Property
Semester 1 2001
Question 2:
Mark: 73 scaled to 78
Issue
The issue here is whether V has any basis upon which she can evict P or S in order to develop the property.
Rudi’s Lease
Primarily, Rudy has a legal and registered lease and it is therefore prima facie enforceable against V. However V may still have grounds to evict R due to possible breaches of the lease covenant.
The facts show that the lease required the rent to be paid quarterly in advance. Under s.84 Conveyancing Act there is also an implied covenant that tenants will pay the agreed rent. However the facts show that R has failed to pay the installment due in March and has therefore breached his covenant.
It therefore needs to be determined whether V can enforce the covenant. As a volunteer, Bogdanovic held that volunteers take the land unencumbered by any (registered) contract of the predecessor. Therefore V cannot enforce the lease unless privity of contract and estate are established. This requires:
a) That the assignee has exactly the same interest as the assignor; and
On the facts, as V received full ownership of the property, it is assumed that this is exactly the same interest that her father had, and that he passed it all on to her.
b) That the express covenant touches and concerns the land
A covenant to pay rent ‘touches and concerns’ the land and V can therefore enforce the covenant.
Remedies
V’s options for a breach of a tenant’s covenant include: damages, injunction, specific performance and forfeiture. It is clear on the facts that V wants to get rid of R, so her preferable option is forfeiture, to bring the lease to an end.
The power of forfeiture can be express. As this is not clear on the fact, it can be implied under s.85 Conveyancing Act (NSW) so long as the tenant is in arrears of rent for 1 month. This is clearly established on the facts (see above). However it should be noted that there is a strict approach to the notion of waiver, and if the landlord (LL) is found to have ‘put up with’ a breach, they are considered to have consented to the breach and cannot forfeit on that ground. On the facts it is not clear whether V’s actions amounted to waiver, and more evidence is necessary to conclude on this basis.
Conclusion
Should there be no findings of consent to non/late payment of the rent, V can validly exercise her power of forfeiture and consequently terminate R’s lease + refer to relief against F
Salim’s Lease
Salim has a legal lease under s.23B Conveyancing Act as it is in the form of a deed, however the lease was not registered. Therefore V, as registered proprietor (RP), prima facie has indefeasible title, and the lease cannot be enforced against her, unless an exception applies: s.42 RPA
1) Unregistered Lease Exception
Section 42(1)(d) RPA states that is order for the exception to apply, the maximum duration of the lease must be 3 years, including any options to renew. The facts show that S’s lease was for 2 years, with an option to renew for 2 years, totaling 4 years, and therefore this exception is not applicable.
2) Fraud
Fraud must be attributable to the RP: Assets Co. It is clear on the facts that V had notice of S’s lease, however mere notice is insufficient: s.43 and there must be acts of personal dishonesty or moral turpitude: Wicks v Bennett.
On the evidence available it does not appear that V acted with moral turpitude or dishonesty and so this exception does not apply.
3) Action in Personam
For this exception to apply, there must be an action that S can enforce against V.
Lease Contract
Primarily as V was not a party to the original contract, it cannot bind her as a third party and there are no contractual relations between S & V, so prima facie this doesn’t apply.
Volunteer issue
Implied Legal Lease
Arguably a legal lease can be implied on the facts as a result of S’s possession of the land and the payment of rent and V’s subsequent acceptance of the rent. In order to determine the implied period, the courts look to the way in which the rent is calculated. On the facts it is unclear, so it will be presumed that S must pay an annual sum, that is payable quarterly. The courts also consider a fixed term of years, as an intention to create the longest term, and they will subsequently award a 1yr tenancy: Moore.
In this case S had a lease for a fixed term of 2 years and given the rent calculation, it is submitted that the implied period of his tenancy is 1 year. For an implied yearly tenancy, s.127(1) Conveyancing Act states that the tenancy is determinable at the will of either party at 1 months notice.
Therefore S’s lease is enforceable against V as a yearly tenancy, however she is able to terminate the tenancy by giving 1 months notice.
Trust Relationship
Alternatively however, the facts, analogously to Bahr v Nicolay give rise to an undertaking that V would hold the property for the benefit of S, under trust. Arguably by telling S that she would honour her father’s commitment, she committed to such an undertaking, so that the trust must give effect to the tenancy and must leave it in place for the fixed term.
However this scenario may be distinguishable on the basis that she did not buy her interest, and she decided to honour the lease herself, rather than by receiving pressure from a vendor, as was the situation in Bahr.
It is therefore submitted that due to this distinction, no trust relationship was formed.
Conclusion
V can terminate S’s contract on 1 months notice, on the basis of an implied periodic lease.
Easement
V wants to know whether she is bound by the easement. Given that she is an RP, she will be bound if it amounts to an exception to indefeasibility.
Primarily it is presumed that the easement was created by prescription (must be at least 20yrs and amount to a use as of right inferred from the long use). Given that there had never been any objection to the use and that such use had continued for decades, it is submitted that it is a prescribed right of way, and is subsequently not registrable. Need more info
Under s.42(1)(a)(i) RPA, the lease will be an exception where:
a) it existed before the property was brought under the Torrens Act, but was omitted on the folio; or
b) where it was created after the property was registered, it had previously been on the register, but was subsequently omitted.
More evidence is needed to conclude, but the fact that the interest is unregistrable suggests that it probably won’t amount to an exception and V could subsequently stop E from using the track doesn’t follow
If however the contrary is found à that it existed prior to the creation of the folio, then V is bound by the easement and cannot subsequently prevent its use by E.