Real Property Tutorial Questions

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Week 2: Tenure and Estates; Native Title; and Fixtures

Tutorial Questions (No pre-preparation question is due this week.)
Dealing with Land

• What do we mean when we talk about ‘Land’?
  • The surface of the earth
  • Fixtures (things attached to the land, such as buildings)
  • The airspace above the land (limited to a height necessary for the ordinary use and enjoyment of the land)
  • The substrata (soil, minerals, and space beneath the land)
• Can people own land?
  • In a sense, fee simple allows it, but under the doctrine of tenure, all land in Australia remains ultimately owned by the Crown.
  • The holder of a fee simple estate has perpetual and exclusive possession, but they do not hold absolute title in the way that private ownership is understood in some other legal systems.
• What does it mean for land to be governed under old system rather than torrens title? Why is it relevant today?
  • Old System title still affects some properties, making it relevant for land transactions, historical claims, and legal disputes.
    • Requires an unbroken chain of historical ownership
  • (a) Conversion to Torrens Title
    • Many Old System properties are gradually being converted to Torrens title under land titling laws.
    • When land under Old System title is sold, mortgaged, or subdivided, it often must be converted to Torrens title.
  • (b) Proving Ownership in Disputes
    • If someone claims ownership over land that was never formally transferred to Torrens title, they may need to prove ownership through old deeds.
    • This is important for adverse possession claims (i.e., squatters’ rights), boundary disputes, and family inheritance cases.
  • (c) Legal Risks for Buyers
    • If a property is still under Old System title, conveyancers must check historical records carefully to ensure there are no missing deeds or ownership disputes.
• Why do we refer to a ‘bundle of rights’? What rights can apply to land?
  • The purchase of a selection of rights related to land to the exclusion of all others under specific conditions
  • The estates in land
    • the fee simple
    • the life estate
    • Leasehold
  • The lesser interests – known as servitudes in the civil law jurisdictions
    • Easements
    • profits à prendre
    • restrictive covenants.
  • Security Interests
    • Mortgages
    • charges
• What is the difference between Rights in Rem and Rights in Personam? Give some examples.
  • In personam - contractual rights and such (against a person)
    • Contractual rights
    • A tortious award claim
  • In rem - right to use, control, or dispose of a specific property (against a thing)
    • The right to possess property
    • The right to use property
    • The right to sell property
    • The right to transfer ownership of property
      Tenure and Estates
• Define a freehold interest. How does it differ from leasehold interests?
  • Freehold interest: a permanent interest in land that gives the owner the right to use and control the property.
  • Leasehold interest: an ownership of a temporary right to hold land or property in which a lessee or a tenant has rights of real property by some form of title from a lessor or landlord.
  • Difference: one is the right to own, the other is the right to hold or use
• What are the two forms of life estate? How do we tell the difference?
  • Two types: Life estate and life estate pur autre vie
  • Life estate: To Maggie
  • Life estate pur autre vie: To Maggie for the life of Bella
• How does a reversion differ from a remainder?
  • Estate in reversion
    • To Alice for life
    • What happens when A dies?
    • Reverts to the grantor.
    • Grantor has a fee simple in reversion
    • The grantor and Alice have simultaneous estates.
    • They both exist at the same time. Alice’s estate is in possession
  • Estate in remainder def
    • a type of ownership in real estate that someone will have in the future
    • If there are conditions, no interest arrises until the conditions are met
• Consider the following grants: who has what interest?
  • To Russell for life, remainder to Harold.
    • Russel: life estate, Harol: Remainder interest
  • To Jimmy for life.
    • Life estate, Grantor(or Heirs): Reversion, no remainder specified
  • In a grant made by Ginny: To Bobby forever. Ginny dies before Bobby.
    • Bobby: fee simple, Grace: No remaining interest
  • To John and his heirs.
    • Fee simple
      Native Title
• What is Native Title? Is it unique to Australia?
  • the recognition by the common law of rights and interests that are sourced in a normative system (we would now say another sovereign system I think) which pre-existed British sovereignty
  • Unique to australia
• What is needed to be proven to establish a successful Native Title claim?
  • Native Title def
    • Content is variable
    • Depends on the facts
    • Evidence to determine the laws and customs in each individual case
    • ‘continuous connection’
    • Communal not individual
    • Not an institution of the common law
  • Whose evidence?
    • Traditional owners – elders
    • Anthropologists
    • Archaeologists
    • Historians
    • (and also drawn from government departments, such as Crown Lands or NSW Land Registry Services)
• Read Attorney-General v Brown. Compare the way in which the Court in this case characterises and describes the doctrine of tenure with Brennan J’s approach in Mabo (No. 2). How was the Crown’s interest in land characterised in each decision? How similar were the underlying arguments presented to the Court?
  • In Attorney-General v Brown (1847), the Court held that upon settlement, all land in the colony vested absolutely in the Crown, applying a rigid feudal doctrine without recognising pre-existing Indigenous rights. In contrast, Brennan J in Mabo (No. 2) (1992) reinterpreted the doctrine of tenure, holding that the Crown acquired only radical title, allowing for the recognition of native title where it had not been lawfully extinguished. While both cases applied feudal tenure, Mabo (No. 2) rejected terra nullius and acknowledged Indigenous land rights, fundamentally shifting the legal framework.
  • Brown = absolute ownership by the Crownn (absolute tenure) vs Mabo (Brennan) = radical title (sovereignty) + tenure (Crown can grant interests but must respect native title unless extinguished)
• Why does an estate in fee simple extinguish Native Title?
  • Fejo: a grant of fee simple is wholly inconsistent with native title and permanently extinguishes it.
  • Established that native title does not “revive” when land returns to Crown ownership.
  • native title is extinguished when rights granted by the Crown are inconsistent with its continued existence

Week 3: The Torrens System

Tutorial Questions
Indefeasibility

• What does it mean when we describe Torrens as a system of ‘title by registration’?
  • The Torrens system is described as a system of “title by registration” because legal ownership of land is conferred by the act of registration itself, rather than by historical claims of ownership or a chain of title, meaning that a registered proprietor’s title is guaranteed and not dependent on prior documents.d
• How do we transact in land under Torrens (ie. what is the process for selling land)?
  • How do we transfer an estate?
    • Two parties enter into a contract for sale.
      • On a nominated day, the contracts are exchanged, and the purchaser pays a deposit. The parties are bound by the contract. This means that the contract is specifically enforceable by the purchaser.
      • In equity, the purchaser is deemed the owner (this is known as the doctrine of conversion) , but the legal estate does not pass until registration.
    • A date is nominated for settlement. The purchase money will be transferred on this day, and the incoming purchaser will be registered as the owner.
      • The conveyance occurs electronically.
      • On 11 October 2021, new changes to our titling system were introduced.
        • The Real Property Amendment (Certificates of Title) Act 2021 allows for cancelling CTs and moving NSW to 100% electronic lodgement of land transactions.
• What is the concept of indefeasibility? How does it operate?
  • It operates by virtue of section 42.
    • An indefeasible title is one that is conclusive.
    • An indefeasible title is one that cannot be set aside due to a defect existing in that title prior to its registration.
    • If one has an indefeasible estate or interest then that estate or interest is held free from all other interests that are not on the register (unless there is an exception)
• Does a Volunteer benefit from indefeasibility? Why? What is the rationale for the NSW position? How might we explain the differences in other jurisdictions (such as Victoria)?
  • Volunteers
    • A volunteer is one who does not provide valuable consideration.
    • Can a registered proprietor who is a volunteer receive the benefits of indefeasibility?
    • This varies considerably across the states and is still quite controversial.
    • Although the decision is not without its critics, in Bogdanovic v Koteff (1988) 12 NSWLR 472 the NSWCA held that, in NSW, volunteers gain indefeasibility on registration.
  • the rationale is that the Real Property Act 1900 (NSW) does not explicitly limit indefeasibility to purchasers for value, whereas jurisdictions like Victoria reject this on policy grounds, prioritising commercial certainty and preventing windfalls to donees.
• While registration can cure documents void for formalities, can it cure registration of an interest with a substantive defect? How was this reflected in Bursill Enterprises v Berger Bros?
  • No, registration cannot cure an interest with a substantive defect, as seen in Bursill Enterprises v Berger Bros (1971) 124 CLR 73, where the High Court held that while an interest recorded in the register gains indefeasibility, the registered interest must still be valid in substance—here, the purported easement was not a true easement but a proprietary right, and because it was not properly notified on the register, it was not binding on the subsequent registered proprietor.
• Does a potential purchaser or mortgagee need to search beyond the register? Why/why not?
  • A potential purchaser or mortgagee generally does not need to search beyond the register because the Torrens system operates on the curtain principle, meaning that all relevant interests should be recorded on the register, and the registered proprietor holds title free from unregistered interests (Real Property Act 1900 (NSW), s 42). However, Bursill Enterprises v Berger Bros (1971) 124 CLR 73 demonstrated that in cases where an interest is ambiguously recorded, a prudent purchaser may need to inspect the instrument behind the transfer to determine the full nature and extent of rights affecting the land.
    Exceptions to Indefeasibility

7. What are the categories of statutory exceptions to indefeasibility? When can they apply? What would be the most relevant in practice?

• Section 42(1)(a) Prior Folio
  • Where an earlier title has already been created for the same interest in land
    • E.g. two folios for the same land.
      • This might happen where a parcel of land is subdivided into two parcels, one subdivision is sold off and a folio created in respect of that parcel. Subsequently, the second subdivision is sold, but the folio created for that parcel includes not only the second subdivided parcel, but also part or the whole of the first parcel.
    • E.g. Two folios where there is an overlap between the two lots of land
  • The prior folio will prevail
  • Consider possible overlap with section 42(1)(c)
• Section 42(1)(a1) Omitted or misdescribed easements
  • Where an easement has been omitted from or misdescribed on the folio, it may be an exception to indefeasibility.
  • This is actually a very narrow exception and can rarely be invoked.
    • E.g. Mistakes during conversion from Old System to Torrens, pre-existing prescriptive easements etc
• Section 42(1)(b) Omitted or misdescribed profits à prendre
  • This is a counterpart to s 42(1)(a1)
  • It is also very narrow and will be discussed in the topic on easements
• Section 42(1)(c) Wrong description of boundaries
  • This exception applies when surveying mistakes are made and land is included in the folio which was not intended to be included by the parties.
    • Where land has been included in a grant, certificate or folio by the wrong description of parcels or boundaries, then title to that land remains with the original owner
    • It covers land intended to be included but which was misdescribed
    • It does not include land that was correctly described but did not belong to the applicant and should never have been included.
  • The exception does not operate against a later purchaser for valuable consideration or deriving from or through such a purchaser (this seriously limits the scope of the exception)
• Section 42(1)(d) Short-term Leases
  • This covers leases of less than three years (including option to renew)
  • In possession or the lessee is entitled to immediate possession
  • Purchaser of the reversion takes with notice of the tenant’s interest (at the time of settlement)
    • Notice can be either actual or constructive
  • We will revisit this in the topic on leases

8. How does the fraud exception operate? What does it mean when we say the fraud ‘must be brought home’ to the registered proprietor?

• Mere knowledge of the fraud by the agent is not enough.
  • That knowledge must be brought home (ie imputed) to the principal.
  • The agent’s express knowledge is imputable. Constructive notice to the agent is insufficient.
  • Thus, actual knowledge of fraud by the agent will be presumed to bind the principal.

9. What types of fraud are possible when transacting land?
   When transacting land under the Torrens system, the following types of fraud can occur:

• Forgery – A party fraudulently signs or alters a document without proper authority (e.g., Frazer v Walker [1967] 1 AC 569).
• False Attestation – A person falsely witnesses a signature, often leading to fraudulent registration (e.g., Schultz v Corwill Properties (1969) 90 WN 529).
• Fraudulent Misrepresentation – A seller or registered proprietor knowingly makes false statements to induce a sale (e.g., Loke Yew v Port Swettenham [1913] AC 491).
• Fraud on the Registrar-General – A party knowingly submits false information to deceive the Registrar-General into registering an invalid interest.
• Fraud by an Agent – Fraudulent conduct by an authorised agent can be imputed to the principal if it occurs within the scope of their authority (e.g., Cassegrain v Gerard Cassegrain & Co Pty Ltd [2015] HCA 2).
• Wilful Blindness – A party deliberately avoids making inquiries into possible fraud when reasonable suspicion exists (e.g., Assets Co v Mere Roihi [1905] AC 176).

10. We often speak of the registered proprietor having notice of fraud. What type of notice is required, and is mere notice enough to bring the fraud home?

• Fraud for Torrens is often referred to as ‘statutory fraud’
  • Torrens Fraud is based on sections 42 and 43 (which excludes mere notice as constituting fraud).
  • So, the estate or interest of a registered proprietor (unless fraudulent) will defeat unregistered interests even where they have actual or constructive notice.
• Elsewhere, you can argue narrow forms of fraud at common law (eg. deceit or fraudulent misrepresentation), but fraud under Torrens is broader.
• You can can also argue fraud in equity (equitable fraud).
  • Equitable fraud is based on notice and is broader than Torrens fraud.
  • Its application to law is thus constrained by section 43

11. Who must the fraud be committed against?

• Fraud against Whom
  • The fraud by the registered proprietor must have been against the party seeking to assert an interest
  • However, it may also be sufficient for section 42 if the registered proprietor has obtained registration by a fraud practiced against the Registrar-General
    • Cases in this category usually arose in the context of mortgages – eg where a bank employee falsely certifies that a mortgage was signed in her presence knowing that the mortgage is to be submitted to the Registrar-General for registration (ie a false attestation or misrepresentation that induced the Registrar to act). See, eg, Australian Guarantee Corp v De Jager [1984] VR 483.
    • This is now substantively covered by section 56C and will be discussed when we look at mortgages.

12. What is the remedy when fraud is successfully established?

• Causes of Action
  • A cause of action a set of pre-defined elements which allow a person to argue for a remedy in court
    • You have studied some in contract law, and will also study some in equity and trusts:
      • E.g. misrepresentation, mistake, unconscionable conduct, undue influence and duress, some forms of estoppel, breach of trust
    • Don’t confuse causes of action with remedies: eg damages; specific performance etc

13. Define what it means to have a claim in personam?

• In Personam Exception to Indefeasibility
  • Claims In personam
    • An in personam right arises by virtue of an obligation created by the registered proprietor:
      • A plaintiff can bring a claim ‘against a registered proprietor a claim in personam, founded in law or in equity, for such relief as a court acting in personam may grant’ - Frazer v Walker at 585
      • Sometimes also called ‘personal equities’ (eg Breskvar v Wall)
      • Registration does not extinguish obligations incurred by a registered proprietor
      • The obligations can be legal or equitable
      • They can arise before or after registration
      • The scope of the exception is unclear and of continuing controversy
        Problem Question

14. Sarah is the registered proprietor of a waterfront property known as “Seaview Villa.” The property includes a luxurious beachfront house and a furnished guest cottage. There is a registered easement on the title in favour of the neighbouring property owner, John, granting him access to a private dock on Sarah’s land.
    Sarah, an art collector, holds the land on trust for herself and her two siblings, Michael and Emily. They acquired the property a few years ago with the intention of converting it into an art gallery and event space. Unfortunately, a recent falling out has occurred among the siblings over the property’s use.
    Sarah decides to lease the guest cottage to Lily without informing her siblings. The lease is for a period of two years, with no option to renew. The lease agreement is not registered, and Lily moves in without any issues.
    Sarah then decides to sell the entire property, including the main house and the guest cottage, to Robert for $1.5 million. Robert inspects the property before the contract exchange and finds the house unoccupied (might be mere notice). Robert walks around the guest house but, without making any further inquiries, assumes the furniture inside belongs to Sarah.
    After the contract exchange but before the settlement, Robert meets Emily, one of Sarah’s siblings, at a local art exhibition. During their conversation, Emily, who has been drinking numerous glasses of champagne, mentions that she and Michael have visited a lawyer and are drawing up documents to dissolve their partnership with Sarah. Emily further tells Robert that she and Michael plan to transform Seaview Villa into a high-end art gallery and have had an architect design plans they will submit to the council for planning approval as soon as the partnership is dissolved. (likely actual knowledge)
    The following day, Robert instructs his legal team to expedite the settlement, and it goes through successfully, with the property transfer registered in his name.
    After the settlement, Robert discovers that Lily is residing in the guest cottage and that she insists on staying for the full two years of her lease.
    Robert seeks legal advice on the following:

• Can Robert erect a fence across the easement to prevent John from accessing the private dock on his property?
  • No
    • The easement is registered, meaning it binds Robert as the new registered proprietor under s 42(1) of the Real Property Act 1900 (NSW).
    • Registered easements run with the land and are enforceable against subsequent purchasers.
    • Blocking the easement would be an interference with John’s legal rights.
• Can Robert legally evict Lily from the guest cottage before the end of her two-year lease?
  • Short-term leases (less than three years) are an exception to indefeasibility under s 42(1)(d) of the Real Property Act 1900 (NSW).
  • Even though the lease was unregistered, Lily is in possession, giving her an enforceable right.
  • Since Robert did not inquire about Lily’s occupancy, he is bound by her lease.
• Can Michael and Emily claim rectification of the register or argue that Robert holds the property as trustee for them, based on the assertion that he was fraudulent in completing the purchase while being aware of their intent to use the land as an art gallery?
  • The key issue is whether Robert’s conduct amounted to fraud under s 42(1).
  • Actual fraud requires dishonesty or moral turpitude (as per Assets Co v Mere Roihi [1905] AC 176 and Bahr v Nicolay (No 2) (1988) 164 CLR 604).
  • Robert had actual knowledge of Michael and Emily’s equitable interest and their intentions before settlement.
  • Expediting settlement after learning of their claim could indicate a dishonest intent to deprive them of their interest.
  • This raises the possibility of fraud or an in personam claim, allowing Michael and Emily to seek rectification or establish a constructive trust.
  • Step 1: Identify the Key Issue
    • The argument is about exceptions to statutory indefeasibility (fraud, in personam claims, statutory exceptions)?
  • Step 2: Determine the Registered Proprietor’s Rights
    • Check the register:
      • Who is the current registered proprietor?
        • Becomes robert
      • Are there any interests recorded on the folio? (s 42(1) Real Property Act 1900 (NSW))
        • Yes, the easement in favour of John is registered.
        • No registered trust, but Sarah holds the land on trust for Michael and Emily, creating an equitable interest
  • Apply Indefeasibility Principle:
    • The registered proprietor holds indefeasible title, meaning they take free from unregistered interests unless an exception applies.
    • Is it a case of immediate (Frazer v Walker; Breskvar v Wall) or deferred indefeasibility (Gibbs v Messer)?
      • Probably immediate indefeasability
    • If there is fraud, when did it occur? Who committed it?
      • Robert knowingly accelerated the deal after hearing a potential issue with the registered proprieter’s authority or claim to the property
  • Step 3: Apply the Exceptions to Indefeasibility
    • Fraud Exception (s 42(1))
      • Is there actual fraud? (Dishonesty/moral turpitude)
        • yes
      • Was the fraud brought home to the registered proprietor (Cassegrain v Cassegrain)?
        • Not directly, since he didn’t make a false representation or forge a document.
        • However, he may be liable for wilful blindness or constructive fraud.
      • Was there wilful blindness or constructive fraud (Assets Co v Mere Roihi)?
        • Yes—he knew of a competing claim and deliberately ignored it to secure registration.
        • Courts have held this sufficient for fraud.
    • Statutory Exceptions (s 42(1)(a)-(d))
      • Short-term lease (<3 years) where the tenant is in possession.
        • For lil, not relevant here
    • In Personam Exception
      • Is there a known cause of action (breach of contract, trust, unconscionable conduct)?
        • Maybe Breach of trusts here
      • Did the registered proprietor assume a personal obligation enforceable against them? (Mercantile Mutual v Gosper)
        • No?
  • Step 4: Consider Unregistered Interests
    • Does the claimant have a mere equity or an equitable interest? (Barry v Heider)
      • Equitable interest
    • Is there an overriding equitable principle (such as estoppel or constructive trust)?
      • Constructive trust
  • Step 5: Determine Priorities (if competing interests exist)
    • If two parties claim rights over the land, who has the better equitable interest? (Breskvar v Wall)
      • Prior beneficiaries (trust)?
    • If both have equitable interests, use priority rules:
      • First in time usually prevails (but subject to equities).
        • Claimants are first in time
      • A bona fide purchaser for value without notice takes free from prior equitable interests.
        • A bona fide purchaser for value without notice would take free—but Robert had notice.

Week 4: Torrens II

Tutorial Held in Week Commencing: 10 March 2025
Torrens Assurance Fund

• Why is there a need for an Assurance Fund under the Torrens System?
  • Funded by a levy on registrations.
  • Real Property Act 1900 (NSW) s 120(1): Compensation is available for loss due to:
    • Fraud (s 120(1)(a))
    • Errors, misdescriptions, or omissions (s 120(1)(b))
    • Land being brought under the Torrens system (s 120(1)(c))
    • Wrongful registration of another person as proprietor (s 120(1)(d))
• Is it possible for the register to be changed to give someone back an interest?
  • 2.1 If the issue concerns correction of the Register:
    • Relevant Statutes & Case Law:
      • Real Property Act 1900 (NSW) s 12(1)(d): Registrar-General can correct errors or omissions in the Register.
      • s 12(3)(b): Corrections cannot affect rights based on uncorrected entries.
      • s 138(1): Courts have the power to create, cancel, or amend a folio in land recovery cases.
      • Castle Constructions v Sahab Holdings (2013) 247 CLR 149: Corrections are limited to clerical errors, not substantive changes.
• Against whom does action for damages lie where someone has lost their interest in land?
  • An action for damages lies against the fraudulent or negligent party responsible for the loss, but if the land has passed to a bona fide purchaser for value (who has indefeasible title under s 42), the claimant’s only recourse is compensation from the Torrens Assurance Fund under s 120 of the Real Property Act 1900 (NSW).
• In what circumstances is compensation available under the Torrens Assurance Fund?
  • Real Property Act 1900 (NSW) s 120(1): Compensation is available for loss due to:
    • Fraud (s 120(1)(a))
    • Errors, misdescriptions, or omissions (s 120(1)(b))
    • Land being brought under the Torrens system (s 120(1)(c))
    • Wrongful registration of another person as proprietor (s 120(1)(d))
      Caveats and Priority Notices

5. What is the function of a Caveat?

• Caveats
• Definition: A statutory injunction preventing registration of dealings without the caveator’s consent (Real Property Act 1900 (NSW) s 74F).

6. What does it mean to have a caveatable interest?

• Caveatable Interest
  • It cannot be lodged to protect a mere contractual or personal right, it must be to protect a proprietary interest.
  • The caveatable interest must exist at the time of lodgement.
  • Examples:
    • Interest of a purchaser under a contract for sale;
    • Interest of an equitable mortgagee;
    • Interest of a lessee under a lease or an agreement for a lease;
    • Option to purchase land

7. What are the key differences between caveats and priority notices?

• Do I lodge a Priority Notice or a Caveat?
  • Priority Notices can provide an easy and cheaper alternative to a Black v Garnock caveat. Although, theoretically, there is nothing to stop a purchaser or an incoming mortgagee in lodging both.
  • A Priority Notice is far more beneficial for use in shorter settlement periods. The standard settlement period is 42 days, but can be longer or shorter. Its use for longer settlement periods beyond 90 days would provide little utility. Parties using a Priority Notice for longer settlement periods should be aware that as it automatically lapses after 60 days, this could allow an unregistered dealing noted on the title to be registered immediately on the lapsing of the Priority Notice. Perhaps a way around this for practitioners might be to lodge a Priority Notice in the 30 days prior to the anticipated settlement, rather than directly after exchange, although, the obvious issue is that the earlier contractual period is left unprotected.
  • Obviously, where there is no dealing to be lodged to give effect to an interest, a Priority Notice would not be suitable.
  • If you have a caveatable interest, it’s far more prudent to lodge a caveat than a Priority Notice. As a caveat stays on the title indefinitely (unless it lapses, is withdrawn or by order of the court) it prevents all dealings with the title. Given that achieving lapsing can be complex, and court proceedings expensive and lengthy, a caveat can provide a party with strong protection

8. Do unregistered interest holders always need to lodge a caveat? What happens if they don’t?

• Unregistered interest holders do not always need to lodge a caveat, but failure to do so can result in loss of priority to later interests. While an unregistered equitable interest is still enforceable (Barry v Heider (1914) 19 CLR 197), failure to lodge a caveat may constitute postponing conduct if a later party acquires an interest without notice and relies on the Register (Abigail v Lapin [1934] AC 491; Heid v Reliance Finance (1983) 154 CLR 326). In such cases, the later equitable interest may take priority over the first in time.

9. What is the appropriate test for determining whether an individual has lodged a caveat honestly and reasonably?

• Wrongful Caveats: A party who lodges a caveat without reasonable cause may have to pay compensation (s 74P, Horswell v Paul (1983) NSW Conv R 55-126, Boensch v Pascoe - [2019] HCA 49).

Pre-preparation question to be handed in
Chris owns a property in fee simple in Lane Cove NSW (“the property”). Chris is in a wheelchair and has a live-in carer, Dee. Chris has one daughter, Carol, who is 22 years old. Chris and Dee have been friends for many years and went to high school together. In 2013, after Chris is diagnosed with multiple sclerosis, Dee moves into the property to help take care of him and Carol. Dee drives Chris to all his physiotherapy appointments and cooks and cleans. In 2023, Carol moves out to live with friends in a townhouse in Paddington. Chris is very thankful to Dee who has taken such good care of him and Carol all these years. Chris is also aware that his health is waning. Six months before his death, Chris has a conversation with Dee about the future. Chris’s daughter, Carol, who has come over to visit, is present for this conversation. Chris tells Dee over dinner that after his death she can live in the property for the rest of her life. Carol nods in agreement and says “Dee, you are like family, that’s the least we can do”. When Dee asks if she needs to see a lawyer, Carol tells her that it is not necessary to go to the hassle and expense. The agreement is put in writing, but Dee does not register the document. She reasons that she has a good relationship with Carol who has stated on more than one occasion that she will respect her father’s wishes. Three months after this conversation, Chris’s health significantly deteriorates. Dee, concerned about formalising the agreement, approaches Carol to discuss the situation - she does not want to trouble Chris. Carol reassures Dee that she will honour the life estate when the property eventually passes to her. Chris dies. Carol inherits the property as sole beneficiary under her father’s will. Carol registers her interest. Dee remains living in the property as per the agreed arrangement. Four months later, Carol has a falling out with her flatmates and wants to move into the property. She gives Dee two weeks’ notice to vacate the premises. Dee is shocked and upset and refuses to move out.
Advise Dee.

Additional practice question for in class discussion only
When Barry’s father, Ricky, passed away, Barry received $950,000 from his estate. Barry immediately set out to invest his inheritance in the property market, believing that to be the safest bet. He did not need extra finance to fund the purchase. Barry purchased a two-bedroom 1960’s house on a small block in Pagewood.
At the time of purchase, the Pagewood Property was in dire need of renovations. Luckily, Barry had the skills and energy to undertake those renovations himself, completing them to a very high standard. The property was even featured in an article in Belle Décor, praising the integrity and skill evident in the new interior design of the house. Unfortunately, the renovations cost much more than Barry had anticipated. This resulted in the need for him to take out a personal loan from Savings Bank to fully fund his vision.
Six months later, Barry lost his job and quickly came to the conclusion that it was too costly to service the interest on his personal loan. As such, he decided to sell the Pagewood property so that he could pay off the debt completely and move on to other projects.
Barry received an offer from Abbey with whom he proceeded to enter into and exchange a contract for sale. Abbey provided Barry with a 10% deposit and requested an expedited settlement. Barry, happy to receive the funds sooner than he expected, agreed and he assured her that he would proceed with the transfer the following week.
Two weeks passed and Barry realised he hadn’t heard anything more from Abbey. As she had taken no steps to contact him, Barry, who had not updated or removed the online listing of the property, entered into another contract of sale with Debbie, a solicitor, who had made a significantly higher offer after finding the listing.
Unbeknown to Barry, Debbie was Abbey’s sister. At a family dinner that week both Debbie and Abbey excitedly shared the news with their family that each was purchasing a property. It didn’t take long for them to work out that they were talking about the same property and that Barry’s conduct has created some serious issues. Debbie, the older sister, told Abbey not to worry and that she would sort it out.
The next morning, Debbie made contact with Barry, transferred the purchase price for the property and had him sign the necessary transfer documents. Debbie immediately proceeded to register her interest. She is now the registered proprietor.
Did Debbie obtain an indefeasible title?
Step 1: Identify the Legal Issue
The key issue is whether Debbie’s registered title is indefeasible, given that:

• Barry had already entered into a contract with Abbey and received a 10% deposit.
• Debbie knew about Abbey’s prior claim before completing her transaction and registering her interest.
• Exceptions to indefeasibility (fraud or in personam liability) may apply.
  📜 Relevant Law:
• Indefeasibility of title – s 42(1) Real Property Act 1900 (NSW) (RPA)
• Fraud exception – s 42(1) RPA + Assets Co Ltd v Mere Roihi [1905] AC 176
• In personam exception – Mercantile Mutual v Gosper (1991) 25 NSWLR 32
• Priority rules for competing equitable interests – Barry v Heider (1914) 19 CLR 197

Step 2: Is Debbie’s Registered Title Indefeasible?
Under the Torrens system, registration generally grants indefeasibility of title (Frazer v Walker (1967) 1 AC 569; Breskvar v Wall (1971) 126 CLR 376). However, exceptions exist, including:
1️⃣ Fraud Exception (s 42(1) RPA)

• Fraud under the Torrens system requires dishonesty or moral turpitude (Assets Co Ltd v Mere Roihi).
• Cassegrain v Cassegrain (2015) 254 CLR 425 – Fraud must be “brought home” to the registered proprietor.
• Breskvar v Wall – Fraud includes deliberate disregard of another’s known rights.
  🔹 Application to the Facts:
• Debbie learned about Abbey’s prior contract at the family dinner.
• Despite this, she rushed to complete the transaction, transferred the funds, and immediately registered her interest.
• This suggests deliberate dishonesty—she knew Abbey had a legal claim but acted to defeat it.
• Barry v Heider (1914) 19 CLR 197): A purchaser who knowingly disregards a prior equitable interest may be engaged in fraudulent conduct.
  ✅ Conclusion:
  Debbie’s conduct likely constitutes fraud under s 42(1) RPA, meaning her title is defeasible and Abbey can challenge it.

Step 3: Does the In Personam Exception Apply?
Even if fraud were not established, Debbie’s title would still be defeasible under the in personam exception.
📜 Mercantile Mutual v Gosper (1991) 25 NSWLR 32:

• In personam liability applies when the registered proprietor is personally bound by an obligation arising in equity, contract, or trust.
• A purchaser who knowingly interferes with another’s equitable rights may be bound in personam.
  🔹 Application to the Facts:
• Debbie knew Abbey had a contractual right to purchase the property.
• Despite this, she acted unconscionably by registering her interest to cut Abbey out of her legal entitlement.
• Muschinski v Dodds (1985) 160 CLR 583): Equity may impose a constructive trust to prevent unjust enrichment.
  ✅ Conclusion:
  Debbie’s conduct violates equitable principles and triggers in personam liability, allowing Abbey to challenge her title.

Step 4: Abbey’s Equitable Interest & Priority Rules
📜 Barry v Heider (1914) 19 CLR 197):

• Abbey’s contractual right + deposit payment created an equitable interest.
• Mere failure to caveat does not automatically postpone an earlier equitable interest (Abigail v Lapin).
  📜 Priority Rules:
• First in time usually prevails, unless there is postponing conduct or fraud.
• Debbie is not a bona fide purchaser for value without notice, because she had actual knowledge of Abbey’s prior interest.
  ✅ Conclusion:
  Abbey’s equitable interest should prevail over Debbie’s registered title due to fraud and in personam liability.

Final Conclusion: Who Wins?

🚩 Debbie’s registered title is defeasible due to:

• Fraud under s 42(1) RPA – She knowingly disregarded Abbey’s rights.
• In personam liability – Equity prevents her from benefiting from unconscionable conduct.
• Abbey’s equitable priority – She had a prior interest, and Debbie is not a bona fide purchaser.
  📌 Recommended Remedies for Abbey:
• Seek an injunction to prevent Debbie from dealing with the property.
• Apply for a constructive trust to enforce Abbey’s contractual rights.
• Claim specific performance to force Barry to honor the original contract.

Week 5: Torrens III

Tutorial Held in Week Commencing: 17 March 2025
Discussion Questions

• What are the common law priority rules? In what circumstances do they apply?
  • Categories of priority contests:
    • Prior Legal vs Later Legal
    • Prior Legal vs Subsequent Equitable
    • Prior Equitable vs Subsequent Legal
    • Equitable vs Equitable
    • Mere Equities
• How are the common law priority rules relevant to Torrens Land? How do we approach priority disputes over Torrens Land?
  • Resolving disputes between unregistered interests or where an exception to indefeasibility applies.
  • Applying Priority Rules to Torrens Land
    • Steps in resolving a priority dispute.
      • Step 1: Identify the relevant interests e.g. a tenant under a lease, a mortgagee, the interest of a purchaser under a contract for sale.
      • Step 2: Identify whether those interests are legal or equitable.
      • Step 3: Identify which interests are actually in competition with one another (cf subsequent slide).
      • Step 4: Apply the applicable priority rule.

First Interest (Earlier in Time)
Second Interest (Later in Time)
Who Wins?
Legal vs. Legal
Another Legal Interest
First in time
Legal vs. Equitable
Later Equitable Interest
Legal wins, unless negligent
Equitable vs. Equitable
Later Equitable Interest
First in time, unless merits favour later interest
Unregistered vs. Unregistered
Later Bona Fide Purchaser
Bona fide purchaser wins

• What does it mean to transact via a deed?
  • To transact via a deed means to execute a legally binding document that is signed, sealed, and delivered, often used for contracts requiring formalities, such as transfers of land or guarantees.
• Is it correct to say that Conveyancing Act s 23C means that an interest is valid because it’s in writing? Why/why not?
  • Equitable Interests - Conveyancing Act 1919 (NSW) s 23C
    • (1) Subject to the provisions of this Act with respect to the creation of interests in land by parol:
      • (a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent thereunto lawfully authorised in writing, or by will, or by operation of law,
      • (b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person’s will,
      • (c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person’s will, or by the person’s agent thereunto lawfully authorised in writing.
    • (2) This section does not affect the creation or operation of resulting, implied, or constructive trusts.
      • NOTE: Wills do not create equitable interests when they are drafted. They have no effect until the testator has actually died. S 23C just says that interests can be dealt with via a will.
• What is the short-term lease exception in s 23D(2)? When is it relevant?
  • Exceptions to Formality Rules
    • (a) Short-Term Leases (≤3 years)
      • Conveyancing Act s 23D(2): Short-term leases do not require a deed or writing if:
        • Best rent reasonably available is paid.
        • Lease takes effect in possession immediately.
        • Total term (including options) does not exceed 3 years.
• What does it mean to assess who has the ‘better equity’? In what circumstances might an equitable interest be postponed?
  • Equitable vs. Equitable Dispute → First in Time Unless the Later Interest Has a Better Equity
    • First in time prevails unless the later interest has stronger merits (Breskvar v Wall (1971) 126 CLR 376).
    • Consider:
      • Notice – Did the later equitable owner have notice of the earlier one?
      • Conduct – Did the earlier equitable owner act negligently?
• What is the function of Real Property Act s 43A? What does it mean to have an immediately registerable dealing?
  • Real Property Act 1900 s 43A protects unregistered interests from being defeated by later registrations if:
    • The interest was taken bona fide.
    • The party gave value.
    • The dealing was immediately registrable.
  • Section 43A
    • (1) For the purpose only of protection against notice, the estate or interest in land under the provisions of this Act, taken by a person under a dealing registrable, or which when appropriately signed by or on behalf of that person would be registrable under this Act shall, before registration of that dealing, be deemed to be a legal estate.
    • (2) No person contracting or dealing in respect of an estate or interest in land under the provisions of this Act shall be affected by notice of any instrument, fact, or thing merely by omission to search in a register not kept under this Act. (i.e. charges recorded on on the Corporations Act register)
    • Applies only between settlement and registration!
      • Before settlement, the party will not be protected from notice.
      • After registration, the party will have the benefit of indefeasibility under s 42, and s 43A is no longer relevant
    • Interpretations
      • The ‘Hardie-Taylor’ view:
        • Hardie J in Courtenay v Austin [1962] NSWR 296;
        • Taylor J in IAC (Finance) Pty Ltd v Courtenay (1963) 100 CLR 550
      • The ‘Kitto’ view
        • Kitto J in IAC (Finance) Pty Ltd v Courtenay (1963) 100 CLR 550
  • Requirements
    • 1. Must be bona fide: Diemasters v Meadowcorp (2001) 52 NSWLR 572
    • 2. Must have given value: Westpac Banking Corporation v Ollis [2008] NSWSC 824, [49] – [56]
    • 3. Prompt Lodgment:
      • The dealing must be lodged promptly or within a ‘reasonable time after settlement’ (Courtenay v Austin).
      • The protection is “not everlasting” and does not assist those “who make no effort to get the protection of registration” (Diemasters).
      • See also comments in Finlay v R & I Bank of WA (1993) NSW ConvR 55-686.
    • 4. Must not have had notice: Drulroad v Gibson (1992) NSW ConvR 55-637
      • Includes constructive notice – so if the purchaser/mortgagee would have discovered the interest had they undertaken the proper pre-completion searches then they will not have the protection of s 43A.
      • Notice acquired before or at settlement will deprive a party of the benefit of s 43A.
      • Notice received after settlement, but before registration, will not prevent a party from relying on s 43A.
      • Notice acquired after registration is irrelevant because of immediate indefeasibility under s 42.
    • 5. Must have a “dealing registrable”: two key requirements

Additional practice question for in class discussion only
Alison recently purchased a property in Moree, where she was hoping to launch an innovative online legal consultancy. To fund this venture, she turns to her old law school friend, Will, for a loan. Will agrees and provides Alison with 30,000. Karen owns the neighbouring farm with a large barn just behind Alison’s property, but it is difficult to access through a patch of woodlands that has grown across her property. The right of way isn’t registered, but Karen immediately begins using the right of way, driving across Alison’s paddock in her large 4WD.
As Alison’s business continues to flounder, her debts mount, and she faces increasing pressure from various creditors. Desperate to resolve her financial woes, she decides to sell her property. The property is listed online, where it catches Daisy’s eye. Captivated by the property’s potential to have multiple holiday homes built, Daisy agrees to purchase it without a physical inspection. Registration has not yet occurred but is imminent.

• a) What is your advice to Will, Karen, and Daisy? (Hint* set out your answer as a priority dispute as practised in class.)

• b) Would your advice change if Daisy’s interest was already registered?

• Will

  • Unregistered mortgage (Unregistered Equitable Interest)
  • First in time
  • Does s 43A apply?
    • Elements
      • 1. Purchaser for Value:
        • Loaned for 250k
      • 2. Registered Interest or Pending Registration:
        • Capable of registration, written mortgage
      • 3. Absence of Actual Knowledge:
        • Unknown on the facts whether anyone had any notice
        • Constructive or imputed notice is insufficient (cf Bahr v Nicolay (No 2) (1988) 164 CLR 604).
      • 4. Unregistered Interest Must Not Be Lodged Prior to Settlement:
        • If an unregistered interest is already lodged with the Land Registry before the purchaser’s registration, they may not be protected.

• Daisy

  • Purchaser’s equitable interest under a contract for sale (Pending Legal Interest )
  • No factual notice of any interests
  • Under s 43A RPA, an unregistered legal interest is deemed legal before registration only if the buyer meets the statutory conditions (IAC v Courtenay (1963) 110 CLR 550):
  • s 43A Requirements:
    • Purchaser for value ✅ Yes, Daisy paid consideration.
    • Pending registration ✅ Yes, her transfer is imminent.
    • No actual knowledge of unregistered interests ✅ No evidence she knew of Will’s mortgage or Karen’s right of way.
    • Dealing is registrable ✅ Yes, transfer of ownership is registrable.
  • Daisy is protected under s 43A, meaning her legal interest will defeat Will’s mortgage and Karen’s right of way.
    • Will and Karen lose their equitable claims once Daisy is registered (Westpac Banking Corporation v Ollis [2008] NSWSC 824).

• Karen

  • Easement or restrictive covenant

  • No registration, no luck

  • Step 1: Identify the Competing Interests

    • Determine the types of unregistered interests:
      • Unregistered mortgage
      • Equitable lease
      • Purchaser’s equitable interest under a contract for sale
      • Easement or restrictive covenant
    • Chronology of interests:
      • Establish the date of creation of each unregistered interest.
      • Identify if any party had notice of the earlier interest.

  • Step 2: Determine Whether the Interests Are Equitable

    • Legal vs. Equitable Interests
      • Legal interests (Real Property Act 1900 (NSW))
        • s 43A,
      • Registered interest (RPA s 41)
      • Short-term leases ≤ 3 years (Conveyancing Act 1919 (NSW) s 23D(2))
      • s 43A may upgrade an unregistered interest to a deemed legal interest before registration.
    • Equitable Interests (Unregistered Torrens Interests)
      • Interests in writing (Conveyancing Act 1919 (NSW) s 23C(1)(a)).
      • Interests enforceable through part performance (s 23E; Maddison v Alderson).
      • Purchaser’s interest under a signed contract for sale.
      • Equitable lease under Walsh v Lonsdale (1882).
      • Vendor’s lien (right to be paid outstanding purchase price).

  • Step 3: Apply the Priority Rules for Unregistered Interests

    • Equitable vs. Equitable: First in Time Rule
      • General Rule: First in time prevails (Qui prior est tempore potior est jure) – Breskvar v Wall (1971)
      • Exception: Later equitable interest may prevail if it has a better equity.
      • Test for a “Better Equity” (Breskvar v Wall; Latec Investments v Hotel Terrigal)
    • Did the later interest holder have notice of the earlier one?
      • If they had actual, constructive, or imputed notice, the earlier interest prevails.
      • Hunt v Luck (1902) – Constructive notice from occupation.
    • Did the earlier interest holder act negligently or contribute to its own postponement?
      • Negligence – Northern Counties Fire Insurance v Whipp (1884)
      • Failure to protect the interest – Walker v Linom (1907)
    • Was the later interest obtained in bad faith?
      • Bona fide purchaser for value without notice prevails (Pilcher v Rawlins (1872)).

  • Step 4: Does s 43A Apply? (Protects some unregistered interests)

    • Statutory Protection for Unregistered Interests – Real Property Act 1900 (NSW) s 43A
      • Converts an unregistered interest into a deemed legal estate for priority disputes.
      • Protects bona fide purchasers from unregistered equitable interests.
      • DOES NOT protect against fraud (RPA s 42 fraud exception).
    • Elements of s 43A Protection (IAC v Courtenay (1963); Taleb v NAB (2011))
      • Purchaser for Value – Must provide valuable consideration.
      • Registered Interest or Pending Registration – Interest must be registrable under the Torrens system.
      • Absence of Actual Knowledge – Constructive or imputed notice does not matter (Bahr v Nicolay (No 2) (1988)).
      • Must Have a “Dealing Registrable” – Interest must be immediately registrable (IAC v Courtenay).
    • Exceptions to s 43A Protection:
      • If the purchaser had actual knowledge of an unregistered interest before settlement (Mercantile Credits v Shell (1976)).
      • If the unregistered interest was lodged before settlement.
      • Fraud (RPA s 42).

  • Step 5: Remedies for a Disadvantaged Interest Holder

    • Proprietary Remedies
      • Constructive trust – If denying the interest would be unconscionable (Baumgartner v Baumgartner).
      • Vendor’s lien – If the seller hasn’t been paid.
    • Personal Remedies
      • Equitable compensation – If loss is suffered (Ancient Order of Foresters v Lifeplan (2018)).
      • Specific performance – If the contract is enforceable.
    • Injunctions or Caveats
      • Caveats prevent dealings (Real Property Act 1900 (NSW) s 74F).
      • Injunctions can stop fraudulent transfers

Week 6: Co-Owners

Discussion Questions
In class practice problems for class discussion only
2. Katy, Sadie, Monica and Candy have been close friends since primary school. While at university together in 2020, the young women decide to purchase a unit as joint proprietors in a new apartment complex in Mortdale NSW. They all contribute equally to the purchase price of 200,000.
After Katy gives Monica the money, a signed transfer is prepared and lodged for registration. Katy then registers her interest.
Sadie, who has been engaged to her partner Andre, finally gets married. Andre decides that he would like to purchase Monica’s original share of the property from Katy. The transfer is registered.
Unfortunately, Sadie dies. As Sadie’s surviving spouse, Andre claims Sadie’s share of the unit. Katy and Candy contest his claim.
a) What is the relationship between the remaining tenants? What are their fractional interests?
b) Will Andre’s claim succeed? Explain your answer.
3. Noah and Bailey are close siblings who decide to start up a business together. They look around for the ideal investment opportunity and end up purchasing a quaint little block of land perfect for their floristry business. The property is purchased as a partnership asset, and the Transfer states they are purchasing as joint tenants. The purchase price is 20,000.00 by painting the house.
Sam also leases part of the property to Bec.
Harry and Sam decide to end the relationship. Harry has now demanded that the property be sold and that the proceeds be split evenly between them.
Advise the parties in relation to the following:
a) Can Harry force Sam to sell the property? What share of the proceeds is Harry entitled to?
b) Assuming the property is sold, can Sam claim an amount for the cost of the renovations? Does Sam have to account to Harry for the rent that she received from Bec?
c) Can Harry claim an allowance for occupation rent?
d) If Sam died suddenly, before any application for an order for sale, can Harry claim ownership of the house?

Week 7: Strata

Tutorial Question
Jack Bauer is the registered proprietor of lot 317 at SP93826. Jack’s apartment is on the top floor (Level
7) of one of three buildings that comprise the apartment complex. There is a shared, interconnected car
park underneath all three buildings, and Jack has one private car parking space within this. Jack has
recently purchased the newly updated Tesla Model 3, an electric vehicle, and is interested in finding a
suitable EV charging solution for his lot.
There is currently no shared EV charging infrastructure in the building; however, two lots already have
personal EV chargers that were installed during the construction of the building in 2019, which pre-
dates the establishment of the Owners Corporation and the development of the applicable by-laws. No
EV charger has been installed in the building since the by-laws came into effect.
Jack’s car park is conveniently located immediately adjacent to the bottom of the elevator shaft on B2.
This is particularly beneficial as all the electrical risers (the cupboards where each apartment’s electricity
meters are placed and through which electricity supply cables run from the Main Electricity Supply room
on B1) are also situated alongside the elevator shaft. The risers and the conduits through the cement
floor plates where the electrical supply cables run currently have space to have an additional cable from
Jack’s meter to his car park so that he could have his own personal EV charger. Eventually, however,
other apartments would have no capacity to run electrical cables through the risers to their own car
parks without substantial building works. The entire strata plan has over 300 apartments, and only 40
of them would likely be able to have such an installation before building upgrades and structural work
would be required.
Jack organises some site inspections and quotes from certified, insured, and reputable EV charger
installers. They all advise that the installation will involve running a single electrical cable from Jack’s
meter on Level 7 through the existing conduits already passing through each cement floorplate within
the electrical risers. Very limited work will be required on B2: the electrical cable can run along existing
electrical roof trays in B2 to reach Jack’s car park, located one space away from the elevator shaft,
resulting in minimal visible alterations to the common property. During the site inspection, each
electrician assessed the building’s Main Switch Room, confirming that no work would be required for
the main building’s electricity supply: there was ample capacity for the building already provisioned.
The potential impact to the common property would thus be the addition of a new circuit switch next to
Jack’s electricity meter in the Level 7 riser and then a visible cable running through the existing conduits
all the way down to B2 and then along the pillar where the charger would be fixed (see attached photo).
The lowest quote that Jack received was for a total installation cost of 745
for the Tesla Wall Charger.
Jack is keen to proceed with the installation and comes to you for advice and help in drafting a
letter to the Strata Committee to apply for permission to install the Tesla Wall Charger as
described.
To help you advise Jack, consider the following:

1. Do the current by-laws (see Canvas) permit lot owners to install EV chargers? Does
   Jack need any kind of approval to install an EV charger as described? If so, what
   approval mechanisms are possible, and which one is best suited to this situation?
   Tip: Think about the different ways that changes can be made to lots and common property
   and where Jack’s proposal fits within those categories.
2. What concerns or considerations might the Committee have in relation to the
   installation of personal EV chargers in the complex? What should they be aware of?
   What other solutions might be available or preferable to approving Jack’s personal
   installation?
3. Jack has heard from a friend that EV chargers can be considered ‘sustainability
   infrastructure’. He’s unsure what that means or if it might help his application if the
   Strata Committee is not supportive.

Week 8: Leases

Tutorial Held in Week Commencing: 7 April 2025
In class practice problems only

• Ted Lasso, known for his unexpected journey from American football coach to leading AFC Richmond in England, decides to embark on a new venture in Sydney, Australia, following a sabbatical to explore his passion for coffee and biscuits. In June 2024, Ted discovers an appealing yet vacant shopfront on Crown Street in Surry Hills, a property owned by Rebecca Welton, who had coincidently diversified her investments into Australian real estate after her experience owning AFC Richmond.
  Eager to bring his dream café, ‘Ted’s Biscuits & Brews’, to life in the heart of Sydney, Ted reaches out to Rebecca to discuss the possibility of leasing the space. Their previous professional relationship, built on mutual respect and friendship, paves the way for a swift agreement. The following day, Rebecca sends Ted an email with an attachment titled ‘Occupancy Agreement for Crown Street Premises’, outlining the terms they had agreed upon. The document reads:
  Occupancy Agreement for Crown Street Premises:
  122 Crown Street, Surry Hills, Sydney
  The parties agree to the following terms:
• The property owner grants the occupier the right to use the premises, including a set of keys and code for the security system. Any changes to the locks or security system require the owner’s prior approval.
• The occupier agrees to pay a monthly occupancy fee of AUD $7,500 on the first day of each month, commencing 1 July 2024 and concluding on 30 June 2026.
• The owner retains a spare set of keys and reserves the right to enter the premises for inspection with at least 24 hours’ notice.
• The occupier is responsible for maintaining the premises in a clean and orderly state and is authorised to use the premises solely as a café and bakery.
  Ted signs the agreement enthusiastically and returns it via email to Rebecca, who responds with a message full of encouragement and anticipation for the café’s success. Ted moves in and begins operations, quickly endearing himself to the local community with his unique blend of biscuits and coffee. Rebecca visits the café soon after opening and congratulates Ted on his excellent coffee and wishes him all the best.
  In September 2024, however, Ted is unexpectedly confronted with a legal notice from Harbourfront Developments Pty Ltd, claiming to have recently acquired the building at 122 Crown Street. The notice states that Ted’s ‘occupancy’ is not recognised as a valid lease and demands he vacate the premises by the end of October 2024 for a redevelopment project. Ted realises that he never received a signed copy of the occupancy agreement from Rebecca.
  Ted comes to you for advice.
• Considering the details of the agreement between Ted and Rebecca, should Ted’s right to use the premises be classified as a lease or a licence?
• Is Harbourfront Developments Pty Ltd correct to assert that Ted’s occupation of the premises is not valid due to the absence of a signed agreement with Rebecca?

1. Is this a lease or a licence?
   To determine whether the agreement creates a lease or a licence, apply the three essential elements of a lease (see Radaich v Smith (1959) 101 CLR 209):

A lease must provide:

Exclusive possession

For a certain term

In the proper form (writing if required by statute)

Let’s apply each.

✅ 1. Exclusive Possession
The agreement grants Ted keys and security codes, and he is the only one using the premises for the café.

Rebecca retains a spare key and a right of inspection, but this alone does not defeat exclusive possession — landlords often have that right in a lease (Swan v Uecker; Radaich v Smith).

The café is run solely by Ted, with no evidence of shared or limited access.

🡺 Ted enjoys exclusive possession.

✅ 2. Certainty of Term
Agreement states: 1 July 2024 to 30 June 2026 – clearly a fixed, definite term.

A lease must have a known start and end date — this does.

🡺 Fixed term is satisfied.

✅ 3. Form and Rent
The agreement is in writing, signed by Ted and returned by email, with express acceptance by Rebecca.

Ted agrees to pay a monthly “occupancy fee” of $7,500 — this functions as rent (label doesn’t matter: see Radaich).

The term is less than 3 years, and Torrens registration is not required (see Conveyancing Act 1919 (NSW) s 23D(2)).

If it takes effect in possession, is for best rent, and is for less than 3 years, it creates a legal lease even if unregistered.

🡺 Proper form is satisfied.

🔍 Labelled “Occupancy Agreement” — does it matter?
No. The label does not determine the legal nature of the agreement (see Radaich v Smith, Windeyer J).

What matters is the substance — exclusive possession, fixed term, rent.

✅ Conclusion on Part 1:
Despite the label, the agreement between Ted and Rebecca satisfies all requirements of a lease. Ted has a valid legal lease that creates a proprietary interest in the land enforceable against third parties.

2. Does the absence of Rebecca’s signed copy invalidate the lease?
   Let’s address this under formalities (Conveyancing Act 1919 (NSW)):

🧾 Statutory Requirements:
Under s 23D(2): A legal lease for less than 3 years may be created orally, in writing, or by deed, without registration, if:

It is for best rent

Takes immediate effect in possession

For less than 3 years

And not by way of fine or premium

✔️ Ted’s arrangement meets all of these conditions:

Lease commenced 1 July 2024, he moved in and began trading (takes effect in possession)

The term is exactly 2 years

There is rent ($7,500/month)

There’s no fine/premium

🡺 A legal lease exists, even without mutual signatures or registration.

✅ Conclusion on Part 2:
The absence of a signed copy from Rebecca does not invalidate the lease. The statutory requirements for a legal short-term lease have been met, and Ted’s occupation is legally protected.

🔚 Final Conclusion:
➤ Ted has a valid lease, not a mere licence.
➤ Harbourfront Developments is incorrect — the lease is enforceable and binding on successors in title, such as Harbourfront, because Ted holds a legal leasehold estate, and they acquired subject to his proprietary interest.

• Hermione owns a small terrace house in Paddington. Harry, a friend of Hermione’s is looking for a place to live. Hermione has been transferred to her company’s London office for a short work assignment and is keen to rent her property to Harry for the three months that she will be gone. Hermione is very particular about her property. Hemione sends Harry an email that outlines the following conditions:
• The agreement is headed ‘licence agreement’.
• It is for a period of three months.
• It requires Harry to pay a ‘licence fee’ of $500 per month.
• Under the agreement, Hermione agrees to arrange for the cleaning of the unit and has a right to keep a key.
• Being very picky, and having some precious items, she arranges to have these locked in one of the bedrooms. Under the agreement, Harry is not able to access this room.
• He cannot keep pets; have friends to stay over; or cook fish (she doesn’t like the smell). He also cannot bring any possessions other than what he can fit in two suitcases.
• The agreement concludes with the statement: ‘I, Harry, agree that this agreement gives me a licence, not a lease’.
• No further document is produced to sign, but Harry agrees and moves in.
  One month later, Hermione is offered a permanent position in London and she accepts it immediately. She decides to sell the terrace house to Ron. The contract for sale is silent about any rights of Harry. On a zoom call to finalise the contract, Hermione tells Ron about the licence. Ron says to Hermione: ‘You can trust me to look after Harry’s interests. He can stay for as long as he needs’. Hermione communicates this to Harry.
  Settlement is expedited and Ron is the new registered proprietor. He immediately informs Harry that he has to move out. Harry still has 7 weeks of possession remaining, according to the agreement, and nowhere to go.
  Harry comes to you for advice:
  Is the agreement between Hermione and Harry a lease or a licence?
  While there’s a clear term and rent, the lack of exclusive possession — due to strong ongoing control by Hermione — makes it most likely a licence, not a lease.

The agreement is designed to preserve Hermione’s control, and that undermines the idea that Harry has a legal right to occupy the property exclusively.

So: Harry holds a personal licence, not a lease.

✅ 2. Is the licence enforceable against Ron (new owner)?
No.

A bare or contractual licence is a personal right, enforceable only against the person who granted it (Hermione).

A licence does not create an interest in land — and therefore does not bind third parties, including purchasers like Ron.

Even though Ron verbally reassured Hermione that he’d look after Harry’s interests, this does not create a binding agreement between Ron and Harry. There’s:

❌ No privity of contract

❌ No estoppel (yet — unless Harry relied and changed position)

❌ No proprietary interest

✅ 3. What are Harry’s remedies (if any)?
As a licensee, Harry has no proprietary right to stay.

Ron can legally revoke the licence, even if unfair.

Harry could try to argue an equitable estoppel based on Ron’s promise — but he would need to show reliance and detriment (e.g. declined another rental because of the promise).

See: Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387

⚠️ Estoppel is difficult to prove here because the conversation happened between Hermione and Ron, not between Ron and Harry, and Harry’s reliance was limited.

• Eliza owns a three-story building in Parramatta. It’s a bit run down, but she thinks she can make some money as a landlord. She leases out two stories to new businesses.
  On the first floor is Gina. She makes jewellery from clay. These are very popular on ETSY, which is her main marketplace.
  On the middle floor is Finn. He intends to set up a small business making handmade quilts and allied items for home decoration. He runs his business from the apartment and has outfitted it as a small showroom.
  Eliza has retained the third floor. She is frequently away on business.
  Each of the tenants sign lease agreements with Eliza. These are expressed to be leases for a fixed period of three years. The leases are registered. Each of the agreements contains the following clauses:
  (2) Eliza will pay the water, but reserves the right, on two days’ notice, to enter and read the water meter;
  (3) Rent is $5000 per month.
  (6) The tenants may not undertake any other activities on the premises other than what has already been agreed to;
  (9) The lessor is entitled to keep keys to the properties but will only enter ‘if necessary’.
  (14) The lessee is responsible for all repairs.

After several months, all is not going very well. It seems that there is indeed a demand for ceramic jewellery. So, Gina has bought a small potting wheel, which enables her to make items faster. She is also expanding into mugs. The wheel is quite noisy and can be clearly heard on the middle floor by Finn. She has also had to purchase a large kiln. Whenever she uses it, Finn has to turn on his air conditioner as the heat transfers into his floor.
Eliza has gone away on a lengthy business trip. In her absence, water pipes on the top floor have begun to leak. The leak is getting worse, and the water is flowing into Finn’s floor, and downward to the ground floor. On at least two occasions the water has damaged expensive fabric bought by Finn to make quilts.
In her absence, Eliza has also given instructions that renovations are to begin on the exterior of the building. Scaffolding is put up. The scaffolding covers the signs to both Finn’s and Gina’s premises. They cannot be seen by passers-by. Business is not good, and they blame it on the scaffolding. Work is also not progressing very quickly on the renovations to the exterior.

a) Advise Finn whether he has any recourse on the grounds of the continual noise. If so, against whom?
b) Advise Finn and Gina as to whether they have any recourse against Eliza for damage and/or loss of income.

Week 9: Leases II

Additional in class problem (for tutorial 8 discussion only)
In the alternative using the same facts as our prep-preparation question:

Monica decides the shop is not doing well enough. She wants out of the lease, but has no grounds, so she asks the landlord if she can assign the lease to Penny. The landlord agrees. The assignment of lease is registered. The landlord starts turning up every day and expecting free coffee and cake. Although this is not a lot of money each time, it does start to add up.

a) Does Penny have to provide this?
b) Would your answer differ if the assignment of the lease was unregistered?

2. In January 2024 Armond entered into a four-year lease over residential property in Darlinghurst. The landlord, Tanya is an old family friend. The unit is located above a nightclub that is especially busy on Friday and Saturday nights as a live music venue. The lease is registered.
   The lease contains the following clauses:

• The rent will be payable on the first Thursday of every month.
• The rent is $5500.00 per month.
• Only one person (the tenant) may reside at the property.
• No pets are allowed.
• The property may not be sub-let without the approval of the landlord.
  In February 2024 Armond lost his job. He did find some temporary part-time work as a dog-walker while he looked for other work, but his income level was significantly reduced. Because of this, he found it difficult to pay his rent. In May 2024 he falls behind in his rent but catches up again in August 2024.
  In October 2024 he falls behind again but catches up by December 2024. When he again fails to make the rental payments on time in February 2025, Tanya’s patience runs out. Tanya is also unhappy that Armond has continued his dog-walking business despite finding a full-time job and that he frequently has dogs at the property. She has also recently discovered that Armond has had an old friend from university, Shane, staying with him in the aftermath of his recent divorce from his partner Rachel.
  Tanya now wishes to terminate the lease.
  a. Advise Tanya whether she can evict Armond and the best way to do so. What damages, if any, will Tanya be entitled to?
  The first issue is whether Armond holds a valid lease. Whether an arrangement constitutes a lease or licence depends not on the label but on whether exclusive possession is granted (Radaich v Smith). Armond resides in the premises, pays rent, and appears to have exclusive control of a defined unit with no retained landlord access. Under these facts, he holds a lease (Swan v Uecker).
  To be valid at law, the lease must have certainty of term and comply with statutory formalities. If the lease is under three years, it is valid without writing or registration if it takes effect in possession, is at best rent, and involves no fine or premium (CA s 23B(1)). In this case, there is no indication the lease exceeds three years, and the arrangement appears to have taken effect in possession with rent paid. Accordingly, Armond holds a valid legal lease.
  Tanya may seek to terminate the lease either at common law for repudiation or through statutory forfeiture. Under the common law, a lease may be terminated for repudiation or fundamental breach. In Shevill v Builders Licensing Board, the High Court held that persistent rent default does not amount to repudiation unless the term breached is essential or the lessee evinces an intention not to be bound. While Armond has defaulted three times in one year, he caught up each time, indicating an intention to continue performance. Unless the lease designates timely payment of rent as an essential term, termination on this ground is unlikely.
  Tanya’s better course is to rely on the statutory forfeiture process. Under CA s 85(1)(d), a right of re-entry is implied where the tenant has failed to pay rent for at least one month. For other breaches—such as alleged commercial use (dog-walking) or unauthorised occupation (Shane’s stay)—written notice must be served under s 129(1), specifying the breach and providing a reasonable time to remedy. The notice must comply with s 129(8), and the parties cannot contract out of this process (s 129(10)). Tanya should therefore issue a compliant notice under s 129(1) before attempting re-entry or seeking possession orders.
  Armond may apply for relief against forfeiture under CA s 129(9), even if Tanya completes forfeiture validly. The court has discretion to reinstate the lease and will consider whether the breach has been remedied, the tenant’s conduct, and whether forfeiture would be disproportionate. As Armond has consistently caught up on his arrears, the court may be inclined to grant relief on conditions.
  If the lease is terminated successfully, Tanya’s entitlement to damages depends on the nature of the breach. Where a lease is validly terminated for repudiation or breach of an essential term, the landlord may recover loss of bargain damages, including for future rent (Gumland Property Holdings Pty Ltd v Duffy Bros; Progressive Mailing House Pty Ltd v Tabali Pty Ltd). However, where termination occurs through contractual re-entry alone, and the breach is not repudiatory or essential, damages are limited to arrears and incidental costs (Shevill). On current facts, loss of bargain is unlikely, and Tanya will likely recover only unpaid rent and recovery costs.

b. Tanya is also concerned that as the unit is above the busy nightclub, it will be difficult to re-let. It had been vacant for almost 10 months before Armond took up the lease. Tanya therefore wishes to know if the property fails to lease for a similar length of time, whether she will be entitled to any higher level of damages.
Where a lease is terminated validly, Tanya is entitled to damages flowing from the breach, provided the loss is caused by the breach, is not too remote, and she has taken reasonable steps to mitigate loss.
If Tanya terminates the lease validly and the unit remains vacant for an extended period, she may attempt to claim future rent as damages. However, as noted, loss of bargain damages are only available if the lease was terminated for repudiation or breach of an essential term. That threshold is not clearly met here.
Even if loss of bargain damages are hypothetically available, the length of vacancy (10 months) would be subject to a strict mitigation requirement. Courts expect landlords to take reasonable steps to re-let the property. If Tanya cannot show that she actively attempted to re-let the premises and that the extended vacancy was not avoidable, she will not recover for that period.
Given that the property is located above a nightclub and was previously difficult to let, Tanya may have some factual basis to argue that the prolonged vacancy was foreseeable. However, damages beyond ordinary arrears will only be awarded where Tanya has actively mitigated and the loss was reasonably foreseeable as a result of Armond’s breach.

3. In May 2022, Roy invested in a charming suburban property located in Avalon Beach, nestled close to a much-loved nature reserve. After months of searching for the right tenant, Roy eventually entered into a lease agreement with Moss in September 2022, for a period of 3 years. The lease was registered with several specific clauses:

• The property must be kept in good condition, with Moss responsible for repairing any damage beyond normal wear and tear;
• Moss agreed to limit noise and visitors to avoid disturbing the serenity of the nature reserve;
• No pets were allowed unless Roy gave explicit written approval;
• The rental amount was established at $4400.00 to be paid on the 28th of every month;
• Moss was not permitted to engage in any form of business activity on the premises without Roy’s written consent;
• No sub-letting of the property was allowed under any circumstances.
  In mid-2023, after losing his job unexpectedly, Moss transformed one of the rooms into an art studio, where he began producing and selling artwork online, as well as holding art classes at the property, all without Roy’s permission. This led to increased traffic and noise, which upset the neighbours.
  Additionally, Moss brought a dog into the home for companionship, again without consulting Roy. While Moss managed to keep up with the rent initially, the extra expenses from his art business and new pet eventually led to him falling behind on rent in February 2024.
  To try and make ends meet, Moss began renting out a spare bedroom to tourists on a short-term basis; however, by the end of August 2024, the number of tourists to the region plummeted, and Moss struggled to find anyone interested. But Moss did manage to catch up on his rent.
  Around this time, Moss’s best friend, Jen, started visiting frequently to spend time with her sick brother, Richmond, who lived nearby. Jen often stayed overnight with Moss as Richmond didn’t have a spare bed. Jen is currently staying 3-4 nights a week in the spare room, and contributes some money to Moss’ electricity, water, and internet bills.
  Despite this, Moss fell behind on his rent again at the end of January 2025. Roy has been growing impatient, and the neighbours have reached out to him to complain about Moss’s actions. Roy comes to you for advice as he would like to consider evicting Moss.
  a) Advise Roy on whether he can evict Moss and the best way to do so. What damages might Roy be entitled to?
  b) Roy is concerned that the conditions required of a tenant (noise, guests etc) given the location of the property will make it different to re-let. It had been vacant for 6 months before Moss took up the lease. If it takes such a long time to find a new tenant again, will Roy be entitled to any higher level of damages?

Let’s revisit this question from last week:
2. Eliza owns a three-story building in Parramatta. It’s a bit run down, but she thinks she can make some money as a landlord. She leases out two stories to new businesses.
On the first floor is Gina. She makes jewelry from clay. These are very popular on ETSY, which is her main marketplace.
On the middle floor is Finn. He intends to set up a small business making handmade quilts and allied items for home decoration. He runs his business from the apartment and has outfitted it as a small showroom.
Eliza has retained the third floor. She is frequently away on business.
Each of the tenants sign lease agreements with Eliza. These are expressed to be leases for a fixed period of three years. The leases are registered. Each of the agreements contain the following clauses:
(2) Eliza will pay the water, but reserves the right, on two days’ notice, to enter and read the water meter;
(3) Rent is $5000 per month.
(6) The tenants may not undertake any other activities on the premises other than what has already been agreed to;
(9) The lessor is entitled to keep keys to the properties but will only enter ‘if necessary’.
(14) The lessee is responsible for all repairs.
After several months, all is not going very well. It seems that there is indeed a demand for ceramic jewelry. So, Gina has bought a small potting wheel, which enables her to make items faster. She is also expanding into mugs. The wheel is quite noisy and can be clearly heard on the middle floor by Finn. She has also had to purchase a large kiln. Whenever she uses it, Finn has to turn on his air conditioner as the heat transfers into his floor.
Eliza has gone away on a lengthy business trip. In her absence, water pipes on the top floor have begun to leak. The leak is getting worse, and the water is flowing into Finn’s floor, and downward to the ground floor. On at least two occasions the water has damaged expensive fabric bought by Finn to make quilts.
In her absence, Eliza has also given instructions that renovations are to begin on the exterior of the building. Scaffolding is put up. The scaffolding covers the signs to both Finn’s and Gina’s premises. They cannot be seen by passers-by. Business is not good, and they blame it on the scaffolding. Work is also not progressing very quickly on the renovations to the exterior.
This time:
a) Finn wishes to assign his lease to Brad. Eliza agrees. Brad moves in. What recourse, if any, does Brad have for the continual noise?
Further assume that when Brad enters into possession, he finds that Finn has damaged the wooden floorboards in the apartment. Brad has also decided to withhold rent because of Eliza’s alleged breaches.
b) Advise Brad whether he is liable for the damage to the floorboards. If so, does he have any recourse against anyone?
c) Can Brad withhold rent?

Week 11: Easements

Additional problem question for in class discussion only:
2. Margie owned a large lot in outer Sydney. On the back half of the lot was a house. In the 1970s Margie subdivided the lot into two. She sold the back half to Jim and the front half to Betty. Betty built a house on the front lot. Prior to the subdivision access from the house at the back of the lot to the road had been across the front half of the lot. After the subdivision and sales, Jim, the new owner, also accessed the road by crossing what is now Betty’s lot. Betty and Jim have been good friends and neighbours for many years. However, after very many years of friendship they recently had a falling out. As a result, Betty is now refusing to allow Jim to cross her lot to gain access to the road.

• Betty is now disputing Jim’s right of access over her lot, which raises the question of whether a valid easement of way exists. This is a positive, non-possessory right to use part of another’s land for access (not amounting to control of the servient tenement: Clos Farming Estates Pty Ltd v Easton (2002) 11 BPR 20,605). There are two distinct parcels: Jim’s back lot is the dominant tenement, and Betty’s front lot is the servient tenement (Re Ellenborough Park [1956] Ch 131), held and occupied separately (Real Property Act 1900 (NSW) s 47(7)). As no express easement appears to have been registered (RPA ss 46, 47; Conveyancing Act 1919 (NSW) s 88(1)), the question is whether an implied easement arose at the time of subdivision.
• Under the Wheeldon v Burrows (1879) 12 Ch D 31 doctrine, an easement may be implied where: (1) the use was continuous and apparent, (2) necessary for reasonable enjoyment of the land, and (3) existed prior to severance by the common owner. Here, Margie used the front part of the lot for access before subdivision, and Jim’s continued use after the sale supports that the access was both continuous and apparent. If the use persisted without interruption and was necessary for Jim’s reasonable use of the back lot, an easement may be implied (Olivene Pty Ltd v Olive Tree Holdings Pty Ltd [2003] NSWSC 956).
• An easement by prescription is unlikely, as such a right requires at least 20 years of open, continuous, and non-permissive use (Williams v STA (NSW) [2004] NSWCA 251), and the facts suggest Jim’s access was permitted informally due to their long-standing friendship. There is no evidence of a registered easement under s 88B of the Conveyancing Act, though the Supreme Court could impose one if reasonably necessary for effective use of Jim’s land and just and equitable to grant.
• While exceptions to indefeasibility may exist where an easement was omitted from registration, such as in Jea Holdings or Castle Constructions v Sahab Holdings, there is insufficient evidence here to establish an equitable right binding on Betty. If an easement is established, Jim may seek injunctive relief to prevent obstruction or require removal of barriers. The outcome will depend on whether a legal or equitable easement can be substantiated on these facts.
  Advise Jim whether he has an enforceable easement.
  In the alternative, the easement is registered, and Jim decides to move to a retirement village and sells his lot to Jesse. Betty takes an instant dislike to Jesse and refuses to allow Jesse to cross her lot to gain access to the road. Can that easement be enforced by Jesse against Betty?
  Further in the alternative, and assuming there is not an enforceable easement between Jesse and Betty, is there any other alternative mechanism that Jesse could try? One additional fact: at the rear of the back lot there is very small gate that gives access to a lane. Because this is a very old gate it is very narrow. It would be extremely expensive to modify the gate because on both sides there are large sandstone walls.

Week 12: Covenants

Pre- preparation question

• Corrine was the registered proprietor of an estate in fee simple. In September 1972, Corrine subdivided her land into 8 lots. The development was registered under s 88B of the Conveyancing Act 1919. Each of the lots was subject to the following covenant:
  “No temporary dwelling, caravan, privy, container, tent or sub-standard dwelling shall be brought onto the Lot”
  This covenant was referred to in all the advertisements and prominently displayed on the plan of subdivision.
  All the covenants were stated to benefit and burden each and every lot. The lots were all sold, and the transfer of each lot was made subject to the above-mentioned covenant. All the lots were sold at auction. Lot 1 was the last to sell.
  None of the original purchasers own the lots. Aurora, the current owner of Lot 3, has bought a second-hand run-down campervan and has parked it on her front lawn. The camper has been sitting there for so long that the weeds have grown around it. The current owner of Lot 1, Truman, is not thrilled about this eyesore and is concerned about the aesthetics of the neighbourhood. Truman has now come to you for advice.
• Can Truman enforce the covenant against the owner of Lot 3, Aurora?
• How would you go about enforcing the covenant if Corrine subdivided the land in 1959, instead? Is your advice the same?