Property Law a Final

LLB 220 PROPERTY & TRUSTS ALLB220COMPLETE LP 3-8EXAM NOTES

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CONTENTS PAGES

Lesson Plan #3 “Possession of Property” – possession, adverse possession page 3

Lesson Plan #4 “Legal Estates and Interests” – Absolute Fee Simple, Life Estates page 10

Lesson Plan #5 “The Origin and Nature of Equitable Interests” – Trusts, Legal and Equitable Interests, Estoppel page 14

Lesson Plan #6 “Conditional Transfers and Future Interests” – Contingent and Vested Interests, Alienation, Uncertainty, Perpetuities page 20

Lesson Plan #7 “Leases Licenses and Bailments” – Landlord rights and responsibilities page 27

Lesson Plan #8 “Servitudes over Property” – Restrictive Covenant + Easement page 41

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Lesson Plan #3Topic: “Possession of Property”

POSSESSION OF PROPERTY

Possession of land creates an interest in the possessor enforceable against the whole world, except someone with a superior right to possession (ownership)

Two components: Animus possidendi (an intention to possess)

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Factum (physical control)

Types of possession: Possession in law : possessory title and physical control

Right to possession: constructive possession

Custody : actual and physical control (de facto possession) and intention to control

Constructive possession: Where one has a right to possession, but is currently not in possession

o Immediate possession: it is a right to possession, to enjoy it nowo Postponed possession: It is a right to enjoy in the future.

Constructive possession includes principal, employer, master

Actual possession: Signifies physical control, without possession in law.

De facto possession: Includes agents, employee and servant, these meet the requirements of possession but law does not

recognize it.

Test of control: If you can direct someone how and when they perform the service then they don’t have custody, rather they

are a contractor who has possession.

Requirements to extinguish the documentary owner’s title: The possession must be open, not secret, peaceful, not by force and adverse, not by consent of the true

owner. A claimant to possessory title must establish actual possession and an intention to possess.

Finders: An Exploration of Possessory Title

Armory v Delamirie – finder’s keepers principle, the finder of an object is entitled to possess it against all but the rightful owner. Although note usually prior possession beats later possession.

When Can a finder keep what they found?

Waverley BC V Fletcher: Where an article is found in or attached to land, as between the owner or lawful possessor of the land and

the finder of the article, the owner or lawful possessor of the land has the better title. o An object in the land ‘is to be treated as an integral part of the realty as against all but the true

owner’o Removal of an object in or attached to the land would normally involve interference with the land

and may damage ito Law looks for substitute owner if the object is in the land

Where an article is found unattached on land, as between the two, the owner or lawful possessor of the land has a better title only if he exercised such manifest control over the land as to indicate an intention to control the land and anything that might be found on it.

Treasure Trove: When gold or silver is intentionally deposited in the ground it will go to the Crown unless the original owner

can be found. (Waverly BC v Fletcher)Page 4 of 50

Protection of Possessions

Penfold’s Wines v Elliot Case

Penfolds sold wine on the condition that the buyer returns the bottles. Elliott’s brother passed on the empty bottles, and he filled the bottles with his own wine and sold it. The claim by Penfolds was conversion.

The difference between conversion and trespass is physical interference with someone else’s right of possession, conversion is the interference with someone’s ownership. Right to immediate possession is not enough to constitute trespass. For conversion it is.

Penfolds has the right to immediate possession, Elliott is just the custodian, the right to possession lies with the brother.

Trespass: A person who brings an action of trespass to goods must be in actual possession of them at the time of the

alleged trespass or entitled to immediate possession. Trespass to goods is any direct infringement of the possession by another of corporeal personal chattels by

means of an asportation or other physical invasion; whether it is intentional or not. The remaining of a person on land after the expiry of permission. If trespass is so extensive it may give right

to adverse possession. Concerned in protecting actual possession. Bailment

o Is the delivery of chattels by the owner or a person with a right to possess, into the possession of another person upon an expressed or implied promise that the chattels will be redelivered or dealt with in a stipulated way – Penfolds

Conversion: This is the unauthorised assumption of the powers of the true owner. The essence is dealing with a chattel in a manner repugnant to the immediate right of possession of the

person who has the property of special property in the chattel.

Detinue: Used when someone withholding goods True owner must be in possession or have an immediate right to possession The defendants refuse to return the chattel on demand.

Innominate Action on the Case True owner must have possession or an immediate right to possession or a right to future possession

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EXAMPLE

X holds a freehold estate in land and does not live there. Y comes onto the land and occupies the land for three years. Y has occupied the land and is in complete control. After three years, X discovers Y’s occupation and seeks to have him removed.

Y’s possessory title will be defeated by X’s proprietary title. Y may have an enforceable title against other claimants other than X. Y can claim adverse possession by proving a continuous adverse possession period of at least 12 Years.

permanent damage.Negligence:

If the person has breached a duty of careJus Tertii

Defendant claims third party has better claim than plaintiff to possession and title

Remedies: Remedies include equitable remedy of discretionary injunction due to the inadequacies of the legal remedy

of damages.

Adverse Possession

Criteria The possession must be open, not secret; peaceful, not by force; and adverse, not by consent of the true

owner, otherwise it will not extinguish the documentary owner’s title – Mulcahy v Curramore Elements

o Factual Element ‘the character and value of the property, the suitable and natural mode of using it, the

course of conduct which the proprietor might reasonably be expected to follow with due regard to his own interests’: Lord Advocate v Lord Lovat (1880)

o Mental Element ‘Intention, in one’s own name and on one’s own behalf, to exclude the world at large,

including the owner with the paper title... so far as is reasonably practicable and so far as the processes of the law will allow’: Powell v Mcfarlane (1979)

o Intention: There must be an intention to possess. ie to exclude the whole world from the land including

the true owner and to have a degree of exclusive physical control of the land in question (Bills v Fernandez-Gonzales)

Open: possession would need to be noticed by a documentary owner reasonably careful of his interests

Peaceful: Force can be used to gain possession but not to maintain it. Permission: There can be no adverse possession if permission was given by the documentary

owner and thus time will not run unless it is revoked (where time will begin to run from the revocation). If permission is given during the limitation period then time stops

Limitation Act NSW 1969

S 54 (4) states that an acknowledgment by the plaintiff must be in writing and signed by the maker otherwise it will have no effect.S 27 (2) Limitation period: 12 years from when new possessor commencing adverse possession

Relevant Factors: Shaw v Garbutt

o Enclosure of the land (ie putting up a fence). Strongest possible evidence o Working on the property. o Ousting all others from the land o Intention of actual payment of rates and taxes for the lando Can survive between long intervals of non use.

Seddon v Smitho Erecting “No tesspassing” sign on land

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Mulcahy v Curramoreo Factual possession – present control of the thing, exclusion of others

Building on the property Occupying a property or residing on it Fencing the property Allowing cattle to ageist on it

Newington v Windeyero Maintaining trees and gardenso Paying rates and taxeso Blocking access so other cannot use land

Possession must be inconsistent with the purpose for which the documentary owner and titleholder intended– Leigh v Jack

Abandoning possession

Time ceases to run if the adverse possessor abandons possession. Mere non use is not conclusive (Nicholas v Andrew) If abandonment occurs before limitation period documentary holder cannot regain possession as title is

extinguished (Mulcahy v Curramore) Abandonment after the limitation period: has a right over land enforceable against the whole world,

whether or not possession continues (Allen v Roughley (1955))

Recovery by Documentary “aka first/actual” Owner

Within the limitation period the documentary owner must resume possession with the intention of possessing. This is usually done by turning out the possessor (Randal v Stevens). Commencing court proceedings usually stops time running or removal of fences, structures or entry and survey of the property over several days (Hodgson v Thompson (1906))

Even if repossession lasts for a very short period of time, time will still run from the beginning. The fact that the adverse possessor’s threats of violence prevent the documentary owner from physically

retaking possession does not excuse less than physical retaking, the alternative is to take court proceedings: Shaw v Garbutt (1996)

Onus proving acquisition lies on possessor on the balance if probabilities: Cawthorne v Thomas (1993)

Limitation of actions

Limitations Act NSW 1969 o Chattels: s 14(1)(b), s 21 – Six yearso Land: s 27(2) – Twelve yearso Crown Land: s 27(1); s 170 Crown Lands Act 1989 (NSW) – Thirty years (S 170 of the Crown Lands

Act removes most crown land from the operation of adverse possession)

12 years starts to tick when the documentary owner cause of action begins to accrue. Where another person begins to take possession of the land adversely from the documentary owner

An adverse possessor cannot assign, give or devise away his or her possessory interest.

Special Problems

Trust Property

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o An adverse possessor (X) cannot take possession from A against the holder of future interest (B): s 31

o When A dies and B has the interest, the limitation period will then begin. The clock must re-start against the tenant in remainder on the death of the life tenant

o Property held on trust is subject to adverse possession: s 47. The beneficiary holding future interests may never claim property

Disabilityo If documentary owner is under a disability, the running of the limitation period is suspended during

the disability. Disability includes under 18, reason by disease, impairment or physical or mental condition, restraint or war: s 52(1) of the Limitations Act NSW 1969

Fraudo Time does not begin to run where the documentary title owner’s cause of action or the identity of

the adverse possession is fraudulently concealed: s 55 Limitations Act. Fraud requires consciousness that what is being done is wrong: Seymour v Seymour (1996) Period also extended by an extra 3 years if the disability would result in time running out.

Series of possessors:

o It is possible to combine the period of occupation of a series of trespassers who do not derive title from each other – provided the possession is continuous and adverse in nature. SHAW V GARBUTT

o Where a series of adverse possessors claim through each other the possessory title will be acquired by the person in possession when the statutory period expires.

o If there are a series of independent trespassers whose cumulative length of their possession exceeds the limitation period. The documentary owner’s title is extinguished (s 38(2) Limitation Act). The final trespasser who is in possession when the documentary owner’s title is extinguished will have a title good against all the world except the previous trespassers.

o There is an ultimate statute bar of 30 years (s51).

Adverse possession of leasehold land A tenant while in possession under a lease, cannot acquire a title by adverse possession against the landlord.

This is either because the tenant is there with the landlord’s permission and so the possession is not ‘adverse’, or because a tenant is not permitted to deny the landlord’s title (Tower Hamlets LBC v Barrett [2006])

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Limitation period may be joined by a number of different, unrelated adverse possessions provided the period is proven to be continuous and uninterrupted (eg. By members of the family)

-A has been in adverse possession of B’s land for 7 yrs and dies, leaving her possessory interest to C; C who immediately goes onto possession, may add A’s adverse possessory period to her own.

- This means B’s title would be extinguished after a further 5 yrs

Whittlsea City Council v Abbatangelo

Family had land surrounding a block of land that was not theirs but they utilized anyway + put fences had animals etc for the extent of the limitation period. Council tried to claim the land, however, Abbatangelos attempted to claim adverse possession

Held: Abbatangelo’s had exercised enough control of the land to be in possession- Intent to possess, mere personal convenience will not constitute intention- Fencing of land and payment of rates suggests intention to possess. Enclosure is the strongest possible

evidence of adverse possession- Possession cannot be pursuant to a licence, lease or other grant- Occupation by residence/ building on the property- Leasing the property to others- Planting trees, crops, livestock, employment of person to mow lawns

Sunny Corporation Pty Ltd v Elkayess Nominees Pty Ltd (2006)

Kelly family owned land adjacent to the disputed land. Land was actually owned by a neighbour. 1972 Kelly acquired a licence from water authority to use the disputed land despite the fact they did not own the land. Kelly thought the licence was a lease and ran cattle on the land

Held: Found that the Kelly family had sufficient intention to possess and factual possession through various acts. This was not withstanding that Kelly had thought the exclusive possession of the land was due to a lease.

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Lesson Plan #4 “Legal Estates and Interests”

Doctrine of Tenures and Estates

Estates: Life Estate: An estate which ends on the holder’s death

Estate in Fee: Estate that descends to the holder’s heir.o Unrestricted: simple.o Restricted: tailed (no longer exists, becomes a fee simple).

Reversions and Remainders:

Reversions : a future right to possession of land. An interest remaining in a person who has granted away less than the whole of his interest in the land. ie A grants a life estate to B, and on B’s death the land will revert back to A. During this period A does not have seisin (Possession of a freehold estate in land). During this period A has an estate in fee simple in reversion and B has a life estate.

Remainders : For example, A grants a life estate to B and the Fee simple to X. X’s estate cannot be classed as a reversion as this implies tenure. And so it is called a remainder, because on B’s death the land remains away from A instead of reverting to A. If the fee simple and the lesser grant are created via the same instrument then b would receive a life estate and X receives A’s reversion.

Leasehold Interests:

A leasehold interest is of certain duration. It expires on a given date. A term is set beyond which it cannot extend.

Distinctions: Under leaseholds the lessee has possession but was not seised. Seisin is retained by the freeholder (lessor).

Fixed Term Periodic Term Tenancy at Will Tenancy at Sufferance

The Absolute Fee SimpleThis is the closest thing to absolute ownership.

Duration: Unrestricted (lasts forever). Will come to an end when bona vacenti. If there is no will or heirs then and the

closest relative is less than a cousin the land reverts back to the crown.

Alienable inter vivos (during life): Yes (s 47 Conveyancing Act)

Devisable by Will (devise): Yes. If a gift of real property it is known as a devise. Can also be divided in a will.

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Words of limitation: Must contain the word “heirs” otherwise the livery of seisin only created a life estate. Eg. “To A and his

heirs”. s 47(1) of the Conveyancing Act allows to merely use the words “in fee” or “in fee simple” or “to A” as long as there is no contrary intention by the grantor.

Determinable and Defeasiable Fees: Determinably Fee Simple (condition precedent) :

o A fee simple that will automatically come to an end on the occurrence of a specified event that may or may not occur. Eg. A fee simple for as long as the land continues to be used for school purposes. When this occurs the land automatically reverts back to grantor or his successors.

Defeasible Fee Simple (condition subsequent): o fee simple qualified by a super added condition of defeasance. Eg. “To A and his heirs, but if the land

ceases to be used as a school then it shall return to the grantor and his heirs”. If this occurs the grantor has the right to enter the land and bring the interest of the fee simple holder to an end, otherwise it will continue as it is not automatic.

The Fee Tail (no longer exists) Duration :

o As long as there are heirs of the designated type then the fee tail will continue. It is restricted to lineal descendants of the original donee.

o If that group became extinct then the estate tail came to an end Variations :

o tail male, tail female, general tail (as long as grantee had children then would pass), special tail (children must have a specified partner and must be their first)

Alienable inter vivos : o Tenant tail can create a life estate

Divisible by will (devise): o No, automatically passed to the heir of designated type.

Words of limitation : o To create an estate tail the word “heirs” as well as words of procreation needed to be used. “To A

and the heirs of his body” and “to A and the heirs begotten by her” would pass a fee tail to A. No longer exists :

o In NSW. Will automatically convert to a Fee Simple under s 19(1) Conveyancing Act.

Life Estate:This is not an estate if inheritanceUpon death of the occupier of a life estate, possession passes to the grantor or tenant of remainder

Ordinary life estate “Sa vie” o To A for life (determinable by death)

Pur Autre Vie :o Measure of occupancy is based on another person rather than the tenant ‘to A during the life of B’

Dower: o Widow to receive one third of husbands estate is fee simple or fee tail and had to be in sole

possession Cutesy:

o Widower entitled to whole of wife’s propertyDisposition by will

Succession Act 2006 s 38:o a disposition of real property to a person without words of limitation is to be construed as passing

the whole of the estate or interest of the testator in that property to that person.Alienable inter vivos:

Yes, but under s 47 of Conveyancing Act must use “To A for life” or any other words showing such an intention. If there is no limitation to life it will be considered a Fee Simple.

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Future Interests

Title immediately vested but possession deferred until a future date Not a freehold estate as there is no immediate right to possession Future interest exists to determine what will happen to the property once life estate ceases:

By Means of revisionary or remainder interests

Doctrine of Wastes“The property must be protected and maintained in a proper manner for later interest holders. This is to reconcile the conflicting interests of life tenant and remainderman in circumstances where the activity (or inactivity) of the life tenant threaten to harm the land.”

Waste denotes any act that permanently alters the land. Usually implies deterioration but may imply improvements. Under s 32 Imperial Acts Application Act the tenant may be given special permission to commit waste. Categories of Waste:

o Permissive waste – the life tenant permits property to decayo Voluntary waste – positive deliberate acts result in harm of property i.e. opening up a mine or

logging.o Equitable Waste: although at common law is allowed to commit, at equity they will be restrained as

equity will not permit a person to exercise a legal right unconscientiously as that abuses the legal right. Under s 9 of Conveyancing Act can be exempted if the instrument conferring the life interest unequivocally states so.

o Ameliorating Waste: acts that improve the land but where the whole character of the premises is in jeopardy. Eg demolish a house.

Enjoyment by Life Tenant

Entitled to income from the property Entitled to possession they may lease out the property Emblements: allows a deceased life tenants legal personal representative (or the life tenant personally when

pur autre vie) to enter the land after the life estate ends and reap the crops that the life tenant had sown:o Applies only to cultivated crops such as corn, hemp, flax or potatoes which are ready to harvest in 12

months.o Applies only when life estate ends of the life tenant’s faulto Applies only to crops sown by the life tenant.

Timbero Where a timber estate the life tenant is entitled to the profits from the timber.o Entitled to Estovers such as for fuelling or housing. Must do so in a reasonably manner.o Unless timber estate the trees are regarded as part of the inheritance and not for the enjoyment of

the life tenant. A life tenant is permitted to remove fixtures that he or she has attached for trade, ornamental or domestic

purposes. After the life tenant’s death, the right can be exercised by the life tenant’s personal representatives.

Formal Requirements: Under Old System land this must be done by Deed (otherwise it may only create an equitable interest): ss

23B, 38 Conveyancing Act NSW 1919

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o Must be on papero Sealed (CL) (s 38(3) Conveyancing Act NSW 1919)o Signed. (s 38 (1) Conveyancing Act NSW 1919)o Witnessed by a person not party to the deed. (s 38 (1) Conveyancing Act NSW 1919)o Deemed to be sealed if expressed to (signed, sealed and delivered).o Delivered (when it is intended to be operative)o Need not be indented (s 38 (2) Conveyancing Act NSW 1919)

Substantive requirements o Intention to confer exclusive possession for relevant timeo Statutory presumptions regarding intended duration, (creates fee simple) s 47 Conveyancing Act

NSW 1919, s 24 Wills Probate and Administration Act 1898, s 36 Succession Act Formal requirements

o Prior to statutory amendments correct words of limitationo Inter vivos: deed, s 23 B Conveyancing Act NSW 1919o Testamentary; will, s 27 Wills Probate and Administration Act 1898, s 6 Succession Act

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Lesson Plan #5“The Origin and Nature of Equitable Interests”

Trust There are two distinct jurisdictional origins of property rights: common law and equityTherefore a party can have a legal or equitable interest Legal Interest

o A legal interest in land is recognised by common law, and must be created and transferred by deed to be effective at law. See Above

Equitable Interesto Occurs when the common law is either deficient or provides no remedy. o When the equities are equal, the first in time prevails. o It will not assist a volunteer, and looks on that as done which ought to be done. o Equity will not allow The Statute of Frauds to be used as an instrument of fraud. o Remedies include specific performance, injunction, equitable compensation, equitable damages,

account of profits and equitable proprietary remedies. o Equitable interests are recognised by the courts of chancery, but are better understood as a

jurisdiction. This allows equity to operate as a forum in which certain types of claims will be heard and certain types of relief granted.

o Commissioner of Stamp Duties (Qld) v Livingstone [1965] AC 694 at 712 Equity in fact calls into existence and protects equitable rights and interests in property only

where their recognition has been found to be required in order to give effect to its doctrineso Creation and transfer of interests in land in equity – trusts

Trusts are a relationship where the trustee holds property (real or personal) for a beneficiary on certain conditions.

Enforceability of contract for the sale of land

Contract for sale in Land

o Creation of transfer of land (to be effective in equity) (CA, s.23):o S 54A (1) Conveyancing Act 1919 follows the State of Frauds 1677 in the need for a memorandum;

aka MUST BE IN WRITINGo description of the lando Identification of the partieso Reference to the transactiono Non incorporation of notes

Unless the document id signed by the defendant An express or implies reference in that document to the second A sufficiently complete memorandum when read together Only possible for purchaser to have interest in property is a grant a specific performance

may be issued on breach

ANZ Banking Group Ltd v Widin

A mortgage document which did not include any details of the title was held to be an insufficient memorandum under s.54A.

Doctrine of part performance : - AS PER 23E(d) of the Conveyancing Act

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o Allows for enforcement of an oral contract for the sale of an interest in land when the contract has been sufficiently acted up by the party seeking to enforce the contract.

o Sufficient that the acts unequivocally and in their own nature were referable to some contract of the general nature of that alleged.

o The acts did not have to be compelled by the contract but merely pursuant to it. o Maddison v Alderson (1883) an act of a party that performs to his or her detriment – and the act must unequivocally refer to the alleged agreement.

Doctrine of Proprietary Estoppel (Waltons Stores v Maher) :

o Where the title holder induces another person to perform certain acts which involve detriment in the belief that he/she will acquire rights over the property:

– The title holder’s rights may be held in equity to be restricted or extinguished in favour of the other person.

o An equity arises in favour of the other person, the nature and extent of the equity depending on the circumstances. Must establish 3 elements:

1. A representation is made by one person.2. A second person relies on that representation to act to their detriment.3. It wuld be unconscionable for the first party to deny the effect of their representation.

Examples of Estoppel

Inwards v Baker 1965

A father made an oral offer to his son of staying in a parcel of land on which to build a house. The son should have a life interest and could stay on the land as long as he desired to live.

Giumelli v Giumelli (1998)

The son worked on an orchard property belonging to his parents. The son received no money apart from pocket money and keep. Development of a property and working without wages, not accepting work elsewhere give rise to “Estoppel”.

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EXAMPLES OF PART PERFORMANCE

Mere payment of purchase money is not sufficient (Britain v Rossiter 1882), but payment of a deposit and forwarding of a deed of transfer is part performance (Steadman v Steadman)

Taking possession of new lease premises is part performance (Kingswood Estate v Anderson) Making improvement is part performance (McBride v Sandland). The owners of land offered to transfer it to their daughter and son-in-law who paid off the mortgage,

the mere act of taking possession was enough to establish part performance (Regent v Millett) Deposit of title deeds by the mortgagor counts as part performance by both parties (Russel v Russel

1783)

The son is entitled to equitable relief. The equity was created by the promise of the parents. An expectation had been created in the son that his work on the farm without the receipt of wages would be compensated by the subdivision of the orchard. The parents were ordered to compensate the son.

Specific Enforceable Contract ( Lysaght v Edwards ) :

o Where there is a valid contract (which is a contract sufficient in form and substance so that there is no ground whatsoever for setting it aside as between the vendor and the purchaser) and the purchase money is not paid the contract is still valid and binding.

o Under equity, it makes the purchase money a part of the personal estate of the vendor (seller) and it makes the land a part of the real estate of the vendee (purchaser).

o Ownership of the land has changed in equity. The vendor is a constructive trustee for the vendee from the moment the contract is entered into.

o He has no rights apart from his right to the purchase money and to rent. o However, no equitable proprietary interest exists when there are conditions that relate to the

existence of the contract (e.g. council approval). o Money being classed as performance of obligations under the contract (McWilliam v McWilliams

Wines). Auctions

o Contract is merely oral at the time the hammer falls so therefore this is no part performance or equitable interest.

o S54 A Conveyancing Act 1919 applies the auction. Right to ensure that an oral contract becomes a written one on the intervention of the auctioneer on the event of either party refusing to proceed.

o The doctrine of part performance allows the enforcement of an oral contract for the sale of an interest in land when the contact has been sufficiently acted upon by the party seeking to enforce the contract.

It is at the moment you have a valid contract for sale the vendor becomes in equity a trustee for the purchaser, the vendor having a right to the purchase money, a charge or lien on the estate for the security of that purchase money, and a right to retain possession of the estate until the purchase money is paid in the absence of express contract as to the time of delivering possession. – Walsh v Lonsdale

TRUSTS

Equitable estates exist simultaneously with the legal estate and not as a substitute for part of it. Under trust, the interest is essentially the (equitable) right to compel the trustees to hold and use their legal rights in accordance with the terms of the trust. Legal interests created when all formalities required have been followed.

Types of Trusts:

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Express trusts depend on an express intent;Resulting trusts on presumed intent;Constructive trusts is imposed to remedy an unconscionable situation.

Express Trusts (actual intention) Formality 23C (1) Conveyancing Act

o Arises where the parties intend a separation of the legal and equitable proprietary interests. Eg. “To A and his heirs to the use of B and his heirs” (A: legal fee simple, B: equitable fee simple) or “to A and his heirs to the use of B for life” (A: legal fee simple, B: equitable life estate).

o No particular form of words, creator of trust must express a clear intention to create it and meets documentary formalities. Can be made through:

Declaration: Person seeking trust continues to own property but declares that they are holding it

as trustee for a stated beneficiary. If valid, the owner is now trustee with a legal interest while the beneficiary has an

equitable interest that is good against the whole world. Settlement:

Owner transfers the property to a trustee on condition that it be held on trust for beneficiaries, and relinquishes any rights over property.

Non-Express Trusts – either resulting or constructive – 23C(2) NO FORMALITY REQUIRED (AKA NONE OF 23C(1) ABOVE)

o Resulting Trusts (presumed intention) Arises by way of presumption of law from certain facts and are rebuttable. There will be no

resulting trust if parties clearly indicate that they did not want a trust to come into operation. – s 23C(2) Conveyancing Act 1919

A resulting trust arises when the legal title to property is transferred to someone but that person is not intended to be the beneficial owner of the property.

Person is intended to hold for the transfer or for a person who has advanced the money for the purchase or for a third party.

A resulting trust does not require written evidence either because of an express exception to the Statute of Frauds or an exception implied on the necessity to overcome fraud.

Needs to be an intention Rebutted when:

When there is an intention by the party contributing the whole purchase or when unequal contribution a common intention that it was a gift.

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23C Instruments required to be in writing

(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.

Purchase price resulting trust: Where distribution of legal title doesn’t reflect contributions to purchase price, then

there will be a presumption of resulting trust or presumption of advancement Presumption of resulting trust

o where parties aren’t in a “requisite relationship” (considered strangers) then beneficial title is presumed to reflect contributions to the purchase price. If the presumption is rebutted then beneficial title reflects legal title and there is no trust

o Calverly v Green – look at what’s been put up front Law is clear that a resulting trust arises in the favour of the person providing the

consideration. Under the presumption of a resulting trust the parties held on trust themselves in

proportion to their original contributions to the price. Calverley v Green The presumption of a resulting trust arises from provision of the purchase price by

someone other than the transferee or by unequal contributions between the joint owners.

These contributions are assessed at the time of purchase. The presumption of a resulting trust may be rebutted by evidence of intention to make a gift, but this intention must be that of the party contributing the whole of the purchase price or in the case of unequal contributions, their common and revealed intention. Intention is judged at the time of purchase.

Examples:o When O grants a legal estate to A but B provides the funds, A will hold on

trust for B.o Where O grants a legal estate to A + B but C provides the funds, A + B will

hold on trust for C.o O grants legal estate to A + B (who have equal shares) but A pays 40% and B

pays 60%. A + B hold legal title as tenants in common and hold in trust for A + B I shares of 40:60.

o O grants a legal estate to A + B (who have equal shares) but A pays 25% and C pays 75%. A + B hold legal title as tenants in common hold in trust for A + C in shares of 25:75

Presumption of advancement: where parties are in a “requisite relationship” –

o Husband to wife or fiancéeo Father to child – now parent to child due to Brown v Brown and Nelson v

Nelson o Nelson v Henderson endorsed Mother to child but no case on Wife to

Husband. This is where there is a prescribed relationship between the parties where equity

assumes that the proper inference is the contrary of that giving rise to an implied or resulting trust. In such a circumstance a trust does not arise but rather one party has intended to benefit the other and that the latter was intended to have both the beneficial and legal ownership of the property in question. This can be rebutted by contrary evidence.

Beneficial title is presumed to reflect legal title and there is no trust. Court presumes what is intended is a gift. Where presumption is rebutted, then beneficial title reflects contributions to the purchase price and there is a resulting trust

o Constructive Trusts

Lysaght v Edwards – equitable doctrine of conversion, court imposes trust irrespective of intention

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Common intention – where the holder of legal title (trustee) in conjunction with non-owner demonstrate common intention that the non-owner will receive an interest

Unconscionable assertion of legal interests - where parties failed to address a particular question of property rights, or if they did, they intended a different distribution of rights from those which a common-intention constructive trust would have given them

A constructive trust arises whenever a trust must be imposed by the courts to do justice between the parties.

It is a remedial device and operates independently of intention. Because it operates to prevent fraud it is outside the writing requirement. Traditionally it has been applied where an existing trustee makes a profit out of the trust but

the circumstances in which a trust will be imposed have not been defined. Equity imposes to preclude the retention or assertion of beneficial ownership of property to

the extent that such retention or assertion would be contrary to equitable principle (Muschinski v Dodds).

The imposition of a constructive trust is that a refusal to recognize the existence of the equitable interest amount to unconscionable conduct and that the trust is imposed as a remedy to circumvent that unconscionable conduct (Baumgartner).

Baumgartner v Baumgartner (1987) 164 CLR 137 – de facto couple bought house in man’s name, both shared costs at ratio of 55:45 (man:woman). HC held that there was no common intention that the woman would have a beneficial interest in the property – but where unconscionable conduct arises, the imposition of a constructive trust my be warranted. If parties pool their earnings, ‘it is proper to regard the arrangement...as one which was designed to ensure that their earnings would be expended for purposes of their joint relationship and for their mutual security and benefit (149)’. It was inappropriate to consider the woman’s contribution as a gift – unconscionable use of man’s legal title to deny her interest. Court held that there was a constructive trust on terms that they had equitable interests proportionate to their respective contributions – 55:45.

Effect of Equitable Interest: The beneficiary’s interest in the trust property is essentially the right to compel the trustees to hold and use

their legal rights in accordance with the terms of the trust. Equitable fees simple can be cut up into life estates, fees tail, remainder and reversions in the same way as

their legal counterparts.Family Relationships:

Family Law Act (Cth): This act now deals with the break-up of property on the dissolution of a marriage as classed under the Act.

Property (Relationships) Act (NSW): This act now deals with the break-up of property of defacto relationships (which now included same sex couples) as defined under the Act.

In both of these cases legislative prevention has ensured that property disputes between particular persons are not resolved according to general and legal equitable principles of property.

Claims between Married people o Legislation provide an equality in law between men and women but the social context within which

the relevant issues arose meant that the concept of separation of property very often did not result in a equal division of property upon separation.

Factors to be taken into account in determining property disputes: Financial and non-financial contributions made directly or indirectly to the

acquisition, conservation or improvement of the properties Contribution made by a party to the marriage to the welfare of the family including

any contribution in the capacity as a home maker or parent Number of prospective maintenance elements – the age and state of health of the

parties, general needs of the parties, duration of marriage and extent to which it has effected the respective earning capacities etc.

Parties future entitlement to superannuation Claims Between Unmarried Partners

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o Property disputes arise between parties in a de facto relationship, parties to homosexual relationships and other family circumstances.

Recent developments in the area of constructive trusts have increased the range of circumstances in which the person without legal title may claim an equitable interest. Availability of a remedy is entirely dependant on the general rules of common law and equity.

Legislation has now been introduced in all jurisdictions and allows for an application for the division of property an in some cases allows for limited maintenance applications and authorizes the parties to enter a binding cohabitation and separation contracts relating to the financial matters between them.

Transfer to a Volunteer: A simple transfer of land from one party to another without any consideration being provided by the

transferee would appear to be such a common situation that the relevant legal principles should be well established.

Issue in this case is whether there is presumption against a gift. A presumption against a gift leaves the beneficial ownership with the transferor: the transferee acquires legal title subject to a trust in favour of the transferor.

A transfer of land to a stranger without any consideration and without any expression of consideration, and in the absence of any evidence of intention, passes a legal estate subject to a resulting trust in favour of the transferor.

See s 44(1) Conveyancing Act 1919

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Lesson Plan #6Topic: “Conditional Transfers and Future Interests”

Conditions Subsequent, Conditions Precedent and Determinable Interests

Vested and Conditional Estates

Vested Remainder Estates Future Interest “IMMUNE FROM RULES AGAINST PERPETUTIES”

It will exist where created by the grantor to vest upon the expiration of the life estate. E.g. X (grandfather): “To Y (son) for life, then to Z (grandson) in fee simple”

Y acquires a life estate which is vested in possession. Z acquires a fee simple remainder which is vested in interest (possession

deferred until Y’s death).

Contingent Remainder Estates Determinable and Conditional interests “SUBJECT TO THE RULE AGAINST PERPETUTIES”

A remainder estate can be made contingent upon the happening of a particular event. All estates are capable of being contingent E.g. “Grandfather X confers a life estate to his son Y for life, then to grandsons, Z, in fee simple provided Z

has reached 21 years of age and has worked on the land for 2 years.” Until all the conditions are complied with, Z will not have vested interest but

merely the possibility of an estate. Once the conditions are complied with, title will vest but the possession will

only vest when the previous estate expires (Y’s death).

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► X makes the following grant:

“to A for life”

►A holds a life estate vested in possession.►X has a fee simple in reversion vested in interest but not in possession.►When A dies, the interest reverts back to X or his heirs.

“to C for life, then to D in fee simple”

►C has a life estate vested in possession.►D has fee simple vested in interest, but not in possession (deferred till C dies).►If D die before C, then his (future) interest will pass to his heirs.

“to E for life, then to F for life”

►E has a life estate vested in possession.►F has a life estate a remainder interest (vested in interest but becomes vested in possession when E dies).►X has a fee simple in reversion.

“to H for life, remainder to J in fee simple provided J reaches 21”

►H has a life interest vested in possession.►J has a remainder interest attached with a condition (called a contingent interest – until J reaches 21).►J will take the interest (vested in interest) when he turn 21 and will be vested in possession when H dies.

“to K for life, then to L for life on reaching 18 for his life”

►K takes a life estate vested in possession. ►L takes a remainder life interest. L’s interest is contingent until he reaches 18, then it becomes vested in

interest (but not in possession).►On L death, the interest reverts back to X.

“To my husband for life, and then to my children who attain the age of 18 in fee simple in equal shares”

►The husband takes a present life estate (vested in possession and interest).►The children take a contingent remainder interest in fee simple in equal shares (not vested in possession and

interest).►The first child, who reaches 18, takes solely the remainder interest, but not vested in possession till the

husband dies.►When the other children reach 18, the eldest child will be

proportionately divested.

EXAMPLES

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DETERMINABLE AND CONDITIONAL INTERESTS

►The grantor may impose limits on the duration of the estate, by reference to the occurrence of some event which might or might not occur.►Limits that are contrary to public policy (contra bonos mores) are void.►Nemo dat quod non habet: if A has a fee simple estate subject to one of these limits, A can only give that limited estate.

CONDITION PRECEDENT “Conditional fee simple”A requirement of the grantor which must be fulfilled before the grantee receives an interest.

Words used – subject to, provided that, if, in the event that on, if, when, subject to, provided that, on condition

Interest of grantor – retains the interest until condition is met Consequence of void condition – real property, fail outright. If personal property the interest takes effect

absolutely (free of condition) unless it is bad in itself. Grounds for holding a condition void

o Contrary to public policy – Zapletel v Wrighto Uncertainty – Re Lichtenstein o Evidential uncertainty – Re Tucko Repugnance to interest granted/restrain on alienation – Re Mackay

Cannot deny the power to alienate “i.e. can’t sell the property” or against public policy “i.e. to A as long as she converts to Catholicism” - Trustees of Church of the Diocese of Newcastle v Ebbeck 1960

Zapletel v Wright – legal title 50% to man and woman, man had the purchase price. This was rebutted as the man had intention for the woman to have a share, on condition that she would continue to co-habit with him (condition subsequent???). Against public policy as it was an immoral de facto relationship

Re Lichetenstein – residuary estate1. Wife for life absolutely – remainder to family trust2. Wife for life – not re-marry, determined by solicitor – remainder family trust

Gift defeasible by condition subsequent – precise and distinct circumstances that will make wife lose interest

Re Tuck - expert knowledge, third party approval. Solicitor didn’t have expertise in determining a ‘de facto’ relationship. Test: can wife tell is actions will result in ‘de facto’

Re Mackay – Company sold car to Mackay (hire purchase legislation) and they entered into a contract with the company saying – 1. Repay by instalments 2. Fetters on ownership 3. Company could take car back on Mackay’s default.M went bankrupt – above restriction were void so company couldn’t take car back e.g. insured under company name and his, couldn’t take it out of state, which is against rights of ownership.

Condition SubsequentA requirement which, if not met in the future, will terminate the interest.

Page 23 of 50“To A in fee simple provided that he does not cease to reside in Australia.” N.B. The grantor may chose to ignore the condition and property remains that of the grantee.

“To B provided that he remains a barrister” - a conditional fee simple which takes effect immediately but if B is no longer a barrister the grantor can reclaim the land.

Words used – but, if, provided that, on condition that Interest of grantor – right of re-entry, must be positively exercised. Until this right of re-entry is exercised, the

fee simple estate continues. This is where it differs from the determinable fee estate. Consequence of void condition – grantee’s interest absolute – condition severed

Determinable Interest “DETERMINABLE FEE SIMPLE ESTATE”estate continues until automatically terminated by the occurrence of some specified determining event, upon which the estate reverts to the grantor.

Concept – determining event sets the ‘natural’ boundary of the interest Condition is inherently involved in the creation of the interest

Words used – while, for as long as, during, until Interest of grantor – possibility of reverter – self executing Consequence of void condition – grantee’s interest fails Specified event may or may not occur.

E.G. “To A in fee simple until he ceases to reside in Australia” If the determinable event occurs, the land automatically reverts to the grantor.

The interest granted passed to the grantor’s heirs if he dies. The interest could be devised or assigned (WPAA, s.5, CA, s.50(1)).

Remainders and Reversions

Contingent Remainders Remainders

o Vesting depends on the occurrence of some contingency, e.g. specified events might have to occur or specified persons must be ascertained.

Example the grant of “to A for life , with remainder to B in fee simple if B attains the age of 21” and assume that at the date of the grant B is not yet 21. The grantor has purported to dispose of the whole fee simple interest in the land, but there is no person in whom the remainder can yet vest.

Note it is said that no interest arises until the contingency is fulfilled and seisin is postponed.

Rules governing remainders: No remainder may be granted in future unless supported by a prior particular estate A remainder must vest at or before the termination of the prior particular estate No remainder may take into effect by cutting short a prior particular estate No remainder after a grant in fee simple.

Contingent interests – RULES AGAINST PERPETUTIES

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E.G. “To A until he marries” – A determinable estate which will revert to the grantor automatically when A marries.

►Rules evolved in order to protect the fundamental principle that land must be freely alienable.Any attempt to obstructing the right of inheritance (alienation) must be struck down.

The Perpetuities Act 1984 – 31 October 1984

Interests created on or after 31/10/84 Transitional period for wills Perpetuity period of 80 years s 7 - 80 years from the date on which the settlement creating the interest

comes into operation. Presumptive validity – wait and see s 8 Age reduction – s 9(1) Class reduction subject to class closing rules – s 9(4) Possibilities of reverter subject to rule [if void, gift absolute] – s 14

4 ELEMENTS

1. The perpetuity period begins to run.2. The interest must vest.3. The length of the perpetuity period4. The ‘wait-and-see’ rule.

1. The perpetuity period begins to run –when the instrument takes effect: (The Perpetuities Act, ss.3(2), 7(1)) A will – the date of the testator’s death Inter vivos – the time the instrument comes into effect, e.g. a deed is executed and delivered.

2. The interest must ‘vest’ in the perpetuity period: - A - The person entitled to the interest must be ascertained. B. - The interest must be ready to take effect in possession, subject only to any prior interests. EXAMPLES

A - “To A for life, remainder to A’s first son” On the date the deed comes into operation, A has no son. A’s life interest is vested; but the remainder to A’s first son is contingent – it will not vest until a son is born. In order to be valid, A’s first son must be born within the perpetuity period (80 years).

B “To A for life, remainder to A’s eldest daughter (B) if she attains 30” When the testator dies, B has not attained 30. B’s interest is therefore contingent and will vest if and when she attains 30. If B attains 30 before A dies, she cannot take possession until A dies. But B’s interest is vested because it is ready to take effect in possession subject only to A’s life estate. B has to be 30 within 80 years after the testator dies after the deed executed.

3. 80 YEARS from the date on which the instrument comes into operation SECTION 7

4. The ‘wait-and-see’ rule - Under s.8 of the Perpetuities Act, an interest is not invalid merely because of uncertainty from the outset whether the interest necessarily will vest within the perpetuity period.

The interest is presumed valid and remains valid if it vests within the perpetuity period. If it does so vest, it remains valid; if it does not, it fails.

Rule applies : o Executory interests,o Legal interests (depends on s 44(2) of C.A.)

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o Equitable interests. When it begins to run : when the instrument that created the instrument comes into operation.

Vesting : For an interest to ‘vest’ it must satisfy 3 conditions:1. The person or persons entitled to the interest must be ascertained;2. the interest must be ready to take effect in possession, subject only to any prior interests; and3. in the case of a class gift, the fractional share to be taken by each member of the class must be known

within the perpetuity period.

Under s 8(1) an interest is treated as valid until such time (if any) as it becomes certain that is must vest (if at all) beyond the perpetuity period.

Class Gifts This is where there is a disposition to a class who are uncertain in number when the limitation is created and

who fall within a common classification and who take the subject matter in shares proportionate to the number of members. Eg. To such of my grandchildren as attain 30.

Class closing rules : a class capable of further increase is made to close as soon as a member becomes entitled to call for distribution of his or her share. They are applied in four situations:1. Immediate class gift with no contingency : “to the children of A (alive)”. If there is a child in existence at

that time then the class will close. If no, child class will not close until no more children can be born (ie to include all members).

2. Immediate class gift subject to contingency : to the child of A (alive) who attains 21”. When the first child reaches 21 then the class closes and includes all those in existence at the time. If not, it will stay open until a child reaches that age.

3. Future class gift with no contingency : “to A (alive) for life, remainder to the children of B (alive)”. When A dies and there are children of B then the class will close. If there are no children on the death of A then the class will remain open until B dies (ie no more children).

4. Future class gift subject to contingency : “to A (alive) for life, remainder to those of B’s children who attain 21”. If prior to A dieing a child of B has attained 21 the class will close on the death of A. If no child on A’s death then the class will close when the first child reaches 21.

S 9(4): Where it becomes apparent that the inclusion of a class member or potential class member will cause a class gift to infringe the rule against perpetuities, that member or potential member is excluded from the class. Eg. “To the grandchildren of A”. We would wait-and-see for 80 years after the death of A (testator) and then exclude any children born after the 80 years. May not need to resort to this due to the class closing rules.

Statutory Age Reduction : Under s 9(1) Wherea) A provision of a settlement creates an interest and the vesting of the interest depends on the

attainment by any person of a specified age; and b) It becomes apparent that the provision would but for this subsection, infringe the rule against

perpetuities but that it would not infringe that rule if the specified age had been a lesser age,The interest shall, for all purposes, be treated as if, instead of its vesting depending on the attainment be the person of the specified age, its vesting depending on the attainment by the person of the greatest age which, if put in place of the specified age, would save the provision from infringing the rule.

Take note of s 8(1) as this “certainty” of vesting outside the 80 year period may occur before the 80 year period. In such a case you can wait-and-see no longer and the interest fails. s 9(1) only applies when it is “apparent” that the interest will infringe the rule against perpetuities unless a lower age is substituted. Also, s 10 requires the wait-and-see provision (s 8(1)) to be applied before age reduction (s 9(1)). page 174-175.

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Successive Interests:

Interests followed by void interest : “to A for life, remainder to A’s eldest great-great grandson”. The failure of the gift to the eldest great-great grandson does not invalidate the gift to A.

Interests following void interests : to A for life, remainder for life to any widow of A, remainder for life to any husband that widow may marry, remainder to such of A’s children as attain 21”. The life estate to A is valid, but the reminder to any widow and any husband may be void if it does not vest within 80 years (wait and see). ► The gift to the children is valid even if the remainder to the widow and husband is invalid. ► The children must be 21 of age within 80 years after the testator dies.

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Lesson Plan #7Topic: “Leases, Licences and Bailments”

WEEK 1 CHARACTERISITICS OF A LEASE

LEASELeases is a personal, contractual agreement between an owner of land (landlord or lessor) and a tenant (or a lessee), whereby the owner agrees to transfer the right to exclusive possession in the land to the tenant for a specific and definable period of time, in return for the payment of a nominated rent.

Leases are governed by a contract, but confer proprietary rights. Interest granted is the right in possession. Leasehold Estate – (“less than freehold”): The duration of these estates is certain, or capable of being

rendered certain. The lessor does not have to be the owner, e.g. sub-lessor, holder of life estate. (Street v Mountford)

)

LICENSE - A licence is merely legal permission for entry and does not constitute an in rem interest.LEASE - A lease confers the exclusive possession on the lessee to exclude all other including the lessor.

LEASE LISENCE

Confers exclusive Possession Permission to enter premises Interest in Land A personal rightLessor cannot enter leased premises Licensor is not trespassing if entering property

Substantive Requirements of Leasehold Interest1. Legal right to exclusive possession of land; 2. Certainty of Term For a period (“term”) less than the term for which the landlord hold the land;

o Term is certain or at least capable of being rendered certain, Commencement date must be certain at the time of agreement OR capable of being rendered certain prior to commencement of the lease.

o Maximum duration must be certain (Prudential Insurance case). Does not apply to tenancies at will or at sufferance.

3. The intention of giving the tenant an interest in the land as opposed to a mere personal privilege.

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Radaich v Smith►Windeyer J:

“Whether a licence amounted to a lease was ultimately a question of intention. If the parties intended to confer exclusive possession then a lease must have been granted and the fact that the agreement may have been described as something else could not prevent it, in substance, from take effect as a lease.”

4. Formality

1. Exclusive Possession

The right to use premises to the exclusion of all others, including the landlord. Without exclusive possession is cannot be a lease (a legal interest) but may be a lesser interest (a licence or

an easement). If there is exclusive possession, it is a lease even if it is not called as such. Whether the transaction has been defined a lease (but not conclusive) EXAMPLE An agreement to confer exclusive advertising space over parts of a roof and exterior wall did

constitute a lease as the lessee held ‘general control’ over those areas (Claude Neon Ltd v Melbourne and Metropolitan Board of Works (1969)

2. Certainty of Term

Commencing date: a. The date on which the lease commences must be certain or capable of being rendered certain

before the lease takes effect. b. Where no commencing date is expressed, one might be implied under the general principles for

implying terms into contracts.c. The failure to specify a date of commencement (or a means to determine) will result in a lease

being rendered void. Duration:

d. the maximum duration of a lease must be certain or capable of being rendered certain before the lease takes effect.

e. If the maximum duration of a lease is certain, the possibility that the lease may end at an earlier time (as yet unknown) does not render it void. Eg. A lease for 20 years or sooner ending of the war is valid (Prudential Insurance)

General: If a lease is void due to uncertainty of term, but the tenant goes into possession and begins to pay rent, a valid tenancy at will may arise under s 127 Conveyancing Act 1919. Leases cannot act retrospectively.

Expiration:- It is not possible to grant a perpetual lease.- The term must be ascertained with certainty.- can be determined by a firm date or a precise method to ascertain the time

(Prudential Assurance Co Ltd v London Residuary Body).

4. Formal Requirements

Legal leaseso Deed – s 23B of CA.o Oral or writing other than a deed – s 23D(2) where:

Term & option does not exceed three years; and be a market rent/best rent reasonably available without taking a fine (premium) Must give immediate right to possession.

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Equitable leases – Marshall v Council of the Shire of Snowy River (1995).

o The equitable lease will have the same effect as a legal lease. The only disadvantage would be, if the equitable lease interfered with other interests, than the lease would be invalid.

o s 23C(1) - No need for a deed but must be in writing, signed by the landlord/agent who is authorised in writing.

(i) a sufficient note; (ii) a memorandum of the agreement, or (iii) acts of part performance (CA, s.54A)

o Otherwise it will be a tenancy at will only (s 23D(1)) unless it can satisfy s 23D(1). o Writing is not required for an equitable lease where there are sufficient acts of part

performance - going into actual possession of premises pursuant to an agreement to grant a lease - Kingswood Estate Co Ltd v Anderson (1963) (s 23E (d)). The acts must be unequivocally and in their own nature referable to an agreement for lease of the kind alleged, although they need not be referable to the very agreement alleged.

o Acts of part performance (s54A, CA): going into actual possession of premises pursuant to an agreement to grant a lease (Kingswood Estate Co Ltd v Anderson (1963)), and paying rent

o Must be an enforceable contract (s 54A of CA) to grant a lease + part performance.o Must be a contract which equity would give specific performance – equity regards as done as

what is ought to be done

(Walsh v Lonsdale) o Where there is an ineffective lease it may be treated as an agreement to grant a lease. Further,

provided the parties’ agreement was for value and was evidenced in writing (s52A(2)) OR supported by sufficient acts of part performance (s 23E(d)) equity would decree specific performance of the agreement, compelling a grant of a formal lease complying with the formalities for creating a lease effective at common law. Until this time equity by injunction would restrain the landowner from acting inconsistently with the agreement.

o However, this equitable lease suffers from the problem of being defeated by a bona fide legal interest. There must first be an agreement for the court to grant specific performance.

Effect of non-compliance with formal requirements:

o The effect at common law is that the lease takes effect only at will (s 23D(1) of CA), unless lease falls within exemption of s 23D(2) (see above) in which case the lease takes effect according to its terms

o The effect at equity is to order specific performance

Types of Tenancies Sufferance, at Will, Fixed Term, Periodic

Tenancies at Sufferance o Arises where a person who entered into possession under a lawful right remains in possession

after that right ceases, and without either the assent or dissent of the person entitled to the property. Most commonly occurs when a tenant remains in possession after the tenancy has come to an end, without landlord’s assent or dissent.

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o The landlord can eject a tenant at sufferance at any time, without prior notice – Natural Gas and Oil Corporation Ltd (in liq) v Byrne.

o Assumes a lack of agreement between L and T – only arises by operation of law, doesn’t create any obligation to pay rent, but T liable to claim for “use and occupation”.

Tenancies at Will o Arises when a person, with owner’s consent, occupies land as tenant on terms that either party

may determine the tenancy at any time. May occur through express agreement – Hagee (London) Ltd v Erikson and Larson, but usually occur through implication –

Where a tenant “holds over” under an expired leaseo Have landlord’s consent but yet to pay rent on an agreed or periodic basis

Where a prospective tenant is let into possessiono Pending a concluded agreement for the grant of a lease o Without yet having paid rent on an agreed or periodic basis

Where a purchaser under a contract of sale is allowed into possession before completiono Once rent is paid on a periodic basis, tenancy at will ceases and there arises a periodic tenancy,

except if parties intended a tenancy at will only. L and T both have the right to terminate it at will, without prior notice

A tenancy at will is broken, by operation of law, if the: Tenant commits waste against the property; Tenant attempts to assign his tenancy; Landlord transfers his interest in the property; Landlord leases the property to another person; Tenant or landlord dies.

Fixed-Term Lease A lease expressly created to exist for a defined period of time (days, weeks, months or years). Duration must be defined, certain and express. A long term fixed lease (300 years) may be transformed into a fee simple. (CA, s.134)

Periodic Leases: o Expressly or implied, it is renewed at the end of each interval, it can be terminated with relevant

notice to each period; week, month, 6 months. o Moore v Diamond (1929) where the fixed term leases exceeds one year, after expiration a yearly

periodic lease is presumed. OVERRULED BY CA s127. Yearly tenancies should not be implied by the payment of rent and that any tenancy which does not set out its duration will be presumed as a monthly tenancy at will by one month notice in writing expiring at any time.

Tenencies for a term of years:o Where a landlord who has already granted a lease grants another lease of the same land to a

different tenant for some or all of the term of the first lease. Operates concurrently during overlap.T2, who has a lease of the reversion, becomes the landlord of T1 and T2 is entitled to all the rent and the enforce the covenants under the agreement. During this time L is deprived of the rights that T2 now has. When the second lease ends T2 gains possession and L becomes landlord.

Concurrent leases: o created where a landlord who has granted a lease grants another lease of the same land to a

different tenant for some or all of the term of the 1st lease. The second lease does not deprive the tenant under the first lease of the right to possession of the property, for the second lease is, in reality a lease of the reversion.

Reversionary Leases:

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o has two meanings, first meaning is a lease, granted now, but with the term to commence in the future. The second meaning is a lease to commence when some existing interest end, such as a lease to commence when the existing lease ends.

o This is a lease to commence when some existing interest ends, that is a lease in reversion as distinct from a lease in possession. This creates an existing leasehold estate between landlord and tenant, not merely a set of contractual rights and obligations.

o S 120a(3) allow for 21 years.

Tenancies by estoppels: o Landlord having no title : this is where the landlord, who has not title to grant a lease, grants a

lease. The tenant is estopped from denying the landlords title and the landlord is estopped from the denying the tenant’s title. There is no lease but rather a tenancy which gives the parties and their successors the rights and liabilities of a legal tenancy on the terms that they created. If legal title is gained then the estoppel is fed and the tenant acquires a legal tenancy.

o Estoppel by convention : where parties conduct themselves on the assumption that lease exists between them and the detriment caused to one if the other were allowed to depart from that assumption makes it unconscionable to allow the departure.

o Equitable Estoppel ( Waltons v Maher ): Where a landlord induces in a prospective tenant an assumption that a lease will be granted, and the tenant acts to this detriment on that assumption, and to allow the landowner to depart form that assumption would be unconscionable, then the landowner will be estopped from denying the existence of a lease and vice versa.

The Rights and Duties of Landlord and TenantIMPLIED, STATUTORY AND EXPRESS COVENANTS

When there are no express terms in the deed, the covenants will be implied into the lease:If there is an express term, the express applies.

Lease Covenantso Give rights to landlord and tenant and the obligations on them [terms of lease]. Commercial

agreements last a long time.

o In a problem Q – (express overrides statute, Statute overrides Common Law)

o Expresso Implied

By statute – Conveyancing Act Common law

Express Covenantso Effect if implied – s 74(2) CA, can negative, vary, extendo Overrides unless you can’t contract out e.g. s 129 notice – express (can’t contract out)o Where is this significant? E.g. statutory covenant to repair: s 84(1)bo Good and tenantable repairo Onerous on To Doesn’t take into account state of premises when possession gained

Covenants implied by common lawo To Tenant

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Quiet Enjoyment Residential Tenancies Act 1987, s.22: As the tenant has a right to possession during the term and thus the landlord cannot substantially interfere with the tenants exercise of that right. Applies to third parties if they are acting on the landlords behalf. Requires an act or omission that is deliberate of that is negligent in the sense that its consequences were reasonably foreseeable E.G. The landlord is liable if the lease (with another tenant) contained a clause that the offending tenant not to cause a nuisance to any other tenant. The landlord is liable if he does not enforce the covenant and solve the plaintiff’s problems. (Aussie Traveller Pty Ltd v Marklea 1998)

Non derogation from grant : LL must not allow anything inconsistent with the purposes for which the premises are leased, unless this has been expressly/impliedly agreed to. There is not need for complete frustration; the test is whether the premises for practical purposes are to be fairly regarded as having been rendered unfit. There is no breach where the premises remain reasonably fit for practical purposes for their intended use, even though less fit then before. The question is: are the premises unfit from a reasonably point of view for the purposes for which [they were] granted (Gordon v Lidcombe Developments). LL must also take care of ancillary premises to allow proper enjoyment of the tenant (Hargroves) e.g. Not making the tenant’s premises unfit or materially less fit for its designated purpose - The landlord could not prevent the free flow of air through the merchants drying sheds- The landlord cannot stop the escalator service used to access - the rent restaurant located on the sixth floor.

Reasonable habitability of furnished dwellings at commencement of term 1) only applies to furnished dwelling houses. 2) Applies only to condition of house when lease begins 3) only applies to the condition of the premises (house and fixtures). Breach would allow termination of lease be tenant The landlord breaches his duties if he does not let premises in a habitable state (e.g. infested

with bugs Smith v Marrable 1843)

o To Landlord Use in tenant-like manner:(Warren v Keen). Additionally a tenant cannot commit voluntary

waste (positive acts of injury to the premises) unless allowed by statute or by agreement with landlord. For tenancy at will this will terminate the lease. Permissive waste (allowing the premises to fall into disrepair) is also not allowed. Tenants are able to make improvements to the premises with the landlords consent. The Landlord cannot unreasonably withhold consent ( s 133B(2))

Delivery of possession to landlord at end of tenancy: tenant must leave at end of tenancy as well as possession being restored to the landlord. Ie, a landlord may seek damages for loss of rent and legal expenses incurred in evicting a sub tenant

Cultivation in husband like manner (farms): the tenant of a farm must cultivate the land in a good and husband-like manner according to the custom of the country (the usage which is prevalent in the neighbourhood where the land lies and which has subsisted for a reasonably length of time).

COVENANTS BY STATUTE Rent:

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o s 84(1) CA the tenant must pay the rent reserved by the lease and must pay it on time. The rent is to abate if the premises or part of them become unfit for occupation due to fire, flood, lightning, storm or tempest

o Legal tender requiredo Remedies for breach

Keep lease on foot and sue for rent as debt: no duty to mitigate If repudiation, can terminate lease and sue for damages: obligation to mitigate

o Doesn’t include advance payment of rent – usually express in leaseo Can tenant withhold rend for breach of landlord’s obligations?

Generally no Exceptions: Right of recoupment [T + L have mutual debts to each other – usually damages] Legal set off Equitable set off – p 345

o Equitable set off for rent: Where the tenant is in arrears of rent, but has claim against the LL for the LL’s breach of a

covenant under the lease, the tenant may be able to invoke an equitable right to set off the LL’s claim for arrears against the tenant’s claim for damages.

The tenant’s claim against the LL just be so closely connected with the landlord’s claim for rent that it would be unjust or inequitable for the LL to proceed with that claim without giving credit for the tenant’s claim. The court must decide that it would be manifestly unjust to allow the LL to recover the rent in the face of the tenant’s claim.

Right of entry: s 85(1) CA o 1)to enter and view the state of repair at a reasonable time of day and giving two days notice. o 2) To require the tenant to repair and in default to enter and repair o 3) To enter to carry out the requirements of competent authorities or to make structural repairs o 4)To re-enter and terminate the lease for failure to pay rent of for breach of some other

covenant in the lease o 5) Can contract out of these CA requirements be an express declaration.

“Covenant to Repair” o The standard of repair is that the premises must be put into such repair as, having regard to the

age, character, and locality of the premises would make them reasonably fir for the occupation of a reasonably-minded tenant of the class who would be likely to take them (Proudfoot)

o When the lease obliges the LL to repair, but entitles the LL to pass the cost on to the tenant, the standard of work that the LL can carry out at the tenant’s expense cannot exceed that for which the tenant can reasonably be expected to pay.

o Unless otherwise stated in the lease, the obligation to repair extend to the replacement or repair of subsidiary parts of the premises but not to the reconstructing of the whole or substantially the whole of the premises.

o If something new and beneficial is provided it is an improvement, but if something is replaced because it has deteriorated it is a repair even if it is better and more modern. Cannot change the character of the item.

o No need to repair an inherent defect (Graham v Markets Hotel)o No obligation to repair for damage caused by fire, flood, lightning, storm or tempesto Fair wear is deterioration caused by the reasonably use of the premises. Fair tear is

deterioration caused by the ordinary operation of the forces of nature. No obligation to repair such things

o Remedies for breach of repair: Damages – What will L get back? whichever is of lower value – decrease in value of

reversion (diminution) or cost of repairs s 133A CA regarding measure of damages overrides C.L ‘tenant like manner’ unless lease excludes s 84(1)(b)

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Tenant’s rights

1) To be given a report concerning the condition of residential premises at the commencement of the lease (RTA, s.8(4))2) To be informed in advance of rent increases (RTA, s.45)3) Exclusive possession and quiet enjoyment (RTA, s.22, CA, s.78)4) Make urgent repairs ► Up to $500 to be reimbursed by landlord within 14 days (RTA, s.28(2))5) Assign and sublet the lease with the landlord’s consent (RTA, s.35)

Tenant’s obligations

1) Pay rent (CA, s.84(1)(a)) - Rent must be paid on time (CA, s.84(1)). No advance payment is required by statute but can be overridden by express covenants. Remedies for non-payment of rent (Common law)

2)The landlord may sue for rent as it falls due – no duty for the landlord to mitigate loss (e.g. finding a new tenant)

3) The landlord may terminate the lease if nonpayment constitute a fundamental breach (repudiation) – the landlord has to mitigate the damages for loss of the lease

4) The tenant has no right to withhold rent for the landlord's breach (obligation to pay rent is independent from landlord’s other obligations), except:

Right of recoupment: the tenant has advanced money that is the landlord’s obligation to pay such as repair expenses

The tenant must pay money properly, andThe landlord must be given prior notice of disrepair.

Equitable set-off: a right to set-off the arrears against the damages for the landlord’s breach of covenant under the lease or other liabilities (Lee-Parker v Izzet 1971)Arrears of rent against breach of repairing obligation (British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd).

5) 2) Keep premises and yield them up in a state of good and tenantable repair (CA, s.84(1)(b)) – a duty of care

USUAL COVENANTS Most likely those from ss 84 and 85 of CA

o Applies where: 1) the parties agree to enter into a lease, sublease etc on the basis that the usual covenants

will apply; or 2) the parties agreement is silent as to what covenants are to apply. The usual covenants

cannot be applied in the face of the parties’ contrary intention.FIXTURES

The common law permits tenants to remove their fixtures that they had brought onto the land, however they cannot remove them if they are so firmly fixed that removal would destroy their essential character on value, or would substantially damage the realty (called landlord’s fixtures). If a tenant removes LL fixtures then they commit waste. Repairing the damage makes no difference.

EXPRESS COVENANTS A lease may contain express covenants but if it silent on certain issues, the usual implied term will be added.

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ASSIGNMENT

Transfer of Leaseholds and Reversions

What are Assignments and Subleases?

Assignment: o Where the whole of the tenant’s interest the lease is transferred. Parties are assignor and assignee

Sublease: o A transfer less then the whole of the tenant’s interest in the lease. Parties are sublessor and

sublessee Test :

o did the purported sublease create and interest that was certain to last as long as, or longer than, the tenant’s own interest? If yes, it is an assignment, even though intended as, and described as, a sublease. If no, it is a sublease.

Right to Assign or subleaseo Can be done for every leasehold interest except common law tenancy at sufferance and tenancy at

will (does not apply to statutory tenancy at will under s 127 of CA). Any attempt to do so will terminate the tenant’s interest and confers no interest on the purported assignee or sublessee.

Formalities o Must be by deed and effective at law (s 23B), whether the term was created by deed or writing or

parol. To be effective in equity, mere writing will suffice (s 23C) or sufficient acts of part performance. Under Walsh v Lonsdale an assignor and assignee may be estopped from denying that there has been a valid assignment, even though no deed or writing has been executed.

Covenants against assigning or Subleasing o Absolute:

completely forbids assigning or subleasing. The LL cannot be compelled to consent no matter how unreasonably the refusion is; if he does consent then he can add any conditions that he likes.

o Qualified: permits subject to landlords consent. Under s 133B(1)(a) of CA the LL cannot unreasonably

withhold consent, unless otherwise expressed Does not apply to tenancies at will. If the LL does withhold consent unreasonably the tenant can either:

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►General rule – The lessor and lessee can agree to almost anything in a lease.►If no mention of rights to assign or sublet in the agreement: The party

may assign at will.►The lease may contain a covenant not assign or sublet without consent.►Consent cannot be unreasonably withheld (CA, s.132)

1) proceed to assign without consent (having been careful to ask initially) and take the risk in any proceedings; or

2) Before assigning the tenant can seek a declaration from the court that the consent was withheld unreasonably

o In both cases the onus is on the tenant to prove that is was unreasonable. LL is allowed to use any grounds that existed on the day including ones that were found out subsequently.

Withholding consent – 3 tests:o Narrow test (Re Gibbs and Houlder Brothers and Co Ltd’s Lease): reasonableness judged according to

personality of proposed assignee or sublessee, or by reference to effect proposed assignment or sublease will have on use or occupation of premises

o Broad test (Bickel v Duke of Westminster): whether the landlord’s refusal is unreasonable in all the circumstances (page 315 for Lord Denning)

o intermediate test: whether landlord’s refusal was designed to gain a collateral advantage for landlord, an advantage not contemplated by lease

o International Drilling Fluids (1986) – a combination of the tests: purpose of ability to withhold is to protect landlord from having premises used or occupied

undesirably landlord cannot refuse on grounds unconnected with landlord/tenant relationship tenant bears onus of proving consent withheld unreasonably landlord does not have to justify conclusions if they are conclusions a reasonable person

could have reached reasonable for landlord to refuse consent because of the proposed use of premises by

proposed assignee landlord need only consider their own interests whether withholding was unreasonably is a question of fact

o Landlord is not liable in damages for wrongfully withholding consent if the tenant suffers damages. o Covenant against subleasing/assigning does not render sublease/assignment ineffective. Unless LL

elects to enforce a right of re entry the assignment or sublease remains effective. May also apply for damages.

What Covenants are enforceable upon Assignment or Sublease? Privity of Contract:

o exists between the original landlord and the original tenant, and so the covenants between the lease are enforceable between them as a matter of contract law. Can enforce even after they have disposed of their respective interests

Privity of Estate:o exists between parties who stand in the relationship of LL and tenant. Thus, it exists between the

original LL and the original tenant. Extends to persons who succeed to the interests of the original parties.

Whether the Covenants are enforceable 1)Where privity of contract exists between the parties, the covenants are enforceable as a matter of contract

law 2) Where privity of estate exists between the parties the covenants are enforceable if they ‘touch and

concern’ the land. In other words there must be a connection between the covenant and the leased land – a connection sufficiently close that, in defiance of privity of contract, the covenant ought to travel with the land.

3) Where neither exist then the covenant cannot be enforced unless see page 322-323.Running of Tenants covenants (Spencers Case) Common Law Burden of covenants

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o The burden of a tenants covenant binds assignees of the lease if the covenant “touches and concerns” the leased land

o Touches and concerns leased land’ means a covenant which inherently relates to the land or to the way in which the land is used or if it affects the landlord in their capacity as such and the tenant in thir capacity as such.

o s 70A(1) provided that a covenant relating to any land of the covenantor is deemed to be made by the covenantor on behalf of himself and his successors in title and has the effect as if such successors were expressed, even though the subject matter may not be in existence when the covenant is made

o The original tenant is liable after the lease is assigned but assignees are only liable for breaches that occurred while the lease was vested in them. LL can sue both the tenant and the assignee (contract and estate respectively).

o The assignee of the lease can enforce against the LL all those LL’s covenants that “touch and concern” the land. That is the benefit of those covenants passes to assignees of the lease

Equity: o Equitable leases are not subject to these rules as privity of estate as it is a common law rule. o There can be no privity of estate between a landlord and a tenant where the lease is equitable as it

does not comply with the formal requirements for creating a legal lease or must have entered and paid rent in circumstances which give rise to lease at common law.

o Where there is a legal lease from the LL to Tenant and then the tenant assigns the lease, in equity, to assignee there would be no privity of estate and the LL’s only remedy would be against the original tenant.

Running Of Landlords Covenants(i.e Assignment of reversion) (Spencers Case) Common law

o s 117 deals with the running of the benefit of covenants when the reversion is assignedo As a result of s 117 assignor of reversion loses all right to the tenant for breaches of covenant. This

is true even where the breach occurred before the assignment. However, the assignee may assign the original assignor the right to enforce the covenant. For the covenants to run they must still touch and concern the land. (328 text)

o s117(1) CA Examples: rent and all benefits of lessee’s covenants are annexed to and go with the

reversion Benefit of every condition of re-entry is annexed to and goes with the reversion → s117(2) CA Benefit of condition of re-entry or forfeiture for breach of lease can be

enforced…o Benefit

s 118 CA Burden of landlord’s covenant “with reference to the subject-matter of the lease”

(ie touch and concern the land) is annexed to and runs with reversion and may be enforced by the tenant. LL is not liable for breaches that occurred before the assignment

o Equity: ss 117 and 118 apply to equitable leases evidenced in writing and thus do not apply to oral leases.

Termination of Leases and Remedies Forfeiture by Re-entry

o Landlord cannot re-enter and forfeit unless the lease allows or there is a statutory right. o If no express proviso then s 85(1)(d) of CA implies into the lease the right of a landlord to re-enter

and determine the tenants interest if rent is in arrears for one month, or if the tenant defaults for two months in performing any stipulation in the lease, or if the tenant fails to comply with a notice to repair.

o Procedure:

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must show that breach has triggered right to exercise power. Must not have waived the breach. Must comply with procedural requirements of lease or statute; notice under s129 CA. Must actually exercise power by re-entering or serving a summons for possession. Normally tenant’s breach does not have to be fundamental to permit re-entry.

o Repudiation/re entry : Where their has been repudiation the landlord can either terminate under contract law or

re-enter and forfeit the lease by exercising an express right of re entry in the lease. Either way the LL can recover damages for loss of bargain under the general principles of contract law which allow damages for loss of bargain where repudiation is established.

Repudiation or fundamental breach is where there is a breach of a condition or breach of another term or terms which is so serious that it goes to the root of the contract, and thus deprives the other party of substantially the whole benefit of the contract. This entitles the innocent party to rescind the contract and sue for damages for loss of the bargain (Progressive Mailing House) What needs to be established in order to constitute a repudiation is that the party evinces an intention to no longer be bound by the contract or that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way (Shevill).

Waiver of Breach : (Page 339) Breach does not automatically result in forfeiture of lease; renders it voidable at

landlord’s option. If landlord elects not to void the lease, cannot forfeit the lease later for the same breach. Waiver may be express or implied. If landlord accepts or demands rent due after breach, a waiver results as a matter of law

Merger o At common law, if the reversion and the leasehold interest vest in the one person, the leasehold

merges in the greater (reversion) and is destroyed. Regardless of persons intention. S 134 conveyancing act

Surrender o A lease can come to an end by surrender. Surrender may be express or by operation of law. It puts

an end to parties future obligations but does not release them from liability for breached occurring before the surrender. Example of surrender is abandonment of possession.

Frustration o Leases are subject to general principle governing frustration of contracts, however there is no

frustration where the tenant is ‘left with something he could use’ Fundamental Breach:

o Goes to the root of the contract.o Breach of an intermediate term (not a condition)o Seriousness of breach and if breach impinges on landlords benefits.

What are the Formal Requirements of Termination? Rent:

o 85(1)(d) implies into lease power for landlord to re-enter without formal demand for payment when rent is in arrears for one month

Other then rent: o s 129(1) requires prior notice of breach of covenant other than rent. s 129(1) cannot be contracted

out of. If does not comply with the section the re entry is ineffective o When re-entering physically:

a landlord cannot use more force than is reasonably required to re-enter: s 18 Imperial Acts Application Act

o Re enter by court proceedings : summons claiming possession in an unequivocal fashion and served on the tenant operates

as a re-entry and brings about a forfeiture from the date of service.What are the Remedies of the Tenant from Termination?

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Relief against Forfeiture o Non-payment of rent :

If the rent is paid (even late) and if the landlord is compensated for loss that followed the tenant’s default, then the security has served its purpose and the tenant ought to have the lease restored .

o Other then rent : s 129(2) of CA . Under this section a tenant can apply for relief against forfeiture either: a)

Where the landlord is proceeding by court action or otherwise to enforce the right of re entry; or b) Where the landlord has re entered without court action.

Relief against forfeiture of Sublease o As a general rule allowed where a headlease is forfeited, and sublease falls with it. (Exception see

page 354 text) Relief against loss of option to renew

o An estoppel may be given denying that the option has been duly exercised.

What are the Remedies of the Landlord at Termination? Damages following termination (Progressive Mailing House v Tabali )

o where terminated for tenants breach, but falls short of repudiation, landlord can only recover damages suffered up to date of termination

o where terminated for tenant’s repudiation then landlord can recover damages for loss of future benefit under the lease

o provisions in leases that particular covenants in the lease are ‘essential or fundamental terms’ are broken then entitle the landlord to sue for loss of future benefits under the lease.

o Note the extent of the landlords damages is subject to the landlords obligation to take reasonable steps to mitigate the loss eg attempting to find another tenant.

Compensation o Use and occupation: Where there is an agreement to pay a defined amount for rent, the landlord is

entitled to recover the rent accrued in the same way as any other debt. If no rent amount has been agreed upon then the LL will be awarded whatever is a reasonable sum for the tenant’s use and occupation of the land. The tenant must have in fact used or occupied the premises, although constructive operation is sufficient. Also, there must have been an agreement, express or implied, that the tenant would pay for the use of the land

Mesne profits: o If a tenant refuses to leave the premises they are a trespasser and the LL is then entitled to damages

for rent which would have been obtained on a re-letting but for the tenant’s continued occupation. Does not need to prove that the premises would have been leased. Will receive money for the whole period of trespassing (page 334 text at bottom).

Damages and Injunction: (335 – 336 text)Loss of bargain damages: the landlord can get this if the lessee has repudiated the contract or if the lessee breaches an essential term or from a funderamental breach.

o The lessor must mitigate damages, by either finding a new tenanto Discounted

Re entry and Repudiation: o Even where the landlord purports to exercise the common law right to terminate for repudiation (as

distinct from exercising an express or implied right of re entry), re entry nevertheless remains necessary to put an end to the lease. This expresses the dual role of contract and property law.

Bailment

Definition

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The owner of personal property delivers that property to another for a limited duration of time, the possessor will have bailment in the property. The bailee (transferee) has a legally enforceable right to retain the goods but the bailor (transferor) has a right to regain possession. During the term of the contract, the hirer is the baileeand bailor will regain possession when the contract is breached.

Hire – when A hires a car for a month from B, the contract of hire is the bailment.

o An essential element of a bailment is the passing of possession. Walton Stores v Sydney City Council Examples

o ANY HIRE PURCHASE

Fixed Term Bailment return of possession at end of termAt will the bailor has immediate right to possession.

Rules of Bailment o The primary legal duty of the bailee is to redeliver the goods/chattels bailed to the bailor or as the

bailor may direct. While in his possession the bailor is liable to take reasonably care especially if this is for a bailee for reward. The onus of proving reasonable care lies on the defendant. In the case of conversion by misdelivery notions of care are irrelevant.

o Expressed simply, a bailee is liable for loss or damage resulting from his dealing with the goods bailed in a manner not authorised by the bailor. (Jackson v Cochrane)

o A bailee does not have to act as insurer, just act reasonably (take reasonably care) o if item is stolen, bailee must show that he acted reasonably to prevent intruders who might steal

goods. Bailee must take positive action to deter thieves and prevent them from accessing bailed goods.

o Law does not look kindly on exclusion clauses unless notice is given (Tottenham Investments Pty Ltd v Carburettor Services Pty Ltd)

What is a Sub-Bailment? Definition

o A sub-bailment is where there has been a bailment by the owner of goods to a bailee, followed by a sub-bailment by the bailee to a sub-bailee.

o The sub-bailee has an obligation to take due care of the bailor’s goods and is liable if they do not do so. Same standard of care as the original bailee

Rules of Sub-bailment o A sub-bailment is where there has been a bailment by the owner of goods to a bailee, followed by a

sub-bailment by the bailee to a sub-bailee.o The sub-bailee has an obligation to take due care of the bailor’s goods and is liable if they do not do

so. Same standard of care as the original bailee.o Once it is recognised that the sub-bailee, by voluntarily taking the owners (bailors) goods into his

custody he then becomes the bailee of those goods. It follows that the owners rights against the sub-bailee will only be subject to terms of the sub-bailment if he has consented to them. Ie. If the bailor has authorised the bailee to sub-bail to the sub-bailee on those terms. Such consent may be express or implied.

o The sub-bailee must be aware that he is holding goods for the original owner as opposed to the bailee.→ (The Pioneer Container)

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Lesson Plan #8Topic: “Servitudes Over Property”

Easements: Basic FeaturesWhat are Easements?

Definition: a right enjoyed by the owner of one piece of land to carry out some limited activity (short of taking possession) on another piece of land, e.g., right to cross one piece of land to provide access to another. Easements are a right which are not natural; they must be acquired by either agreement or operation of law. Profits a prendre) also fall into this category of rights

Distinction between Profits a prendre and easements: Easement may give rights of entry, but never to take away part of the land, Profits a prendre always gives a right to enter, and always a right to remove some part of the soil or produce.

Personal rights: if A’s right to cross B’s land is an easement, it binds all future owners of B’s land, if it is simply a licence, personal to A and B; it does not bind the land and a later owner of B’s land may ignore it

Positive easements: rights of entry onto another’s land to enable something to be done on the land, e.g., right of way

Negative easements: rights to prevent something being done, conferring no right of entry; categorise from Phipps and Pears; light, air, support of buildings on land, right to receive water.

What are the essential Characterisics of an Easement? (Re Ellenborough Park)

o There must be a dominant and servient tenement : an easement is exercised over land (servient tenement) for the benefit of other land (dominant tenement). The easement will run with the land (both benefit and burden)

o Easement must ‘accommodate’ the dominant tenement : It must benefit the dominant tenement and be connected with its enjoyment. Whether it “accommodates” the land depends on whether it has a necessary connection with the land, in the sense of being reasonably necessary for its better enjoyment as a parcel of land. Question of Fact. Usually will need to be contiguous. Easement will survive subdivision but will only benefit that part of the larger whole that was the former dominant tenement

o If an easement benefits a business on the land it doesn’t necessarily benefit the land unless the business profits are connected with the land. Clos Farming Estates v Easton & Anor

o The same person must not own and occupy the dominant and servient tenement : except under s 88B of CA which allows the registration and recording of a plan of land, indicating an easement intended to be created, creates the easement even though the land benefited and the land burdened are in the same ownership

o the right claimed must be capable of forming the subject matter of the grant Easements “lie in grant” grantor must be capable of granting an easement, grantee must be capable of receiving it right must be of the type that is capable of being granted by deed grant must not be too vague or indefinite

Creation of Easements

Creation by express grant Legal Must be by deed (s 23B CA). No particular words are necessary. Person who holds an equitable interest

cannot create a legal easement. Equitable Mere writing will suffice (s 23C). If no writing can be enforced by sufficient acts of part

performance (ss 23E(d), 54A). Subject to above a binding agreement to grant a legal easement creates an

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equitable easement, since equity regards as done what ought to be done. An agreement that fails for want of formality creates an equitable easement.The grant of an option to acquire an easement also creates an equitable easement.→ What sort of easement will be determined by the terms of the agreement. To create an easement the agreement must display on intention to impress qualities on the dominant and servient tenements of a permanent nature →

Enforcement against third parties s 88(1) CA an Easement is unenforceable against a person not party to its creation unless the easement clearly indicates:

o a) the land benefited; o b) the land burdened; and o c) the persons whose consent is required to release, vary or modify the easement.

Creation by express reservation A conveys or transfers the fee simple to B; and B grants an easement to A. Statutory Easement and Exstinguishment s 88K allows the Supreme Court to make an order imposing an easement if it is reasonably necessary for the

effective use or development of the other land s 88K(2) no order can be made unless the court is satisfied that the use of the benefited land will not be

against the public interest. The owner of the burdened land, and those with registered interest in the burdened land, can be adequately compensation (s 88K(4)). The applicant has made all reasonably attempts to obtain an easement, without success. The easement takes effect when it is ordered.

s 88K(2)(b): Court cannot grant easement unless the owner of the servient land can be adequately compensated for any loss. See page 393 text for amount. Compensation determined solely by reference to the loss incurred by the servient owner, not the benefit to the dominant owner.

NOTE Easement cannot be granted that is more extensive than the grantor’s own interest in the land. It is possible to grant easements for duration of a lease

Problems of Scope and Location

Easements expressly granted or reserved : o This is a matter of construing the instrument where the normal rules apply in that it will be looked at

according to the normal meaning of its words, read in the light of circumstances existing at the time of the grant.

o An easement cannot be used in a manner beyond the use which the terms of the grant and the surrounding circumstances indicate objectively was contemplated by the parties at the time of its creation.

Where words are clear and unambiguous there is no need to resort to surrounding circumstances.

Where a grant is clearly expressed in wide and unrestricted terms it will be inappropriate to limit the extent of permissible use by reference to the use made of the dominant tenement at the time of the grant.

Mere alteration of the nature or use of the dominant tenement does not affect the right to the easement, unless as a result the extent of use of the easement is substantially enlarged.

General Rules o Easement cannot be used in a manner beyond the use which the terms of the grant and

surrounding circumstances allow foro Easement cannot be used in a way that unreasonably interferes with the rights of others who are

entitled to share its useo Cannot cause avoidable damage to the servient tenemento Use of easement may change to keep up with technology, e.g. change from horse and carriage to

cars.o Grant of easement carries with it ancillary rights reasonably necessary for its exercise and enjoyment

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o Grant of easement does not traditionally impose on the grantor an obligation to keep it in repair. However, where expressed in agreement s 88F of CA will allow them to be acted upon. Otherwise, it is for the grantee to do the work needed to ensure that an easement can be exercise

o a “floating” easement is an easement which is not limited to any specific area on the servient tenement

Interference with Easement : o There must be a real and substantial interference.

Does not necessarily need to cause present physical impediment. o Remedy: Substantial interferences are actionable in nuisance. Two courses are available:

Abatement: the interfered with may enter the land and put an end to the interference. May seek damages or an injunction

Short v Patrial Holdings Pty Ltd (1995): Ratio →o Easement is not a personal right; it is attached to the dominant land for the benefit of the land.o Any part of the dominant land may benefit from the easement unless, on proper construction,

easement only benefits land in original form.o If the land is subdivided, dominant tenements cannot impose additional burden on servient

tenement just because there are more users.o Presumption that an easement is intended to be appurtenant to the dominant tenement and every

part of it. Harris v Flower

o prohibited the rule that the owner of DT could use the right of way to transit from the DT to another parcel of land that doesn’t have the benefit of the easement

National Trust v Whiteo permissible to use the right of way to gain access to land other than the DT if the purpose of access

was ancillary to the enjoyment of the DT Westfield Management Limited v Perpetual Trustee Co Ltd

o court held that the rule prohibited the use of the easement in a manner that was not contemplated by the parties at the time of the grant

Termination and Modification or easements

How may an Easement be terminated or Modified? Express release :

o an express release by the owner of the dominant tenement. Must be by deed (s 23B(1)) Abandonment :

o There must be shown on the part of the dominant tenement owner “a fixed intention never at any time thereafter to assert the right himself or to attempt to transmit it to anyone else”.

o Failure to assert an intention to use an easement is very different from asserting an intention to abandon it.

o Mere non use it not abandonment Common ownership and possession:

o Where both pieces of land are fused by coming into common ownership and possession of the same person, they are extinguished. Exceptions (page 420):

o NOTE No extinguishment when the tenant, B, of A (A being the dominant tenement and B being

the servient tenement) is in possession of the servient land. Also the easement will only be suspended if A owns and occupied the dominant land but is

only a tenant on the servient land. Easements created under s 88B of CA are not extinguished by common ownership and

possession. Order of Court:

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o (Durian Holdings v Cavacourt (2000)) under s 89(1) the Supreme Court can modify or wholly or partially extinguish an easement if satisfied:

a) its continued use would impede the reasonable use of the servient land without practical benefit to the person entitled to the easement

b) those entitled to the easement have agreed to the easement being partially or wholly extinguished, or may be considered to have abandoned the easement

c) Modification or extinguishment of easement would not substantially injure those entitled to the easement.

NOTE: Court may declare whether land is affected by easement, nature and extent of

easement, and who may enforce it. An Easement may be treated as abandoned if it is satisfied that it has not been used

for at least 20 years (Real Property Act s 49(2)). Cannot move an easement but can extinguish the old one and create a new one.

Durian Holdings v Cavacourt (2000): see page 370 SM for reasons or extinguishment and below, easement has not been used for the purpose it was created for since November 1971 the easement was originally granted because the dominant tenement was landlocked, that is no longer

the case it is impossible to use the dominant tenement for its original purpose the owner of the servient land has been using the site of the easement for different purposes since 1981 the use of the tenement for its original purpose is now impossible, and illegal

Profits a PrendreWhat are Profits a Prendre? (Clos Farming) Definition:

o A right to enter another person’s land and take away part of the soil or the natural produce of the soil. They may exist in

Common: exercisable in common with others or

Severability: exercisable to the exclusion of all others. This is determined by construing the grant of

the profit Example

Plant products that are part of the soil and a natural produce of the soil can be subject to profit a prendre.

Some are the product of cultivation and are not the subject of a profit a prendre: Fructus naturales v fructus industrials. For distinction see page 423.

How Are Profits a Prendre created? They may exist in perpetuity or for a limited time only. It must be created by deed (s 23B) but in equity mere writing is sufficient (s 23C) as are acts of part

performance. Can also be made via a registration of a plan under s 88B. In order to be enforceable the instrument must

indicate the land to be burdened and the land to be benefited (s 88A)How are Profits a Prendre Extinguished? Released in a similar fashion to easements. Also Termination of Lease or mortgage. s 89 court order to modify or extinguish. Or when subject matter becomes exhausted, or there is common ownership.

Forestry Rights: see page 426

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What are Rentcharges? → Definition: Is an annual or periodic payment charged on land and payable by the landowner. It gives rise to no tenure or privity of estate between the parties; the owner of a rentcharge has no tenurial relationship with the land on which it is charged. It is incorporeal property in gross, enjoyed by the owner personally and not in the capacity of proprietor of land.→Creation→ Rentcharges may be held in fee simple, for life, or for a term of years. Must be by deed to create legal interest inter vivos. In equity may be granted by a contract to grant them; deed is not required.Enforcement: see page 429.

CASES:Clos Farming Estates v Easton & Anor [2001]: find the difference between

Moody v Steggals: where the sign advertising the business accommodated the inn which thus accommodated the land; and

Hill v Tupper: where there was no connection between a monopoly pleasure boat business on the canal and the ordinary use of the small piece of land on the bank. Did not accommodate the dominant tenement.

Introduction to CovenantsA freehold covenant is essentially a promise made by an owner of land to a third party. Generally they have arisen in relation to the sale of part of an estate, where (for example) the purchaser of the part promises not to use the land except for a private residence, so as to protect the value of the land being retained by the vendor. As it forms a contract between the land owner and the third party, it can be enforced between those two parties. Problems arise where either of the parties sells their interest. At common law the benefit of a covenant can pass on the sale of land, although the covenant must touch and concern the land – that is, it must be of importance to successive owners and enhance the value of the land. A covenant not to be a nuisance to the covenantee would seem to fall within this definition.

Positive covenant (easements): will not bind 3rd parties or successors. The contract will allow the parties to sue: privity of contract

Negative covenant (restrictive covenants): can bind 3rd parties or successors in equity, based on the rules of unconscionability

Covenanter: the party subject to the burden of a covenant (Subservient land) Covenantee: the party entitled to the benefit of a covenant (Dominate land) remedies are seen in contract law. However only nominal damages are recoverable, because the

covenantee who has parted with the land has suffered no meaningful loss At law: only the covenantee must own the land In equity: both parties must be owners of land The original parties continue to be bound even after having left the property After the original parties to the contract have sold their estates, then only the benefit can be imposed on 3rd

parties, and the burden if it is a positive covenant, not if it is negative The enforceability of covenants may be extended to 3rd parties at Common Law, in equity, or by statute

covenants at law

The Running of Covenants at LawHow do Covenants affect Freehold Land? (Rhone v Stephens)

Common Law →o Burden:

of a covenant does not run at common law. Under s 70A(1) the covantor remains contractually liable to the convantee even if the land has

already been sold to X. Devices to make the burden run

Personal Covenants: Each successive covantor will enter into an identical agreement with the original covantee.

Enlarging a long term lease: include covenant in a long term lease which is then converted into a fee simple under s 134 of CA.

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Benefit/Burden principle: the obligation to contribute in return for accepting the benefit is an intrinsic part of the rights acquired by the successor in title. Whether an obligation of this kind has been created is a question of construing the instrument that created the interest. The more closely the obligations are linked to the right acquired, the easier it is to construe the instrument as granting a conditional right. Only applies where the successor is free to reject the benefit

Repairing: under s 88BA it allows the imposition of a positive covenant requiring one or more of the persons having the benefit or burden of an easement to maintain or repair the site of the easement. If by deed it will then run with land to successors in title.

o Benefit For the benefit to run at common law it must satisfy two requirements

1) Touch and concern the covantee’s land: o the covenant must either affect the land as regards its mode of occupation, or it

must be such as per se, and not merely from collateral circumstances, affects the value of the land.

o Cannot touch and concern the land if so large that it cannot in fact reasonably benefit the land. Parties and the court have the right to sever land.

o S 88(1) requires the instrument creating the covenant to clearly indicate which land is benefited, otherwise the covenant is not enforceable against the covantor’s successors in title.

o A covenant which is entered into for the benefit of a parcel of land, benefits the whole of the land and not the individual parts which it may later be subdivided into.

o Can be rebutted when the terms of the covenant viewed in the light of surrounding circumstances indicate that the covenant was intended to benefit not only the land as an entirety but also its subdivided parts.

2) Both parties must have the intention, when creating the covenant, that the benefit should run with the covantee’s land. o The words must be found in the document creating the covenant, construed in the

light of surrounding circumstances if necessary. o s 70 CA implies this intention (NB: There are contrary views as to whether you need

to express annexation or not; better off just to express it ). Once annexed the benefit runs.

o Intention that the benefit of the covenant run with the dominant land (s70) page 523!!

The Running of Covenants in EquityHow do Covenants affect Freehold Land? (Rhone v Stephens) Equity (Rhone v Stephens)

o Burden to run Covenant must be negative: It must be negative (ie restrictive). In determining negativity equity will look at substance and not merely form. It is essentially a

term which can be achieved by doing nothing. Eg. Don’t build a house. Must benefit covantee’s land: the covenant must be intended to, and must in fact, benefit land

the covantee owns at the date of entering into the covenant. The required benefit will be absent if the covantee’s land is too large to be in fact benefited by the covenant. Land needs to be near but not contiguous. S 88 clearly indicated

To enforce against successors

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Indicates land benefitted, land burdened = intention to run Intention: at the time of creation their must have been at intention that the burden of the

covenant should run with the covenantor’s land so as to bind successors in title. Ie. Covantor should covent for “himself, his heirs and assigns”, or similar.

S 70A will presume that the covenant runs with the land unless rebutted by an expressed contrary intention; would the section be “inconsistent with the purport of the instrument”

o Benefit to Run Enforcement by original covantee :

is in contract. Enforcement by successor to original

covantee when o a) The benefit has been annexed to the covantee’s land; or o b) although not annexed, the benefit has been assigned

Tulk v Moxhay 4 conditions: a. Covenant must be negative or restrictive: Positive covenant would impose financial burden not just for refraining from doing something. Negative covenant is one that prevents the owner from doing something Whether the covenantor is required to incur expenditure, if so then it is positive Would the covenantor have to put his hand into his pocket in order to carry out the covenant? Haywood v

Burnswick Permanent Building Society (1881) Examples: to keep A’s land as an open space is negative, to erect a fence is positive, not to divide A’s land in

flats is negative, not to let A’s land fall into disrepair is positive If the covenant is partly positive and partly negative, the court will sever the positive parts, and only the

negative parts will go with the land: Pirie v Registrar-General (1962). For example, ‘keep the property as residence only’: can be positive, but may have a negative nature. Maybe you have to maintain residential buildings, keep in habitation conditions so people can live in it

b. Covenant must touch and concern the land of the covenantee: Must benefit the land, rather than a person The covenantee must have held the benefited land at the time the covenant was made The covenantee must still not part with the land before seeking to enforce the covenant: Clem Smith

Nominees Pty Ltd v Farrelly (1978) A restrictive covenant will not benefit land if the benefited land is situated at some distance from it

c. Intention to bind the land If it is personal only, the benefit will not run S 70A: presumes that the burden is intended to run with the land, unless the covenant indicates to the

contrary Burden on land, not the estate

d. Notice of burden Must have knowledge of existing restrictive covenant before he binds his interest The equitable interests will not bind a bona fide purchaser who takes for value and without notice of the

restrictive covenant Those who take the burdened land without notice (C), the covenant is automatically extinguished. If this

person then transfers the land to another party (D) with notice, the covenant cannot be revived. In other words, the covenant will still have no effect on the 3rd party (D) because C would already have unlimited rights with no covenants attached

Notice has to be knowledge of the existing covenant, it does not have to be written

“Annexation” : Page 48 of 50

Annexation will arise if the following conditions are met: Touch and concern

o Must benefit a person as owner, not as an individualo It must affect the mode of use or occupation of the land, or affect the value of the lando Obstructing sea view will decrease the value of the land, not increase it and therefore does not touch

and concern the land o Examples: to improve and keep river banks in repair (Smith and Snipes Hall farm Ltd v River Douglas

Catchment Board (1949)), to build no more than one dwelling house on the covenantor’s land (Rogers v Hosegood), keep the property as a private residence, to repair a road, not to carry on a particular kind of business on land, to supply pure water to the covenantee’s land and a covenant not to use the covenantor’s land for the retail sale of goods.

o Benefited land must be ascertainable (clearly identifiable): s 88(1). A land too large is deemed unclear (1, 700 acres was ineffective: Re Ballard’s Conveyance), unless intention is made on each and every part of the land. Where the covenantee’s land is a considerable distance from the burdened land, it was held not to touch and concern the land: McGuigan investments v Dalwood Vineyards

o Need 1 piece of land – the benefited land, but in equity you will need 2 pieces of land Intention that the benefit should run with the land

o The parties must intend that the benefit of the covenant is to run with the land and benefit the 3rd party; look at the facts

o Rogers v Hosegood: it may ensure to the benefit of the vendors, their successors and assigns and others claiming under them to all or any of their lands adjoining

o s 70: intention is presumed if such successor and other persons are expressed in the instrument; eg. ‘the benefit of Eastend Farm’ is sufficient. Whoever owns the Eastend Farm will benefit, doesn’t have to be a specific name. This presumption may be rebutted expressly in the covenant. It is also possible to exclude certain persons who derive title from receiving the benefit, such as tenants, while allowing the benefit to run with others.

The benefited land must be identified, or capable of being identified In order for the benefit of the covenant to run with ownership of the covenantee’s land the benefited land

must be identified by the covenant, or be identifiable by means of extrinsic evidence

Assignment : see page 454. NOTE: ss 70(1) and 88(1) of CA will almost always result in the benefit of any covenant that touches and concerns the land necessarily being annexed to that land and automatically passing with it dispensing with the need for it assign

Creation, modification, suspension and discharge of covenantsWhat are the Formal Requirements for Creating Covenants?

Legal Covenants must be created by deed. A restrictive covenant is an equitable interest not a legal one it need not be created by dead (s 23B).

o However, writing is necessary (s 23C) in absence of sufficient acts of part performance (s 23E). S88B: when a plan is lodged with the Registrar-General, plan must indicate restrictions intending to benefit

or burden land comprised in the plan. o Any covenants made this way are annexed to the land benefit (88B(3)) S88(1) Covenants must

comply with this section. See page 458 text. o Concerns only covenants enforceable in equity, since burden of freehold cannot run in common law. o Concerns only restrictions contained in an instrument. o Concerns the persons against whom the restriction may be enforced, not by whom it may be

enforced, applies only when a person not party to the creation seeks for the enforcement. S88(3)What are the Remedies for Breach of Covenant?

Injunctiono To succeed the owner will have to prove that the breach will cause “imminent and substantial

damage”. Where breach of a covenant already exists, the owner of the benefited land may seek an injunction to restrain continuance of the breach.

o In equity, injunction may be available if: The injury to the plaintiff’s legal rights is small

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The injury is capable of being estimated in money The injury can be adequately compensated by a monetary payment The case is one where it would be oppressive to grant an injunction

Damages Can be sought at common law where the action is taken by the original convantee (or by a successor to

whom the benefit has run or been assigned) against the original convantor. Where the action is against a successor of the original covantor, damages must be sought in equity, for only in equity does the burden of a covenant run.

How are Covenants Extinguished? Operations of Law : Extinguished if land benefited and land burdened come into common ownership. Where

only parts of the benefited and burdened lands come into common ownership (and possession) the covenant is extinguished to that part. Do not revive if land later goes back into separate ownership. Under s 89 common ownership is a ground for the SC to extinguish the covenant.oOlder system title, with no notice of the covenant, purchaser is not bound by the covenant. Hard to

prove because the covenant is part of the title deeds Release :

oExpress release: owner of land benefited may release the covenant expresslyo Implied release: if owner of land benefited submits to a long course of usage which is inconsistent with

the existence of the covenant, or has disregarded breaches to justify that a reasonable person would believe that future breaches would be ignored. Mere inactivity does not in all cases result in an implied release, e.g., if the breach is infrequent.

s 89(1) of CA allows the Supreme Court in specified circumstances to modify or wholly or partially extinguish easements and restrictive covenants. It will do so when satisfied:

a) The existence of the covenant is useless because the land use has changed (obsolete), or continued existence would impede the reasonable use of the burdened land without practical benefit to the unburdened land (must have sterilised the land);

b) The person entitled to the easement or benefit have agreed to the modification or extinguishment, or by their actions might be seen to have abandoned the easement/covenant;

c) The proposed modification or extinguishment will not substantially injure the benefited party.

Two considerations need to be taken into account:1) The proposal before the court cannot be merely reasonable to an impartial planner; and2) It was not designed to enable a person to expropriate the private rights of another purely for his

own profit.

Town Planning considerations: these can be taken into account in determining whether the grounds prescribed by s 89 have been made out, and also (where they have been made out) the way in which the court should exercise its discretion. Even if a modification or extinguishment is necessary to enable the development to proceed the court will not be deterred from denying the application.

Discretion: Even if the Supreme Court has made out more than one of the grounds in s 89(1) it reserves a discretion to refuse to make an order modifying or extinguishing a covenant

Environmental Planning and Assessment Act: s 28 allows the act to override private covenants that would otherwise stand in the way of development. Only override the covenant to the extent necessary to allow the development to proceed. The extent of the overriding is a question of construction.

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