Property Law Example Final Exam Answers

Question 1A. Torrens Title

Relevant Parties are Sirius, Mr Kreacher, Albus, Gringotts Bank, Ron, Hermy, Elf Bank, Malfoy and Uncle Vernon. 

Sirius: He was originally the Registered Proprietor of the freehold estate in fee simple of Grimmauld Place.  

Albus: According to the Real Property Act 1900 (NSW) s 57(1) states that “A mortgage, charge or covenant charge under this Act has effect as a security but does not operate as a transfer of the land mortgaged or charged.” This means that the mortgagor retains the legal title to the property in question with the relevant mortgage and the mortgagee holds a security over the property in the event the mortgagor fails to repay the mortgage. In the facts Harry has clearly been given a mortgage from Albus on the grounds of faith and blind trust in order to purchase the property of Grimmauld Place, and Albus would have held an interest in the property as a security for the amount of $500,000 only if he registered the mortgage officially. Since Albus has not registered the mortgage, he has lost his right in holding a legal interest in Grimmauld Place as security for the mortgage taken out by Harry. 

Ron: Had Ron lodged a caveat on time he would have had an equitable interest in Grimmauld Place. 

Vernon: Harry’s uncle also has an equitable interest for the retrieval of the Privet Drive Property which he previously owned as he has also been removed of his legal title by Harry’s fraud.

Hermy: 

Has Hermy Satisfied the legal requirements in order to acquire Grimmauld Place? According to s 4 of the Statute of Frauds 1677 (UK) there are formal requirements which must be met in order to have a legally binding contract. Section 54 A of the Conveyancing Act 1919 (NSW) states that “the contract upon which such action is brought, or some memorandum or note of the contract, is in writing, and signed by the party to be charged or by some person by the party lawfully authorised.” In accordance with the facts stated Harry has provided Hermy with the certificate of title to the property and has furthermore transferred his interest in Grimmauld Place through a completed written contract of sale document which is properly stamped and signed. Thus, Hermy has satisfied the legal requirements as per s 54A of the Conveyancing Act 1919 (NSW) to acquire Grimmauld Place. 

Does Hermy have notice of any previous unregistered interests? As stated in s 43 of the the Real Property Act 1900 (NSW), “Except in the case of fraud no person...dealing with...the registered proprietor...shall be required...to...ascertain the circumstances under...which such proprietor or any previous proprietor...was registered...or shall be affected by notice actual or constructive of any trust or unregistered interest.” In accordance with the facts stated both Hermy and Elf Bank have no knowledge of the unregistered mortgage interest of Gringotts Bank owing to unawareness but are aware of the unregistered leasehold interest that Mr Kreacher holds owing to the failure of properly inspecting the property. Hence, Hermy does not have notice of previous unregistered interests and thus, retains the legal title to the property. 

Can Hermy gain a registered legal interest in Grimmauld Place? As per s 41 of the Real Property Act 1900 (NSW) which says that “dealings in relation to property are not effectual until recorded in the Register.” Hermy and Elf Bank have both submitted their dealings in order to be registered. If registration is granted, then Hermy will acquire an indefeasible title. If all the above requirements are satisfied Hermy is likely to have an indefeasible title to the property.  

Elf Bank: Does the Bank have an official legal mortgage with Hermy?

Section 56C of the Real Property Act 1900 (NSW) the “Mortgagee must confirm the identity of the mortgagor before presenting them with a mortgage for lodgement”. Furthermore, as stated in S56(C) (1) of this Act the mortgagee (Elf Bank) “must take reasonable steps in order to ensure” the complete identity of the mortgagor before providing them a mortgage. It is unclear from the facts whether these steps have actually occurred however the mortgage was executed and it can be presumed that all these requirements were fulfilled by Hermy. Thereby, making the mortgage official between the parties.

Does Elf Bank hold any interest in Grimmauld Place? According to the Real Property Act 1900 (NSW) s 57(1) states that “A mortgage, charge or covenant charge under this Act has effect as a security but does not operate as a transfer of the land mortgaged or charged.” This means that the mortgagor retains the legal title to the property in question with the relevant mortgage and the mortgagee holds a security over the property in the event the mortgagor fails to repay the mortgage. In the facts Hermy has clearly taken out a mortgage with Elf Bank in order to purchase the property, therefore Elf Bank does hold an interest in Grimmauld Place as a security for the amount of $630,000 that Hermy has taken through a mortgage. Elf Bank therefore holds a legal interest in the property only for the security of Hermy’s mortgage.  

Malfoy: Has Malfoy Satisfied the legal requirements in order to acquire the Privet Drive property? According to s 4 of the Statute of Frauds 1677 (UK) there are formal requirements which must be met in order to have a legally binding contract. Section 54 A of the Conveyancing Act 1919 (NSW) states that “the contract upon which such action is brought, or some memorandum or note of the contract, is in writing, and signed by the party to be charged or by some person by the party lawfully authorised.” In accordance with the facts stated Harry has provided Malfoy with the certificate of title to the property and has furthermore transferred his interest in Privet Drive through a completed written contract of sale document which is properly stamped and signed.Thus, Malfoy has satisfied the legal requirements as per s 54A of the Conveyancing Act 1919 (NSW) to acquire Grimmauld Place. 

Does Malfoy have notice of any previous unregistered interests? As stated in s 43 of the the Real Property Act 1900 (NSW), “Except in the case of fraud no person...dealing with...the registered proprietor...shall be required...to...ascertain the circumstances under...which such proprietor or any previous proprietor...was registered...or shall be affected by notice actual or constructive of any trust or unregistered interest.” It is clearly stated in the problem question that Malfoy does not have any knowledge of any unregistered interests of any of the parties involved and he also does not have any knowledge that the documents of the property were in fact forged by Harry. In saying this Malfoy should have checked and ensured that this was not the case. However, this point is not considered according to the facts. Therefore, Malfoy will retain a legal title to Privet Drive.    

Can Malfoy gain a registered legal interest in Privet Drive? As per s 41 of the Real Property Act 1900 (NSW) which says that “dealings in relation to property are not effectual until recorded in the Register.” The facts state that Malfoy submitted his dealings in order to be registered. If registration is granted, then Malfoy will acquire an indefeasible title. If all the above requirements are satisfied Malfoy will have an indefeasible title to the property.  

 

Question 1B. Torrens Title

Sirius: He was originally the Registered Proprietor of the freehold estate in fee simple of Grimmauld Place.

Albus: According to the Real Property Act 1900 (NSW) s 57(1) states that “A mortgage, charge or covenant charge under this Act has effect as a security but does not operate as a transfer of the land mortgaged or charged.” This means that the mortgagor retains the legal title to the property in question with the relevant mortgage and the mortgagee holds a security over the property in the event the mortgagor fails to repay the mortgage. In the facts Harry has clearly been given a mortgage from Albus on the grounds of faith and blind trust in order to purchase the property of Grimmauld Place, and Albus would have held an interest in the property as a security for the amount of $500,000 only if he registered the mortgage officially. Since Albus has not registered the mortgage, he has lost his right in holding a legal interest in Grimmauld Place as security for the mortgage taken out by Harry. 

Ron: Had Ron lodged a caveat on time he would have had an equitable interest in Grimmauld Place. 

Vernon: Harry’s uncle also has an equitable interest for the retrieval of the Privet Drive Property which he previously owned as he has also been removed of his legal title by Harry’s fraud.

Hermy: Hermy has satisfied all the legal requirements in order to acquire the property. Section 43 of the Real Property Act 1900 (NSW). According to the fact scenario Hermy and Elf Bank are deemed to have knowledge of both Ron and Mr Kreacher’s unregistered interests as they have not properly checked the property but were unaware of the Bank Gringotts mortgage which was unregistered. Hermy would thereby leave her property which would be subject to all equitable interests of the relevant parties that she had notice of at the time she was given the legal title. Both Elf Bank and Hermy have an official legal mortgage. 

Malfoy: According to the scenario Malfoy had deliberately decided to ignore his feeling that he was not dealing with the registered proprietor at the time which was Vernon and went ahead with the deal of Privet Drive anyway. This act can make Malfoy potentially guilty of fraud as he had a feeling that their agreement may have been fraudulent. Malfoy may lose his title to the property and the title will be returned and restored back to Vernon after legal proceedings take place. 

 

Question 1C. Torrens Title

Caveats can be lodged by anyone who is claiming a legal or equitable unregistered interest in Torrens Title Land as per s 74F(1).

Caveats should be lodged when the person who is granting the interest is the registered proprietor (that is when indefeasibility is still in operation) Leros Pty Ltd v Terara Pty Ltd (1992). 

Caveats all allow the registered proprietor in this case Vernon who has lost control of the Certificate of Title due to Harry’s fraud to caveat in order to protect his own interest according to s 74F(2). 

The effect of caveat is to prevent the person getting indefeasibility and the winner of the legal title will be decided by the general law priority rules. 

Priority accorded will be based on registered legal interests first, registered equitable interest second, unregistered legal interests third, unregistered equitable interests fourth and the unregistered v unregistered interests last. 

 

Question 2A. Fixtures

Definition of Fixtures: Fixtures are items which have developed and are clearly annexed or attached to land in ways which ultimately leads them to become a part of that land. It follows from a Latin maxim ‘quicquid plantatur solo, solo credit,’ which essentially means whatever is affixed to the soil becomes a part of that soil. 

In the case of McIntosh v Goulburn City Council (1985), according to the decision of JA Mahoney whose decision was that there can be no single test applied in order to sufficiently determine whether an item of the property is a fixture or a chattel. Instead as per the decision in the case of Belgrave Nominees Pty Ltd v Barlin-Scott Airconditioning (Aust) Pty Ltd (1984) by the Supreme Court of Victoria several factors including the degree of annexation and the intention behind that annexation must be considered and taken into account in order to determine whether an item is a fixture or a chattel. This applies to all fact scenarios and applies to the above hypothetical scenario. 

Annexation ought to be determined through two principles arising from a two step test found in the common law case Holland v Hodgson (1872) a UK case in order to determine whether an object can be classed as a fixture or not: 

1. The degree of annexation (that is the extent of the item which is attached to the property).
2. The purpose of annexation (this is the intention).  

In order to decide whether or not the items of the property will be considered as fixtures or that of chattels it is important to have a look at the test which is found at common law in the cases of Holland v Hodgson (1872) a UK and Belgrave Nominees Pty Ltd v Barlin-Scott Airconditioning (Aust) Pty Ltd (1984) case from which two very important principles arise that of “if an item is fixed to the land, and is not merely resting by its own weight, then it is more likely to become a fixture” and “if an item is not fixed to the land, and is purely resting on its own weight, then it is more likely to become a chattel”. There are two presumptions when determining if an item of property in question is a fixture or that of a chattel. 

1. If the chattel is attached to the piece of land and is considered as not resting on its own weight, then it is more likely than not for the item to become a fixture and the onus to prove that it is not a fixture is on the party seeking to prove that it is not a fixture. 
2. If the chattel is not attached to the piece of land then it is more likely than not for the item to not become a fixture and the onus to prove that it is a fixture is on the party seeking to prove that it is a fixture. 

Once this is determined, it is important to next look at the purpose of annexation which has the ability to convert the above mentioned presumptions (interchangeably) and is also stronger than that of the degree of annexation when it comes to determining whether an item which is a chattel is a fixture or whether it will remain as a chattel. For our purposes it is crucial to look at the principles of “when an item is attached the test is whether it has been fixed with the intent that the item shall remain in position permanently or for an indefinite or substantial period of time” thus becoming a fixture and “when an item is attached to the land with the intent for the item to remain in position only for some temporary purpose and for a limited period of time” thus becoming a chattel which come from the case of Australian Provincial Assurance Co Ltd v Coroneo (1938). 

For each item on the RivenDell property the above mentioned test will be applied in order to determine whether or not it is a fixture or chattel.

Legal Issue: Whether or not the neon sign, outdoor furniture, the statute of Alf, trampoline, air conditioning units and the oil paintings are fixtures which should remain inside the RivenDell property or a chattel which can be removed from the RivenDell property?

Neon Sign: 

As stated in the facts of the scenario, the large neon sign displaying the hotel’s name “The Homely House” has been mounted to the wall over the entrance to the mansion. Therefore, it is more likely to become a fixture. The onus of proof now falls on El to prove how the item is not a fixture. Regarding the purpose of annexation of the large neon sign displaying the hotel’s name “The Homely House” was always going to stay there for an indefinite period of time. Therefore, the neon sign will be classed as a fixture.   

Outdoor Furniture:

As stated in the facts of the scenario that the outdoor furniture on the flat rooftop garden on top of the mansion has been attached to that of the furniture to the hotel through the use of chains and padlocks. Therefore, it is more likely to become a fixture. The onus of proof now falls on El to prove how the item is not a fixture. According to the facts, the purpose of the annexation would reveal that at no stage was El intending to keep the furniture there forever as El’s primary intention of attaching it to the property was in fact to prevent theft from occurring in the first place. Therefore, the outdoor furniture will not be considered as a fixture per se. 

Statute of Alf: 

As stated in the facts of the scenario the statute of Alf is a heavy freestanding bronze life-size statue of El’s friend Alf which has been placed in the courtyard of the mansion and therefore has not been attached to the property, here the purpose of annexation will not apply as the statue itself is not annexed to that of the property. The onus of proof now falls on Andrew to prove how the item is a fixture. Therefore, the statute of Alf will be considered as a chattel.  

Trampoline: 

As stated in the facts of the scenario the trampoline is attached (annexed) to the ground of the property with hooks as a precaution to prevent the trampoline from being blown away in high winds. The degree of annexation in this case would say that it is more likely for the item to be a fixture than that of chattel. The onus of proof now falls on El to prove how the item is not a fixture. Regarding the purpose of annexation of the trampoline was for the sole purpose of enjoyment of El’s guests at the hotel, therefore adding to the value of the property itself. Therefore, the trampoline will be considered a chattel as per the case of Leigh v Taylor (1902). 

Large Oil Paintings: 

As stated in the facts of the scenario the large oil paintings in each of the hotel rooms which depict scenes from an idyllic country manor life is attached (annexed) to the property through nailing it into the wall as this is the only way in which the paintings can be mounted. Regarding the degree of annexation of the large oil paintings would indicate that this item would be a fixture rather than a chattel contrary to the case of Leigh v Taylor (1902) where paintings were held to be chattels. The onus of proof now falls on El’s to prove that the item is not a fixture.  The purpose of the annexation of the paintings was for both the appearance as well as the aesthetics of the hotel which the guests of the hotel could look at and enjoy thereby adding to the value of the property Leigh v Taylor (1902). Therefore, the oil paintings can be determined as both a fixture or a chattel depending on which way the court decides. 

Air Conditioning Units: 

As stated in the facts of the scenario the air conditioning units are attached (annexed) to the property as it is connected to each room of the hotel via both walls and vents. Regarding the degree of annexation of the air conditioning units would indicate that this item would likely be a fixture than a chattel. The onus of proof now falls on El to prove that this item is not a fixture. With regards to the purpose of annexation it is clearly evident that the air conditioning was used in order to control the temperature within the hotel while simultaneously providing a quality of life which all guests visiting/staying at the hotel can reasonably expect and the intention was therefore to add more to the value of the property. Therefore, the air conditioning ought to be determined as a fixture rather than a chattel. 

Conclusion: Therefore, the neon sign and air conditioning units should be classified as fixtures while the outdoor furniture, statue of Alf and Trampoline should be classified as chattels with the large oil painting going to whoever the court decides to give it too.   

 

Question 2B. Adverse Possession 

Definition of Adverse Possession: Adverse possession is a statutory mechanism for the changing of the ownership of land based on long term possession.

Legal Issue: Whether or not El is able to claim the legal title of Loriyan on the basis of that of adverse possession? 

In accordance with the definition as stated by Cockburn J in the case of Asher v Whitlock (1865), “Adverse possession is when a holding of or possession of the land creates an interest in that of the possessor which is enforceable against the whole world, except for someone with a superior right or that of the true legal owner themself.” According to that of s 38(1) of the Limitation Act 1969 (NSW) in order for El to obtain the said legal title to that of Loriyan, El must show that discontinuance/dispossession of that of Gladys has occurred and that this possession must be adverse in nature.

Discontinuance: 

Discontinuance is a factor of adverse possession which is detailed in s 28 of the Limitation Act 1969 (NSW). Section 28 of the legislation states “where the plaintiff in an action on a cause of action to recover land or a person through whom the plaintiff claims (a) has been in possession of the land, and (b) while entitled to the land, is dispossessed, or discontinues his or her possession.” As stated in the facts of the scenario Gladys was the original registered proprietor of the property Loriyan. Accordingly, the facts state that Gladys had moved overseas 20 years ago in order to conduct some important business and gave El the keys to her property 12 years ago. Gladys has not reclaimed possession of her property the Loriyan during the entire 20 years from when she left for overseas and this would suffice as Gladys being dispossessed of possession of Loriyan. 

Possession is required to be adverse in nature: 

It is crucial to prove both possession and that this possession was adverse in order to establish if possession was adverse in nature. In order to prove possession, the case of Whittlesea City Council v Abbatangelo (2009) states two important elements in order to satisfy possession these are factual possession and the intention to possess. 

As per the case of Whittlesea v Abbatangelo (2009) factual possession includes sufficient degree of physical control and custody of the land or occupation of it (sole access to land= custody) by the individual. From the facts, El has harvested timber from the property 18 years ago in order to supplement his income, furthermore, he has also stored goods which are highly valuable in the garage of the property 16 years ago, El has also lodged many tourists throughout the summer year starting 12 years ago and finally has held the keys to Loriyan for a total period of 11 years and 364 days from when he first received them. Therefore, factual possession of Loriyan by El has been satisfied. As per the case of Whittlesea v Abbatangelo (2009) there must be an intention by El to exercise exclusive control of Loriyan and furthermore to exclude the whole world at large without owning the property per se. Accordingly, El has used the property to create extra income, has held the only set of keys known to the property and would be assumed to be the true owner of Loriyan to any person who stayed at Loriyan. Therefore, it is established that El had an intention to possess Loriyan even though he does not own it at the time. 

Possession “must be open, not in secret, not taken by force or adverse, not by consent of the true owner” as per the case of Mulcahy v Curramore [1974] in order to satisfy the element of possession being adverse in nature. It is clear based on the facts that El does not have Gladys permission to use her property in the ways in which El has in the scenario. Furthermore, it was clear for all to see as the property was open through the use of the property as a hotel for paying guests and El’s possession was peaceful and did not harm anyone in any way. Therefore, this element is satisfied and El may be able to claim Loriyan unless he is barred by the statute of limitations act regarding time. 

Time Period:

Section 27(2) of the Limitation Act 1969 (NSW) prohibits a dispossessed owner (Gladys) of the land from bringing a cause of action to recover her land after the passing of the prescribed period of time which is 12 years. Based on the facts El has received a set of keys to Loriyan from Gladys 12 years ago providing him with full access and possession of Loriyan. After 11 years and 364 days after El received the set of keys Gladys says that she is going to move back into Loriyan in a couple of weeks’ time. Because Gladys has not reclaimed possession of Loriyan until after the 12-year period lapses. Therefore, El has adverse possession as prescribed by the legislation of 12 years. Gladys title to the property has been extinguished and El has his rightful title to the property.