Web viewLeases. Common law lease. Leases confers exclusive possession of estates carved from freehold; limited in time (WA v Ward) Interests of lessee and lessor. Reversion

http://lawcorners.wordpress.com/

Property 2 Final

Leases1. Common law lease

a. Leases confers exclusive possession of estates carved from freehold; limited in time (WA v Ward)b. Interests of lessee and lessor

i. Reversion : interest in lease, can be assigned (sold/transferred/disposed of)ii. Sublease : lessee sublets premises for duration < lease’s duration

1. If => term of lease, then it is an assignment of the lease despite description (Milmo)2. Yearly tenant has sufficient reversion to sublease for term of years (Oxley)3. Protected tenant may sublet for period longer than contractual stipulation

c. Leases can be:i. Fixed term – specified duration

ii. Periodic – definite period in absence of notice (Anderson)d. Creation of leases

i. Lease created through express agreements or where parties agree to enter lease at later dateii. LL’s obligations: quiet enjoyment, payment of rates, repair & clearing, furniture & fittings

iii. LL can make specific provisions for landlord rights if tenant does not pay rent or breaches other covenants

2. Substantive requirementsa. Certainty of duration

i. At CL, duration must be certain/capable of being certain (Say v Smith and Fuller)ii. Fixed term (FT)

1. Maximum period must be certain (Lave v Chantler)2. Does not deprive parties to lease that is flexible in determining duration

iii. Periodic tenancies (PT) 1. Exception to certainty of duration, certainty requirement met as PT is deemed to be a FT

that continues unless brought to end by notice2. Can combine features of FT & PT (Amad)3. If term stipulates PT determined only by lessee, it is void (Centaploy)

iv. Tenancy at will (TW) 1. Lasts until terminated by notice of either party, requires period of reasonable notice

thus satisfies certainty of duration (Landale)2. May be determined b death of party or attempt to assign by T3. T at will is liable in absence of agreement, to pay reasonable sum for use/occupation of

land (Zegir)v. Tenancy at sufferance (TS)

1. Arise where T holds over at expiry of lease, without LL’s assent/dissent; if time effluxes (fixed term lease) r by notice (PT/TW)

b. Exclusive possessioni. A grant of exclusive possession is required for a valid lease (Radaich v Smith)

ii. Distinction between lease & licence depends on intention and nature of rights conferred; look to the conduct of the parties (Errington)

iii. Legal exclusive right of possession distinguished from grant of permission to enter land and use it for some purpose

iv. Must look to substance of transaction, rather than the words used to determine whether it is a lease agreement (Crabbe):

1. Where landlord’s right to introduce new occupants is limited by dimensions of property = lease (AG Securities v Vaughan)

2. Label given not irrelevant but only key factor (Chaka Holdings)v. Can turn to common sense to determine if sole and exclusive use exists (WA Club v Nullagine)

vi. Exclusive possession of a portion of a premise


1. It is possible to grant exclusive possession of a portion of a building such as the roof, and exterior walls – thus lease & not licence (Claude Neon)

2. Where land used for purpose other than agreed purpose, owner remains in possession and it is a license (Streatfield)

vii. Exceptions to exclusive possession 1. Parties did not intend to enter legal relationship (Errington)2. Where relationship was between vendor-purchaser, master-servant, or where owner

has no power to grant tenancy (requisitioning authority)a. Employer grants employee exclusive possession to perform duties (Mayhew v

Suttle)b. Exception to above where grant of exclusive possession to employee represents

remuneration, even where the employee has duties to perform while in occupation (HA Warner)

3. A mere family financial arrangement may have not been intended to be legally blinding (Cobb v Lane)

3. Formal Requirementsa. Formalities in Torrens depend on lease duration, >3 years – must be registered (s 53(1) RPA)b. Old system land: All leases must be by deed and in writing (s 23B, s 23C -23E CA)

4. Agreement for a lease in equitya. Can enter into future lease under contract in writing; does not create legal leaseholdb. Deemed enforceable in equity, if in writing or supported by part performance (Walsh)

i. Walsh applies only where agreement is complete and enforceable in contractii. Agreement may be binding even without formal document, if court can fill omissions (Branca)

5. Implied tenancies at CLa. No valid lease executed, tenancy may be implied at CL if land possessed by tenant paying rent

i. Occur where parties have no agreement/arrangement at allii. Parties enter into void lease

iii. Parties into agreement for lease or lease that does not comply with statutory formalitiesiv. Lessee holds over upon expiration of FT lease without holding-over clause

b. Yearly periodic tenancy i. s 127 CA – ‘no agreement as to duration’

1. No tenancy from year to year shall be implied by payment of rent if there is no agreement as to its duration

2. Tenancy shall be deemed determinable at the will of either party by one month’s notice in writing expiring at any time

3. If uncertain as to date of creation of lease, subj to express agreement to the contrary, tenancy determinable by 6 mths notice in writing expiring on June 30

ii. Implied CL leases can incorporate the terms of any agreement – if it provided the length of the lease, then it automatically terminates at the end without needing a month’s notice (Dockrill v Cavanagh)

c. Other implied periodic leases i. Character of tenancy determined based on circumstances (York Motors)

1. Lessee takes possession, pending agreement re terms – implied tenant at will, even with compensation for use of premise

2. When rent is paid periodically in advance, strong presumption that periodic tenancy is created

ii. Where tenant is in possession for < 2 years – and has always paid rent by the week, a weekly not yearly tenancy would be implied (Soloman v Bray)

iii. If a tenant holds over the determination of a periodic tenancy and pays rent with reference to the period of the former tenancy, the presumption is that the same periodic tenancy has been revived (Burnham)

iv. Informal instrument may evidence an agreement for a formal lease (Leitz Leeholme)


1. Different sources of rights under contract and the s 127; can terminate under CL, but still liable for damages under contract

2. S 127 tenancy actionable against a 3rd party – e.g. if the landlord sells it to a person who registers, tenant can enforce against that person

3. Legally implied lease and equitable lease can co-exist6. Tenancy by estoppel

a. No title in landlord i. Where LL has no estate in land and purports to grant leasehold interest, LL is estopped from

denying the lease (Lee v Ferno Holdings Pty Ltd)1. Does not create an interest in land: thus only enforceable between the two parties, and

not against 3rd parties (e.g. real owner) (Kay v Lambeth)a. Except where the landlord has a beneficial interest (Barton Hill)

2. The reverse is true, so that if the lessee has been in possession during the entire length of the lease, he cannot refuse to comply with his obligations because the lessor does not have legal title (Barton Hill)

ii. Estoppel also arises where LL acts prematurely and grants lease before actual acquisition of the estate (Buckwell v Mann)

b. Equitable estoppel i. Lease by equitable estoppel may arise where tenant expends money on premises in expectation,

induced by landlord, of a new lease (Taylor Fashion)ii. Tenancy by estoppel does not arise from receipt of rent by receiver appointed by mortgagee

(CBA v Baranyay)7. Concurrent leases

a. LL grants lease to more than one tenant of the same land for the same or different periodb. LL assigns to 2nd tenant the right of reversion, at end of first lease – 2nd tenant becomes landlord of 1st

tenant, receives rent and can enforce covenants under original lease (Brisbane Amateur Turf Club)c. If 2nd lease <= 1st there is not right to possession at expiration of original lease (s 120A)

8. Reversionary (future) leasesa. At CL actual term of lease can commence at any future time (Abjornsen)b. Legislation will prevent creation of leases where term of commencement is too remote

i. Void if > 21 yrs from date instruments (s 120A)ii. Section does not invalidate contracts for leases > 21 from date if subject of the contact will not

be a reversionary lease when granted (Re Strand and Savoy)9. Doctrine of interesse termini (executor interests)

a. At CL, creation of leasehold requires possession by lessee unless lease created under statute of usesb. Generally abolished (s 120A(1) CA)

Leasehold Covenants1. Covenants implied by CL

a. Implied covenants trumped by express covenants on same subject matter (Malzy)b. Are modified by statutory implied obligationsc. Quiet enjoyment

i. LL subject to implied covenant not to interfere with tenant’s quiet enjoyment of premises in all leases (Markham v Paget)

ii. LL has duty to ensure tenant can occupy and enjoy preimises without disturbance or interference from lessor or those he/she is responsible for (Hudson v Cripps)

1. Licence granted to statutory authority does not prevent lessor from being bound by covenant; lessor liable for actions of statutory authority (JC Berndt v Walsh)

iii. Act breaking such covenants equate to trespass e.g.1. Removing windows and doors (Lavendar v Betts)2. Repeated threats to remove tenant (Kenny v Preen)

iv. Disturbance must be more than trivial:


1. Writing letters demanding tenant to vacate is not a breach (David Jones v Leventhal)2. Building external staircare that passes bedroom is not a breach (Browne v Flower)

v. Negligent acts which cause loss of enjoyment are a breach of covenant (AF Textile Printers)1. Term in lease excluding liability of LL to do something to the building, except where

failing to ply within reasonable time to written request, is not effective where LL’s negligence leads to the actual demise of the tenant (Martin Camera Corner)

vi. Quiet enjoyment right can be modified by agreement between parties, written down accordingly (Famous Makers Confectionary)

vii. Remedies1. Punitive damages – where breach of covenant is trespass (Lavender v Betts)2. Compensatory damage – mere breach of covenant (Perera v Vandiyar)

d. Obligation not to derogate from the grant i. LL is bound to abstain from doing anything that would render demised premises unfit for

ordinary purpose, LL/T2 does not hinder use of land by T1 (Aldin v Latimer)1. Obligation does not extend to special businesses which require extraordinary protection

ii. Test of actionable interference with premises: must be ‘substantial or ‘material’ (Carpet Fashion)

iii. Where grant is made for a particular purpose, LL is under obligation to ensure land remains fit for purpose breached by ‘practical frustration’ of that purpose (Aussie Traveller)

e. Liability for acts of others i. LL cannot disturb possession of lessee or authorise its disturbance by others (Aussie Traveller)

ii. Requires physical interference, must be reasonably foreseeableiii. LL may be liable for acts done creating nuisance done by trespasser or natural causes if he fails

to take steps to adequately prevent themiv. Although LL loses control over premises, he/she is responsible for tortuous acts done on the

land by the tenant if at the time of parting from possession and control, it was reasonably foreseeable that the tenant would do those acts

v. Landlord is not liable if tenant did not check if premises can be legally used for his purposef. Nuisance by stranger/tenant

i. LL is not liable in nuisance to 3rd parties for unruly tenants (Smith v Scott), unless1. LL authorises premise for person calculated to cause nuisance (Peden v Bortolazzo)

g. Lawful acts of interference i. LL is liable where LL authorises lawful acts which cause interference (Sanderson)

h. Title paramount i. Where LL has the best title, he will not be liable under express/implied covenant for quiet

enjoyment for interference with T’s possession (Lavington)i. Obligation to repair

i. @CL no obligation to repair except:1. limited obligation that LL must put furnished premises into state of repair at

commencement of term2. where inspection of premise would have been expected (Northern Sandblasting)

ii. Obligation to repair outside of premises may be implied into lease that imposes express obligation on T to repair inside (Barrett)

iii. Term will only be implied if necessary to give business efficacy to contract (Codelfa)iv. Common areas

1. Where lease relates only to part of premises, may be under implied obligation to repair common areas of building (Irwin)

j. Duty of care for safety of occupants i. LL must take reasonable care to avoid foreseeable risk of injury to occupants (Northern

Sandblasting)ii. ‘Reasonableness’ depends on purpose for which premises was let, terms of lease, level at which

rent was pitched, specified obligations, statutes (Bartlett)


iii. To determine reasonable fitness, can consider origin of defect (Bartlett):1. Defective flooring (Cavalier)2. Defective tap giving electric shock (Northern Sandblasting)

iv. Defect must be more than dangerous when used in ordinary, regular manner (Bartlett)1. It is reasonable for LL to replace items that are not defective but involve foreseeable risk

of injury if safer items are available, depending on circumstancesv. Duty not confined to defects existing at beginning of tenancy (Northern Sandblasting)

vi. Liability of LL1. LL’s liability depends on whether duty is ‘personal’ and ‘non-delegable’ (strict liability)2. Liability suffered by entrant primarily rests with occupier (Australian Safeway)3. LL’s duty to ensure premises contains no dangerous defects extends to entrants,

including T’s invitees and persons present on T’s business or in relation to their business4. Duty of LL to 3rd parties is only for dangerous defects (narrower than duty to tenant)

k. Tenant’s obligations i. Use premises in a tenant like manner (Warren v Keen) NOT a covenant to repair – e.g. shut

windows during rainii. Yield up possession – i.e. when lease ends, give possession back at the end back to the landlord

2. Covenants implied by statuteo S 74 CA – statutory implied covenants (s 84, 85) can be expressly excluded by the contracto S 84(1)(a) – Covenant to pay rent

Lessee must pay rent, unless premises is destroyed or damaged by fire, flood, lightning, storm, or tempest or shall suffer war damage so; then the rent thereby reserved, or a proportionate part thereof, according to the nature and extent of the damage sustained shall abate, and all or any remedies for recovery of the rent shall be suspended until the demised premises shall have been rebuilt or made fit for the occupation and use

o S 84(1)(b) - Implied covenant to repair on lessee Lessee must keep the demised premises in good and tenantable repair, having regard to their condition at the

commencement of the said lease, accidents, war damage and damage from fire, flood, lightning, storm and tempest, and reasonable wear and tear excepted.

o S 85 – Implied powers in lessor to inspect premises (1)(a) Lessor can twice in every year during the term at a reasonable time of the day upon giving to the lessee two

days’ previous notice, enter upon the demised premises and view the state of repair thereof, & give notice in writing of any defect, requiring the lessee or the lessee’s executors, administrators or assigns, within a reasonable time, to repair

(1)(b) That in default of the lessee, lessor may from time to time enter the premises and execute the required repairs

(1)(c) Lessor may, at all reasonable times during the term, with workers and others and all necessary materials and appliances, enter upon the demised premises or any part thereof, for the purpose of complying with the terms of any present or future legislation, provided that such control, destruction, repairs, alterations, and works shall be carried out by the lessor without undue interference with the occupation and use by the lessee.

(1)(d) If rent is in arrear for the space of one month (although no formal demand therefore has been made), or in case default is made in the fulfilment of any covenant, condition, or stipulation, whether expressed or implied, and such default is continued for the space of two months, or in case the repairs required by such notice as aforesaid are not completed within the time therein specified, the lessor may re-enter upon the demised premises (or any part thereof in the name of the whole) and thereby determine the estate of the lessee, but without releasing the lessee or the lessee’s executors, administrators or assigns from liability in respect of the breach

3. Covenants by necessary implicationa. Court may imply terms on contractual principles to give effect to partier’s intentions as a whole

(Dillon v Nash)4. Express Covenants

a. Covenant as to user i. Most leases contain covenant restricting use of premises

ii. Where lease contains covenant not to alter use without LL’s consent, statute provides no fine payable but LL can demand payment for damage, diminution of value & legal expenses (s 133B(3) CA)

b. Covenant to pay rent i. At CL, LL has right to recover reasonable sum from T for use and occupation of land


ii. LL’s ability to recover rent depends on status as assignee, subtenant or licenseeiii. Occupation does not automatically make occupier liable to pay rent by way of restitution for

unjust enrichment (National Mutual Life Nominees)iv. Not necessary for a lease to provide for payment of rent (Cth Life v Anderson)v. Rent does not have to be fixed, may vary with circumstances (Walsh)

1. Sufficient if amount of rent is capable of being rendered certain2. Concluded agreement or capable of being fixed by third party/machinery (Randazzo)

vi. Rent review clause1. Issue of if the person appointed is an arbiter or expert valuer (Edmund)2. Courts may imply words to avoid ‘absurd’ results created by clause (Westpac)

vii. Statutory implied obligation to pay rent, varied by express agreement (s 84(1)(a) CA)c. Option to renew

i. Strictly construed, conditions for exercise must be precisely fulfilled (McCaul)ii. May be lost to lessee by reason of trivial breach (Gilbert)

iii. Relief against loss of option to renew1. LL must give T notice specifying breach causing them to lose option to renew (s 133C-G)2. T will have specified period to apply to courts for relief against loss of option3. ‘Reasonable rent’ clause in option - should be based on market value of premise without

consideration of who paid for improvements (Ponsford)4. Rent review clause – establish machinery or express need to take step; must look to

language of lease to determine intention of clause (Callaghan v Merivale)

Assignment of Lease1. Is it an assignment or a sublease?

a. Assignment: T transfers entire interest to assignee, who steps in original T’s shoes as new T of LLb. Sublease: Grantor retains leasehold interest but creates new leasehold estate in land of lesser duration

dependent on continuance of T’s interest2. Covenant against assignment or subletting

a. Unless express provision otherwise, lessee may assign/sublet without consent of lessor, even in periodic tenancies (Cth Life Assurance v Anderson)

b. Lessee should seek lessor’s consent in all cases (Richardson v Somas – WA case)c. Lessor entitled to reasonable time to consider application for consent (Richardson v Somas)d. Absolute prohibition : against assignment, underletting, parting with possession

i. Any assignment is breach, even if assignee is respectableii. LL can waive application of assignment but consenting to proposed assignment

1. LL may waive particular assignment without prejudicing his rights re future (s 120 CA)iii. Grant of licence does not amt to sublease (Chaplin v Smith)iv. Equitable mortgage by deposit of title deals does not infringe covenant not to assign or underlet

(Do de Pitt v Hogg)e. Qualified prohibition – assignment without consent of lessor is prevented

i. At CL, LL could refuse consent to proposed assignmentii. Implied that lessor’s consent will not be unreasonably withheld unless lease contains express

provisions to the contrary (s 133B CA)1. Proviso that tenant should offer surrender of lease to LL before assignment, does not

contravene s 133B (Creer v P&O)2. Building lease > 40 years with 7 years to run – assignment may be made without

consent of lessor with written notice, notwithstanding contrary provision (133B)iii. Even if LL is not entitled to refuse consent arbitrarily, T will be in breach if they assign without

first seeking the landlord’s consentf. Reasonableness of LL’s refusal

i. Depends on ‘all the circumstances of the case’ (Bickel); reasonable if:


1. Assignee would obtain tenancy/sub-tenancy protected by rent restriction legislation (Lee v K Carter)

2. Assignee’s purpose was to participate in development scheme by LL of area including demised premises (Pimms)

3. If proposed sub-lessee intended to use premises for purpose prohibitedg. Unreasonable where:

i. LL worried that Ts would not lease from him if proposed assignees leases adjoining premises (Holder Bros & Co)

ii. Assignee was purchaser of T’s business, was respectable and responsible and equally protected by security of tenure legislation (McEnzie v McAllum)

iii. If any disadvantage incurred by lessor on an assignment is minimal/ out of proportion to harm suffered by lessee if consent were refused (International Drilling Fluids)

iv. If lessor is ‘tardy’ in replying, this could suggests unreasonableness (Scarcella)h. Remedies for LL – T assigns without consent

i. While assignment in breach of covenant will pass leasehold estate to assignee, LL can forfeit against assignee (Barrows)

ii. T may be restrained from assigning lease by injunction if LL acts promptly enough (McEacharn)iii. Injunction also granted where T sub-lets in contravention of covenant

i. Options for T when LL refuses consent i. Apply to court for declaration that LL is unreasonably withholding consent- safer, quicker (NGL

Properties)ii. Proceed with assignment, accept risk that court might hold that refusal was reasonable – no

liability if T is right, but no damages (Yared v Spier)3. Enforceability of covenants after assignment

a. Assignment vs sublease i. Assignment:

1. Destroys privity of estate between LL & T;2. Creates privity of estate between assignee & LL

ii. Sublease:1. Privity of estate between LL/sublessor not affected2. Privity of estate between LL/sublessee not created3. LL cannot directly enforce covenants against sublessee, but can enforce covenants

indirectly by exercising right of forfeiture under head lease4. In certain cases sublessee may be entitled to relief against forfeiture

b. Does covenant run with the land? i. Registered

1. Will run with land if original lease was valid at law, whether written or orally made (Boyer)

ii. Unregistered interests in land1. If lease is not registered, assignment effective in equity only, therefore cannot be sued

on covenants in lease (Karacominakis)2. Where there is no privity of estate between lessor and assignee, lessor cannot enforce

rent review clause in lease against assignee (Chronopoulis)3. s 23B CA (requirement of deed) applies to unregistered interests in land under Torrens

system, so assignment of oral lease that is not by deed will be ineffective at law (Chronopoulis)

c. Privity of estate i. Applies only to legal leases, or if not, must comply with formal requirements, e.g. must have

entered a paid rent that gives rise to a CL leaseii. No requirement that covenants must ‘touch and concern’ land to be binding upon successors in

title in relationship of privity of estate, in Torrens land (Karacominakis)iii. Once a transfer is registered, the estate or interest passes to transferee, who will be liable for all


requirements and liabilities under the instrument (s 51 RPA)1. Transfer of lease creates privity of estate and privity of contract between the lessor and

transferee (Karacominakis)2. s 51 applies to transfer of leases but not reversions, applies equally to LL &T (McFayden)

d. Privity of contract i. Privity of estate (L-T relationship) terminates following assignment/reversion, but any liability

under contract will remain, depending on wording of covenantii. Covenant dealing with land presumed to be made on behalf of covanentor and successors in

title, unless instrument expresses contrary intention (s 70A CA)iii. When covanenting on behalf of successors in title, liability must depend on privity of estate (not

contract) (Duckworth)e. Squatters barring title

i. If squatter bars T’s title of tenant by adverse possession, they are not an assignee, so not liable for breach of terms in original lease (Tichborne)

ii. In certain cases, may be stopped from denying terms of original lease, e.g. where adverse possessor takes advantage of provision in lease (Ashe v Hogan)

4. Assignment of reversiona. Benefits/burden of covenants will be annexed and will go with reversion (s 117(1) CA)

i. Except: if lease specifies only original LL to get benefit, then covenant is personal, therefore s 117 would not operate

ii. Assignee of reversion acquires right to sue for breaches of covenant committed before the assignment and the assignor loses that right. (Ashmore)

iii. Assignee of reversion not entitled to rent arrears due before assignment (Bentley in Ashmore)b. No attornment by lessee necessary upon conveyance of reversion, in legal/equitable leases (s 125(1) CA)

i. Assignee should inform T of ownership change; in oral leasec. Guarantees

i. Guarantees in lease do not run with lease (Sacher Investments), therefore not enforceable by assignee of the reversion unless express notice given in writing from assignor to debtor (s 12 CA)

ii. Covenant with guarantee that could ‘touch and concern the land’ enforceable by assignee without express assignment if clearly intended to run with the land (Duffy Bros)

1. Where words of guarantee clearly express intention to benefit assignees, are enforceable even where subsequent lessors were not in privity of contract with guarantors (Duffy Bros)

d. Severing reversioni. Grant of concurrent lease (assignee becomes lessee)

1. Lessee of reversion may sue or be sued on all covenants in leaseii. Assignment of LL’s interest in part only of the leased land

1. Legislation provides for apportionment of conditions in case for assignment by LL of an interest in part of land (rarely exercised)

2. Legislation also permits that the assignee in such a case, where appropriate, to give notice to quit to, or exercise right of re-entry against T of land assigned to assignee.

3. T has reciprocal right to terminate tenancy of whole land (s 119 CA)

Remedies1. Forfeiture of lease by LL

a. Landlord’s ability to bring lease to end prior to expiration if:i. Express right to forfeit in lease/statute

ii. Breach of leaseiii. LL must service notice on T unless within exception to notice requirement


iv. Breach must be current at expiry of notice periodv. LL must effectively forfeit lease

vi. T must not have been granted relief against forfeitureb. Enforcement of right of re-entry: breach

i. Non-repudiatory: power of re-entry, allows termination by LLii. Repudiatory: accept & terminate under contract OR re-enter and forfeit

iii. Lease typically confers express power to terminate in event of breachc. Notice requirement (s 129 CA)

i. LL required to serve notice to T as condition to exercise right of re-entry (s 129(1))1. Exceptions: bankruptcy (s 129(6)(e)); rent (s 129(8)); lease>=1yr (s 129(6)(a))2. Rent

a. Statute: ½ years rent in arrears, re-entry without formal demand (s 8 LTA)b. Where rent is > 1 mth in arrears, no demand necessary for exercise of implied

rent to forfeit (ss 85(1)(d) CA)ii. Notice requirement gives tenant chance to remedy breach

1. Still required to give notice; even where notice does not require breach be remedied (Steiger); or breach is incapable of being remedy (Scala House)

2. Landlord not obliged to claim compensation (Tannahill)3. Notice merely identifying breach without detailing damage is ineffective (Gerraty)4. Where there is assignment without consent, notice must be directed to assignee as

assignment is effective not with-standing breach (Old Grovebury Manor Farm)iii. T must be given reasonable time to remedy the breach (s 129(6)(a) RPA)

1. Usually 3 months (Penton), but depends on circumstances (Billson)2. Shorter period allowed for irremediable breach (McGrigor’s Trustee)3. Courts generally resist attempts to circumvent legislation requiring notice (Plymouth)

d. Assignment by lessee i. Lessee who assigns lease and takes covenants from assignee – may reserve right of re-entry for

breach of covenant (Shiloh Spinners)ii. Right to re-enter enforceable against subsequent lessee or subtenants against whom covenants

are not directly enforceable by original lesseee. No right to forfeit if breach waived

i. Express waiver1. Unequivocal recognition of breach = waiver in law (Cornille v Saha)

ii. Implied waiver1. Aware of breach but performs act clearly recognising continuance of tenancy eg

accepting rent (NGL Properties)2. Once LL unequivocally elects to treat lease as forfeited, no subsequent acts = waiver3. Waiver does not operate as general waiver of all breaches, only breach in question

f. Forfeiture must be effective i. Effective forfeiture must follow conditions stipulated by lease agreement re re-entry (Moore)

ii. Must be an unequivocal demand for possession – LEASE IS DETERMINED FROM THIS DATE1. Need physical re-entry or issue OR service of writ for possession (Billson)2. Once effected it cannot be undone3. Forfeiture affected by peace re-entry (Howard)4. After this date, tenant is trespasser, and liable to pay mesne profits (Boynton)

iii. Mere INTENTION to re-enter is not sufficient (Moore)iv. Proviso for re-entry

1. Effect of proviso upon breach, makes lease voidable but not void by LL (Jones v Carter)a. LL can elect to forfeit or continue the lease

2. No express proviso – can only re-enter for breach of a fundamental term = repudiation3. Breach of obligations construed as conditions for granting lease e.g. to pay rent, do not

need express proviso to re-enter (Doe d Darke Bowditch)


g. Relief against forfeiture (RAF) i. RAF granted by the courts in:

1. Generally, not absolutely for non-payment of rent when all arrears are paid (Stieper)2. Defective notice under s 129 (Dalla Costa)3. Lessee would suffer disproportionate penalty if relief not granted (Di Palma)

a. Value of improvement greater than value of damage caused (Love v Gemma)ii. RAF may be granted for an equitable lease (Hayes v Gunbola)

1. For a LL’s gaining windfall from renovations by lessee (Wynsix)iii. Relief will be refused when it is inequitable to grant relief, taking into account (Steiper)

1. Conduct of applicant for relief – whether default was WILFUL2. Gravity of breaches3. Disparity between value of the property of which forfeiture is claimed as compared with

the damage caused by the breachiv. Conduct of T may disqualify them from seeking RAF in ‘exceptional cases’ e.g. (Gill in Stieper)

1. Notorious for using premise as disorderly house; affect image of premise2. Obligation owed at law or equity3. ‘Sufficiently serious risk’ of inability or foresight of inability to pay future rent (despite

paying all arrears) (Wilkinson)v. Application for RAF

1. Application for RAF under s 129 CA must be made before the landlord enters into possession by way of court order (Rogers v Rice)

2. No time limit for making application for relief if landlord had enforced the right of re-entry without the aid of the courts

vi. Courts wide jurisdiction in determining relief (s 129 CA)1. Will not be granted as to prejudice innocent third parties (Gill v Lewis)2. Relief may depend on the knowledge of the third party on the T’s application for relief

(South Lodge Developments)vii. Forfeiture, subleases & licences

1. If head lease is forfeited, the sublease is as well2. Legislation now allows relief to be granted to STs, even if T is not entitled to relief, if ST

can prove that they did not participate in the breach and acted reasonably (s 130 CA)3. RAF extends to licences provided that an equitable interest in the land is coupled with

the licence - the licensor should be estopped from terminating the licensee’s right to occupy (Proctor v Milton)

h. Self help i. Right to levy distress by LL – abolished (Landlord and Tenant Amendment Act)

ii. Right to retake physical possession of the premises after termination or expiration of the lease2. Remedies in contract – Repudiation

a. Ordinary principles of contract law, including that of termination for repudiation or fundamental breach, apply to leases (Progressive Mailing House)

i. Mere presence of an express provision for re-entry in a lease does not exclude any other CL right of termination of the lease by the lessor

b. What constitutes Repudiation? i. Repudiation requires a party to demonstrate intention no longer to be bound by the contact or

that he intends to fulfil the contract only in a manner substantially inconsistent with the obligations (Shevill)

ii. Requires nexus between breach and loss; breach must have deprived whole or substantial part of the benefit of performance

iii. MERE breaches of covenants do not amount to repudiation or fundamental breachiv. Repudiation by the landlord

1. Withholding of consent by LL does not constitute repudiation (Scarcella)2. Beach of implied term that LL keeps premises reasonably inhabitable, by failing to


remedy in reasonable time may constitute repudiation (Cicirello)c. Remedies in contract

i. If LL breaches obligations, tenant can maintain action for termination and recover loss of bargain damages (Marshall)

ii. Loss of bargain under express provision in contract (Shevill)iii. Following T’s repudiation, landlord may

1. Discharge both parties from further performance and terminate the lease (Tall-Bennett)

a. Two ways to terminate (Marshall):i. Re-entry for beach of covenant (required notice by s 129 CA)

ii. Application of ordinary principles of contract (s 129 does not apply); allows for sue for loss of bargain for loss of lease (India v Florlim)

2. Elect to keep the lease on foot and sue for recovery of renta. There will be no duty to mitigate loss by taking steps to let the premises out,

landloard can also recover due rent (Tall-Bennett)iv. Anticipatory breach - Necessary to terminate lease or re-enter as a condition of obtaining

damages for prospective loss (Ogle)v. Frustration of lease requires use of premises to be impossible, mere unprofitability is insufficient

(Maori Trustees v Pentice)d. The plea of set-off

i. Allows the parties to set off moneys owing to each other, effectively reduces or extinguishes one party’s demands e.g. rent arrears, damages to T

ii. Can be used against LL if he has acted like a nuisance and breached covenants (Eller)1. LL’s obligation to repair does not arise until he has been notified2. Notification to LL by T must be given before offset can arise

iii. Sum must be liquidated, and ‘unchallenged’iv. Statutes of set off

1. Claims of both parties must be liquidated debts (i.e. fixed sum) or money demands (Hanak in British Anzani)

2. Claims must be ascertained with certainty at time of pleadingv. Abatement @CL

1. Operates where goods or work has diminished in value due to the breach2. Circumstances where set off against rent is available @CL:

a. Where T expends money on repairs to premises that LL covenanted to carry out but failed to do so in breach of covenant

b. Where T paid money on LL’s request regarding some obligation of LL in connection with the land

vi. Equitable set off 1. Available where equity would regard cross claims as available2. Right to set off unliquidated claim where cross claim (Shipmair in Anzani):

a. arises out of same contract (i.e. lease) as the claim, ANDb. is so directly connected with the least that it would be manifestly unjust to

allow claimant to recover without considering the cross claim3. If T is not already covered by an existing CL remedy, equity will intervene where T has a

bona fide cross claim for unliquidated damages against LL’s proceedings based on non-payment of rent

4. Unliquidated awards in nature cannot be quantified preciselya. Set off for unliquidated damages is a defence to so much of the claim as is

represented by the eventual amount of the award madeb. If the set off is large and bona fide over the claim, it will be a complete defence

5. If the claim does not derive from the lease, it could be a right in equity


a. If lease/sublease is not directly breached, valid claim may still exist where there is a breach of implied obligation that premises should be kept fit for whatever purpose it is meant to be used for is breached

6. Exceptionsa. Right to equitable set-off may be excluded by agreement between parties (Hong

Kong); Must use clear, explicit words (Grant)b. However, if party has acted unconscionably they may not be able to rely on that

clause (Highwater Nominees)3. Bonds - As bonds are not a penalty or pre-estimate of damages, the LL may claim more than the value of the

bond for a breach of covenant (NLS)Freehold covenants

1. Enforceability of covenants in equitya. A purchaser with notice of a restrictive covenant, shall be bound by the covenant in equity (Tulk)

i. However a negative covenant will be enforceable against an adverse possessor regardless of notice (Re Nisbet and Potts’ Contract)

b. The only persons that can enforce a covenant are those with an interest in the land that benefits from the covenant (Formby v Barker)

i. LL can enforce a restrictive covenant in the original lease against a sublessee as LL’s right of reversion is sufficient interest to derive benefit (Regent Oil)

c. Covenant must benefit covenantee’s land i. The benefit of the covenant must attach to the land (Clem Smith)

1. Merely attaching to the business of the company is insufficient2. Covenants restricting business practices that is to benefit another land owner’s

business is deemed to be benefiting the land (Newton Abbot)3. Distance may be an important factor that can eliminate the benefit in law (McGuigan

Investments)4. Restrictive covenants confer a benefit to another’s land in business if it has the effect

of ‘substantially lessening competition’ (s 45B TPA)ii. Expert evidence is admissible when assessing if a restrictive covenant ‘touches or concerns’ the

parcel of land it is alleged to benefit (Marten v Flight Refuelling Ltd)d. Covenant must be negative to run with the land

i. Only burden of negative covenants run in equity (Haywood v Brunswick)1. Covenant to repair the land is not a negative covenant

e. Exceptions to benefit/negative: i. ss88D and 88E CA: prescribed authorities right to enforce public negative & positive

covenants, regardless of covenant benefit to authority’s landii. S 88BA gives private persons the right to impose positive covenants requiring maintenance or

repair of land that is the site of an easementf. Covenant must be intended to run with the land

i. Cannot be personalii. Covenants affecting land deemed to be made on behalf of covenanter and successors in title,

unless contrary intention appears (s 70A CA)g. Remedies for breach of negative covenants in equity

i. Equitable damages or injunction (Wrotham Park Estate)h. 3 ways in which the benefit of a covenant can pass in equity: (Formby v Barker)

i. Express annexation of the covenant to the land of the covenanteeii. Express assignment of the benefit of the covenant

iii. By virtue of the doctrines relating to building schemes or schemes of development2. Restrictive covenants and the Torrens system

a. All states (except SA) permit the notification of restrictive covenants on register (s 88(3) RPA)b. Despite appearance on register, restrictive covenants are only equitable interests, not legal interests &

indefeasibility ( ss 42 and 43 RPA) does not apply (Re Martyn)


i. In the absence of fraud or formal notice, the restrictive covenant will not be enforceable (Dalco Holdings)

ii. Covenants allowed to appear on register is for convenient notification; but if one were to discover if the benefit covenant has passed, one must make external investigation

c. s 88(1) CA Covenant not enforceable against third party, unless the instrument clearly indicates:i. land to which the benefit of the easement if appurtenant

ii. land which is subject to the burden of restrictioniii. persons whose consent to a release, variation or modification of the covenant is required

d. s 88(3) CA – RG has the power to note restrictive covenants(retrospective), only applies to covenants that comply with s 88(1), which requires the covenant to identify land burdened and benefitted

e. Scheme of develop/building schemes iv. A scheme of development is allowed in Torrens so as long it identifies the land – it is used upon

failure to set up a legally effective covenant (Re Louis)v. It does not matter if parts of the land were sold (after subdivision), the burden/benefit can still

attach to those landvi. s 88B When subdivision plan lodged, intended easements and restriction must be indicated

1. Not extinguished if owner of benefited land acquires greater interest in burdened land (s 88B(3))

Easements1. Characteristics of Easements

a. Easements are property interests which run with the land; obligation imposed by/benefit derived from easement passes to each new owner and remains only as long as land remains in ownership

i. General Types: easement of way, service easement (drainage, sewerage, telephone, electricity)ii. Owner of dominant tenement (DT) has limited rights to servient tenement (ST)

1. Owner of DT cannot restrain trespass to that landiii. Can be positive (right to do something), or negative (right to stop neighbour doing something

e.g. easement of light – stop from building)2. Four substantive requirements (Re Ellenborough Park)

a. A DT & a ST i. Cannot have an easement in gross (no DT) (Barba)

1. DT must be identifiable; may consist of incorporeal property (e.g. right to lay pipes), or corporeal (land) or both

2. Interest in gross: benefits person, not land3. An easement in gross, with no reference to the DT, gives rise to no more than a personal

licence (Gapes v Fish), or may amount to joint occupation (Harada)ii. Easements in gross – public authorities

1. s 88A Easement without a DT may be created in favour of a prescribed authority if for the purpose of or incidental to the supply of a utility service to the public including gas, water, electricity, drainage and sewage

2. s 88A(2) and (2A) – Easements in favour of Crown, local or public authority3. s 88B(3) Easement in gross created by registering plan of subdivision with RG

iii. Extrinsic evidence may be admissible: (Barba)1. to prove the intention of the parties, AND2. to identify the DT so as to establish appurtenancy

iv. Formal Requirements1. s 88(1) CA Easement not enforceable against a person interested in the ST, not being a

party to its creation unless the instrument clearly indicates:a. the land to which the benefit of the easement if appurtenantb. the land which is subject to the burden of easement or restriction


c. the persons whose consent to a release, variation or modification of the easement is required

2. s 88(1A) Land is clearly indicated if it is showed in a manner prescribed by the CA/RPA or other manner satisfactory to the RG

v. DT must be identified before the grant or contract to grant (Ladbroke Retail Parks)1. An option to purchase additional land capable of being benefited by easement cannot

bind successors in title to the servient tenementb. The easement must accommodate the DT – required connection

i. Numerus clausus – new species of incorporeal hereditament cannot be created at the will and pleasure of the owner of property (Hill v Tupper)

ii. If a grant fails to confer rights that ‘accommodate’ the DT, the grantee will receive only a licence1. A licence confers only personal rights enforceable only against the licensor, but has no

remedy against a third party who disturbs him; the licensee must seek permission of the licensor to sue in their name

iii. An easement may accommodate the DT even where the DT/STs are not contiguous, provided they are sufficiently close (Todrick)

1. Must provide a real benefit to the land itself2. Some degree of physical propinquity is required; distance too great = no benefit3. ST & DT do not have to be adjacent, as long as there is the necessary ‘nexus’ between

the ST and DTs (Re Ellenborough Park)iv. Accommodates the DT when the motive is not illegal, unless the right claimed is wholly

unconnected with the beneficial use of land, or there was no way of the enjoyment of the DT1. Purported easement conveyed for the benefit of a very small piece of land (as a

conveyancing device) (Waddington)v. Sufficient nexus to the normal enjoyment of the DT (Clos Farming)

1. Depends on nature of DT, must advantage and enhance DT2. Where the easement relates, not to the land but to the business of the occupant of the

land, the easement cannot be tied to the landa. Pure commercial interests of themselves are not sufficient, unless DT is the

natural place to carry out the business or linked to commercial necessity3. A private garden is an attribute of ordinary enjoyment of a residence attached (Re EP)

vi. An easement can continue to benefit individual lots into which the DT is later sub-divided, depending on the terms of document (Gallagher v Rainbow)

c. DT and ST must not be held and occupied by same person i. CL principle: a person cannot acquire rights against themself – largely abrogated by statute

ii. s 88B(3)(c)(ii) CA – an easement may be created by registration of a plan of subdivision to RG, even though at time of rego, ST and DT are in the same ownership

iii. s 69 CA – as above for Torrens land under RPAiv. s 46A RPA – person may create an easement despite owning both ST & DT if both are Torrensv. s 47(7) RPA – An easement will continue to exist if DT and DT come to be held by same person

vi. At CL, tenant may acquire an easement over neighbouring land owned by his or her landlord, not withstanding that the landlord holes the fee simple estate in both (Borman v Griffith)

vii. The easement once granted continues to bind LL’s successors and is only extinguished when the DT and ST fall into the ownership and occupation of a single person (Cardwell v Walker)

d. Right capable of forming the subject matter of a grant i. Category of easements must alter and expand with changes that take place in the circumstances

of mankind (Clos Farming)1. Novelty alone is insufficient to bar recognition of a new easement; but character of the

new right must meet and satisfy the conditions for easements found in Ellenboroughii. The grant of an easement is prima facie also the grant of such ancillary rights as are reasonably


necessary to its exercise or enjoyment (Jones v Pritchard in Moncrieff)1. In unusual circumstance, right to park may be an ancillary right to the right of way – esp

where there is no significant harm to interests of ST (Moncrieff v Jamieson)iii. Requirements to satisfy condition 4

1. The rights cannot be too wide or too vague: a matter of degree (Re Ellenborough Park)2. The rights cannot be inconsistent with the exclusive proprietorship or possession of ST

owners or amount to joint occupation/co-occupation/exclusive use of STa. Rights conferred on DT must not interfere with the exclusive possession of ST

such as deprive them of the predominant use of the land, and must leave sufficient residue for the ST (Clos Farming)

b. A is insufficient if ST retains only a ‘mere shadow of ownership’c. Test: asks whether the servient owner retains possession and reasonable

control of the servient land (Moncrieff v Jamieson)d. Easements giving the dominant owner exclusive rights include – right of storage

(Nigeria v John Holt in Moncrieff), right of aqueduct etc3. Rights must be distinct from mere rights of recreation without utility or benefit

a. An easement is distinct from the indefinite and unregulated privilege of ‘jus spatiandi’ - wandering at will over all and every part of another’s field or park (Re Ellenborough Park)

b. Right to walk from property to watergate river was an easement, analogous to a right to access a common garden for the purposes of walking about the garden (Duncan v Louch)

c. The enjoyment of a defined area of recreation not given to the public, but to a limited number of lot holders = an easement appurtenant to and for the enjoyment of the lots transferred (Riley v Penttila)

3. Types of Easementsa. Rights of way

i. Questions to ask:1. Are the acts of owner of DT authorised by the terms of the easement?2. Are the acts of the owner of the ST in interference with those rights?

ii. The extent and nature of the right of way determined by construction of express terms in light of circumstances (Gallaher v Rainbow)

1. No separate investigation into the use contemplated by the parties is necessary or permissible (Perpetual Trustee v Westfield Management)

2. Admissibility of evidence/extrinsic material:a. Objective circumstances is admissible e.g. physical features, boundariesb. Subjective ideas and purposes of the grantor are irrelevant e.g. intentions and

expectations of the parties e.g. development of the areac. Rules of evidence assisting construction of contracts, such as in Codelfa, do not

apply to the construction of the easement (WM v PT)d. Third party who inspects the Register cannot be expected to look further for

extrinsic material which much establish circumstances existing at time of creation of registered dealing

iii. Three principles determining if use of ST is authorised by easement (PT v WM):1. Use authorised must benefit the DT2. Unreasonable use of land causing unreasonable damage is restrained as nuisance3. If ambiguity exists, instrument will be construed against grantor; rule of last resort

iv. Principles in determining extent of rights granted to DT:1. Where height or width of right not specified, DT will have such rights that are

reasonable in circumstances for enjoyment of the easement (Loclot v Pullen)2. A right must be used for the purposes of the DT only (Peacock in PT)3. Easement was not intended to provide access to remoter properties unless the wording


of instrument suggests (PT v WM):a. Intention to acquire new properties; ANDb. The DT would be used to access those properties;c. Access to the properties would benefit the purposes of DT

4. Registered easement may change with nature of DT, so long as terms of grant are sufficiently broad (WM v PT)

a. Power of court to modify s 89 CAb. Modification to a right of way will not be allowed if it goes ‘far beyond anything

contemplated at the time of the grant’ (Jelbert v Davis)v. Examples of rights of way

1. Grant of right to ‘pass and repass’ does not include right to park, unless implied from circumstances existing at date of grant (S&M Ceramics)

2. If precise path is not identified, right of way is not void for uncertainty, but the grantee must choose the most direct way (Maurice Toltz)

b. Fencing easements - Obligation to fence, akin to an easement, largely covered by Dividing Fences Actc. Rights to light and air – negative easement

i. HC recognises right to uninterrupted access an enjoyment of light and air to doors and windows of buildings or buildings to be erected (Cth v Registrar of Titles (Vic))

ii. Right cannot be acquired by prescription – because of impossibility of interrupting it (Harris)d. Rights of support

i. At CL not easements but natural rights issues from the land (Dalton v Angus)ii. Rights to support a building on land, however, may be an express easement

iii. Party walls:1. At CL where owner sold buildings mutually supported by party wall, there would be

implied cross-easements as necessary to carry out common intention to use of wall (Richards v Rose)

2. Under statute, where wall is described as party wall – mutual cross-easements of support arise (s 181B(1) CA)

e. Protection from weather – negative: NOT an easementi. Protection from weather is entirely negative; right to stop neighbour from pulling down

house/cutting trees if permitted - would unduly restrict neighbour from enjoyment of own land and hamper legitimate development (Phipps v Pears)

ii. If it exposes your house to weather, that is your misfortuneiii. Can only protect by covenant that would be binding in contract, but not enforceable on any

successor without notice (not an easement)f. Duty to expend money

i. Duty to pay for water supply transmitted by pipe under land to neighbour cannot amount to an easement (Rance v Elvin)

ii. Grantor of easement can validly attach to grant a condition that the grantee shall expend certain sums of money on DT on basis that obligation is an easement or part of or incident to an easement (Frater v Finlay)

g. Positive covenants attached to easements i. For a positive covenant to run with the land and bind subsequent proprietors, it must satisfy the

benefit and burden principle (Clifford v Dove)ii. E.g. cattle yard easement, ST dismantled equipment, DT sought mandatory injunction for reconstruction

iii. S 88BA(1) CA – permits creation of covenant requiring maintenance or repair of site of easement or other land subject to easement or both

1. Covenant imposed by registration under RPA or deeds s 88BA(2) CA2. Registration instrument must indicate land to be maintained or repaired, land to which

benefit is appurtenant and land which is burdenedh. Other examples of easements:

i. Right to park cars (London & Blenheim Estates)


ii. Right to enter land for purpose of maintain external wall & fixtures (Beck v Auerbach)iii. Right to enter land to use toilet (Hedley v Roberts)iv. Right of access to air (Cable v Bryant)v. Right to cause nuisance on ST, by noise (Joshua’s Contract), by noxious waste disposal

(Pwllbach Colliery)1. BUT right to spread coal dust by wind too indefinite

vi. Right to use airfield to test aeroplanes (Dowty Bolton Paul)vii. Right to bring good through doorway of adjacent shop (Wilcox v Richardson)

i. Not easements: i. Rights to a view or to prospect (Aldred’s Case)

ii. Rights to an undefined flow of air (Harris v DePinna)iii. Right to hit cricket balls (Miller v Jackson)iv. Rights that amount to possession of ST

4. Creation of easementsa. Easement may be created or granted by owner of ST in favour of owner of DT; can be for a duration

equivalent to duration for which estate exists in land e.g. easement for life/term of yearsi. Duration above own estate may be permitted by legislation

ii. Reserved easement – owner transfers part of land but retains right of way over transferred landb. Easements can be created by:

i. Express grants or reservationsii. Implied; Acquired by long user or prescription

iii. Created by court where reasonably necessaryc. Easements expressly created

i. Express grant in CL effective as legal interest in ST by deed 1. No express words necessary, written deed2. If requirement not met – then mere licence3. Informal document may be effective in equity (Walsh v Londsdale)4. Equitable easement requires characteristics described in Re Ellenborough Park

ii. Express grant in Torrens by registration 1. s 46 RPA – provides means of creating easement by executing transfer to approved form2. s 88B(3)(c)(ii) CA – on registration of plan of subdivision indicating an easement,

easement vests in owner of benefited land3. s 88B(3A), s 47 RPA – easements recorded on folios of benefited and burdened land

iii. Easements enforceable in equity 1. Easement by oral contract or informal document, preceded by contract is enforceable in

equity if satisfies formal requirements / supported by sufficient acts of part performance (Talga Investments)

iv. Express reservation 1. LL selling portions of land may expressly reserve easements over land conveyed2. At CL, vendor faced difficulties – as easement did not exist at time of execution of

conveyance3. To overcome this:

a. Reservation included in conveyance conveyance + re-grant (Wickham)b. Vendor declares use of easement intended to be reserved, executed by statute

i. Use must comply with s 88 CA to be enforced against third parties5. Extinguishment of easements

a. Abandonment @ CL (s 89(1)(b) CA)i. Easements are perpetual in nature, acquiescence on the part of the other of the DT is necessary

to give effect to any act of abandonment –knowledge & intention (Treweeke)ii. CL doctrine of abandonment should be applied strictly to the interests of third parties relying on


the Torrents registeriii. Registered proprietors of the dominant tenement could not be prejudiced by the acts and

omissions of predecessors in title (Proprietors Strata Plan No 9.968 v No 11,173)1. An interference/obstruction amts to a disturbance of an easement in law, only if it is

substantial – although total destruction is not necessary (Treweeke)2. Absence of any complaint does not in the circumstances raise an equity upon which the

owner of ST can rely upon s 89(3) – consistent which existence of intention not to use right of way whilst alternative means of access was available

3. Duration of period of non-user is only material as one element from which the dominant owner’s intention to retain or abandon may be inferred

4. Easement cannot be abandoned by DT not having knowledge that easement exists (Obadia v Morris)

5. Strictness of test in Treweeke endorsed in Long v Michie [60 years of non-use, numerous obstructions]

6. Successful claim where, non-use 30 years, construction of brick wall for 20 years & difference in levels made crossing by vehicles impossible (Duran v Cavacourt)

b. Statutory extinguishment i. Court order to extinguish easements that become obsolete/ have been abandoned (s 89 CA)

ii. Proof that easement has become ‘obsolete’ as required by s 89(1)(a) is difficult to establish (Long v Michie)

iii. s 89 CA: Power of Court to modify or extinguish easements, profits à prendre and certain covenants(1) Court may, on the application, by order modify or wholly or partially extinguish the easement:(b) that the persons >18 yo of full capacity has by their acts or omissions modified or wholly or in part extinguished/ waived/ abandoned the easement(3) The Court may on the application make an order declaring whether or not in any particular case any land is affected by an easement, and the nature and extent thereof, and whether the same is enforceable, and if so by whom

c. Express release i. Deed required at CL to effect a valid release s 23B(1) CA:

1. No assurance of land shall be valid to pass an interest at law unless made by deed.i. Equity will give effect to informal release, where ST in reliance on informal release by DT acts to

his or her prejudice (Waterlow v Bacon)ii. Removal from certificates of title expressly released under Torrens (s 47(6), (6A) RPA)

iii. Easement released on registration of a plan for land s 88B(2)(c1), (3A), 195Dd. Unity of DT and ST

i. One person acquires fee simple estate in both DT and ST and is in possession of both tenements, easement extinguished at CL

1. Does not cause to disappear a right of way it is necessary to the use of the land which previously had the benefit of that easement

2. Fee simple in one tenement and limited estate in the other, mere suspension during period of unity of title

3. Unity of possession but not unity of title, suspension revives upon unity of possession terminating

ii. Abrogated by statute s 47(7) RPA1. An affecting interest (being an affecting interest that benefits land) recorded in the Register shall not be

extinguished solely by reason of the same person becoming proprietor of separate parcels of land.e. Alteration to DT constituting excessive use

i. If he DT assumes a very different character – excessive use may lead to its extinguishment1. Conversion of agricultural land to camping site (Jelbert v Davis)2. Damage to property caused by changed use of property wall, then right of support

would be lost (Ray v Fairway Motors)3. Enlargement of flat does not lead to excessive use (Graham v Philcox)

6. Indefeasibility of registered easementsa. Expressly granted by registration of an instrument in the appropriate form, registered on either ST or DT


or both; indefeasible on registrationb. Easement not registered on certificate of title of ST – will indefeasibility operate to defeat it?

i. Existed at time land brought within Torrens but omittedii. Duly registered but later omitted or mis-described (James v RG)

c. Three questions to ask:i. Does the easement (express, implied or prescriptive) come within statutory exceptions to

indefeasibility?ii. Is it enforceable against the registered proprietor or other unregistered interest holders?

iii. Is it capable of taking advantage of a description of the land on the register? (Dabbs v Seaman)d. Omitted and mis-described easements

i. Exception to indefeasibility includes all easements in exists at time land brought under Torrens: implied, necessity, prescription – binding registered proprietor, even if no fault can be established on part of RG (Dobbie)

ii. s 42(1)(a1) RPA: Exception to indefeasibility: the case of the omission or misdescription of an easement:a. subsisting immediately before the land was brought under the provisions of this Actb. or validly created at or after that time under this or any other Act or a Commonwealth Act

iii. ‘Validly created’ means instruments executed, registered in accordance with s 46 RPA1. Execute document, lodged but not registered – not covered2. Only express easements registered & subsequently omitted or mis-described are

enforceable against RP3. No scope for implied/prescriptive easements – never validly created or bind RPs who

take without fraudiv. Includes registered easements which were accidentally omitted when a new certificate was

issued, enforceable against a person who subsequently becomes the RPv. Indefeasibility principle does not prevent RP of Torrens DT to benefit from an easement over

general law ST even tho the benefit is not registered on the RP’s title

Mortgages1. Secured mortgages

a. In the event of default of debtor:i. Unsecured loans: only remedy available to creditor is personal action for repayment of the loan

ii. Secured loan: remedies over specified property of debtor in preference to unsecured creditorsb. May include a charge, a hire-purchase agreement, floating charge, but not terms contractc. Mortgages of chattels affected by special legislation:

i. Under registration of ‘bill of sale’ grantee has power in circumstances to seize chattels1. Penalty for failing to register – bill of sale void against third parties & sometimes

between grantor and grantee2. Consumer Credit (NSW) Act 1995 (CC): Uniform consumer credit legislation across all states

a. s 8(1) Applies to credit contracts or guarantees where mortgagor is national person or strata corporationb. s 6(1) Credit is provided wholly or predominantly for personal, domestic or household purpose & charge

made for providing credit & credit provided in course of business for taking creditc. s 12 Contract in form of written documentd. s 18 Credit provider must give debtor copy of credit contracte. s 14 Credit provider must give debtor pre-contractual statementf. s 15 Pre-contract disclosure statement must refer to matters such as the amount, rates, interest

calculation, repayments, credit fees, default rate, charges , commissiong. s 15(L) Pre-contractual document to describe the property involved in a mortgageh. s 28(1) Contract must not provide for annual percentage rate to vary if debtor is in defaulti. s 28(2) May provide higher rate of interest following default in respect of amt in default and only while

default continuesj. s 44 Third party mortgages are prohibited


k. s 75 Debtor has right to pay out credit control at any time upon payment of specified chargesl. s 80 Credit provider can only take enforcement action if debtor is in default, and default notice given for

30 days without remedym. s 85 Acceleration clauses operate if debtor is in default, served with default notice that contains

additional information concerning effect of acceleration clause on liabilityn. Part 3 Div 1 contains the main provisions on mortgages under the Codeo. Hardship and unjust transaction provisions – unconscionability

i. s 66 Debtor may apply to credit provider to change the contract because of illness, unemployment or other reasonable cause

ii. s 68 Debtor may also apply to the courtiii. s 70 Power of court to reopen unjust transactions, considering whether a term is unjust:

1. s 70(2): non/compliance, relative bargaining power, negotiation, age/condition/mental condition, independent legal advice

2. s 70(1): guarantor may apply for relief where guarantee is unjust but loan contract

3. Common law Mortgagesa. At CL, approach to mortgages one of strict enforcement. If mortgager did not pay on due date, rights

were extinguished and mortgagee become absolutely entitled to the landb. At equity – mortgagee had an equity of redemption equal in value to the differences between the amt of

debt and the value of the propertyi. Equity of redemption is a equitable interest in land which is enforceable against anyone to

whom the mortgagee transmits his fee simple, except a bona fide purchaser without noticeii. A law, mortgagor has parted with his land and has only a limited right to recover it, in equity he

is the owner of the land, though subject to the mortgageiii. Equity of redemption is an interest the mortgagor can convey, devise, settle, lease or mortgage

c. Foreclosure – order of court made on mortgagee’s application, declaring equitable right to redeem was at an end and thus leaving the mortgagee with an unhampered fee simple

d. CL mortgage must be by deed to be effective at law specific performancee. Equitable mortgage recognised if evidence of oral agreement & part performance – loan advance &

deposits of title deeds (Walsh v Lonsdale)4. Priorities between Torrens Mortgages

a. Priority of registered mortgages will generally be determined according to the date of registrationb. Equitable mortgages determined by priority in time, possession of certificate of title, caveatsc. Tacking

i. Under CL, an prior mortgagee makes a further advance without notice of the subsequent mortgage, his security for the total indebtedness will prevail over the subsequent mortgage (Mercantile Credits)

ii. However, if the prior mortgagee has notice of the subsequent mortgage, his priority is limited to the amt owing under the mortgage at the date of receipt of such notice (Hopkinson in MC)

iii. The rule in Hopkinson applies to mortgages registered under RPA (MC)iv. Actual notice is required before the mortgagee can be prevented from tacking further advances

(Central Mortgage v Donemore)1. Actual notice by registration of subsequent mortgage2. Lodgement of caveat did not constitute constructive notice of later unregistered

mortgage3. Actual notice of equitable interest, sufficient to show notice and not knowledge

(Westpac v Adelaide Bank)4. Actual notice to mortgagee’s agent would suffice as notice to mortgagee, but not to

clerical worker in agent’s officev. Further advances includes loans of further sums of money but not extension of time for


repayment of original sum (Burnes v Trade Credits)1. Right to tack after notice is lost even when there is a duty to make advances (West v

Williams)2. Knowledge of later mortgage relieves mortgagee of duty to make further advances

vi. Priority between registered mortgages by registration in the prescribed form (s 56A RPA)1. Exception: The first mortgagee should have priority over later mortgagees even if notice

existed, when the later advance was used for property improvements (Matzner)2. Advances for improvements made after notice of subsequent mortgages were not

designed or liable to diminish the value of the security of the subsequent mortgages3. Completion of buildings puts mortgaged property into saleable condition and serves the

interests of all partiesvii. Right to tack available only to mortgagee who holes a legal (registered) interest; equitable

mortgagee of shares has no right to tack (Chase Corp)viii. Purchaser from a mortgagee exercising the power of sale will take free of later ranking

mortgagees, their rights confined to the purchase moneys (Sussman)5. Remedies: Power of sale, Right to sue on personal covenants, Foreclosure, Right to possession

6. Power of salea. Right to exercise power of sale depends on:

i. Default in payment of principle or interestii. Breach of some covenant in the mortgage

iii. Failure to remedy the breach for a specified period after notice (Bevham)b. Where a power of sale becomes exercisable, it is an implied term of the mortgage that the mortgagor

facilitates the mortgagee’s entry upon the property by handing over the keys and making available a copy of the lease (NRMA v Individual Homes)

c. Statutory duty: notice to the mortgagor i. Mortgagee may exercise the power of sale conferred by s 58 RPA if there has been a default in

payment and a notice is served under s 57ii. s 57 requires the mortgagee to bring to the attention of the mortgagor the particular default and

require him to make it good, does not require him to specify the amount (Websdale)1. Notice is still effective if it does not state/specify the amt due or over/under states that

amt; will not invalidate it2. Notice is not invalidated for prematurity (Notaras)3. There is a duty to specify the amt in a notice to guarantors, although no duty to

mortgagors (Upton v Baron)4. Notice that merely notes defaults, but fail requires mortgagor to remedy them was

invalid (Nemeth v Reachcord)d. Equitable duty – conduct of sale

i. Conflict between mortgagee’s interest in a quick sale, and mortgagor/subsequent mortgagees’ interest in the best price (Bangadilly)

ii. The test is one of bona fides, not a duty to get the best price possible; a genuine and primary desire to obtain the best price consistent with the right of a mortgagee to realise his security (Southern Goldfields)

1. The equitable duty includes a duty to take reasonable precautions to obtain a proper price (Cuckmere); no CL duty in negligence (Ultimate Property Group)

2. Sufficient steps must be taken to ensure the validity of the sale to bona fides includes: advertising, informing subsequent mortgagees, setting a desirable auction date

3. Conscious planning, deceptiveness or collusion = conclusive of a lack of bona fidesiii. Sale to associate

1. Mortgagee may not sell the property to himself or herself or to someone acting on the mortgagee’s behalf (Farrar v Farrar)


2. Court disfavours sale to related individual or corporation, although no absolute prohibition (Tse Kwong Lam)

iv. What is recklessness?1. Recklessness is ‘not caring whether its fair and proper value was obtained’, as

distinguished from the mere want of care or prudence – lack in skill or attention (Pendlebury in SG)

2. Failure to reject bid and endeavour to sell for higher price by private treaty where there is not evidence to show that a higher price could be reasonable expected – is not reckless disregard

3. Failure to obtain a valuation is a merely a lack of prudence which can be remedied if the sale is well advertised (Nilrem Nominees)

4. Deliberately keeping seriously interested purchasers away from auction will be guilty of reckless disregard (Artistic Builders)

v. Timing of the sale (Kingsland)1. No obligation on mortgagee to exercise power of sale if it does not which to do so2. Failure to sell at any time does not constitute breach of equitable duty; no liability3. Failure to assess offers before decision to sell is not a breach of duty

vi. If mortgagee sells to a purchaser who cannot complete, and later resells when the market has fallen, may be in breach of duty owned to mortgagor and liable for loss of opportunity (Higton)

vii. ‘Fair’ or ‘true’ market value is difficult to determine (Cuckmere)– depends how much someone is willing to pay for it

e. Appointment of receiver i. Receiver is deemed to be the agent of the mortgagor, and the mortgagor alone shall be

responsible for his acts and faults (Kingsland)7. Court ordered sale

a. In CL mortgages court can order sale in lieu of foreclosure or redemption (NSW s 103 CA)i. Does not apply to Torrens land, no equivalent provision in RPA

b. Courts of equity probably have an inherent jurisdiction to order sale rather than foreclosure where it is beneficial to the parties; applying to both CL and Torrens mortgages (Yarrangah)

i. May also be used with equitable mortgage (King Investment Solutions)8. Protection of purchaser from mortgagee in breach [purchaser v mortgagor]

a. Mortgagee did not have the power of sale to begin withi. No default of mortgagor OR Failed to meet notice requirement

ii. Statutory protection for purchaser 1. Purchaser not be answerable for loss, misapplication or non-application, or be obliged to

see application of the purchase money by purchaser paid; purchaser will not be required to inquire into any default or notice on mortgagor’s part (s 58(2) RPA)

2. s 58(2) will not protect where equitable duty is breached; only protects purchaser from constructive notice of mortgagor’s possible non-default or mortgagee’s failure to provide adequate notice

3. Protection is only from date of settlement, not date of contact with the mortgagee (Forsyth)

b. Mortgagee breached equitable duties in power of sale (Forsyth)i. Mortgagee has good title to convey

ii. In the proper exercise of power of sale, mortgagor bound by contract, even before completioniii. If the purchaser has knowledge mortgagee’s lack of good faith, he does not obtain a better right

than the mortgagor (even if transaction is completed)iv. If purchaser had no knowledge, his title cannot be challenged by the mortgagor once the

transaction is completedv. Before completion of contract, mortgagor has a better interest

1. If legal – prevails over subsequent equitable2. If equitable – prevail if no postponing conduct


3. Court will set aside improper sale even where purchaser entered into contract without notice of improper exercise of power (Forsyth)

vi. Between completion of registration and purchaser’s transfer, purchaser will not be affected by notice of impropriety by mortgagee (s 43A RPA)

9. Application of proceeds of salea. Purchases money from sale of land/estate/interest shall be applied (s 58(3) RPA):

i. Payment of expenses occasioned by such saleii. Payment of money owing to the mortgagee

iii. Payment of subsequent mortgages in order of priorityiv. And surplus paid to the mortgagor

10. Application by mortgagor for injunction relief to restrain exercise of power of salea. Situations where mortgagor may seek injunction:

i. Mortgagor alleges no occasion has arisen for exercising powerii. Mortgagor claims that notice requirements have not been met

iii. Mortgagor alleges power of sale is being exercised improperlyiv. Mortgagor claims to be able to sell property at higher pricev. Mortgagor entered into mortgage due to misrepresentation of misleading conduct

b. A mortgagee will not be restrained from exercising his power of sale because the amount is in dispute, or because the mortgagor objects to the manner of sale, unless: (Allfox)

vi. The mortgagor pays the amount claimed into courtvii. Amount claimed is excessive

viii. The validity of the mortgage is in issueix. The availability of the power of sale is in issue – e.g. breach of covenant is challenged, or

whether the notice requirements were complied withx. Mortgagor seeks orders under s 52 TPA for alleged misleading/deceptive conduct by mortgagee

(Town and Country Sport Resorts Conditions/terms upon which court will grant reliefc. If mortgagor has no power of sale

i. Injunction to prevent interference with legal rights not necessary to restrain saleii. Will not need to ‘do equity’ by paying amount claimed into court to restrain sale

d. If power of sale is improperly exercised, can claim for breach of mortgagee’s equitable dutyi. Mortgagor must do equity, but paying amount outstanding into court and seek redemption

before restraining the sale11. Exceptions to the requirement of paying into court

a. Where mortgagor charges mortgagee with improper exercise of power of sale or other ‘equitable deliquency’ and seeks an account following completion of sale, mortgagor will not usually be required to pay into court the balance of mortgage debt in order to seek remedy (Scandinavian Pacific)

i. General rule is that mortgagor seeking to restrain mortgagee must pay amount of any undisputed debt, or if debt is disputed, must pay disputed sum into court

ii. Once mortgagee has exercised power of sale, he has expended the advantage he had as a secured creditor. Will be an unsecured creditor for any balance if the sale does not recoup the amount of mortgage debt

iii. If mortgagee then sues mortgagor for remainder outstanding, and sum claimed is disputed because mortgagee was guilty of wilful neglect or default in exercise of powers, then mortgagor’s only remedy will be to seek the taking of accounts in equity.

iv. Mortgagor claiming accounts must offer to pay sum found by courts to be payable by him by taken accounts, otherwise claim may be barred.

12. Mortgagee’s right to possession of landa. No automatic right to possession under Torrens land

i. As mortgagee only has charge over the land and not the transfer of estate, the mortgagor will remain RP of legal fee simple estate

ii. However, mortgagee will have the right to enter possession of mortgaged land on default by


mortgagor in payment of principal/interest (s 60 RPA)1. Language of s 60 is clear and unambiguous; no statutory notice conditioning the power

of sale is necessary before the mortgagee could take possession (Zanzoul)2. However, valid notice must be served before commencement of ejectment proceedings

s 55A (Lamshed v Plakakais)iii. Mortgagee cannot exercise power of sale unless notice is served (s 111 CA)

b. Liability of mortgagee in possessioni. Mortgagee in possession following mortgagor’s default will be liable to account on the basis of

profits that would have been received but for the wilful default (Zanzoul)ii. Mortgagee is not a trustee, nor will they be obliged to care of property as an owner might

(Kennedy in Commissioner of Taxation)iii. However, mortgagor’s interests cannot be discounted entirely; will be liable for ‘gross

negligence’ that leads to the property’s deterioration (Wragg in Kennedy)iv. Mortgagee is obliged to account for mortgagor’s continuing interest in property (Rowe)

Documents

Web viewLeases. Common law lease. Leases confers exclusive possession of estates carved from freehold; limited in time (WA v Ward) Interests of lessee and lessor. Reversion