person as the legal owner (a ‘nominal owner’, no right to benefit; trustee);
o Equity recognises another person as owner (the person who is entitled to benefit from the property;
beneficiary);
o Both have a proprietary interest;
o But with different spheres of enforceability.
 The result is that the trustee (legal owner) holds the property for the benefit of (on trust for) the
beneficiary (equitable owner) – fiduciary relationship.
 Trusts can arise in 2 main ways:
1.Created expressly by; or
o Transfer: “A conveys Blackacre to T on trust for B”; or
o Declaration: “A owns Blackacre. A declares himself as trustee of Blackacre for B.”
2.By operation of equitable principles.
o Trusts may be presumed or imposed by a court in its equitable jurisdiction.
o A beneficial interest in land necessarily suggests the existence of a trust.
o Two main types: constructive trust (see Topic 11) and resulting trust.

 Examples:
 X conveys his property “To A on trust for B”. X has nothing. A has a legal fee simple (present – vested in
possession). B has an equitable fee simple (present – vested in possession). B, as the equitable owner, has
the right to possession, use and enjoyment.
 X conveys his property “To A for life then to B on trust for C”. X has nothing. A has a life estate (vested
in possession). B has a legal fee simple remainder (vested in interest). C has an equitable fee simple
remainder (vested in interest).

Historical Development of Equitable Jurisprudence

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 Where no writ available a person could petition the King who sat with his advisors including the
Chancellor for relief. Chancellor started to hear these petitions without King. Chancellor was a religious
person and could determine the disputes as to conscience. Fairness, mitigating harshness of common
law. Was not a court to start with but became more so (Court of Chancery). There was no precedent and
the courts of equity had broader remedies than that of CL court (injunction and SP). Equitable developed
very distinct causes of action (generally not approximated at all in CL) and some specific types of legal
arrangements not known to CL (e.g. partnerships and trusts).
 Equitable remedies are discretionary.
 Courts are vested with both equitable and common law jurisdiction.
 Where equity and common law conflict, equity will prevail (Supreme Court Act 1958 (Vic) s 29).
 The recognition of the trust evolved from the earlier device of the ‘use’.

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TOPIC 6: Fragmentation by Reference


to Time: Leasehold Estates

A. Terminology

 Lessor = landlord = person granting the lease.


 Lessee = tenant = person taking the lease.
 The lessor is said to lease or let the premises (demise7 is occasionally used).
 Leasehold reversion = lessor’s interest in the land during the currency of the lease.
 Assignment = transfer of whole right to another (e.g. if the lessor disposes of his leasehold reversion, he
is said to ‘assign the reversion’; if the lessee disposes of his leasehold interest, he is said to ‘assign the
lease’). Important point is that they give away ALL of their interest in the land.
 Sub-lease = tenant sublets the premises for any period less than the duration of the lease. The tenant has
not given away all of their interest; they still have obligations under the lease. The lessee continues to pay
rent to the lessor, but is now entitled to receive rent from the sublessee instead of remaining in occupation
of the premises (i.e. lessee is both a tenant and landlord).

B. Essential characteristics

Q1: Right to exclusive possession?

 Exclusive possession is control of the premises to the exclusion of all others.


 Look at the objective intention of the parties to grant exclusive possession (Radaich per Windeyer J;
approved in Street v Mountford). What rights does the agreement create? If a right of exclusive
possession, then it is a lease.
 Factors to look at:
o The terms used are not relevant (“Parties cannot turn a tenancy into a licence merely by calling it one”
per Lord Templeman in Street).
In Radaich the deed was held to create a lease, despite it using the terms ‘licence’, ‘licensor’ and
‘licensee’. Similarly, in Street, the agreement was held to be a lease, despite it being called a
‘licence’ and providing that it did not give a tenancy protected under legislation.
o Who has physical control of entry?
In Radaich, the ‘licensee’ had keys to the doors and deadlocks (a “lock-up shop”).

7
Demise = a lease of land.

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o Who is allowed entry, and under what circumstances?


In Radaich the landlord could come in and inspect, but had to give 24 hours notice. A reservation
to the landlord of a limited right to entry is not inconsistent with a grant of exclusive possession –
subject to such a reservation, a tenant can exclude the landlord as well as 3rd parties from the
demised premises (per Windeyer J).

Examples

 Radaich v Smith (High Court)


 Facts: S granted R the right to conduct a milk bar business in their premises for 5 years, based on the sole
and exclusive ‘licence’. The deed also used the terms ‘licensors’ and ‘licensees’. There was a term that
she would pay an annual sum by weekly instalments in advance.
 Held: Lease. R had been given exclusive possession.

 Street v Mountford (House of Lords)


 Facts: M was granted exclusive possession of a furnished room under a written agreement labelled a
‘licence’. She was obliged to pay a ‘licence fee’. There was an express term that the agreement was not to
give the ‘licensee’ a tenancy.
 Held: Lease.

Q2: Certainty of duration?

 At the beginning of the lease, the lease must have a certain maximum duration:
o Lace v Chantler: A lease “for duration [of war]” was held to be invalid because it was impossible to
ascertain when the lease would end.
o NB. As long as the maximum period of the lease is certain, the fact that it may be determined within
that period on the occurrence of an event the timing of which is uncertain, does not render the
lease invalid. Thus the effect of Lace in England was overcome by the Validation of War Time
Leases Act 1944, which converted leases for the duration of the war into terms of 10 years
determinable at the end of the war by one month’s notice on either side.
o Similarly, in Prudential Assurance, the tenancy was to continue “until the land was required by the
council for road widening purposes.” Invalid fixed term lease as uncertain maximum duration.

 Does it apply to periodic tenancies?


o In Prudential Assurance, invalid fixed term lease.
o But, since the tenant went into possession and paid rent on a yearly basis, there was a periodic tenancy
determinable on 6 months notice. The terms of the fixed term lease applied to the periodic lease to
the extent they were consistent.
o The rule in Lace v Chantler applies to periodic tenancies.
o Periodic tenancies are not uncertain because they are determinable on notice and thus this power cannot
be restricted.

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o Here, the landlord could determine the tenancy even if land not required for road widening.
o To say otherwise would make a “nonsense” of the rule of certainty of duration and the concept of a
periodic tenancy (as Lord Templeman pointed out, “It is of the essence of a periodic tenancy that
both the landlord and tenant shall be entitled to give notice determining the tenancy”).

If NO exclusive possession and/or NO certainty of duration, NO LEASE, TRY LICENCE

C. Classification

Q3: What type of lease is it?

1. Fixed term (tenancy for a fixed term or term of years):


 Certain maximum duration (1 day or 999 years);
 Expires automatically at end of period;
 Always created expressly (oral or written).

2. Periodic tenancies:
 A tenancy for a fixed period, with provision it will continue for similar term of same period
unless determined;
 Terminates when appropriate notice given;
 Even though it can roll over indefinitely, it’s deemed to be certain because period is certain;
 Can be created expressly, when there’s an invalid fixed term lease or after expiry of a fixed
term lease (see Prudential Assurance).

3. Tenancy at will:
 Consent to occupy given by lessor but no rent payable by tenant;
 Can be determined at any time by either lessor or lessee;
 ‘Deemed’ determined after 1 year (important for Topic 14 AP);
 The lessee cannot alienate their interest;
 Not really a leasehold estate as no defined duration, but so called for convenience;
 Arises expressly (uncommon) or by implication (‘holding over’ or ‘early possession’).

4. Tenancy at sufferance:
 When a tenant enters property lawfully but wrongfully continues in possession without
consent or dissent (e.g. under a lease for a fixed term where lease is terminated, ‘holding
over’);
 Terminated at any time without notice;
 Created only by implication;
 Again, not genuine leasehold estate.

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D. Creation

See Topic 12.

E. Leasehold Covenants

 The rights and duties of landlords and tenants may derive from a number of sources, including:
1. Covenants expressly agreed to between the parties
2. Covenants implied by the common law
3. Covenants implied by statute
 ‘Covenant’ means any promise in a lease or an agreement for a lease.

1. Express covenants

 The lease is a contract and the parties are generally free (subject to statute) to agree on terms.
 Landlord’s covenants usually include:
o Allowing tenant quiet enjoyment; and
o To make structural repairs.
 Tenant’s covenants usually include:
o Obligation to pay rent, rent review etc.;
o To make non-structural repairs;
o To use the premises only for specified purposes;
o Not to assign or sublet without L’s permission; and
o Restrictions on use/forfeiture.

2. Covenants implied by common law

 In the absence of an express covenant dealing with the same subject matter, the common law will imply
certain covenants. Note these are less important today (rights and obligations either regulated by
legislation or expressly set out).
 Why might covenants need to be implied into leases?
i. Covenants implied because of the existence of custom or usage;
ii.Covenants implied in fact to give business efficacy to the lease (implied to give effect to the presumed
intention of the parties); or
iii. Covenants implied by law from the nature of the contract itself, irrespective of the parties’
intentions, implied in all contracts of that class or type (test is necessity).

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Implied obligations of the landlord

i. Implied condition of fitness for human habitation at the commencement of the lease

ii. Implied covenant for quiet enjoyment

 The tenant is permitted to peaceably hold and enjoy the demised premises without interruption.
 Test for breach: Has the ordinary and lawful enjoyment of the premises been ‘substantially interfered’ with
by the acts of the landlord (Hawkesbury)?
 Question of fact.
 For example, in Hawkesbury, the landlord’s relocation of the exhaust fan was a ‘substantial interference’ as
the restaurant could not operate at full capacity. Here the lessor knew that the premises would be used as a
restaurant (if they didn’t know, then arguably no breach, since no interference with ‘ordinary’ enjoyment).

 Hawkesbury Nominees v Battik


 Facts: B, the sub-tenants, were running a restaurant in the basement of building leased by HN. The
ventilation was inadequate, causing an increase in smoke and heat in the kitchen. As a result, the restaurant
could not operate at full capacity (reduced from 137 to 20-30). B claimed breach of covenant for QE or
breach of implied term not to interfere with air system so as to render the premises unfit for purposes of a
restaurant.
 Held: The ‘acts of the landlord’ complained of was that they relocated the exhaust fan before B was the
assignee of the sub-lease. Hill J said this relocation was a “continuing breach”, which spanned both the
initial tenancy and B’s tenancy. The relocation must have been a ‘substantial interference’ at the time (since
the mere fact that B became a tenant cannot turn what was not a breach into a breach); or the situation must
have deteriorated so that effects of action only became obvious over time. In this case, both were satisfied.

iii. Implied obligation not to derogate from the grant

 If the grant is made for a particular purpose, the lessor is under an obligation not to use the land retained by
him in such a way as to render the land granted “unfit or materially less fit” for the particular purpose for
which the grant was made.
 Test:
1. Has there been a breach of covenant?
 Q: Has there been a “substantial interference” with the right of occupation of the lessee so that the
premises are rendered “substantially less fit” for the purpose for which they were let?
 Do not need practical frustration of purpose of lease.
 Physical interference is not required.
2. If interference due to activity of 3rd party, is the landlord liable for breach?
 According to MacPherson JA in Aussie Traveller, can be argued on two lines:

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i. Failure by lessor to enforce provisions: The lessor is in breach of the implied covenant not to
derogate from its grant if, through lease provisions, they were capable of correcting or
terminating the interfering conduct but failed to do so (ratio decidendi); or
ii. Reasonable foreseeability: The lessor is in breach if, at the time of demising the premises to
the 3rd party, they knew or ought reasonably to have foreseen that the activities of the 3rd party
would interfere with the lessee’s purpose for which the premise was let (obiter dictum).
 For example, in Aussie Traveller, (i) there was an express clause in the lease between landlord and
3rd party that they were not to cause nuisance, damage or disturbance to any other tenant. The
landlord did not enforce this clause are therefore liable. And (ii) the lessor was aware of the
sawdust problem, and must or ought reasonably to have foreseen that, unless controlled, it was
likely to effect the lessee’s business.
(Aussie Traveller)
 Question of fact.

 Aussie Traveller v Marklea


 Facts: AT leased part of a building from M for manufacture and sale of canvas goods. M also leased
adjacent part to Top Flight, who makes timber staircases. The 2 premises separated by partitions, but gap
near roof. Sawdust from TF blown into AT premises and damaged products and the noise was very loud.
 Held: Substantial interference and M liable due to failure to enforce clause with TF.

Relationship between i. and ii.

 Differences in scope:
o NDG requires interference to be from the land retained by the landlord (if landlord retains no land, no
NDG – e.g. threats);
o NDG requires an awareness of purpose of the lease (if unknown or unusual then no NDG  but
arguably this is also required for QE).

 Can sometimes argue both in the alternative.


 As Hill J says in Hawkesbury, there will be a breach of the covenant for quiet enjoyment or alternatively the
implied covenant not to derogate from the grant where the acts or omissions of the lessor are such as to
render the demised premises unfit for the purpose for which the leased premises are intended to be used.

Implied obligations of the tenant

i. Implied covenant to use the premises in a tenant-like manner


ii. Implied duty not to commit waste
iii. Implied covenant to yield up possession

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3. Covenants implied by statute

Leases of Torrens System land

 s 67(1) Transfer of Land Act provides for a number of covenants to be implied into leases for more than 3
years and registrable under s 66:
o (a) Lessee will pay rent, rates and taxes;
o (b) Lessee will keep and yield up the leased property in good and tenantable repair;
o (c) Lessor may once in every year enter upon the leased property and view the state of repair;
o (d) Right to re-enter if the rent is in arrear for the space of one month, or if breach or non-
observance of covenants continues for the space of one month.
 Implied into registered assignments of leases – assignee will observe all covenants in assigned lease and
will indemnify tenant (s 67(2)).
 Implied into sub-lease of registered leases – sub-tenant will observe all covenants of head lease (s 71(4)).
 Can contract out of these by agreement (s 112).

F. Assignment

 There may be a covenant in lease not to assign or sublet the premises without prior consent of landlord.
 Modified by s 144(1) Property Law Act:
Covenant shall be deemed to be subject to a proviso to the effect that such consent shall not be
unreasonably withheld and that no fine or sum of money in the nature of a fine shall be payable
for or in respect of such licence or consent (except for reasonable expenses incurred).
 BUT effect of this provision can be avoided by ‘express provision to the contrary’.

G. Enforceability of Leasehold Covenants After Assignment

 Three basic scenarios:


1. Assignment by the tenant to third party (assignee);
2. Assignment by landlord (leasehold reversion);
3. Sub-lease by the tenant to third party.

 The legal relationships:


o Privity of contract (between the contracting parties); and
o Privity of estate (the relationship of landlord and tenant between two parties – a property relationship,
rather than contractual relationship).

 BIG ISSUE – What covenants impliedly pass with the land?


 A lease creates privity of contract AND privity of estate.

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 Covenants are usually enforceable between parties on the basis of privity of contract.
 However, a significant exception developed to the doctrine of privity of contact, which allowed the
burden and benefit of certain covenants in leases to run with the lease (i.e. so covenants are enforceable
by or against assignees).
 Can be provided by statute.

Scenario 1: Assignment by tenant

After Tenant Assigns

Landlord Lease T
(privity of contract)
(privity of estate)

Tenant

Assignment
contract
(pr
ivi (privity of
of
ty contract)
es
tat
e)

Assignee

 Is assignee bound by (and can assignee enforce) the covenants in the original lease?
 Certain leasehold covenants will bind tenant’s assignee (and remain enforceable by assignee), but:
o Only while privity of estate between landlord and assignee; and
o Only those covenants which touch and concern land (see below for definition).
(Spencer’s case)

 Is original tenant still bound by (and can original tenant still enforce) the covenants in lease?
 Depends on wording of the covenant in lease between L and T:

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o If tenant covenants ‘on behalf of himself and successors in title’ then yes; or
o If tenant covenants expressed to ‘continue only while tenant continues as tenant’ then no.
 The assignee will be primary debtor, but if T is still bound by covenants, T can be sued by L.
 However, if no express indemnity, T can seek indemnity from A (s 77(1)(c) Property Law Act).

 So, after assignment, if there is a breach of covenant landlord can choose to sue:
o Original tenant (privity of contract – subject to above); or
o Assignee (privity of estate – subject to above).

Scenario 2: Assignment by landlord

Picture 2: After Landlord Assigns

^ Landlord Lease Tenant


(privity of contract)
(privity of estate)

Assignment
Reversioner
contract
(privity of
contract) te)
s ta
e
y of
t
pr ivi
(

 Are covenants in lease enforceable by or against reversioner?


o Yes, but under statute (Property Law Act).
o s 141: Benefits. The benefit of covenants ‘having reference to the subject-matter’ of the lease are
enforceable by R.

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o s 142: Burdens. The obligations of covenants ‘having reference to the subject-matter’ of the lease bind
R.
o ‘Having reference to the subject-matter’ = ‘touch and concern’.
o Note: only for non-rent covenants, because s 141 says that rent is covered.

 Are covenants enforceable by or against landlord?


 Enforceable by: L gives up right to sue for past breaches unless reserved in assignment document (right to
sue vests in R).
 Enforceable against: L still liable for breaches before and after assignment (but as with assignments by
tenants, it can be limited by wording in the original lease itself). L can seek contribution (through action
for contribution).

 So, after assignment, if there is a breach of covenant tenant can sue:


o Landlord (privity of contract – if not excluded by original covenant); or
o Reversioner (privity of estate; primary debtor).8

‘Touch and concern’ the land

 Examples:
Covenants by the tenant to:
 Pay rent;
 Repair the premises;
 Not to assign or sublet without L’s prior consent;
 Insure the premises against fire; and
 Use the premises as a private dwelling only.
× Pay rates assessed in respect of other property; and
× Pay a sum of money not reserved as rent to a 3rd party.
Covenants by the landlord to:
 Renew the lease;
 Consent to the assignment of a lease;
 Not build on certain parts of neighbouring property; and
 Supply the rented premises with good water.
× Allow the tenant the right to purchase the property;
× Pay the tenant a fixed sum of money at the end of the lease unless a renewal is offered and
accepted; and
× Purchase buildings erected by the tenant.

 If the covenant in question is a novel one, ask:


1. Does it satisfy Lord Oliver’s test? (P&A Swift)

8
NB. If T sues R for obligations of L, then R can get contribution from L.

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i. The covenant benefits only the reversioner for time being, and if separated from the reversion,
ceases to be of benefit to the covenantee;
ii. The covenant affects the nature, quality, mode of user or value of the land of the reversioner;
iii. The covenant is not expressed to be personal (that is to say, neither being given only to a specific
reversioner nor in respect of the obligations only of a specific tenant); and
iv. The fact that a covenant is to pay a sum of money will not prevent it from touching and concerning
the land so land as the 3 foregoing conditions are satisfied and the covenant is connected with
something to be done on to or in relation to the land.
Note: in above test, the reversioner = person enforcing the covenant against covenantor.
2. Does the covenant affect the landlord in their normal capacity as landlord, or the tenant in their normal
capacity as tenant? I.e. a covenant that would be found in a typical landlord-tenant relationship (e.g. not
very specific or personal).

 P&A Swift Investments


 Facts: L leased to T, a subsidiary of D. D guaranteed T would pay the rent and honour the lease. L’s
liquidator assigned the reversion to P, but the assignment did not specifically include an assignment of the
benefit of the guarantee to P. T defaulted and D refused to pay under the guarantee.
 Did D’s covenant guaranteeing that T’s covenants, which touched and concerned the land, would be
performed and observed itself ‘touch and concern’ the land?
 Held: Yes, D liable (“A surety for a tenant is a quasi tenant who volunteers to be a substitute or twelfth man
for the tenant’s team and is subject to the same rules and regulations as the player he replaces” per Lord
Templeman). If the surety guarantees obligations of the tenant which touch and concern the land, then that
suretyship covenant itself touches and concerns the land. There was no privity of estate between P and D, so
s 141 cannot apply. Thus P’s claim rests upon common law rule.

Scenario 3: Sub-lease by tenant to 3rd party

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After Tenant Subleases

L (“Head”) Lease T
(privity of contract)
(privity of estate)

ST
Sublease
(privity of
contract)
(privity of
estate)

No legal relationship
between landlord and
subtenant

 There is no legal relationship between ST and L, thus neither can sue each other directly, enforcement
directed through T. No issue about enforcing covenants between ST and L, all covenants enforced via T.

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H. Residential Tenancies

 Residential Tenancies Act 1997 (Vic).


 Operates as a code.

Residential Tenancies Act 1997 (Vic)

What is a ‘Residential Tenancy’?

3 Definition of “tenancy agreement”: means an agreement, whether or not in writing and whether
express or implied, under which a person lets premises as a residence.

5 Act applies to assignees in same manner as it applied to assignor.


6 Does not apply to fixed term tenancies exceeding 5 years that do not include a provision enabling
determination by notice before 5 years. Exception: tenant has right or option to purchase, is not covered
by s 13, and entered into after 2008.
7 Applies to premises used primarily for residential purposes, even if a trade, profession or business is
also carried on by the tenant on those premises.
8 Does not apply to premises that form part of a building in which other premises are let by the landlord
to the tenant for the purpose of a trade, profession or business carried on by the tenant.
9 Does not apply to fixed term tenancies if (a) immediately before entering agreement, premises were the
landlord’s principal place of residence; and (b) fixed term <60 days; and (c) agreement states that (i)
immediately before entering agreement, premises were landlord’s principal place of residence and (ii) the
landlord intends to resume occupancy on termination.
10 Does not apply if premises are ordinarily used for holiday purposes.
11 Does not apply to premises included in or on other premises let to the tenant by the landlord that are
for the time being used, or are ordinarily used, for the purpose of (a) grazing or (b) farming (see Act for
list  uncertain whether ‘farming’ means for the purposes of business or commercial sale).
12 Does not apply to a tenancy agreement created or arising under the terms of a contract of employment
or entered into in relation to such a contract.
13 Does not apply to a tenancy agreement created or arising between parties to a contract of sale or
mortgage of the premises in accordance with a term of the contract or mortgage.
20 Does not apply to premises situated in a motel or hotel unless (2) fixed term >60 days.
21 Does not apply to premises that are, or are situated in, (a) any premises used as a school or for
education and training purposes; or (b) any residential premises ancillary to a school or an institution
which provides education and training if those premises (i) are owned or leased by the school or the
institution or formally affiliated with the school or institution; and (ii) are used to accommodate students
or staff using the premises referred to in (a). (b) “Formally affiliated” is met if a written agreement exists
between the school or institution and the owner or operator of the premises to provide accommodation
primarily for students enrolled or staff employed.

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22 Does not apply to premises provided as temporary crisis accommodation (accommodation provided on
a non-profit basis for a period <14 days; s 3).
23 Does not apply to premises that are, or are situated in, (a) a health or residential service; or (b) any
premises ancillary to a health or residential service and primarily used to accommodate medical, nursing
and other staff or any member of the family of a person using that service.

Fixed term and periodic tenancies

“fixed term tenancy agreement” means a tenancy agreement for a fixed term (s 3).
“periodic tenancy agreement” means a tenancy agreement other than a fixed term tenancy agreement (s 3).
230 (1) A tenant is deemed to occupy premises under a periodic tenancy agreement if: (a) term of a fixed term
tenancy agreement ends; and (b) tenant under that agreement continues in occupation.
(2) The rental period under periodic tenancy agreement is: (a) if rental period under fixed term TA was >1
month, a monthly period; and (b) if rental period under fixed term TA was ≤1 month, a period equivalent to that
rental period.
(3) Periodic tenancy agreement is on the same terms, so far as applicable.

Can the parties contract out of the Act?

27(1) A term of a tenancy agreement is invalid if it purports to exclude, restrict or modify, or purports to
have the effect of excluding, restricting or modifying: (a) the application to that tenancy agreement of all
or any of the provisions of this Act or (b) the exercise of a right conferred by this Act.
BUT a landlord or tenant may apply to the Tribunal for an order declaring that a provision of this Act
does not apply to the tenancy agreement (24(1)). On an application, the Tribunal may by order declare
that provision does not apply (25(1)), but only if they are satisfied that in all the circumstances the
application of a provision of this Act would occasion severe hardship to the applicant (25(3)).

General requirements for Tenancy Agreements

26(1) Tenancy agreement, if in writing, must be in prescribed standard form. Penalty: 5 PU (2). But
failure to comply does not make the tenancy agreement illegal, invalid or unenforceable.
27(1) see above. (3) A provision that requires a party to a written TA to bear any fees, costs or charges
incurred by the other party in connection with the preparation of the TA is invalid.
28 (1) A tenant may apply to the Tribunal for an order declaring invalid or varying a term of the tenancy
agreement. The Tribunal may do so if it is satisfied that the term is harsh or unconscionable or is such that
a court exercising its equitable jurisdiction would grant relief (2).
29 A landlord must give tenant a copy of the tenancy agreement (1) before tenant signs it. Penalty: 5 PU.
And further penalty of 5 PU if landlord fails to give copy (2) within 14 days after agreement is signed.
30 (1) A person must not (a) refuse to let premises; or (b) instruct or permit that person’s agent to refuse
to let premises; to another person on the ground that the other person intends to live on the premises with
a child (child means <16 years, (4)).

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(2) Exceptions: (b) premises that are the principal place of residence of the person; or (c) premises that by
reason of their design or location are unsuitable or inappropriate for occupation by a child (person may
apply to Tribunal for an order declaring whether or not premises are unsuitable or inappropriate, (3)).

Rent

How is rent to be paid?

39 Rent accrues from day to day and, subject to s 242, is recoverable or refundable accordingly.
42(1) Rent is payable at specified place or, if none, at rented premises. And (2) in specified manner (if
any).
49 A person must not take or dispose of a tenant’s goods on account of any rent owing by tenant.

Can it be made payable in advance?

40 Landlord must not require a tenant to pay rent >1 month in advance (unless weekly tenancy, see
below). Penalty: 10 PU. Exception: if amount of rent payable for each week exceeds $350.
41 Despite above, a landlord must not require a tenant to pay rent >2 weeks in advance if the period in
respect of which rent is payable is not more than one week.

Can a landlord increase the rent?

44(1) Landlord must give tenant at least 60 days notice in the prescribed form of a proposed rent increase.
Requirements:
o (2) Notice may only provide for one rent increase;
o (3) Notice must inform tenant of their right under s 45;
o (4) Must not increase rent before fixed term ends (unless agreement otherwise provides);
o (4A) Must not increase rent at intervals of <6 months;
o (5) Rent increase in contravention is invalid.

What can the tenant do if the rent seems excessive?

45 Tenant may apply to the Director to investigate and report if the tenant (a) considers rent is excessive
having regard to the fact that the landlord has reduced or withdrawn services, facilities or other items
provided with the rented premises; or (b) has received notice of a rent increase and the tenant considers
that the proposed rent is excessive.
46(1) After receiving Director’s report under s 45, tenant may apply to the Tribunal. NB. Application can
be made directly to Tribunal (no Director) if there are reasonable grounds for doing so ((3) and (5)).
47(1) If an application is made under s 46, the Tribunal may: make an order declaring rent or proposed
rent excessive and directing that rent must not exceed amount specified for specified period (12 months,

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(4)); or dismiss the application.


(3) Rent or proposed rent is “excessive” if it is more than a reasonable rent, having regard to:
o Director’s report ((2));
o Comparable rents in same locality;
o State of repair and general condition of premises;
o Costs of goods, services and facilities provided with premises;
o Any charges in respect of rented premises for which landlord is or may be liable;
o Costs of goods, services and facilities provided by tenant;
o Any charges payable by tenant;
o Any work tenant has done, or agreed to do, with landlord’s consent to the premises;
o Any changes in rent and condition of rented premises or facilities since the commencement of
the tenancy agreement and since last rent increase;
o Number, amount and timing of rent increases (if any) in past 2 years; and
o Any valuation of rented premises.
48 Tribunal can also order landlord to refund rent (amount = amount of rent payable between period
when tenant applied to Director/Tribunal and the date of the order – maximum amount of rent specified
in s 47).

Rights and Duties of Landlords and Tenants

What are the general duties of tenants and landlords?

Tenant:
59 Must not use premises for illegal purpose.
60 Must not cause nuisance or interference with the reasonable peace, comfort or privacy of any occupier
of neighbouring premises.
61 Must avoid damage to premises or common areas.
62 Must give notice of damage as soon as practicable, specifying the nature of the damage.
63 Must keep rented premises in a reasonably clean condition except to the extent that the landlord is
responsible under TA for keeping the premises in that condition.
64(1) Must not install fixtures or make any alteration, renovation or addition without landlord’s consent.
(2) Before a tenancy agreement terminates, a tenant who has done so (with or without landlord’s written
consent) must: (a) restore the premises to original condition, except for fair wear and tear; or (b)
compensate the landlord.

Landlord:
65(1) Must ensure that on the day that it is agreed that the tenant is to enter into occupation, the rented
premises are vacant and in a reasonably clean condition. (2) Tenant is not required to enter into
occupation of premises which do not comply with (1), and (3) tenant is not required to pay rent until they
actually enter into occupation.

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66 Must, on or before occupation day (a day that is the agreed day on which the tenant is to enter into
occupation, (5)), give the tenant certain information:
o (1) Written statement in approved form setting out rights and duties of landlord and tenant;
o (2) Written notice of landlord’s full name and address, and an emergency telephone number to
be used in the case of urgent repairs; or (3) Agent’s full name, address, telephone number and
fax number and stating whether they can authorise urgent repairs and max amount; and
o (4) Notice of any change of this information within 7 days from change.
67 A landlord must take all reasonable steps to ensure that the tenant has quiet enjoyment of the rented
premises during the TA (no definition, use common law).
68(1) Must ensure that premises and common areas are maintained in good repair. (2) Landlord not in
breach if (a) damage caused by tenant and (b) landlord has given tenant notice to repair under s 78.

What can be done if these duties are not performed?

Q1: Is it a duty provision?


Q2: How does party make application? 3 ways: if duty provision, ss 208 and 209; if not s 210; if
person committed an offence, also maybe s 215.
Q3: What will the likely outcome be?

“duty provision” means any provision of Division 5 of Part 2 (ss 59-71), except ss 59, 62 and 66 (s 207).
 If duty provision, use ss 208 and 209, if not a duty provision (and not s 66) use s 210.
“required time” means 14 days (s 207).

208 (1) A person to whom a duty is owed under a duty provision may give a breach of duty notice to a
person in breach of that duty. (2) Requirements of notice:
o Specify breach;
o Give details of loss or damage caused by breach;
o Require person, within required time, to remedy breach or compensate;
o State that person in breach must not commit a similar breach again;
o State that if notice is not complied with: an application for compensation or compliance order
may be made to Tribunal (s 209); or if s 240 applies, notice of intention to vacate may be
given; or if s 249 applies, a notice to vacate may be given;
o Be in writing;
o Be addressed to person in breach; and
o Be signed by person to whom duty is owed.
209 If a breach of duty notice is not complied with, the person may apply to the Tribunal for a
compensation order or a compliance order.

210 A person can apply to Tribunal for compensation order on other grounds (i.e. other than breach of
duty provision or s 66; namely, for loss or damage suffered because of other party’s failure to comply
with TA or other duties  E.g. to pay rent, but see s 213).

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213 Landlord not entitled to claim compensation for unpaid rent unless rent is unpaid for at least 14 days
after it has accrued due. Exception: if tenant has on 2 or more occasions failed to pay rent within 14 days.

215 Where party convicted of any offence against this Act, the court may, on application by other party,
order convicted person to pay compensation for loss or damage suffered because of the commission of
that offence.

211 Matters which may be considered by Tribunal:


o Has party in breach taken all reasonable steps to comply with duties in respect of which the
claim is made?
o In case of breach of TA, has applicant consented to failure to comply with duties?
o Whether or not money has been paid to or recovered by applicant by way of compensation,
including money recovered or entitled to be recovered from the bond (see also s 214);
o Whether any reduction or refund of rent or other allowance has been made to the applicant;
o Whether or not action has been taken by the applicant to mitigate the loss or damage;
o Any offer of compensation; and
o If a claim is made with respect to property damage, any action taken by party in breach to
repair damage at that person’s own expense.
212 Orders of Tribunal: (1) For applications under s 209, if Tribunal satisfied that person was entitled to
give the notice and that it was not complied with, they may order: (a) person remedy breach; (b) pay
compensation; or (c) refrain from committing similar breach. (2) For applications under s 210, if Tribunal
satisfied that compensation should be paid it may make an order directing person to pay compensation.
(4) If order made against tenant, the order must specify that if they fail to comply they may be given a
notice to vacate the rented premises.

214 A person who has received compensation from a bond is not precluded from taking proceedings
under this Part to recover an additional amount by way of compensation.

Repairs and Maintenance

What is the situation if urgent repairs are required?

“urgent repairs” defined in s 3: burst water service; blocked or broken toilet; serious roof leak; gas leak;
dangerous electrical fault; flooding or serious flood damage; serious storm or fire damage; failure or
breakdown of any essential service or appliance provided by landlord for hot water, water, cooking,
heating or laundering; failure or breakdown of gas, electricity or water supply; an appliance, fitting or
fixture provided by a landlord that uses or supplies water and that is malfunctioning in a way that results
or will result in a substantial amount of water being wasted; any fault or damage that makes rented
premises unsafe or insecure; serious fault in life or staircase; or any prescribed damage.
72(1) A tenant may arrange for urgent repairs if (a) tenant has taken reasonable steps to arrange for
landlord to immediately carry out repairs; and (b) tenant is unable to get landlord. (2) If tenant carries out

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repairs, (a) tenant must give landlord 14 days written notice of repairs and cost; and (b) landlord is liable
to reimburse tenant for reasonable cost of repairs or $1,000, whichever is less.
73(1) Tenant may apply to Tribunal for an order requiring landlord to carry out specified urgent repairs
if: tenant cannot meet cost; repairs cost >$1,000; or landlord refuses to pay cost. Will be heard within 2
business days.

How does the Act deal with non-urgent repairs?

Failure of landlord to comply with s 68


74(1) Tenant may apply to Director to investigate whether landlord is in breach of duty to ensure that
premises are maintained in good repair if: tenant has given landlord written notice advising landlord of
non-urgent repairs and landlord has not carried out repairs within 14 days. Director must investigate; may
negotiate arrangements for carrying out of repairs if satisfied that landlord is in breach of duty; and must
give report to tenant (3).
75 Tenant may apply to Tribunal for an order if tenant has received Director’s report, and tenant is still of
the view that satisfactory arrangements have not been made for carrying out the repairs.  76 Tribunal
may make an order requiring the landlord to carry out repairs if it is satisfied that the landlord is in breach
of the duty to maintain the rented premises in good repair.
77 If tenant has given notice to repair and landlord has failed to comply, rent may be withheld from the
landlord (placed, by order of Tribunal, in a Rent Special Account until landlord carries out repairs).

Failure of tenant to comply with s 61


78 Landlord may give repair notice to tenant if damage is caused to premises because of a failure of the
tenant to comply with s 61. Repair notice must be in writing and must state: nature of damage; that
damage was caused by breach of duty; if landlord wishes tenant to repair damage, that landlord requires
tenant to repair at tenant’s expense within 14 days and if tenant does not do so, landlord may repair
damage at tenant’s expense; or if landlord wishes to repair damage, that landlord is undertaking repairs
and tenant is liable.
79 Landlord may do repairs and tenant liable for reasonable costs of repairs.

Can a tenant Assign or Sub-let?

81(1) Tenant must not assign or sub-let without landlord’s written consent.
(2) Landlord must not unreasonably withhold consent.
(3) Assignment or sub-letting without landlord’s consent is invalid, unless the Tribunal has determined
that consent is not required.
82 Tenant may apply to Tribunal for a determination that consent of landlord is not required if landlord
unreasonably withholds consent. If consent not required, assignment or sub-letting may go ahead.
(Not unreasonable for Director of Housing to without consent if assignment or sub-letting would
disadvantage persons on a public housing waiting list, s 83).

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84(1) Landlord cannot ask for fee or payment for giving consent. (2) Tenant can apply to Tribunal to get
fee back. Does not prevent landlord from requiring tenant to bear any fees, costs or charges incurred by
landlord in connection with the preparation of a written assignment of a TA (3).

5 Act applies to assignees in same manner as it applied to assignor.

231(1) New tenancy created where head tenancy terminated. A person becomes the tenant of the landlord
in respect of rented premises if (a) person is in possession of the premises under a sub-tenancy agreement
granted to them by a person who is a tenant under the head tenancy agreement; and (b) head tenancy
agreement terminates; and (c) sub-tenancy agreement does not terminate. Tenancy created under (1) is on
the same terms as the sub-tenancy agreement, (2).

Termination of a Tenancy Agreement

When can a tenancy agreement be terminated?

216 A tenancy agreement does not terminate and must not be terminated except in accordance with this
Division.

217 Terminated by agreement of landlord and tenant.


218 Terminates if tenant vacates the premises with the consent of the landlord. Consent is irrevocable.
219 Terminates if landlord or tenant gives a notice to vacate or notice of intention to vacate and tenant
vacates or TA terminates in accordance with s 334 or 342. Except where sub-let (see s 221).
220 Terminates if tenant abandons premises.
221 Terminates if premises are sub-let, and landlord or tenant gives notice to vacate or notice of intention
to vacate, and termination date specified in notice has expired.
222 Termination by owner.
223 Termination by mortgagee.
224 Termination by merger (that is, where interests of landlord and tenant become vested in one person).
225 Termination by disclaimer (for example, on repudiation of the agreement by the tenant accepted by
the landlord).
226 Terminates if tenant has not entered into possession of the premises and tenant has given a notice of
termination on the ground that the premises are: not in good repair; unfit for human habitation; destroyed
totally or to such an extent as to be rendered unsafe; not vacant; not legally available for use as a
residence; or for any other reason unavailable for occupation.
227 Terminates if tenant has not entered into possession of the premises and landlord has given a notice
of termination on the ground that the premises are: unfit for human habitation; or destroyed totally or to
such an extent as to be rendered unsafe.
228 If sole tenant dies, TA terminates at the earliest of the following: 28 days after landlord given written
notice of death by legal personal representative or next of kin, or 28 days after landlord has given a notice
to vacate, or a date agreed in writing, or the date determined by Tribunal on application of landlord.

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229(1) A landlord must not, except in accordance with Act, (a) require or compel or attempt to compel
the tenant to vacate the premises; or (b) obtain or attempt to obtain possession of the premises by entering
them, whether the entry is peaceable or not (it is a good defence if landlord proves that they obtained or
attempted to obtain possession because they reasonably believed that tenant had abandoned the premises,
(2)). Penalty: 20 PU.

When can a tenant give the landlord notice of intention to vacate?

235 Tenant may give landlord a notice of intention to vacate premises. The notice must specify a
termination date not less than 28 days after the date of notice. 236 Notice has no effect if it specifies a
termination date earlier than the end of the term of the TA, or contrary to an express provision regarding
determination by notice.
237 Period of notice reduced to 14 days in certain circumstances (e.g. tenant requires special or personal
care and needs to vacate in order to obtain that care [defined in (4)], or requires temporary crisis
accommodation and needs to vacate in order to obtain that accommodation).
238 Tenant may give notice if premises are: unfit for human habitation; or have been destroyed totally or
to such an extent as to be rendered unsafe. The notice may specify a termination date that = date on which
notice is given.
239 Tenant may give notice if landlord fails to comply with a Tribunal order under s 212. Termination
date ≥14 days after date of notice.
240 Tenant under fixed-term tenancy may give notice if: landlord has breached a duty provision, and on 2
previous occasions landlord has been in breach of same provision, and the tenant has on each occasion
given a breach of duty notice. Termination date ≥14 days after date of notice

What if a tenant abandons the premises?

241 If landlord believes tenant has abandoned premises, landlord may apply to Tribunal for an order
declaring that tenant has abandoned them. The Tribunal may by order declare that the premises were
abandoned by the tenant.
242 If tenant abandons premises and landlord has received rent in advance, the landlord is entitled to the
lesser of: that amount, or such part of that amount as does not exceed the amount of loss or damage
suffered as a result of the abandonment. Landlord must refund the excess.

When can a landlord give the tenant a notice to vacate the premises?

Landlord may give notice:

For all the following, termination date may be date on which notice is given.

243 If by the conduct (by act or omission) of the tenant or tenant’s visitor damage is maliciously caused
to the premises or common areas.

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244 If tenant or tenant’s visitor (by act or omission) endangers the safety of occupiers of neighbouring
premises.
245 If the premises: are unfit for human habitation, or have been destroyed totally or to such an extent as
to be rendered unsafe.

For all the following, termination date ≥14 days after date of notice.

246 If tenant owes at least 14 days rent.


247 If tenant fails to comply with a provision relating to payment of bond.
248 If tenant fails to comply with an order of the Tribunal under s 212.
249 If tenant has breached a duty provision, and on 2 previous occasions has been in breach of same
provision and landlord has on each occasion given a breach of duty notice.
250 If tenant has used the rented premises or permitted their use for any illegal purpose.
251 Permitting child to reside in premises, in contravention of a term of TA.
252 If landlord (a public statutory authority) was induced to enter the TA by a statement by the tenant
which related to a matter on which eligibility to rent the premises depended and which the tenant knew to
be false or misleading.
253 Assignment or sub-letting without consent.
254(1) A landlord may, before the end of the term of TA, give the tenant a notice to vacate if: (a) rented
premises were landlord’s principal place of residence immediately before the TA was entered into; and
(b) the TA states this; and (c) the TA states that the landlord intends to resume occupancy of the premises
on the termination of the agreement. Notice may specify a termination date that is the date of the end of
the term. Importantly, (4), a landlord is not entitled to give notice under this section if they have entered
into >2 TA’s since the premises were the landlord’s principal place of residence.

For all the following, termination date ≥60 days after date of notice.

255 If landlord intends to repair, renovate or reconstruct the premises immediately after the termination
date (if less than 5 rental premises in building, otherwise immediately after last tenant vacates); and the
landlord has obtained all necessary permits and consents to carry out the work, and the work cannot be
properly carried out unless tenant vacates.
256 If landlord intends to demolish the premises (same conditions as above).
257 If premises are immediately after the termination date to be used for the purposes of a business or for
any purpose other than letting for use principally as a residence.
258 If the premises are immediately after the termination date to be occupied: by the landlord; or by the
landlord’s partner, son, daughter, parent or partner’s parent; or by another person who normally lives
with the landlord and is wholly or substantially dependent on the landlord.
259(1) If premises are immediately after the termination date to be sold or offered for sale with vacant
possession. Or (2)-(2A) if premises have been sold and all contingent conditions have been satisfied, the
landlord may within 14 days after sale is definite, give a tenant a notice to vacate the premises.
260 Premises required for public purposes.

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264 A landlord who obtains possession of rented premises in respect of which a notice to vacate has been
given under ss 256, 257 or 259 must not let the premises to a person for use primarily as a residence
before the end of 6 months after the date on which the notice was given. Penalty: 20 PU. Tribunal can
determine otherwise.
266(1) A notice given under ss 255-263 in respect of a fixed term tenancy agreement is of no effect: if it
specifies a termination date that is earlier than the end of the term of the TA, or is otherwise in
contravention of a term of the TA.

Variable termination date

261 A landlord under a fixed term tenancy agreement may, before the end of the term of the tenancy
agreement, give the tenant a notice to vacate the rented premises at the end of the fixed term. Notice must
specify a termination date that is the date of the end of the term. The notice must be given: if fixed term
≥6 months, not less than 90 days before end; or if fixed term <6 months, not less than 60 days.
263 A landlord may give a tenant a notice to vacate rented premises without specifying a reason for the
giving of the notice. Termination date ≥120 days after date of notice.

265(1) A landlord is not entitled to give a notice under s 263 in respect of rented premises if an order is in
force under s 47 (excessive rent) in respect of those premises. Any notice given in contravention of (1) is
invalid, (2).
266(1) A notice given under ss 255-263 in respect of a fixed term tenancy agreement is of no effect: if it
specifies a termination date that is earlier than the end of the term of the TA, or is otherwise in
contravention of a term of the TA.
(2) A notice under ss 261 or 263 is of no effect if it was given in response to the exercise, or proposed
exercise, by the tenant of a right under this Act.
(3) Can challenge. Restricts how long tenants have to challenge notice under ss 261 and 263.

Can a tenant challenge a notice to vacate?

321A Nothing in this Division affects any right a tenant may have to challenge the validity of any other
notice to vacate under this Act.
321B Tenant may apply to Tribunal to challenge the validity of a notice given under ss 255-260, within
30 days after receiving notice.
321C Tribunal may determine whether or not the notice is valid.

Regaining possession

Can a landlord apply for a possession order? Why might a landlord make such an application?

Division 1-Application for Possession Orders

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322(1) A landlord may apply to the Tribunal for a possession order for rented premises if the landlord has
given the tenant a notice to vacate (other than a notice under ss 261 or 263).
Or (2) if landlord has given notice under ss 261 or 263 and the tenant has not delivered up vacant
possession.
Or (3) if tenant has given the landlord a notice of intention to vacate and the tenant has not delivered up
vacant possession of the premises.
326 Time for application. (1) An application under s 322(1), may be made at any time after the notice to
vacate is given but not later than 30 days after termination date.
(2) An application under ss 322(2) or (3) must be made after termination date, but not later than 30 days.

Order of Tribunal:
o 330(1) Tribunal must make a possession order requiring tenant to vacate if they are satisfied
that: (a) where notice has been given, the landlord was entitled to give the notice and it has not
been withdraw; or (b) where notice of intention to vacate was given by tenant, landlord acted
reasonably by relying on the notice; and tenant is still in possession after termination date
specified in notice;
o 331(1) Tribunal may dismiss or adjourn an application if it is supported with a notice to vacate
given under s 246 (rent) and Tribunal considers satisfactory arrangements have been or can be
made to avoid financial loss to the landlord. If adjourned, the Tribunal may make a possession
order if tenant has continued to accrue arrears of rent; or dismiss if tenant has paid all arrears
and accrued no further arrears (3).
o 332(1) Despite s 330, the Tribunal must not make a possession order if: (a) application is
supported with notice to vacate given under s 248 (failure to comply with Tribunal order) and
(b) they are satisfied that failure to comply was trivial or has been remedied as far as possible;
and there will be no further breach; and breach of duty is not a recurrence of a previous breach
of duty.
333(1) A possession order must include: the day (being a day ≤30 days after the day on which possession
order is made) by which tenant must vacate premises; a direction to the tenant to vacate by that day; a
direction to the principal register to issue a warrant of possession in accordance with s 351 on the
application of the person who obtained the possession order; and (2) a warning that if the tenant fails to
comply with the direction they may be forcibly vacated by a member of the police force.
334 If a possession order is made, the tenancy agreement terminates at the end of the day before the day
on which possession of the rented premises is delivered up to the landlord or mortgagee.

Division 2-Alternative Procedures for Possession (for ss 246 and 261)

335 A landlord may apply to the Tribunal for a possession order for rented premises if the tenant owes at
least 14 days rent to the landlord.
336 On making an application under s 335, the landlord must give to the tenant personally or by
registered post a notice to vacate the premises. Termination date ≥14 days after date of notice.

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337(1) If land has given a notice to vacate under s 261 (end of fixed-term), the landlord may give the
tenant a further notice informing the tenant that the landlord intends to apply to the Tribunal for a
possession order if the tenant does not deliver up vacant possession by the end of the termination date.
Time periods apply for when notice can be given. (3) A landlord may then apply to Tribunal if tenant has
not delivered up vacant possession.

Objection by tenant under Division: 338(1) If tenant wishes to object to the making of a possession order
under this Division, the tenant must: lodge a notice of objection with the Tribunal and serve it on the
landlord. (3) On lodging the notice of objection, Division 1 applies (a) in relation to an application under
s 335, as if the application for the possession order were made under s 322 after giving a notice to vacate
under s 246; and (b) in relation to an application under s 337, as if the application for the possession order
were made under s 322.

339 If no notice of objection, the landlord may lodge a request for determination with the Tribunal. A
request must be made within 28 days after the termination date set out in the notice, otherwise application
is deemed to be withdrawn.
341 If a request for determination is made, and the principal register is satisfied that the determination
should be made, the principal register must: (a) make a possession order directing tenant to vacate
immediately or on a later specified day; and (b) make a determination of the amount of rent owing to the
landlord; and (c) make a determination directing paying out of bond. (3) A possession order under this
section must provide that a warrant of possession must be issued on the application of the landlord. (4) A
possession order under this section must include a warning that if the tenant fails to comply with the
direction they may be forcibly vacated by a member of the police force
342 If a possession order is made, the tenancy agreement terminates at the end of the day before the day
on which possession of the rented premises is delivered up to the landlord.
343 If principal registrar is not satisfied that the determination should be made, they may, or if the
applicant so requests must, refer the matter to the Tribunal for determination. Division 1 then applies
(same as for ss 338(3) above).

Why might a landlord seek a warrant for possession?

351(1) A person who obtains a possession order under this Part may apply to the principal register for a
warrant of possession.
(2) A person who obtains a possession order under Division 2 has 30 days to apply.
(4) Warrant must be executed within 30 days after issue (354 The Tribunal may extend the time in which
the warrant of possession may be executed. Does not apply to warrant issued under a possession order
made under Div 2).

352 The Tribunal may provide in a possession order that the issue of a warrant of possession be
postponed (for ≤30 days) if non-postponement would cause hardship to the tenant (greater than to the
landlord). Exceptions: order made on application of a landlord who has given notice to vacate under ss

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243-245; or an order made under Division 2. 353 Immediate issue of warrant if failure to comply during
postponement.

355 A warrant of possession:


Must:
o Be in a prescribed form;
o Be directed to a member of the police force or an authorised person;
o Give brief details of the possession order; and
o Be signed by principal registrar.
It authorises the person:
o To enter the rented premises and, by force if necessary, and with such assistance as is
necessary, to compel all persons to vacate.
o But not to remove any goods from premises.
o Entry must not be made between 6pm and 8am, or on a Sunday or public holiday.
356(1) A possession order is discharged if the applicant for the order does not: in the case of order under
Div 2, within 30 days; or, in any other case, within 6 months; apply for the issue of a warrant of
possession. (2) Warrant of possession lapses if it is not executed within the time stated in the order (or the
Tribunal’s extended time).
357 Person to whom warrant is addressed must return it to principal register and specify in writing
whether it has been executed (no later than 60 days after issued).

Points about RT Act:

 Residential tenancy is much broader than a common law lease (no requirements of exclusive possession or
certainty of duration).
 No formalities required.
 There are only 2 types of residential tenancies: fixed-term and periodic. A fixed-term tenancy does not
automatically terminate by effluxion of time, but must be brought to an end by notice on the part of the
landlord or the tenant. Where a fixed-term tenancy comes to an end, and no statutory notice has been given,
a periodic tenancy comes into existence.
 Quiet enjoyment (s 67): not defined in legislation, so retains CL meaning. But goes further than CL as
landlord must now take “all reasonable steps” to ensure quiet enjoyment.
 Repairs (ss 68, 72-79): legislation has overturned the common law’s caveat emptor rules in relation to
repair obligations.
 There is no security of tenure for tenants under the RTA. Landlords may bring to an end a periodic tenancy
by notice without any ground (s 263), while a fixed-term tenancy may terminate by effluxion of time.
 One of the most important protections offered to tenants by the legislation is that if the tenant does not
voluntarily deliver up vacant possession, the landlord must approach the Tribunal for an order for
possession.

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 A landlord or tenant may give notice of termination where the other party has breached the agreement (this
contrasts with the CL, where a tenant can only terminate for breach if it amounts to a repudiation by the
landlord of the contract).

I. Other Statutory Regulation

Retail leases

 Business tenants are provided with some protection by the Retail Leases Act 2003 (Vic).
 Regulates leases entered into after 1 May 2003 (s 11).
 Not a code - thus areas not covered are governed by the common law and any other applicable legislation.

 s 4(1) “Retail premises” means premises, not including any area intended for use as a residence, that
under the terms of the lease relating to the premises are used, or are to be used, wholly or predominantly
for: (a) the sale or hire of goods by retail or the retail provision of services.
 8 exclusions in s 4(2).
 If lease term is less than a year, Act may not apply (s 12).
 Act applies to retail premises in Victoria (s 13).
 Parties cannot contract out of the Act (s 94).

Consumer protection legislation

 Trade Practices Act 1974 (Cth) protects consumers, including tenants. Sections 52, 53 and 53A deal with
misleading and deceptive conduct by corporations (see also the Fair Trading Act 1999 (Vic), ss 7-11 in
relation to unconscionable and misleading conduct by individuals). Part IV of the TPA deals with
covenants affecting competition, and may affect some covenants in retail and other commercial leases.
 Landlords and tenants are also specifically prohibited from engaging in unconscionable conduct in
relation to proposed or existing retail leases (Retail Leases Act ss 76-80).

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TOPIC 7: Contractual Licences

 If you don’t have a lease, then you have a licence.

 A licence gives the licensee permission to do something on the land that would otherwise be unlawful (e.g.
entry, use or occupation).
 Three types of licence:
1. Bare licence;
 Permission to enter onto the land of another with or without conditions attached;
 Created expressly or by implication;
 No consideration (no contract);
 No proprietary rights;
 Enforceable against licensor only; and
 Revocable at any time by owner.
2. Licence coupled with a grant; or
 Licence + property interest;
 Permission to enter land in order to exercise proprietary rights over the land itself or chattels
lying on it (e.g. profit à prendre or easement);
 Capable of binding 3rd parties;
 Interest can be assigned; and
 Irrevocable.
3. Contractual licence.
 A contractual right to enter land of another and to use or occupy it for a particular purpose;
 Created by express or implied agreement;
 Confers only contractual rights;
 No exclusive possession (otherwise would be a lease);
 Need not be of certain duration (it’s not a lease); and
 Traditionally, enforceable against licensor only.

Revocation of Contractual Licences: The Position Between Contracting Parties

Q: If licensor wrongfully revokes licence, what remedy is available to licensee?

 Contractual licence does not create proprietary rights.


 Contractual licence can be revoked at will, even in breach of contract (Cowell).
 Where there is wrongful revocation, the remedies available are:
1. Damages for breach of contract; or
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2. Injunction (Heidke).
 In Cowell, the majority of the High Court found it inappropriate to grant equitable remedies
where only a contractual interest. Cf. In Heidke, Hardie AJ, a single judge of the NSW Supreme
Court, held that equity may treat a contractual licence as irrevocable.
 Criteria for equitable relief (Heidke):
i. Would the loss suffered be adequately compensated by an award of damages?
o In Heidke, Hardie AJ said that damages were not adequate compensation for the Youth
Carnival not going ahead.
ii. Would injunction be tantamount to ordering specific performance where a court would not
otherwise do so?
o SP is not available where:
 It would cause hardship to P or D;
 P does not have ‘clean hands’ (for example, in Sigma, the Court of Appeal
held that VCAT should have considered whether the licensor was in breach of
contract before granting an injunction);
 There was delay or acquiescence on the part of P;
 It would compel the performance of personal services or compel the
maintenance of a personal relationship between the parties (such as an
employment relationship);
 It would involve the court in constant supervision.
 Injunction is a discretionary remedy and should not be granted automatically (Sigma).

 Examples:
o Cowell v Rosehill Racecourse
 Facts: C bought ticket to races and was wrongfully asked to leave. After refusing, he was forcibly
removed.
 Held: C simply had a contractual right which is enforceable in personam by an action for damages.
Note, since there is no property in a spectacle (as held by Latham CJ) this was not a licence
coupled with a grant. Evatt J, dissenting, stresses that a proprietary right is not a precondition to
equitable intervention. In equity, the licence should be regarded as irrevocable.
 Some criticisms of the majority decision: Latham CJ seemed to assume that a decision in favour of
C would have created a proprietary interest in a spectacle – this was debunked by Evatt J.
Furthermore, Latham CJ might have been so opposed because equity would never have decreed SP
of this contract, however, C was only asking for declaration that his removal was unlawful.

o Heidke v SCC.
 Facts: The council agreed to allow a youth group to use an oval for a Youth Carnival for valuable
consideration. The council repudiated the agreement and refused to allow members of the group to
use the oval.
 Held: There was a contractual licence. The contract contained no express or implied term allowing
revocation (so it was wrongful); and that the award of damages to the plaintiff in this case would

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not be adequate compensation for their loss. He granted an injunction preventing the council from
repudiating the agreement.

o Sigma Constructions v Maryvell Investments


 Facts: M (licensor) granted S (licensee) a licence in writing to use its premises in order for S to
construct a hotel on its adjoining land. M revoked the licence claiming S was in breach. Here, the
licensor revoked licence and sought an injunction to stop ex-licensee from further using the land
(perhaps wrongfully, since there was implied stipulation that M would not revoke for breach).
VCAT applied Cowell’s case and held that M had revoked licence, whether wrongfully or not, and
automatically granted an injunction.
 Held (Vic Court of Appeal): VCAT erred by failing to take into account discretionary factors,
including whether M’s revocation was in breach of contract. Therefore, when a licensor seeks the
assistance of the court to evict a licensee, the court must consider whether the licensor was in
breach of contract when they revoked the licence in the first place.

Can Contractual Licences ever be Enforced Against Third Parties?

New owners of land

 General rule: contractual licences not enforceable against 3rd parties, even if they have notice (King).
 Exception:
o In exceptional circumstances, the court can impose a constructive trust (Ashburn Anstalt).
o That is, the new owner takes the property subject to a constructive trust for the licensee’s benefit.
o The court will not impose a constructive trust unless it is satisfied that the conscience of the owner had
been affected so that it would be inequitable to allow him to deny the claimant an interest in the
property.
o Test: Did the parties intend the purchaser to give effect to the licence?
o This can be demonstrated where:
 The new owner paid a reduced price for the property or gained some other benefit because of the
licence; or
 It is known that performance of the licence is important to the sellers and the new owners assure
that it will be enforced (e.g. Lyus v Prowsa Developments – in this case, the sellers made
conveyance subject to the contract despite not having to, and the new owner’s solicitors wrote to
the seller giving an assurance that their client would take reasonable steps to enforce the
contract).
 BUT mere notice is not enough (since this may be consistent with an intention by the seller to
disclose all possible incumbrances known to him).
o Persuasive, not binding (obiter in English Court of Appeal case).

Trespassers

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 An action of trespass to land is available to the licensor, not the licensee (where licensee has no right of
exclusive possession; Georgeski).

Examples

 Examples:
o King v David Allen Billposting
 Facts: K agreed with DA to give them permission to affix bills to a wall on the side of a picture
theatre owned by himself. Subsequently, K agreed to grant a lease of theatre to a company. DA
attempted to post their bills on the walls of the theatre, but were prevented by the company. DA
sued K for damages.
 Held: Contractual licence between K and DA was not enforceable against the lessee. K liable.

o Georgeski v Owners Corporation


 Facts: P held a licence from the Crown over a portion of riverbank and the abutting riverbed on the
Georges River in Sydney. In accordance with the terms of the licence, P built a jetty and a slipway
on it. D held an easement of way along the western edge of P’s land, down to the riverbank. P
sought an order declaring her rights over the jetty and slipway, and an injunction prohibiting D
from trespassing on them.
 Held: P’s right of occupation rests in contract only (i.e. a license). Trespass to land entails
interference with possession and is maintainable only by someone who has a right of exclusive
possession (e.g. owner or tenant). Barrett J did not follow Manchester Airport v Dutton. Mere
physical presence or physical use can never satisfy the test for trespass to land. In this case, P has
no legal right of possession in respect of the land the subject of the licence. Its effect is no more
than to confer on her the landowner’s permission to occupy for a stated purpose. Claim dismissed.
P’s right to remove the jetty and the slipway as provided for by the license might create a profit à
prendre. If a person interfered with either the jetty or the slipway (e.g. by dismantling) then P
could obtain injunction relief to restrain that action. But mere use of the jetty or slipway is not
sufficient to sustain an interference.

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TOPIC 8: Fragmentation by Reference


to Nature of the Interest: Easements

A. Introduction

Servitude interests

 Servitudes are lesser non-possessory interests in land (incorporeal hereditaments). They give the interest
holders particular rights in respect to land which, though less than a fee simple, can be none the less
powerful rights and one enforceable against 3rd parties.
 Servitude interests include easements, profits à prendre and restrictive covenants.

Easements

 An easement is a right enjoyed by the owner of one piece of land (the dominant tenement) to use or carry
out some activity short of taking possession, or, less commonly, to prevent certain activities, on another
person’s land (the servient tenement).
 Easements, unlike licences, create a proprietary interest (and therefore run with the land).
 But cannot grant exclusive possession.
 Therefore, in increasing rights: licence  easement  lease.
 An easement can be a:
1. Positive easement: allowing something to be done by interest holder on other person’s land; or
2. Negative easement: allowing the interest holder to restrain certain activities from being carried out on
other person’s land (rare).

B. Characteristics

 Four essential characteristics of an easement (set out in Re Ellenborough Park and Riley v Penttila):
1. There must be a dominant and servient tenement;
2. The easement must be for benefit of the dominant tenement;
3. The dominant and servient tenements may not be owned and occupied by same person; and
4. The easement must be capable of forming the subject matter of a grant.

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 The law determines these characteristics, i.e. even if the parties wish to create an easement they will not
succeed unless the interest satisfies these requirements.

1. There must be a dominant and servient tenement

 Dominant tenement = land benefited by (being accommodated by) the easement.


 Servient tenement = land burdened by (subject to) the easement. Land over which easement is granted.
 Person with the right to an easement must own dominant tenement.

 Cannot have an easement in gross; that is, an easement without a dominant tenement (subject to leg).
 If a right is granted to someone who does not own land, no dominant tenement, therefore only a licence.
For example: “I give you the right to take a short cut across my property” (licence) cf. “I give my
neighbour the right to take a short cut across my property” (easement).

2. The easement must be for the benefit of the dominant tenement

 Q: Is the right connected with the normal enjoyment of the dominant land? (Re Ellenborough)
 Question of fact.

 Factors to consider:
o Depends on the nature of the right and the dominant tenement.
 For example, in Re Ellenborough, the dominant tenement was used for residential purposes
and the right was full enjoyment of a nearby park. Evershed MR held that a garden
“undoubtedly” enhances, and is connected with, the normal enjoyment of the house to
which it belongs and thus so too does a park which is the ‘communal garden’ for nearby
houses.

o Does easement enhance value of dominant land? Relevant, but not conclusive.

o Are the two tenements neighbouring? Not necessary, but they must be sufficiently close for the servient
tenement to offer some benefit to the dominant tenement. For land a long way away, it’s harder to
show this connection.
 For example, in Re Ellenborough, an easement was still found where the dominant tenement
was “in close proximity” to the servient tenement.

o Does the easement benefit a business on the dominant tenement? Does not preclude an easement but
benefit must be more than simply business benefit (must be for normal enjoyment of land). Ask: If
business was not being conducted on that land, would any owner of the land still obtain a benefit?

Subdivisions and consolidation

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 If dominant land is subdivided, easement is presumed to accommodate the subdivided parts.


 If dominant land is consolidated with other land, easement only benefits what was dominant tenement.

3. The dominant and servient tenements must not be owned and occupied by same person

 Does not apply unless both pieces of land are owned and occupied by the same person: therefore, there
can be an easement if landlord owns both lands, but a tenant is leasing one (when leasehold reverts,
easement will extinguish).

 General common law principle that a person cannot acquire rights against himself or herself.
 If the dominant and servient tenements come into the same ownership the easement is extinguished. Even
if one of the former tenements is subsequently sold to another party, the easement will not revive.

4. The easement must be capable of forming the subject matter of a grant

 Elements (Re Ellenborough):


i. Is the right conferred too wide, vague or uncertain?
 Isn’t the right “to use a park” a mere jus spatiandi (a right to wander)?
 Generally, a jus spatiandi creates an indefinite and unregulated privilege.
 In both Re Ellenborough and Riley, the court said that the right to use a park ≠ jus spatiandi.
Because where, as in both cases, it is given to a limited number of dominant owners for a
defined servient land it is very certain.

ii. Does it confer exclusive possession or exclusive use?


 That is, does it amount to rights of joint occupation or substantially deprive the servient
owners of proprietorship or legal possession?
 If so, then it is beyond the scope of an easement (try lease or AP).
 For example, in Copeland, D practically had control to do whatever he wanted on the land,
including exclude the owner. An easement was refused because this right went beyond any
normal idea of an easement and amounted to a claim to possession or to joint use of the
land, which could only be proved by a successful claim for AP.

iii. Is it a mere right of recreation without utility or benefit?


 Requires some benefit to dominant tenement, overlaps with Characteristic 2.
 In Re Ellenborough, the park = garden and “constitutes a beneficial attribute of residence in
a house as ordinarily understood.”
 Similarly, in Riley, Gillard J said that, even though each lot was very large, it “undoubtedly
adds to the enjoyment and occupation of each block to have the added liberty of using the
contiguous large private area for the purpose of recreation, garden or park.”

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Examples

Re Ellenborough Park
 Facts: A large area of land was subdivided into plots surrounding an inner portion (known Ellenborough
Park). Each plot owner was to have an easement giving them the right to use the Park, subject to the
payment of a proportion of the cost of maintenance. Q: Was this a valid easement?
 Held: Contentious on 2nd and 4th characteristics. But yes, valid easement.

Riley v Penttila
 Facts: Subdivision of land. A large reserve was created as a result (“Outlook Park Reserve”). Subdivider
remained owner of reserve. Some lots backed onto Reserve. In each transfer of land, each purchaser of
the lots was granted “the liberty to enjoy the reserve for the purpose of recreation or a garden or a park.”
In 1967, D bought lot 36. In 1971, they began to excavate a swimming pool in reserve area. P, owner of
several other lots, sought an injunction. D claimed P had no easement rights.
 Held: Just because each easement in each conveyance was worded differently, therefore no common
easement, does not matter. P had an easement.

Copeland v Greenhalf
 Facts: D proved that for 50 years he and his father before him had used part of P’s land as a place to store
vehicles connected with his business. D claimed a prescriptive right to continue storage.
 Held (Upjohn J): ‘The right claimed goes wholly outside any normal idea of an easement, that is, the
right of the owner or the occupier of a dominant tenement over a servient tenement. Practically, D is
claiming the whole beneficial use of that strip of land; he can leave as many or as few lorries there as he
likes for as long as he likes; he may enter on it by himself, his servants and agents to do repair work
thereon. It is virtually a claim to possession of the servient tenement, if necessary to the exclusion of the
owner; or at any rate, to a joint user.’

C. Scope and Construction of Express Covenants in Easements

 Construction of easements:
o Q: What did the original parties intend?
o Answered by construing the contract (i.e. intention assessed from the terms).
(Westfield Management)

 For example
 Westfield Management Ltd v Perpetual Trustee Company
 Facts: The then owners of premises known as Glasshouse (now owned by PT) granted a right of way
burdening its property and benefiting the then owner of Skygarden (now owned by W). W later acquired
two other, remoter properties. All four properties face Pitt Street Mall, Sydney, and are adjoining. W

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wanted to use the right of way over Glasshouse for the purpose of crossing Skygarden in order to access the
two new properties.
 Held: The omission of the words ‘and across’ from the phrase ‘to and from [the dominant tenement]’ in the
instrument indicated an intention that the easement was not intended to provide access to the remoter land.
 The court also agreed that the apportionment of expenses and responsibilities indicated an intention that the
easement was for the benefit of Skygarden only, since they do not contemplate access to >1 property.

D. Common types

 Positive easements:
o Right of way: right to cross another’s land;
o Rights of drainage over neighbouring land.
 Negative easements:
o Right to support;
o Right of light;
o Right to defined flow of air.

E. Creation

By express grant

 Servient tenement owner agrees to grant the dominant tenement owner rights over land.
 I.e. express agreement between servient and dominant owners.
 Can be legal:
o General law land = require a deed;
o Torrens System land = registration.
 Or equitable:
o Easement not validly created at common law;
o May be enforceable in equity if 4 characteristics are satisfied and there is a specifically enforceable
contract evidenced in writing or by sufficient acts of past performance (see Topic 11).
 Enforceability:
o GL land = equitable easements will bind all later legal interest holders except a bona fide purchaser for
value without notice of the interest;
o TS land = legal and equitable easements both exception to indefeasibility of title (s 42(2)(d) TLA –
enables all easements, registered or not, to be enforceable against a new registered proprietor).

By express reservation

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 On sale of land, a vendor may reserve an easement (e.g. right of way) over the land conveyed.
 At common law there were difficulties in terms of how an easement could be effectively reserved in that
type of scenario. I.e. if I reserved easement before selling land, then easement is extinguished because I
own both pieces of land; conversely, if I executed an easement afterwards it wasn’t effective unless M
agreed. So there was a common law rule of contemporaneous conveyances to allow a reservation (I
convey the land to M and he would re-grant me back an easement).
 Abolished by legislation (s 65 PLA).
 According to s 65 PLA, a reservation in a conveyance will be recognised.

By implied reservation

 Generally, a grantor must expressly reserve an easement (Wheeldon v Burrows).


 Two exceptions:
(i) Easements of necessity; and
o Arises where an easement is necessary for the use of the land retained;
o Easement must be ‘essential’ (cf. convenient, which isn’t enough);
o Reason for implying easement is to give effect to the presumed intentions of the parties;
o E.g. right of way will be implied where remaining land is landlocked and cannot be used at all
(North Sydney Printing).
(ii) Intended easements (easements by common intention).
o Again, reciprocal easements will be implied to implement the common intention of the
parties;
o The parties must have actually intended the land granted to be used in some particular manner;
o E.g. where there are two semi-detached houses, mutually dependent on each other for support,
the courts will imply that there are cross-easements of support in relation to the common wall.

 These are legal easements (they arise by operation of law).

By implied grant

Cf. Implied reservation, in implied grant it is the buyer who wants the easement (not the seller).

(i) Easements of necessity (as above)

(ii) Intended easements (as above)

(iii) The rule in Wheeldon v Burrows: continuous and apparent easements


 Elements:
1. Right must be continuous and apparent: need visible signs of use of easement (e.g. worn track);
2. Easement must be reasonably necessary (but not essential) for enjoyment of land;

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 Note it is uncertain whether 1 and 2 are both required, or are alternatives, since Thesiger LJ of the
Court of Appeal said, “on the grant, there will pass to the grantee all those continuous and apparent
easements, or in other words, all those easements which are necessary to the reasonable enjoyment
of the property granted.”
3. At the time of the conveyance, the right was used by the prior owner;
4. Easement must satisfy 4 characteristics in Re Ellenborough; and
5. Must not be expressly excluded by terms of contract.
 The extent of easement is measured by nature of right that grantor had prior to the sale. I.e. new owner
can do only what the previous owner could do (cannot be extended). Essentially, a right that was
being used by the previous owner is converted into implied easement in favour of new owner.
  If Wheeldon not made out, try using (iv) below.

(iv) By general words imported into conveyances by statute


 A conveyance9 of land is deemed to include and shall operate to convey all “easements and rights” (s
62 PLA) unless expressly excluded (s 62(3)).
 Applies to GL and TS land.

 Because it includes “rights”, it may create new easements in itself. Elements: (1) conveyance (e.g.
sale); (2) satisfies 4 characteristics of easements; (3) some evidence of use (not as strong as
Wheeldon’s requirement for physical evidence); and (4) not expressly excluded.
 E.g. In Ward v Kirkland, 2 neighbouring blocks of land originally owned by same person but occupied
by different people. One occupant could enter the other occupant’s land at will to maintain a
common wall. Both land sold. P was held to have an easement based on his right to enter the land for
repair.

(v) By simultaneous conveyances of adjoining blocks of land by one landowner to different purchasers
 Essentially, it’s just saying that the above rules apply to simultaneous conveyances (i.e. if the grantee
of ‘dominant’ land would have been implied an easement against grantor, but grantor simultaneously
sold that ‘servient’ land to another grantee, G1 will be implied the same easement but against G2).

(vi) As shown on plan of subdivision


 Easement implied by statute:
1. s 12(2) Subdivision Act 1988 (Vic):
o Subject to express exception on plan, there are implied all easements and rights necessary
to provide: (c) support, shelter or protection; or (d) passage or provision of water,
sewerage, drainage, gas, electricity, garbage, air or any other service of whatever nature;
(e) rights of way; or (f) full, free and uninterrupted access to and use of light for windows,
doors or other openings; or (g) maintenance of overhanging eaves-
If the easement or right is (Sheppard):

9
“Conveyance” defined in PLA s 18(1): conveyance includes a mortgage, charge, lease, assent, vesting
declaration, disclaimer, release, surrender, extinguishment and every other assurance of property or of an
interest therein by any instrument, except a will.

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 Necessary for the reasonable use and enjoyment of the dominant land; and
 Necessary = essential;
 I.e. no other reasonable alternatives to achieve function;
 Something more than convenience.
 Consistent with the reasonable use and enjoyment of the servient land.

o Body Corporate v Sheppard


o Facts: BC argued that it had an implied easement of right of way through S’s penthouse in
order to access plant and equipment on the roof and maintain the building functions. S
had refused access and therefore building contractors needed to access the roof area via
the stairs.
o Held: Not necessary: the access sought to be achieved pursuant to the implied easement
had been, was currently and would in the future, be readily available by alternative
means, albeit at greater cost and inconvenience.
Similarly, not consistent: the number and frequency of service visits, the necessary route
through the key private living areas, and the carrying of equipment and chemicals through
those areas would constitute intrusion of a degree and nature wholly incompatible with
the reasonable use and enjoyment of a private residence.
No easement.

2. s 98 TLA:
o The owner of an allotment of land shown on an approved plan of subdivision shall be
entitled to the benefit of easements “of way and drainage and for party wall purposes and
for the supply of water, gas, electricity, sewerage and telephone and other services to the
allotment” shown of the plan of subdivision “as may be necessary for the reasonable
enjoyment of the allotment and of any building or part of a building”, as if those
easements had been expressly granted.

 Need to use both s 98 and s 12(2) – arguably require same test.

By prescription/ long user

 Continuous long use by the owners of the dominant land may give rise to an easement by prescription
under the doctrine of lost modern grant.
 It is a legal easement.
 Applies to both GL and TS land.

 Elements:
i. 20 years or more of continuous use;
o Onus of proof on claimant;
o Can be by different parties (add periods of use together);

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o What is continuous? 3 times in >25 years is not, but 6-10 times per year is.
ii. Use must be exercised without force, secrecy and permission; and
o Force: A claim will fail if use was forcible (e.g. where owner attempts to prevent use);
o Secrecy: The enjoyment of the right must be ‘open’, that is, of such a character that an
ordinarily, diligent land owner would have a reasonable opportunity of becoming aware of
that enjoyment; and
o Permission: use must have been ‘as of right’, that is, the claimant exercised the use as though
entitled to do so as an incident of ownership of the dominant land. User by permission is not
user as of right.
iii. Owner of servient land must have known about use and acquiesced in it.
o That is, they haven’t consented but they haven’t protested;
o E.g. in Sunshine, there was held not to be a prescriptive easement of pedestrian right of way
because neither the owner of the servient tenement nor his agent knew about the use, so no
acquiescence.
iv. BUT: Easement of long user can only be acquired against an owner in possession of land (Sunshine).
o So if servient land is leased out, no easement of prescription;
o This is because the owner of the servient land is not in a position to prevent that use, so there
can be no acquiescence (the landlord lacks the legal right to prevent use by trespassers, the
right to prevent trespass lying with the tenants).

 Example: Sunshine Retail Investments v Wulff


 Facts: Residents of adjoining cul de sac had used a short cut over 91 Mathoura Road to Toorak Village
for more than 20 years. Developer bought number 91 and sought to close off access. Residents claimed to
have acquired a prescriptive easement of pedestrian right of way.
 Held: No easement. Hedigan J thought the use was not ‘open’, “I am not satisfied that it must have been
apparent to an ordinary diligent owner that the residents were using the pathway.”
Also, since neither the owner nor his agent knew of the use, there was no acquiescence.
Thirdly, claim must fail as the servient tenement was tenanted at the time of the commencement of that
use. Even if the premises were not tenanted but the owner was not in possession at the commencement of
that period, no easement will be granted. Time does not run while the owner is out of possession.

By statute

 E.g. Subdivision Act 1988 (Vic) s 46, Sch 2, which provides that there are implied over the land in a strata
or cluster plan the easements referred to in s 12(2) of this Act.

Easements and the Torrens System

 Easements “howsoever acquired” are protected as paramount interests under the Torrens System in
Victoria. NB. This means that they run with the burdened land whether they are registered or not: TLA s
42(2)(d).

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 I.e. “Easements, howsoever acquired, are enforceable against/ by the new owner (TLA s 42(2)(d))”.

F. Extinguishment and Modification

By agreement or release

 Dominant owner may expressly release the servient owner from the easement.
o GL land: a deed is required, although equity on the usual principles will give effect to an informal
release;
o TS land: dominant owner can transfer his interest in TS land to another (s 45 TLA).

By abandonment (non-user)

 For TS land, servient owner may make application to the Registrar for the deletion from the Register of
any easement where it has been abandoned or extinguished (s 73(1)).
 Non-use or non-enjoyment for a period of 30 years will be sufficient evidence of abandonment (s 73(3)).
 Only the registered proprietor of the servient tenement may make an application under s 73(1) (Riley).
 At common law, long period is important but not conclusive, owner must intend to abandon (Riley).

By alterations to the dominant tenement

 If the dominant tenement comes to assume a very different character, the easement may come to an end.
So, cases have held that excessive use of an easement may lead to its extinguishment.

By unity of seisin

 If one person acquires the fee simple estate in both the dominant and servient tenements, and is in
possession of both tenements, the easement is normally extinguished at common law.

By statute

 s 36(1) Subdivision Act: when amending a planning scheme or issuing a planning permit, Council may
require removal of easement. Owner can apply to VCAT to acquire or remove an easement. Only where
removal or acquisition is required for “the economical and efficient subdivision or consolidation or
servicing of, or access to, land covered by the amendment” and “will not result in an unreasonable loss of
amenity in the area affected by the removal or acquisition.”
 s 62 Planning and Environment Act 1987 (Vic): in deciding to grant a permit, the responsible authority
may use the procedure above to remove or acquire an easement.

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TOPIC 9: Fragmentation by Reference


to Nature of Interest: Security Interests

Torrens System mortgage

 Mortgagor = borrower (debtor);


 Mortgagee = lender (creditor, bank or financial institution).

 Mortgagee does not become the legal owner, but acquires a registered interest in the nature of a statutory
charge (s 74(2) TLA), while the mortgagor remains the registered proprietor.

 A mortgage is created by registration (s 74 TLA).


 If no registration, may be enforceable in equity (per s 81 TLA, which provides that mortgagee should
have same rights in equity as he would have had if the legal estate had been vested in him). Subject to
Consumer Credit Code (need written and signed documentation where Code applies, see s 12).

Rights of Mortgagees on Default

Right to sue on the personal covenant

 If the mortgage contains a specific provision whereby the principal sum and interest thereon are made
payable by a specific date, and the mortgagor defaults, the mortgagee is entitled to take action against the
mortgagor for breach of covenant.
 This right is not based on mortgagee’s security interest, but rests on contractual obligations of mortgagor.

Possession

 On default by mortgagor:
o Mortgagee acquires statutory right to enter into possession of mortgaged land by receiving rents and
profits and may bring an action of ejectment to recover the land (s 78(1) TLA).
o A TS land mortgagee is in the same position as a GL land mortgagee (s 81(1) TLA).
o Two consequences:
o Firstly, the mortgagor is liable to eviction without any formal demand or notice (in GL land mortgages
there was an implied re-demise to the mortgagor until the date for repayment, and upon default, the
tenancy is terminated and the mortgagor becomes a tenant at sufferance); and

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o Secondly, mortgagee is liable to account to the mortgagor on the basis of profits that would have been
received but for mortgagee’s negligence.  Thus it’s disadvantageous for mortgagee to take
possession without exercising a power of sale.

Sale of the property

1. Need default.
Depends on agreement but ‘default’ normally relates to: failure to pay the principal or interest instalment;
or failure to comply with another covenant in the mortgage;

2. If default continues for 1 month (or other expressed period) mortgagee may serve notice in writing on the
mortgagor to remedy the default (s 76(1) TLA). For the notice to be valid it must state: there has been a
default and that a sale will be affected if default continues.

3. If within:

i. 1 month (or other fixed period) (s 77(1) TLA); or


ii. If Consumer Credit Code applies (mortgagor is a natural person and credit provided for personal,
domestic or household purposes; ss 6 and 8), at least 30 days (s 80 – cannot be contracted out of, per
s 169(1));
Mortgagor does not comply with notice the mortgagee can exercise power of sale (s 77(1) TLA).

Conduct of the Sale

 Per s 77(1) the property may be sold:


o Together or in lots;
o By public auction or private contract;
o Cash contract or terms contract; and
o Subject to any terms and conditions mortgagee thinks fit.

 But it must be sold “in good faith and having regard to the interests of the mortgagor” (s 77(1)).
 Mortgagor has an interest in sale being conducted properly (they get the residual money, s 77(3)(iv)).

 Two requirements (outlined by Murphy J in Goldcel):


1. Mortgagee must act in good faith;
 Judged subjectively;
 Has mortgagee acted honestly, fairly, and without fraud or collusion?
 In Goldcel, Murphy J held that both sales were not affected bona fide. In sale of Bali Hi, there
was conflict of interest and collusion, as the purchaser of the land (F) was a client of the solicitor
for the mortgagee (S) and inter alia S opted to sell privately and not at auction in order for F to
purchase the property at lower price.

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In relation to Lilydale land, the agent disclosed the reserve price to an intending purchaser, so
the purchaser paid less than he otherwise would have and less than the best price for the
property.
 Cf. No collusion in Vasiliou, where purchase funded by mortgage from subsidiary of mortgagee.
 Requirements (1) and (2) must both be met (e.g. in Goldcel, sale of Bali Hi was best price, but
power of sale improperly exercised because of lack of bona fides).

2. Mortgagee must have regard to the interests of the mortgagor.


 Assessed objectively;
 Has the mortgagee taken reasonable steps to obtain the best (Goldcel) or proper (Henry Roach)
price for the property?
 What matters is the price obtained (Vasiliou) – if the price is satisfactory, then it doesn’t matter
if mortgagee didn’t take reasonable steps. Conversely, if the price is less than satisfactory, then
ask if reasonable steps were taken.
 THEREFORE:
If best price = sale valid;
If not proper price = were “reasonable steps” taken;
If proper price, not best price = decide between the two.

 Factors to consider if “reasonable steps” have been taken (Lush J in Henry Roach):
o Entitled to give first consideration to his own interests;
o Entitled to sell at the time of his choice and without waiting for a time which a selling
owner might consider more propitious;
 In Henry Roach, the property (an oil refinery) was sold for $350,000 despite
valuations between $740,000 to $4 million. Lush J found that at the time of the sale
there was no market for the site (“the mortgagor had been unable to produce buyers
or investors and the auction did not produce them”). The lender didn’t have to wait
until interest improved, and therefore power exercised validly;
 In Guss, mortgagor argued that the property should have been auctioned on 22
January, and not 5 February on which it was sold, to capitalise on the wash-on effect
from the sale of a nearby property. However, Ashley J thought that this produced no
loss because there would have been no wash-on effect (he did not decide whether
mortgagee was under obligation to make this date adjustment).
o Is not entitled to adopt or accept any arrangement or price merely because it will see him
paid out;
o Is not entitled to sell without advertising to an appropriate market and highlighting the
potentiality of the property (court in Vasiliou of the opinion that if price is unsatisfactory
advertising is unlikely to be an answer to the allegation that duty was breached);
o Bound to take reasonable steps to ascertain value of property before selling (need formal
valuations);
o Must make changes to the property that would provide a premium on the sale price (Guss).

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 In Guss, mortgagor argued that the property should have been sold in two lots; and
not to sell it that way seriously prejudiced the potential return from the sale.
However, Ashley J held that to do so would be a “gamble” and may not have yielded
a premium.

 Examples
 Vasiliou
V mortgaged property to W. At that time, the property was let to F. V defaulted. W served a notice on V
requiring her to remedy her default within 31 days. About 3 months later, W wrote to V stating that it had
taken possession of the property and was exercising its power of sale. F telephoned W’s agent expressing
interest in purchasing the property. F offered to purchase at $400,000 and W accepted. The purchase of
the property by F was financed by a mortgage loan from a subsidiary of W. V challenged the sale.

Consequences of sale

 An instrument of transfer by a mortgagee in approved form may be accepted by the Registrar as sufficient
evidence that the power of sale has been duly exercised (i.e. no need to make enquiries, s 77(2));
 The purchase price must be distributed in the following order of priority (s 77(3)):
(i) All costs associated with sale;
(ii) All moneys due or owing under mortgage;
(iii) Moneys owing in respect of any subsequent mortgage(s) (in order of priority); and
(iv) Any residue to mortgagor.

What interest is acquired by a registered purchaser from the mortgagee?

 Purchaser gets good title upon registration (s 77(4)).


 Upon registration of a transfer from the mortgagee, the estate or interest of the mortgagor as registered
proprietor shall vest in the purchaser, free from the mortgage and any encumbrance subsequently
registered, except: a lease, easement or restrictive covenant to which mortgagee is a party/ has consented
in writing; or a mortgage, charge, easement or other right that is for any reasons binding upon the
mortgagee.
 Further, the title of the purchaser shall not be impeachable on the ground that: no case had arisen to
authorise the sale; or due notice was not given; or the power was otherwise improperly or irregularly
exercised.

 Therefore, if power of sale not exercised properly and transfer registered, the mortgagor is restricted to a
claim for damages against mortgagee (unless purchaser knew of a breach by mortgagee).

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TOPIC 10: Acquisition and Transfer of


Proprietary Interests

Overview

Two main ways in which an interest in real or personal property may be acquired:
1. By transfer (derivative acquisition).
Consensual transaction (inter vivos transfer or testamentary disposition). Or can be non-consensual (for
example, under bankruptcy, compulsory acquisition or confiscation of proceeds of crime) or pursuant to a
court order.
2. By original acquisition (otherwise than by transfer of title).
- Native title;
- Recognising novel proprietary interests;
- Adverse possession; or
- Doctrine of fixtures.

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TOPIC 11: Sale of Land

A. Formalities for passing an interest in land

General Law land

 All lands and all interests therein shall lie in grant (s 51(1) PLA).
 All conveyances of land are void unless made by deed (s 52(1) PLA).
 This does not apply to (s 52(2)): (d) leases or tenancies not required by law to be made in writing; (g)
conveyances taking effect by operation of law.
 What is a deed?
o Signed and sealed (s 73 PLA);
o ‘Sealed’ requirement satisfied if deed expressed to be sealed but not so sealed (s 73A).

Torrens System land

 Upon registration the estate shall be created, varied, extinguished or passed (s 40(1) TLA).
 Equivalent to GL deed (s 40(2) TLA satisfies s 52(1) PLA).

If done, it gives you a legal interest.


But what about before settlement?

B. Contracts for sale of land

 There is almost always a time lapse (e.g. 30-90 days) between the time a contract of sale is made and
settlement (the time when the deed of conveyance (GL) or executed transfer (TS) and paper Certificate of
Title (if any) is delivered to the purchaser on payment of the balance of the purchase moneys).
 What makes a contract of sale valid and enforceable?
 Contract of sale must meet formal requirements to pass title in equity (before title has passed in law).
Therefore, a contract for sale of land, while being ineffective itself to transfer legal title, may transfer
equitable title.

Will title pass in equity?

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 Title will pass in equity to the purchaser once there is a specifically enforceable contract of sale. This
requires a binding contract and either:
1. A written contract, or a note or memorandum in writing complying with s 126 Instruments Act; or
2. An oral contract supported by sufficient acts of part performance.

Q1: Binding contract?

 Offer and acceptance; valuable consideration.

Q2: Written contract complying with s 126?

 Elements (s 126 Instruments Act):


i. Agreement, or a note or memorandum of the agreement, in writing; and
o What is a sufficient note or memorandum in writing?
o In ANZ v Widin, documents did not include date of the mortgage or particulars of title in
relation to the property. Hill J held that the details of the land had to be included in whatever
was signed by mortgagor. That the details of land were in another document (the diary note of
the Bank manager) was not enough, since the note could only be related to the mortgage by
oral evidence which was inadmissible.
ii.Signed by the person to be charged or their agent (“person to be charged” is the person you’re trying to
enforce the contract against).

 Failure to comply:
o Contract is not void or voidable, but is unenforceable as a written agreement.
o However, equity will order specific performance if part performed (go Q3).

Q3: OR Part performance?

 Test: The acts relied upon as part performance must be unequivocally and in their own nature referable to
some such agreement as that alleged (Earl of Selbourne in Maddison, approved by HCA in Regent).
o “Unequivocally referable” means no other explanation for those acts than to perform such an
agreement (McBride);
o “Some such agreement” means a contract of the general nature (Regent);
o The acts must have been done by a party to agreement on the faith of the agreement and permitted by
the other party on that basis (McBride);
o But the acts do not have to be required by the contract, just carried out under it (Regent);
o Examples:
 In Mason, setting snares on the land, paying helpers and taking rabbits were acts ‘exclusively’
referable to the alleged profit à prendre to hunt for game on the land;
 In Regent, R bought property and then agreed with M that in consideration of M paying off
the mortgage and repaying the deposit, M could live in the house and, once paid off, R would

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transfer title. HC held that taking possession of a house, paying off the mortgage and making
repairs were acts referable to a contract of sale (which is of the general nature of the terms
contract alleged); and
 In ANZ v Widin, ANZ endorsing and accepting bills, obtaining an indemnity agreement and
having mortgage form signed as security for indemnity were acts unequivocally referable to a
contract of the general nature alleged by bank (a mortgage contract).

 The HCA in Regent left open whether the less strict test in Steadman could be used: acts must, on balance
of probabilities, point to existence of some contract and be consistent with contract alleged. However, it
has not been accepted in Australia (e.g. not used in ANZ v Widin).
 Therefore, payment of money alone is not enough.

 Q4: Would equity actually order specific performance of contract?

 Discretionary remedy.
 In assessing whether SP is available, a court will also consider:
o Was P in breach of contract? (If so, then no SP; Tanwar);
o P must be ready, willing and able to perform;
o Contract is one which equity will enforce (e.g. not for personal services);
o Balance of convenience will support it (no constant supervision);
o P has ‘clean hands’;
o No delay or acquiescence on part of P;
o Would not cause hardship to P or D; and
o Damages are not adequate compensation.

 If specific performance not available only because land has been transferred to a third party (as in Bunny
Industries), it is sufficient that it would have been available when contract of sale entered into. Note: this
still requires all factors above to have been met.

What interest passes if contract is enforceable in equity?

 Test: Does P have a specifically performable contract? If so, then P has an equitable interest (Tanwar);
 The extent of the equitable interest depends upon the form in which SP would be granted by a court
(Haslam). That is, it represents that which an order for SP would compel the seller to do (Boge).
 This equitable interest can be sold, devised, alienated or mortgaged.

For Bunny-like scenarios, can purchaser get profits?

 In Bunny Industries, the 1st purchaser could get the proceeds of sale (profit and deposit) from a
subsequent registered sale by the vendor to another purchaser because the vendor was a constructive

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trustee of the property for 1st purchaser (following Lysaght per Jessel MR) and the subsequent sale was in
breach of trust.
 However, in Tanwar, the High Court criticised Lysaght and held that the vendor is not a trustee for
purchaser (to say they were “concealed the essential contractual relationship which governed the duties of
the parties”). Thus they removed the foundations of decision in Bunny Industries.

 Presumably though, the outcome will be the same, since both cases hold that the purchaser gets an
equitable interest, and therefore vendor not permitted to transfer legal estate to a third person because in
equity property has already been transferred to purchaser. Purchaser will get damages, and as part of
these damages would be compensation for loss of a right to on sell to another purchaser, measured by
value of vendor’s second sale. Though uncertain.

Traditional approach

 Lysaght v Edwards per Jessel MR.


 According to Bunny Industries, the extent of equitable interest is measured by the amount of the purchase
moneys paid.
 Vendor becomes in equity a trustee for purchaser.
 Vendor is not a bare trustee as he has an interest in the property to the extent of the unpaid purchase
moneys (he has a charge on the land as security for unpaid purchase money and right to possession until
money paid).

Examples

 In Lysaght, V entered into contract of sale with P, after contract of sale had been accepted but before
legal estate was transferred, V died and left all his property to H in a will. Is H bound by contract? Under
contractual rights, a contract between V and P extinguishes upon V’s death. However, P had an equitable
fee simple and, under GL land priority rules, P’s prior equitable interest was better than H’s subsequent
legal interest, and so P could enforce contract against H.

 In Bunny Industries, FSW entered into a contract of sale of land to P who paid a deposit. Later FSW sold
to another purchaser for a higher price and sale was registered. P sought proceeds of sale to 2nd purchaser
from FSW. Held (Connolly JA): FSW was a constructive trustee of the property for P. Second sale of
land in breach of trust, and FSW accountable to P for proceeds of sale (P gets deposit and profits). Here,
P got all the profits, despite only paying the deposit, presumably because they were reading, willing and
able to pay the balance.

 In Tanwar, Vendors entered into contracts of sale with purchaser. Time was expressed to be of the
essence. Funds arrived a day later than completion date. Vendors served a notice of termination, and T
sought specific performance. Held: SP not available as purchaser was in breach of contract.

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C. Statutory regulation of land sales

Sale of Land Act 1962 (Vic)

 31 Purchaser has 3 day cooling off period (if auction, no cooling off period);
 32 Vendor’s statement – disclosure prior to sale – vendor needs to supply certain information to P
(including details of any mortgage, charge, easement or covenant over land, details of planning restrictions,
amounts of outgoings affecting land (rates, taxes, charges etc), any notice of intention to compulsorily
acquire, a list of services and if connected to land, a statement if no access to property by road, and details
of insurance policy maintained by vendor – (2)(g));
 32(5) Can rescind contract if false information provided in s 32.

What happens if property is damaged during settlement period?

 As soon as contract of sale is signed, risk passes to purchaser;


 34 Where a dwelling house is destroyed or damaged so as to be unfit for occupation before P is entitled to
possession, P may rescind contract within 14 days of notice of damage;
 35 Purchaser gets the benefit of any insurance cover held by vendor. A prudent conveyancer never relies on
this section, but always takes out a cover note as soon as the contract is made (e.g. vendor might be
underinsured or cancel their insurance);
 36 Where land has been destroyed or damaged, the vendor may restore that damage and where the vendor
does so before the purchaser becomes entitled to possession, the purchaser shall not be entitled to rely on
the provisions of ss 34 or 35;
 Also s 50 Insurance Contracts Act 1984 (Cth): P deemed to be insured under V’s insurance policy to
buildings where the risk has passed to the P.

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TOPIC 12: Creation of Leasehold


Interests

Legal leases

General Law land

 A legal lease must be created by deed (s 52(1) PLA).


 However, there is an exception (s 54(2)):
i. Leases for a term not exceeding 3 years (includes periodic tenancies, even though they may continue
beyond that time, and leases where option to renew);
ii.Taking effect in possession (means a lease that is to commence at or before the date it is made);
iii. At the best rent which can be reasonably obtained without taking a fine (“best rent” means market
rent, and a “fine” is a premium paid to the landlord for the grant, renewal or transfer of the lease).
Leases fitting this description are legal, notwithstanding that they are not created by deed.

Torrens System land

 Leases for a term >3 years must be registered (ss 66 and 40 TLA).
 Leases for a term ≤3 years and periodic tenancies are un-registrable. Note: if it also falls within s 54(2)
PLA, then it could be classified as a legal lease under that provision.

 Distinction between legal and equitable leases is not so important.


 Under s 42(2)(e) TLA, the registered proprietor takes subject to the interest of a tenant in possession of
the land (but excluding any option to purchase). Thus all leases (whether legal or equitable) are
enforceable against new RP.

Equitable leases

Creation of equitable lease

 Non-compliance with formalities means the lease cannot be a legal lease, but the agreement to lease will
create an equitable lease if it is specifically enforceable (principle in Walsh v Lonsdale).
 The agreement may be specifically enforceable if it:
1. Complies with s 126 Instrument Act;

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o See Topic 11.


o Agreement must identify parties, premises and duration of the term of the lease and substantial
terms of the agreement.
2. OR doctrine of part performance is satisfied;
o See Topic 11.
o E.g. where: taking possession and making alterations; granting and taking of possession;
collecting rent from an occupant; continuing in occupation but on different terms than
previously; permitting occupancy and entering into requests by occupant for planning
approval; or continuing an occupation initially permitted only because of negotiations for
occupancy.
3. AND no discretionary bars to specific performance (see Topic 11).

 The equitable lease is on the same terms as if a legal lease had been created (Walsh). That is, the landlord
is entitled to exercise the same rights he would have had under the legal lease, and the tenant is entitled to
the same protection he would have had under the legal lease.

Periodic tenancy

 In addition to an equitable lease, if tenant enters into possession and pays rent then a legal periodic
tenancy is created (Chan v Cresdon). It’s a tenancy because it falls within s 54(2) PLA.
 Period = rental period;
 Not very useful, since either party can determine by giving notice at end of period.

Is equitable lease as good as legal lease?

 Not really (High Court in Chan).


 Equitable lease depends on court finding a specifically enforceable agreement. Whereas a legal lease,
once registered, is valid even if agreement behind lease was not specifically enforceable.
 Under GL land, equitable leases were not as enforceable as legal leases. But under TS it’s nearly as good.

 Some covenants may not apply to equitable lease (depends on interpretation). In Chan, High Court held
the guarantor of a tenant’s obligations was not liable when tenant defaulted because guarantee referred to
“guarantee of obligations under this lease” and this was interpreted as meaning only the registered lease;
and not the agreement to lease (which created an equitable lease) nor the periodic tenancy.

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TOPIC 14: Adverse Possession

A. Possessory Title

Concept

 Since the Crown was, technically, the owner of all land, it was necessary for the common law to protect
something other than ownership.
 The early law protected the person ‘seised’ of land (i.e. a person in possession).
 The possessor of land had an interest in it, enforceable against the whole world, except against someone
with a superior right of possession. This superior right to possession might be based on documentary title,
or in some cases, an earlier possessory title.
 Title is therefore relative (more than one person may have a legal estate in land at the same time).
Question is who has the better title as between the two parties?

General Principles

Possessory title

 Possessor has a possessory title; a legal estate in fee simple (inchoate: “undeveloped”, i.e. because it
hasn’t extinguished someone else’s documentary title).
 Possessory title is good title. A person in possession is entitled to take action against anyone interfering
with his possession, unless that person can demonstrate a superior title (Perry v Clissold; Mabo).
 Order of rights:
o Documentary title holder has best right (until limitation period runs);
o But as between the others, the party with the earliest possessory title will win (unless there has been
abandonment of that right, or subsequent possessor has possessed property for limitation period).
 For example, in Perry, Government compulsorily acquired land squatter was squatting on. Privy Council
said that between squatter and Government, the squatter had the better title (it doesn’t matter that another
person had the best title) and he was entitled to compensation.

 Possessory title entitles the possessor to: recover possession from a subsequent person who enters into
possession adversely to them; and sell, give away or devise their interest.

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B. Limitation of Actions and Adverse Possession

When will court award damages in lieu of injunction to restrain a trespass?

 An injunction is the prima facie remedy for trespass (Breakfast Investments);


 Damages will only be ordered in exceptional situations;
 Test (Jaggard):
1. If the injury to P’s legal rights is small;
2. Capable of being estimated in money;
3. Can be adequately compensated by a small monetary payment; and
4. Would be oppressive to D to grant an injunction;
Then damages in substitution for an injunction may be given.

 In Jaggard, D built a house on property at the back of their block and used remaining land on their block
for right of way in breach of a covenant that it would only be used for a private garden. Similarly, this
new house used private road (continuing trespass). P, another resident in the cul de sac, wanted an
injunction. Court of Appeal refused; damages appropriate. Here, injury was small (minimal increase in
traffic), could be estimated in money (what D’s might reasonably have paid for right of way and release
from covenant), and an injunction would be overly oppressive because new house would then have no
road access.
 In Breakfast Investments (encroachment case), BI attached metal cladding to sections of its building that
protruded into PCH’s airspace. PCH wanted injunction to remove cladding. Injunction upheld. Here harm
posed by injunction to BI was removal of non-structural addition, so very minimal.

TEST FOR ADVERSE POSSESSION

Does not apply to Crown land (s 7), railroads (s 7A), land owned by water authorities (s 7AB), Local Council
land (s 7B), or common property owned by body corporate (s 7C).

i. After 15 years of adverse possession, owner cannot bring an action to recover land (s 8 Limitation of
Actions Act 1958 (Vic)) and title of owner is extinguished (s 18).
What this means is that the adverse possessor’s inchoate title has ripened into the best possible title, since
the only person with a superior title can no longer assert that title (Perry v Clissold; Mabo).

ii. How to you calculate “15 years”?


 For time to start running against the owner, you need: (i) owner to be out of possession (s 9(1)) and (ii)
land to be in adverse possession (s 14(1));
 See iii for definition of adverse possession;
 When does time stop running?

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o If true owner commences proceedings to recover possession and is successful;


o Peaceable but effective entry onto land and resumption of possession (self help). Need a clear
assertion of possession; mere formal entry does not stop time (s 16);
o Acknowledgement of title by claimant (e.g. lease, licence or offer to purchase); or
o Possessor abandons possession (no set length of time, depends on nature of non-use).
 Successive periods of possession:
o May be aggregated (so long as none of the above) (Mulcahy);
o Do not need to expressly aggregate (no transfer of interest);
o Adverse possession must be continuous and uninterrupted (s 14(2));
o What constitutes a ‘break’ for AP to be interrupted?
o Depends on facts: not a break if there is an intention to return (e.g. in Mulcahy, the original
possessor didn’t live on the farming land for 6 years, but he continued and intended to come
back, thus no abandonment and so no break);
o If there is a break, time starts running again (possessor needs to wait 15 years);
o What if one squatter leaves, another comes on, and first squatter comes back and wants AP?
o Possessor with the earliest possessory title has the best title.

iii. What does “adverse possession” mean?


Not defined in statute, use common law.

Two elements:
Both are questions of fact, and determined by looking at nature of land and the manner in which it is
commonly used and enjoyed.
1. Factual possession; and
 Must be open (not secret), peaceful (not by force), and adverse (not by consent of the true owner –
this excludes occupation under leases or licences, at least until term expires and no extension as in
JA Pye10) (Mulcahy);
 Dealing with land like an owner;
 Must be an appropriate degree of physical control of the land;
 In the case of a large area of land, the acts of possession performed in a portion of the land may be
sufficient to establish adverse possession over the whole – need to demonstrate sufficient acts of
possession though (i.e. appropriate degree of physical control of whole parcel of land).

2. Intention to possess.
 Animus possidendi.
 Intention to possess the land to the exclusion of others so far as reasonably practicable (including
the true owner; for example, as in Buckinghamshire, by fencing and a locked gate only allowing
access to claimant’s land);
 Must be clear and unequivocal acts;

10
Here, claimant was granted a grazing licence for a few months in 1983, later was asked to vacate, claimant
sought further licence but owner did not reply. Claimant then stayed on land until 1999.

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 Claimant does not have to prove acts of use are inconsistent with the true owner’s intended use of
the land (in JA Pye, farming of owner’s land by claimant was not inconsistent with the owner’s
intention to use land later as residential development, but this doesn’t matter);
 Not necessary to show an intention to own now or later, or to exclude in the future; only an
intention to possess for the time being (Buckinghamshire; thus in JA Pye, there was no
inconsistency between the claimant being willing to pay the true owner if asked and his being in
the meantime in possession).

Special rules

 Future interests:
o A has fee simple; grants B a life estate by will; C remainder fee simple.
o Squatter enters possession whilst B alive.
o C has either:
 15 years from the date of adverse possession; or
 6 years from the date his interest falls into possession (i.e. B’s death).
Whichever is the longer period to evict squatter (s 10(2)).
o Justified because it would be unfair for C to lose interest when they’re powerless to stop possession.

 Landlords and tenants:


o What happens when tenant stays on in possession after lease has come to an end?
o When does time start running?
o s 13(2): oral periodic tenancy deemed to be determined at end of first period unless tenant pays rent;
o s 13(1): tenancy at will deemed to be determined one year after it was created.

Adverse possession and Torrens System

 Rights of adverse possessors are protected as paramount interests (s 42(2)(b) TLA).


 Covers inchoate possessory fee simple – therefore, time does not start running again if a new registered
proprietor.
 Once registered proprietor’s title has been extinguished, adverse possessor can apply to become
registered proprietor.

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POLICY

Property in the Human Body

Should there be property in the human body?

See also Moore above.

For

 Mortimer criticises the majority in Moore because they assume that patients’ are freely able to ‘look
elsewhere for medical assistance’ if they do not want the body part to be put to the informed use; however,
perhaps no alternative doctor is available (of the same expertise).

 Current position is ambiguous and arbitrary. It is a “legal fiction” (as said in Roche v Douglas [2000] 22
WAR 331) to deny tissue property status but recognise it in favour of 3rd parties, simply because “work and
skill” has been done it (such as, in Doodeward v Spence, preserving a ‘two-headed’ baby in a jar). Or, in the
absence of such work and skill, to distort the law by saying that the theft of tissue samples can protected by
suing for theft of the containers holding the tissue (as Mortimer contends).

 There is growing judicial unease at the current position.


For example, in R v Kelly and Lindsay (1998) the UK Court of Appeal said in obiter that this may change in
the future, especially if organs acquire “a use or significance beyond their mere existence”. In the US case
of Colavito (2006) the court said in obiter that “there is no common law doctrine that you can’t have
property rights in the human body.”

Against

 Concern it will introduce commerce into the medical field. For example, Mortimer argues that giving
human tissue a price will result in exploitation and erode the foundation of voluntary donation.  As
Broussard J points out, this argument is misconceived because property and sale do not have to go together
(just keep the Human Tissue Act 1982 (Vic) in force).

 Mortimer fears it means “we will go from being the ‘subjects’ of the legal system to its ‘objects’.” Allowing
human beings to be ‘possessed’ by another is inconsistent with principles of dignity, autonomy and respect

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for human life (akin to slavery).  Again, misconceived, since there is a prohibition on selling human
tissue (see also Mosk J, who argues to deny property rights is akin to slavery).

 Conversion is an inappropriate cause of action to use for Moore-like scenarios (Nicol).


o Conversion = dealing with property in a manner seriously inconsistent with the owner’s possession or
right to immediate possession.
o Problems when applying conversion:
To the tissue samples
 Since M does not have actual possession they must establish a right to immediate possession.
Thus he must show that ownership of the tissue was not relinquished. The only way to do this
would be to establish that a bailment exists; i.e. that the bailee (the researcher) is voluntarily and
knowingly in possession of the tissue of the bailor (the source). Would have to show: (i) the
researcher knew he was only in possession of the tissue and that ownership remained in the
source and (ii) there was a promise of re-delivery of possession or a promise to destroy the tissue
at the source’s request. This is unlikely.
 If a bailment was found to exist, experimenting on the cells would most likely amount to a
“repugnant” dealing and hence conversion.
 However, what damages could be recovered by M?
Damages usually = market value. But here, no market value. No replacement value. Yes, M’s
tissue was by itself special, but the HT Act prohibits selling human tissue, so M suffered no loss.
To the profits from the cell line
 Would the creation of the cell line continue the operation of the bailment?
The progeny of animals and plants created during a bailment are the property of the bailor not
the bailee. Using this analogy, it could be argued that the cell line comprises progeny of the
original cells and therefore belongs to the source and not the researcher. However, the fact that
considerable skill and effort are required to create the cell line may not support this analogy.
o Therefore, even if Moore was recognised to have proprietary rights in his tissue, recovery of damages
under conversion would be unlikely. So what’s the point of giving property rights? They have no
practical value.
o HOWEVER, with the High Court’s recognition of native title in Mabo, a right which, as defined in
that case, was extremely fragile, it could be argued that while the right may be valueless it may
nevertheless have important symbolic value. In Mabo it was the rejection of terra nullius and the
recognition of Aboriginal land claims. Likewise, in cases similar to Moore, the value lies in its
symbology; that researchers cannot ignore the rights of those from which their raw material is
sourced (especially since the HT Act fails to give individuals autonomy over tissue removed during
medical procedures  BUT couldn’t this just be amended?).
It also affords the sources of tissue some degree of protection of their abuse. For example, a person
whose kidney is stolen. The traditional claim would be that for battery; but it makes more sense for
there also to be a claim for theft of the kidney.

 Other areas of law are more appropriate to help Moore share in the profits (Nicol). For example, equitable
patent rights (where it would unconscionable for the inventors to deny the source being an assignee on the

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patent) or expand restitution law (unjust enrichment – this was the only action upheld by the US court in
Greenberg as having a reasonable chance of success).

Should there be paid organ donation? (Potts)

 The demand for organs significantly exceeds the available supply (e.g. at present, 95,000 Americans are
awaiting a transplant and 6,000 die annually while waiting; in Australia, between 20-30% of people
awaiting heart and liver transplants die while waiting). The problem is not a shortage of organs (in the US
alone, 20,000 usable cadavers are buried each year) but a lack of donations.
 Current system of altruistic donations is not working; people have very little incentive to donate.
 Donors should be reimbursed.

Objection Response
Sends the wrong message.
Transplantation would remain prohibitively
It might encourage individuals to live more
expensive and thus such behaviour would not
recklessly if they believe that organs are readily
be fostered.
available at any time.
Altruism has failed. Why should our “reliance
Concern that all voluntary donations will cease.
on altruism ‘condemn the sick’”.
Paying for donations would increase the cost of As supply increases, the market price will fall
transplant operations and research. accordingly (supply and demand).
How is this any different to current medical
Rich versus poor arguments.
costs? Price could be controlled by legislation,
Discriminates against people based on their
e.g. transplantable organs could be allocated on
ability to pay. Poorer patients would be priced out
the basis of need and urgency (and not by an
of the organ market, and this is unethical and
‘organ auction-house’).
unacceptable.
Why deny a poor person the ability to sell the
May lead to an exploitation of the poor (third
one valuable commodity that they have? Could
world countries may be used as ‘organ farms for
restrict donations to cadavers, so this argument
the wealthy’).
of ‘rich preying on the poor’ disappears.
There exists a fundamental contradiction in
arguments that are purportedly based on
humanitarian grounds – a market would offer
The human body should not be commodified. A
many people a chance at a better life (both for
threat to ‘human dignity, individuality and
the donor and recipient). A decision to sell
integrity’.
one’s organs is not the same as depriving
oneself of autonomy altogether; the ability to
do so is a reaffirmation of one’s autonomy.

 Further benefits: could eliminate illegal trade in organs; and 52% of Americans favoured some sort of
financial compensation for human organs, while only 22% opposed any compensation.

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 Disadvantages: could reduce the quality of donations (as observed in the US for paid blood donation); and
the majority of people die in ways that make their organs non-transplantable, so people will be paid in life
for their organs which may never actually be of any use.

 Proposals include: income tax deductions for donors; health insurance reductions; payment of expenses
related to donation such as travel costs, lost wages and coverage of other existing medical bills; a ‘futures
market’, in which people could contract for the sale of their organs for delivery after their death; and
payment of funeral expenses.
 Potts advocates a posthumous organ market.

 I disagree with his proposed system. In particular, the idea to give indirect financial reward to the donor of
the organ is not a “gimmick.” It provides incentives to the donor for donation (in the form of tax deductions
or paid funeral expenses), but no incentives to third parties, which, under Pott’s system, would have an
interest in the donor’s death, which of course may be abused and discourage donors. The cost of this system
is offset by the savings to the health industry in having more donors (60% of transplants are kidneys; each
patient taken off of the kidney waiting list saves between US$200,000 and $400,000 for the payers, be they
Medicare or private insurance), there’s no rich vs. poor arguments and it does not give an unfettered right to
owners to “sell” their organs since financial gain is restricted and controlled.

Doctrine of Fixtures

Criticisms and Reform options (Abbs)

 Contention: The law of fixtures is in urgent need of revision. Abbs describes it as: anachronistic;
artificial; elusive; uncertain; a confusing façade; illusory; and, obsolete.

 Criticisms:
o A single, overarching doctrine ‘cannot literally cover all the fact situations and circumstances.’
o Decisions involve policy concerns and value judgments, which do not fit in to the tests.
o Decisions are uncertain (as Professor Butt says, “it is often not east to predict from the facts of the case
whether the court will find the item in dispute to be a fixture”).
o Courts stress that attention must be paid to “all the relevant circumstances,” which belies the operation
of the “tests.” They are consistently cited yet often substantially ignored.
o The ‘degree of annexation’ test has suffered a “perceptible decline” in importance. And “it has been
substantially abandoned in practice.” Abbs argues that it should not be recognised as a test and
instead as one of the subsidiary issues that may be used to determine objective intention.
o They provide little in the way of predictability or principle.

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 Reform options:
o The relationship between the parties in dispute is fundamental to fixtures cases.
o The purpose of the law’s intervention is to make a decision on entitlement to ownership.
o The Q to ask is: “Which of the parties, on balance, possesses the more reasonable expectation of
entitlement to the benefit of the item in question?”
o I.e. the law protects an “expectation interest”
o But only in the absence of an express agreement by the parties.
o A flexible, case-sensitive “transactional approach” should be applied to fixtures.
o  But then wouldn’t this just add to the uncertainty of which Abb complains.

Doctrine of Tenure

Historical background

 Doctrine of tenure (from Latin tenere, meaning to hold, possess or occupy) it refers to a mode of
holding land whereby one person (the ‘tenant’) holds land from (or ‘of’) another, subject to the
performance of certain obligations.
 History: William the Conqueror confiscated property of English landowners and then redistributed these
lands. It followed that only the Crown ‘owned’ land absolutely.

Crown

d d
lan
Tenant in chief owe
s in are
rest (mesne lord) s
inte vice
nts Ser
Gra

Tenant in demesne
(only rights of actual occupation)

 ‘Tenants in chief’ were tenants who held directly from the Crown.
 ‘Mesne lord’ is someone who stood between the King and the tenant in occupation.
 ‘Tenants in occupation/ demesne’ would be granted land in return for services (‘socage tenure’).

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 This process of creating tenures out of tenanted land was known as ‘subinfeudation’.
 Subinfeudation was eventually abolished, and all free tenures were converted to socage tenures (i.e. all
land was held of the Crown).

 Therefore, in Australia, no person can ‘own’ land. When Australia was settled, the doctrine of tenure was
incorporated into Australian law as part of the received law, subinfeudation was no longer possible, so
there were no overlords; thus the Crown owns all land absolutely. What we call ‘owners’ hold an interest
(‘estate’ in land) of the Crown.
 It can be argued that the Doctrine of Tenure was never really part of Australian law because there is no
evidence of socage tenure (i.e. no services or money owed to ‘hold’ land). However, the High Court in
Mabo said “It is far too late in the day” to overrule this doctrine.
 Native title is an exception; it is an example of allodial (absolute) title, rather than tenurial title.

Leases

Exclusive possession

 What should the court do when there is exclusive possession but they wish to find a licence?
 For example, the facts of Cobb v Lane; where D was allowed to stay at his sister’s house.
 The courts can either (1) Hold that there is exclusive possession, but a lease does not exist because there
was no intention to create legal relations (as they did in Cobb – the Court of Appeal said that D’s
possession was a consequence of a convenient family arrangement designed to provide financial
assistance to D and his immediate family. These circumstances suggested that the parties did not intend to
enter into a binding legal relationship, but only to confer a ‘personal privilege’ on D). This was suggested
by Taylor J in Radaich and approved by Lord Templeman in Street v Mountford; or
(2) Use Windeyer’s rationale in Radaich, and say that due to policy reasons the occupant does not have
exclusive possession in law and therefore no lease.

 Option (1) is “self-contradictory and meaningless” (because exclusive possession = lease) but (2) is
counterintuitive, since it creates a category of legal exclusive possession distinct from a lay-persons view
of exclusive possession (and really how can policy considerations convert the latter to the former?).
 I prefer the English courts and Taylor J’s view.

Criticisms of Certainty of Duration

 The application of this requirement in Prudential Assurance (1) defeated the intentions of the original
parties and (2) led to a “bizarre” and “unsatisfactory” outcome (it severs a retail shop from its road
frontage; dividing two estates that, for all practical purposes, should be joined).

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 Here the majority of the House of Lords expressed concern over this “ancient and technical rule”. It has
no satisfactory justification or present useful purpose. However, they concluded it is too well entrenched
in the common law to be overruled by courts and that it should be considered by the Law Commission.

 This rule is just a matter of semantics (i.e. a lease ‘for 999 years determinable by either party at the end of
the war’ is valid, but a lease ‘until the end of the war’ is not; see Lace v Chantler).
 On the other hand, at least the former provision forces a date at which the lease will cease. For example,
the alternative outcome in Prudential Assurance would have entitled the tenant to stay there “for ever and
a day” at the 1930 rent of £30 when the annual current commercial rent would exceed £10,000 (Lord
Templeman). This may have been a public policy decision.

Licences

Should property law recognise a licence as an interest in land?

Decision in Georgeski v Owners Corporation

 Barrett J of NSW Supreme Court.


 Trespass to land entails interference with possession and is maintainable only by someone who has a
right of exclusive possession (e.g. owner or tenant). As between licensor and licensee, where no right of
possession is involved, it is the licensor who may sue for trespass, not the licensee.
 On the English Court of Appeal decision in Manchester Airport v Dutton:
o Facts: In order to build a second runway, MA was granted a licence by the National Trust to enter
and occupy a nearby wood to remove trees so that the new runway was safe. However, protestors
had entered the wood and were preventing such work. MA brought summary possession
proceedings against protestors and was successful. The Court of Appeal dismissed appeal (2:1);
o Chadwick LJ in dissent took the traditional approach;
o Laws LJ, with whom Kennedy LJ agreed, expressly rejected this approach: “the true principle is
that a licensee not in occupation may claim possession against a trespasser if that is a necessary
remedy to vindicate and give effect to such rights of occupation as by the contract with his licensor
he enjoys.”
 Barrett J preferred the approach taken by Chadwick LJ in dissent: “To do otherwise would be to fail to
accept principles about the nature of trespass to land which are deeply rooted in Australian law and have
been recognised by the High Court.”

Numerus Clausus principle (Edgeworth)

 The term numerus clausus refers to ‘a restricted list of entitlements which the law will permit to count as
property interests’ (B Rudden).

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 <12 categories of entitlement to land: estates (fee simple, life estate and leasehold); ‘servitudes’ (easements,
freehold covenants and profits); and, security interests (mortgages).
 To rank as an interest in land, a right must come within one item on this menu of interests (“must fit within
firmly established pigeonholes”). If not, it will fail to be enforceable as property. This is reflected in Dixon
J’s judgement in Victoria Park.
 It is this principle which means that contractual licences cannot qualify as proprietary interests.

In support

 There are three historical reasons in support of the numerus clausus principle:
1. To maximise the uses to which land can be used/ to maximise efficient use of land. This can be
understood in the context of the burgeoning market-oriented economic order in the middle of the 19th
century in England. If parties were free to restrict the usages of land by agreements capable of binding
successors in title indefinitely, land could be shackled in ways that might revive all the impediments to
economic reform that were endemic in feudal real property law. For example, in Prudential Assurance,
if the fixed-term lease was valid, then the tenant’s could stay on that land “for ever and a day” paying
the nominal rent of £30, making the land worthless;
2. To minimise the difficulties that confront 3rd parties who purchase the land. An increase in the number
and range of rights would make the conveyancing process more complex, time-consuming and
hazardous; it would result in enormous transaction costs. It follows that the numerus clausus principle
can be justified as a balancing act by means of which the largest number of property rights is allowed
consistent with the imposition of a reasonably efficient system of conveyancing;
and
3. To protect the integrity of what Lord Brougham refers to as ‘the science of the law.’ If property owners
were able to create at whim any kind of property right, the process of measured categorisation of
interests by the judiciary and legislature would be frustrated. In turn, the capacity for the legal system
to develop would flounder. No shared professional knowledge about property rights could be firmly
established if particular rights could not be described as falling within well-defined categories, and
conforming to settled understandings about core principles.

Example

 Georgeski:
 The answer to each of these questions was complicated by the majority decision of Manchester Airport. In
that case, the Eng Court of Appeal held that where a licensee has been granted a right of occupation of land,
they will have a sufficient right to support an action in trespass against 3rd parties. This decision is important
because it raises the status of the licence from purely a contractual right (enforceable in personam) into a
right over the thing (in rem).
 Barrett J rejected the majority’s decision.
 His Honour referred to Radaich v Smith to support the traditional notion that an action in trespass to land
may only be brought by a person in possession of the land. “Remedies for trespass vindicate possession, not
occupation” at [102]. A licensee has occupation but not possession.

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 During the life of the licence, it is the licensor who retains the right to sue; if they decline to do so, the
licensee has no remedy against the trespasser for invasion of land.
 Barrett J offered a strong reaffirmation of the numerus clausus metaprinciple (in concurring at [94] with
Martin B’s approach in Hill v Tupper, that to allow the licensee this right in this instance would lead to ‘an
indefinite increase of possible estates’).

Criticisms

 This rationale derived most of its force in the context of a complete absence of systems of land registration.
This approach appears to be unduly restrictive in light of all-pervasive Torrens registers. There is far less
need at the present time to protect purchasers by means of keeping tight limits on the numbers of property
rights.
 (1) is a reflection of the laissez-faire11 economic philosophy that was dominant at the time, but the mid-20th
century rejected as inadequate this approach, leading to the rise of the welfare state (protection of weaker/
vulnerable parties).
 The acute (serious) and unjustifiable vulnerability of the licensee, if not accorded proprietary status, has
already been recognised in legislation across Australia in the context of residential tenancies. E.g. RTA
affords lessees and licensees the same measure of protection.
 In the facts of Georgeski, P was placed in an invidious (unacceptable, unfair) position where she was reliant
on the licensor, who was not inconvenienced by the activities in question, to commence action against D. In
practice, it will be very difficult to persuade licensors to assist aggrieved licensees in this way.

Conclusion

 The key reason for retaining the numerus clausus has been removed by Torrens registration systems.
 Furthermore, if the reasons advanced by Lord Cottenham in Tulk v Moxhay for recognising novel
proprietary interests retain any force, as Edgeworth thinks they should, (that is, (i) inexcusable damage to
covenantee; (ii) prevention of unconscionable commercial behaviour; (iii) notice by the purchaser of 3rd
party rights; and (iv) enhancement of the economic or other values of the land), then they ought not to be
confined in their application exclusively to the negative freehold covenant.
 Where the precise detail of such rights can easily be contained on the register for all prospective purchasers
to see, 3rd parties are not likely to be disadvantaged by them, and the land, far from being rendered
unproductive or constrained by such rights, is as likely to be enhanced both in value and amenity by their
recognition.
 However, such “root-and-branch” revision of the range of property interests is better left to, and undertaken
by, legislatures. But judges do have a role in developing the law in cases where authorities are unclear.

Numerus clausus and easements

 In Phipps v Pears [1965] 1 QB 76, Lord Denning said the creation of novel negative easements must be
looked at with caution; the law has been ‘very chary’ of creating any new negative easements. The
11
Laissez-faire = ‘allow to do.’

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underlying reason is that if such an easement were to be permitted, it would unduly restrict your neighbour
in his enjoyment of his own land. It would hamper legitimate development. Likewise here, if we were to
stop a man pulling down his house, we would put a brake on desirable improvement.
 A right to protection from weather (if it exists) is negative; it is a right to stop your neighbour from pulling
down his own house. It was rejected as an easement.
 Webb v Bird held that a man who had a windmill on his property had no remedy against a neighbour who
built a school house which cut off the winds, because no right to wind and air, coming in an undefined
channel, existed.

Security Interests

Purposes and Types security interests

 Unsecured debt: The credit provider may be prepared to extend credit facilities without requiring the
borrower to provide security. This means that in the event of default by the debtor, the only remedy
available to the creditor is a personal action for repayment of the loan.
 Secured debt: A secured loan has the advantage that, in the event of default, the creditor is entitled to
exercise remedies over specified property of the debtor in preference to unsecured creditors. In general, the
remedies available to a secured creditor do not require the intervention of a court and may be exercised
swiftly and with a minimum of formality.
 Security interest is property right of lender allowing recovery of debt. Land commonly used as security
because identifiable, permanent and tends to hold its value.

 Types of security interests:


o Mortgages;
o Fixed charge: a security over specific asset of debtor (e.g. specific machinery) which can creditor
can sell in the event of insolvency;
o Floating charge: a security over assets generally of a company – not specific – if company goes
insolvent then the charge will “crystalise” over general assets of the company and become “fixed”.
E.g. over the goods of a company;
o Pledges/pawns: pawnshops – where money is lent on the security of an item for a certain period
after which item can be sold to recoup loan;
o Lien: various kinds – main one in property is where vendor transfers property but purchaser does
not pay – vendor retains an equitable interest in the property;
o Retention of title clauses: often used in commercial contracts to cover exposure – where a
company supplies good to another, the contracts between them may provide that even though the
goods have been sent from Company A to Company B, title will not vest in Company B until a
defined event like payment occurs. Means if Company B goes under before the event, Company A
can simply claim own goods back.

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Forms of security interests

 Hire-purchase agreement: hire contract which after certain fees have been paid provides for the item (e.g. a
car) to be transferred into the name of hirer;

 Terms contract: often used before mortgages were readily available – e.g. where vendor of house essentially
fund a sale by keeping title to the property but allowing the purchaser to have possession in return for
payment on the house plus interest, after which the vendor will transfer property.

Regulation of terms contracts

 Terms contracts create a number of problems for purchasers: e.g. where the land is subject to a mortgage at
the date of the contract and the vendor subsequently defaults, where the vendor is a purchaser under a terms
contract, or where the vendor subsequently enters into a mortgage.
 NB. Abuses of terms contracts of sale led to the imposition of certain restrictions on the making of terms
contracts of sale in Victoria.

Sale of Land Act 1962 (Vic)

2. Definitions
terms contract has the meaning set out in section 29A;

29A. What is a terms contract?


(1) For the purposes of this Act a contract is a terms contract if it is an executory contract for the sale and
purchase of any land under which the purchaser is-
(a) obliged to make 2 or more payments (other than a deposit or final payment) to the vendor after the
execution of the contract and before the purchaser is entitled to a conveyance or transfer of the land; or
(b) entitled to possession or occupation of the land before the purchaser becomes entitled to a
conveyance or transfer of the land.
(2) In subsection (1)- deposit means a payment made to the vendor or to a person on behalf of the vendor before
the purchaser becomes entitled to possession or to the receipt of rents and profits under the contract; final
payment means a payment on the making of which the purchaser becomes entitled to a conveyance or transfer
of the land.

14. Certain agreements void


Any agreement under which a person purports to waive any right the person may have under this Act to avoid a
contract is void.

And ss 29B-29V:
Subdivision 2-Certain terms contracts prohibited

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 B(2)(a): Cannot sell land unless registered proprietor of the land.


 F: If Act is contravened, (1) the contract is voidable by the purchaser unless (2) vendor (a) acted honestly
and reasonably and ought fairly to be excused and (b) the purchaser is substantially in as good a position as
if all the relevant provisions of Act had been complied with.
 G: Provisions that exclude, modify or restrict any rights conferred on the purchaser by this Act are void.
Subdivision 3-Transfer and mortgage back
 H: Purchaser can ask vendor to transfer the land and to provide a mortgage to secure the money owing
under the terms contract.
 J: If vendor fails to do so, the Act prescribes serious penalties ((a) purchaser is entitled to all civil remedies
for breach of contract, and (b) vendor is guilty of an offence: 60PU for person or 300PU for body
corporate).
Subdivision 4-Mortgages and terms contracts
 M: Imposes restrictions on selling land subject to a mortgage ((a) mortgage must only relate to that land, (b)
contract must expressly state land is subject to a mortgage).
 N: If vendor contravenes M, contract is voidable and prescribes serious penalties.
 P: Vendor cannot mortgage land that is subject to a terms contract.
 Q: Vendor may ask purchaser to take a transfer of land and execute a mortgage (i.e. H).
 S: Prescribes remedies for contravention of P.
 T: If purchaser fails to comply with notice from Q, same penalties as for J.

Nature and Type of Mortgages

General Law vs. Torrens System Mortgages

General Law Torrens System


Mortgagee does not become the legal owner, but
Mortgagee takes legal title to the property while the
acquires a registered interest when mortgage is
debt is outstanding, but must reconvey it to the
registered (s 74(2) TLA), while the mortgagor remains
mortgagor when the debt is repaid.
the registered proprietor.
Equity compels mortgagee to treat property as no
In theory, not a true mortgage at all, because no
more than a security. They are not entitled to exercise
transfer of ownership. But it’s a statutory charge on
the usual rights of ownership unless default.
the registered fee simple. Practically the same.
Created by deed (since involves conveyance of land). Created by registration (s 74 TLA).
If no registration, may be enforceable in equity (per s
81 TLA, which provides that mortgagee should have
If deed is invalid, mortgagee does not acquire legal
same rights in equity as he would have had if the legal
title but mortgage recognised and enforced in equity
estate had been vested in him).
by specific performance.
Subject to Consumer Credit Code (need written and
See Topic 11.
signed documentation, see s 12).
See Topic 11.
An ‘equity of redemption’ arises as soon as the Technically, no ‘equity of redemption’. Because
mortgage is made. It is an equitable interest in the land there’s been no transfer of legal title.
consisting of the sum total of the mortgagor’s rights in It is, however, used to refer to the mortgagor’s right to

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the property (value = market value of prop – amount


outstanding under loan).
Thus while in law, mortgagee is owner, in equity,
a discharge of the mortgage after it has been repaid
mortgagor is the owner of land.
This is an interest in land and can be alienated, leased
or mortgaged.
A 2nd mortgage, when registered, operates in the same
manner as the 1st mortgage to give the mortgagee a
If this interest is mortgaged as security for a further
legal interest.
loan, 2nd mortgage can operate only in equity.
Mortgagees get priority in order of registration (e.g. 1st
mortgagee gets paid first etc.)
Mortgagor has ‘equitable right to redeem’ – a right When paid off, mortgagor has a right to call for a
included in the ‘equity of redemption’ (right to have discharge and mortgage is discharged by being
property reconveyed on payment of principal). stamped.
If mortgagor defaulted, court would order ‘decree of
foreclosure’, made on mortgagee’s application,
declaring that ‘equitable right to redeem’ was at an See Rights of Mortgagees on Default (above).
end and thus leaving the mortgagee an unhampered
fee simple.

Changes in the Mortgage Industry

 Financial de-regulation in the 1980s encouraged a more competitive lending environment.

Problem 1: Securitisation

 Since the late 1990s, many mortgages are ‘securitised’.


 Securitisation is a process by which illiquid income-producing assets are converted into tradeable
securities (Foreman)
 Process:
o Mortgage ‘originator’ (e.g. bank) sells mortgages to ‘special purpose vehicle’ (SPV);
o SPV becomes registered mortgagee; and
o Mortgage assets are pooled, and securities backed by the pool are sold to investors, which provide an
income stream financed from the mortgagors’ repayments.
 Why? Allows lenders to receive payment for loans virtually immediately, without having to wait 30 years
to be repaid. Further, it enables superannuation trusts and investors to invest in residential mortgage
lending without participating directly in the mortgage market. And it gives borrowers access to mortgages
financed by superannuation funds and other non-traditional lenders (how else could subprime mortgages
be afforded?).

 Why is this a problem?


 Recent subprime mortgage crisis illustrates point.

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 Subprime mortgages are risky (subprime borrowers have poor credit history, cannot qualify for
traditional loans, and are often 1st-time borrowers/ 1st-home buyers; subprime mortgages have high loan-
to-value ratios (up to 100%), require payments that are a significant % of borrowers’ incomes, often
approved without borrower stating or substantiating their assets, liabilities or income, and often have a
very low interest ‘teaser’ period).
 By 2007, about 20% of residential mortgages in the US were subprime.
 As Foreman points out, as a consequence of securitisation, the entities that organise and/or approve loans
do not directly bear the risk of default (as US Federal Reserve Chairman Bernanke explained, “the risks
are largely passed on to the investors”). These entities typically make their profit on the volume of loans
they transact (rather than the quality).
 As a result, some US lenders have approved loans they would not have otherwise approved. It’s
encouraged some to engage in careless and, in some cases, improper conduct in their dealings with
borrowers.
 The downturn in the US housing market, combined with the expiration of the teaser period of loans
originated in 2005, meant that the crisis came to a head in 2007.
 Has resulted in many mortgagors’ losing their homes (as a result of subprime mortgages entered into
between 1998 and 2006, 2.2 million US households will lose their homes to foreclosure) and a web of
litigation in the US.

Problem 2: Mortgage brokers

 Accompanying the new competitive environment, a new and, as yet, unregulated industry of mortgage
brokers has come into being which negotiates mortgages for lenders.
 Banks are supervised by ASIC and must have a licence (AFSL).
 Cf. Mortgage brokers have no regulation.
 RBA Governor “There is no regulation at all of mortgage brokers yet this is an industry that has grown up
and is quite big now.”
 The Consumer Credit Code only applies to private domestic purposes. Thus MBs can sidestep it by
requiring borrowers to say it’s for business, even though it’s private.
 Credit itself is not a financial product under the Corporations Act 2001 (Cth), so MBs are not regulated
under that Act either.
 Reform options:
 Make credit a financial product so the Corporations Act applies.
 This will treat MBs the same way as stock brokers: thus they would have to have an AFSL12 and financial
trading licence, and those that are bad could have their licence revoked and ASIC would be involved.
 Furthermore, amend Consumer Credit Code: exclusive requirement for lenders to assess repayment
capacity, impose positive obligations on lenders to assist borrowers, and make it apply to business
transactions too (so no more side-stepping). Since it is a state-based code it may be difficult to amend.
 Current regulatory framework is ineffective for this current credit market.

12
AFSL = Australian Financial Services Licence. Licensees are subject to rules about quality of advice and
disclosure, and are also required to belong to an external dispute resolution scheme. EDR schemes are an
effective and low-cost mechanism for resolving consumer complaints.

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Equity’s Protection of the Mortgagor

Clogs on the Equity of Redemption

 Equity developed a number of principles that were intended to protect the right of mortgagors to redeem
the land on repayment of the mortgage debt and thus preserve the nature of the mortgage as a security
transaction.
 It is often said that equity would not allow the mortgagee to clog or fetter or restrict the mortgagor’s
power to deal with the equity of redemption.
 That is, the courts would not allow the mortgagee to prevent or postpone the mortgagor from getting the
property back and would not permit the mortgagee to impose a fetter on the mortgagor's right of
enjoyment of the property after redemption. Any such restrictions in the mortgage were invalid.

Unconscionability

 In recent times courts have been less prepared to set aside terms in mortgages which restrict redemption
or confer advantages on mortgagees after the mortgage has been redeemed. However, equity may
intervene to prevent enforcement of mortgage terms because it would be unconscionable to allow the
mortgagee to do so. A number of doctrines may operate to produce this result.

Statutory Protection of the Mortgagor

Trade Practices Act 1974 (Cth)

A covenant in a mortgage that substantially lessens competition may be invalid under TPA, Part IV.

 s 51AC prohibits unconscionable conduct in trade or commerce for transactions up to $3m for business
purposes and applies to mortgages.

Consumer Credit Code

 In September 1995, the Consumer Credit Code, a national uniform legislation scheme, took effect in all
Australian states and territories. The Consumer Credit Code is contained as an appendix to a Queensland
Act, Consumer Credit (Queensland) Act 1994 (Qld). Vic has adopted the Code by legislation (Consumer
Credit (Victoria) Act 1995 (Vic) s 5).
 The objectives of the Code are (explanatory note to the NSW legislation): to provide uniform laws that
apply to all forms of consumer lending and to all credit providers; to allow borrowers to make informed
choices when purchasing credit (‘truth-in-lending’); to regulate the credit provider’s conduct throughout

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the life of the loan; and to provide significant redress mechanisms for borrowers in the event that credit
providers fail to comply with the legislation.
 The Code cannot be avoided or modified by contract: s 169(1).

 The Consumer Credit Code applies to mortgages over land if the mortgage secures obligations under a
credit contract or guarantee and the mortgagor is a natural person or strata corporation (s 8(1)). A credit
contract is one where the debtor is a natural person ordinarily a resident in the jurisdiction, and the credit
is provided or intended to be provided wholly or predominantly for a personal, domestic or household
purpose, a charge is made for providing the credit and the credit is provided in the course of a business of
providing credit (s 6(1)).

 Where the Code applies, the debtor benefits from a range of consumer protection provisions which
include:
o Credit contact in the form of a written document signed by debtor and credit provider (s 12);
o Debtor must be given a copy of the credit contract (s 18);
o Creditor provider must give the debtor a pre-contractual statement before entering into the credit
contract (s 14), referring to matters such as (s 15): property involved in a mortgage; amount of credit;
annual % rate; calculation of total amount of interest charges; repayments; credit fees and other
charges; default rate, if any; any commission paid by or to the credit provider; and details of any
insurance financed by the contract;
o Debtor has a right to pay out the credit contract at any time upon payment of specified charges (s 75).

 Special features of the Code:


o Division 3 of Part 4
o In cases of hardship, if a debtor who is unable because of illness, unemployment or other reasonable
cause to meet the debtor’s obligations under a credit contract but reasonably expects to be able to
meet those obligations if the terms of the contract were altered, then the debtor may apply to the
credit provider to change the contract (s 66). If they do not change the contract, the debtor may apply
to the court to change the contract (s 68).
o The court is given the power to reopen unjust transactions (s 70). In considering whether a term of a
credit contract is unjust in the circumstances relating to it at the time the contract was entered into,
the court may have regard to a variety of factors set out in s 70(2), including (but not limited to): the
consequences of compliance or non-compliance with all or any of the provisions of the credit
contract; the relative bargaining power of the parties; whether the terms of the credit contract were
the subject of negotiation; whether the debtor because of age or physical or mental condition was
reasonably able to protect his interests; and whether independent legal advice had been obtained by
the debtor.
o A guarantor may apply for relief where the guarantee is unjust but the loan contract is not (s 70(1)).
o Under s 72, court can review unconscionable fees, interest or charges and can annual them.

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The Consumer Credit Legal Service says that these provisions are easily circumvented by getting borrowers to
say that the loans are for business purposes.

NB. Acceleration clauses in a credit contract may only operate if the debtor is in default under the contract and
then only if the debtor (or guarantor or mortgagor as the case may be) has been served with a default notice
under s 80, which contains additional information concerning how the debtor’s liability is affected by the
operation of the acceleration clause (s 85).

Australian Securities and Investments Commission Act 2001 (Cth)

Mortgages are classed as ‘financial products’ under s 12BAA(7)(a) of the ASIC Act. Statements made in
relation to financial products fall within the definition of ‘financial services’ pursuant to s 12 BAB.

s 12CA(1) provides that: ‘A person must not, in trade or commerce, engage in conduct in relation to financial
services if the conduct is unconscionable within the meaning of the unwritten law, from time to time, of the
States and Territories.’
Extended by s 12CB (where financial services are of a kind ordinarily obtained for domestic purposes, subject to
certain limitations); and s 12CC (where financial services are obtained for business purposes up to a maximum
of $3m, excluding listed public company borrowers).

The ASIC Act also provides all mortgagors with protection against misleading & deceptive conduct (s 12DA),
and makes certain misleading representations strict liability offences: ss 12DB-DM. Mortgagors’ remedies are
listed in Subdivision G of Part 2 of the Act.

Power of Sale

Proper price vs. Best price

 Lush J in Henry Roach expressed the opinion that these words in s 77 had the effect of bringing together
the concepts of an obligation to act in good faith and an obligation akin to an obligation to exercise care.
That is, a duty to take reasonable precautions to obtain a proper price (as put by the dissentient Menzies J
in Forsyth v Blundell).
 However, Murphy J in Goldcel believes that s 77(1) requires that the mortgagee, on selling, must take
reasonable steps to ensure that, at the time of sale, he is getting the best price then available for the
mortgaged property, and reasonable steps to obtain the best price must be taken, irrespective of the
amount of the mortgaged debt. The “interests of the mortgagor” must include at least his interest to see
that the mortgagee takes reasonable steps to get on sale the best possible price available for his property.

- Ashley J in Guss: As to a mortgagee being required to “have regard to the interests of the mortgagor”, it
seems to me that the obligation described by Murphy J in Goldcel was somewhat more substantial than the
obligation described by Lush J in Henry Roach. Difference lies in this: in Henry Roach Lush J found in the
concept of a mortgagee having regard to the interests of a mortgagor an echo of the common law duty to

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take reasonable precautions to obtain a proper price – this was sometimes expressed as part of the duty to
act in good faith and was not equivalent to a common law duty of care; in Goldcel, however, Murphy J
considered that a mortgagee is required to take reasonable steps to ensure that, at time of sale, he is getting
the best price then available –determined objectively. This went beyond the approach of Lush J because it
introduced the concept that a mortgagee must take reasonable steps to obtain the best price in lieu of a
requirement that he take reasonable precautions to obtain a proper price. Moreover, it proposed that
compliance with the duty or not should be objectively assessed, rather than by considering the duty as one
emanating from and shaped by the duty of a mortgagee to act in good faith. Perhaps, however, it retained
some of the notion of the primacy of the interests of the mortgagee; because it seemed to imply that a
mortgagee has the power to determine the sale date.

- Murphy J did not equate the duty owed with a common law duty of care. He certainly did not say that a
mortgagee would breach its duty to have regard to the interests of a mortgagor if it acted negligently in
selling the mortgaged property.

 The Queensland provision specifically states that it is the duty of a mortgagee in the exercise of a power
of sale ‘to take reasonable care to ensure that the property is sold at the market value’ (Property Law Act
1974 (Qld), s 85(1)). Within 28 days from completion of the sale the mortgagee is to give the mortgagor a
notice specifying the manner of sale, the name of the purchaser, the amount of the purchase price and the
date of completion. The title of the purchaser is not impeachable on the ground of the mortgagee’s breach
of duty, but the mortgagor has an action in damages against the mortgagee.
 The legislation was applied by the Supreme Court of Qld in McKean v Maloney, where the mortgagee, in
exercising their power of sale over land situated in Proserpine, employed an agent in MacKay who
inadequately advertised the auction in the local papers. McPherson J found that the conduct of the
mortgagee in engaging an estate agent who was not local was not ‘improper’ but that the mortgagee did
breach the duty imposed by s 85(1). His Honour said that ‘the mortgagee was not justified in declining to
follow the obvious course [to get a local agent] and she must accept the consequences.’ Does this case
suggest that there is a real difference between the ‘recklessness’13 test and the ‘negligence’14 test?

 Why doesn’t mortgagor sell the property himself?


 The issue is that the bank has all these processes down pat, they want their money fast (generally), they
don’t want to have to rely on the borrower. But then couldn’t you then adjust the legislation to provide
guidelines under which the mortgagor has to sell the property? In practice, Jenny doesn’t think it would
work (you’d be doing other things to keep the property, i.e. go slow while you refinance).

13
Recklessness Heedless or careless conduct where the person can foresee some probable or possible harmful
consequence but nevertheless decides to continue with those actions with an indifference to, or disregard of, the
consequences. Recklessness implies something less than intent but more than mere negligence.
14
Negligence Elements: the existence of a duty of care; breach of that duty; and material damage as a
consequence of the breach of duty. A duty of care is a legal obligation to avoid causing harm, and arises where
harm is foreseeable if due care is not taken. D breaches this duty if he fails to avoid the risk where a reasonable
person would have done so.

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Adverse Possession

Policy and Reform

For/Against

 Original justifications for AP:


o Holders of rights (e.g. registered proprietor) should not sleep on their rights (they should attend to
their property);
o AP is economically efficient because it encourages productive use of land (Posner);
 BUT what about where owners hold land in reserve for the future (e.g. seeking council
approval)? And, as O’Conner points out, no requirement that possessor actually improves land.
o Labour theory (person who expends work on land should get proprietary rights);
o At some stage the factual status quo should be recognised (reliance/ certainty argument – if
someone has been living on land and farming it, the law should recognise their interest);
o Problems with proof become more difficult the longer the period of time after the dispute arises
(hard to prove who had the best title, or to find who was documentary title holder, as in Perry’s
case); and
o For non-GL land, allows more accurate Register – that is, owner has abandoned property,
possessor is in possession, AP allows Register to be updated to reflect true position. Furthermore,
land which has been bought and sold off the Register tends to remain underdeveloped, since
mortgage lenders will not accept possessory titles as security for loans.

 Against (general, for against for part parcel claims see below):
o Conflicts with TS (TS no longer an adequate reflection of interests in land, e.g. AP can have been
sitting on the land for 14½ years and then sale, suddenly new purchaser only has 6 months to
remove possessor that they might not know about. Compromises purpose of system, when you
have another mechanism of property rights);
o Unfair to true owner;
o Conflicts with human rights (see below).

Part parcel claims: disputes over land adjacent to boundaries

 In Victoria, AP claims may be made in relation to whole parcels or part parcels of land. Most AP disputes
arise when improvements made by one land owner (A) encroach onto the neighbour’s land (B) – small
sections of land, boundary disputes/ part-parcel disputes.

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 Before limitation period expires B can obtain an injunction to restrain the trespass. After the limitation
period, A’s encroachment may extinguish B’s title to the land occupied by the encroachment (title will be
statute barred and lost).
 Some states prohibit the use of AP claims to adjust boundaries.

 Policy reasons not to use AP in boundary disputes/ encroachment disputes include (O’Conner):
o AP draws no distinction between honest and dishonest encroachers – should not reward bad faith
acquirer;
o It ignores the circumstances in which the encroachment occurred and the conduct of the parties;
o Allows encroacher who has made no improvements to acquire title;
o Provides a fee simple when lesser right may have been satisfactory (e.g. easement or lease);
o No compensation for loss of title; and
o No procedural protection for original owner (title lost without notice after AP).

 Benefits: it simplifies title search and dispenses with a check survey (Register should reflect true status of
land, including encroachments – or, if your land is over on another’s, then they cannot get that back from
you) – check surveys are used less in Vic than NSW, which allows owners to recovery boundary strip.

Reform options

 The law is a good thing;


 BUT it must be made much more nuanced;
 Different circumstances should be treated differently – different rules to reflect different policy interests;
 E.g. there should be a distinction between a good faith possessor and a bad faith one. “Good faith” means
they take the land in a belief it’s their own. Cf. “Bad faith” where the possessor doesn’t believe that the
land is theirs (typical squatter). In the UK there’s recognition of the difference between these two. The
Land Registration Act 2002 in the UK provides that AP is only allowed for: people who had reasonable
belief that the land belonged to them. Reason: it’s fundamentally unfair to allow people to benefit from
bad faith adverse possessing.
 It is argued by Merrill that this would increase the cost of administering the rule if the court were required
to make findings about the state of mind of the possessor in each case. O’Conner responds by pointing
out that Courts already do this on a daily basis (it’s “exaggerated”).
 O’Conner suggests modification of 4 main areas of AP:
1. Over whole land. Shouldn’t have automatic extinguishment. Once 15 years, owner should have an
opportunity to veto acquisition of land by other person. A conditional veto rule: if BF, owner has a
right to veto claim to get title; if GF, no right to veto. See LR Act. Less radical than prohibiting adverse
possession and having mistaken improver statutes.
Before 15 years is up, reliance interest of possessor should be protected (e.g. 5 years squatter), by
compensation (pay out 5 years worth).
2. Boundaries. Protect reliance interest, same as above. Options: adverse possession (as Vic is doing:
problems, see above); no adjustment of boundaries by AP (all States do this apart from Vic and WA;

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but here good faith owners who make lasting improvements on owner’s land are vulnerable, as the
owner could charge improver high rent for use of land, knowing that they will pay because of
expenditure on land); building encroachment laws (best suited; NSW; give courts wide discretion to
provide relief to encroaching neighbour on just terms, while discouraging deliberate or negligent
encroachment; court can order removal of encroachment or transfer of title with compensation; court
considers situation and value of land, nature and extent of encroachment, character and purpose of
encroaching building, loss or damage incurred by owner, loss or damaged that would be incurred by
improver if required to remove, and circumstances of encroachment – Vic has no provisions, but
should also include guiding principles, though courts have identified Acts are aimed at preventing
blackmail by owners seeking to make profit from encroachment – Young J in Hardie v Cuthbert;
another principle is to encourage E to check location of boundaries before construction).
3. Missing owners. Regardless of GF or BF, should be allowed. After 15 years, title extinguished. Ensures
Register can be updated, not in TS interests to have a missing owner and not know who’s entitled. Plus
efficiency arguments.
4. Crown land. Normal principles of AP don’t apply for Crown or council land (s 7 LTA). This is good.
Unfair for Crown land to be part of same principles. State owns land on trust for the community; and
it’s too hard to police.

Human Rights

 Is law of adverse possession consistent with property rights recognised by the Charter of Human Rights
and Responsibilities 2006 (Vic) s 20?
 In 2007, the European Court of Human Rights, sitting as a grand chamber, held by a majority of 10:7 that
Article 1 of Protocol No. 1 (protection of property) to the European Convention on Human Rights had
not been breached by the Limitation Act 1980 (UK).

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