o (1) In a deed it shall be sufficient in the limitation of an estate in fee simple to use the words in fee or fee simple without the words heirs, or in the case of a corporation sole without the word successors, or to use the words in tail or in tail male or in tail female, without the words heirs of the body, or heirs male of the body, or heirs female of the body

o (2) Where land is conveyed to or to the use of any person without words of limitation, such conveyance shall be construed to pass the fee simple or other the whole estate or interest the person conveying had power to dispose of by deed in such land unless a contrary intention appears by such conveyance.

o (3) This section applies only to deeds executed after the commencement of this Act.

● Succession Act 2006 (NSW), s 38

o (1) A disposition of real property to a person without words of limitation is to be construed as passing the whole estate or interest of the testator in that property to that person

o (2) This section does not apply if a contrary intention appears in the will

Legal and equitable interests

● Requirements for creation of a (particular) proprietary right o Essential/substantive requirements

▪ What package of rights has grantor intended to create? E.g.:

● Fee simple [exclusive possession forever]

● Life estate [exclusive possession for duration of measuring life]

● Lease [exclusive possession for certain term]

● Easement [right, accommodating dominant land to use, or restrain use of,

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● Profit a prendre [right to enter servient land and remove the soil or its natural produce]

o Formal requirements – how must that intention be manifested?

● Legal interests

o Deed: CA, s 23B(1)

o Certain short-term leases: s 23D(2) o Implied leases and easements o Statutory tenancy: s 127

o NB: If you have a registered interest in Torrens land, that interest is indefeasible and legal. If the interest is unregistered, it will probably be equitable, but there are certain exceptions. Where the exception applies, the interest will not be indefeasible (b/c it’s unregistered), but will

nevertheless be regarded as the equivalent of a general law legal interest.

● Equitable interests

o Written and signed instrument: s 23C(1)(a)

▪ But s 41, RPA – it’s not possible to create an equitable interest in Torrens land simply by way of written and signed instrument in absence of consideration: Corin v Patton. In absence of consideration, it’s possible to make a gift by handing over transfer and CT, but simply handing over transfer isn’t enough: Corin v Patton.

o Contracts for the sale of land or to grant an interest in land

▪ Which are enforceable, s 54A(1), (2); and

▪ In respect of which equity would decree specific performance

▪ E.g. Lysaght v Edwards; Walsh v Lonsdale

▪ This principle applies to Torrens land: Chan o Declaration of trust: s 23C(1)(b)

▪ 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 o Resulting or constructive trust: s 23C(2)

▪ Constructive trusts arise when, to prevent inequitable or unconscionable dealing, equity holds one person to be trustee for another

▪ E.g. purchase price resulting trust, presumed where legal title taken in a manner that does not reflect respective contributions to purchase price and no operable

presumption of advancement. E.g. You put in ½ million, and I put in ½ million. We purchase a block of Torrens land. Only I am recorded as the registered proprietor. The way in which legal title is held doesn’t reflect contribution to the purchase price. Equity presumes that I hold the land on trust for myself and you in equal shares.

● Purchaser’s equitable interest is commensurate only with amount of purchase price paid – don’t become “full” beneficial owner until full purchase price paid o Vendor’s or purchaser’s lien – arises through operation of law

o Equity of redemption on grant of a general law mortgage

o NB: Equitable interests suffer from disadvantage that remedies for their protection are discretionary. Common law remedies are “as of right”.

General law priority rules

● NB: If A grants a legal lease to B and later purports to convey legal fee simple to C, C takes fee simple subject to B’s lease – here inconsistency b/w B’s interest and C’s interest is partial only, and C takes such interest as A has – namely, the reversion in fee simple.

● Subject to registration schemes:

o CA, s 184G [old system land]

o RPA, ss 41-43A, 45, 118 [Torrens title land]

● Prior legal v later legal

o Butt says this is an application of nemo dat – prior takes priority over later (orthodox view) o There is another view where prior can be postponed to subsequent legal in same situation where

prior legal substituted by later equitable

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● Prior legal v later equitable

o Whipp: prior legal postponed to later equitable where holder of prior legal interest is guilty of some kind of fraud, or holder of prior legal held out a third party as being its agent with particular authority to deal with land.

o Walker v Linom: if holder of prior legal doesn’t get in title deeds, and this allows third party to represent itself as true owner of property, and someone takes an equitable interest from third party, then holder of prior legal interest is postponed.

o Must be “gross” negligence. Not every failure to obtain or retain possession of the title deeds will postpone the legal interest. E.g. legal interest holder may have made genuine inquiry as to the whereabouts of the deeds and been given a plausible explanation or their non-availability; or the legal interest holder may have obtained some only of the title deeds, but with reasonable grounds for believing they were the only deeds in existence.

● NB: Don’t usually need to have regard to first 2 rules due to defeasibility and registration

● Prior equitable v later legal

o Most common where s 43A of RPA applies

o Later legal prevails if it has been acquired for value, in good faith (bona fide) and w/o notice of earlier equitable interest: Pilcher v Rawlins

▪ Purchaser = anyone who acquires for value an interest in the land. Not limited to purchaser of fee simple, but extends to any person providing value in return for interest.

▪ Value = consideration in money or money’s worth. Need not equal full value of property, but more than nominal. Marriage = valuable consideration (Floyer v Bankes).

o Extension of protection – rule in Wilkes v Spooner [1911] 2 KB 473

▪ Protection afforded to a bona fide purchaser for value w/o notice of an earlier equitable interest can also be claimed by [can “shelter”] someone taking a legal estate from such a person, even if the successor had notice of equitable interest (or was a volunteer)

▪ But protection cannot be claimed by a trustee repurchasing property sold in breach of trust or fraudulent party repurchasing property acquired by fraud and then sold to a bona fide purchaser: Vaughan Williams LJ at 483-484

▪ Facts:

● Father carried on business of a pork butcher at Premises #1 under a lease that restricted him to that use. Father carried on business as a general butcher at Premises #2 under a lease from a different landlord.

● Father assigned the lease and sold the business in regard to Premises #2 to his Apprentice. Father granted to Apprentice a restrictive covenant in respect of his lease of Premises #1 limiting the use to that of a pork butchery

● Father negotiated with Landlord of Premises #1 a surrender of his lease and the grant of a new lease to Son, allowing use of the land as a general (and not just a pork) butchery.

▪ Held: Son not bound by Father’s restrictive covenant burdening his lease of Premises #1 in favour of Premises #2. The surrender of the lease of Premises #1 to the Landlord was a transfer of the legal lease to the Landlord. Landlord was a bona fide purchaser of that legal estate for value (the grant of a new lease to the Son) w/o notice of the equitable interest of the Apprentice in the lease (the benefit of the restrictive covenant). The Landlord took free of the restrictive covenant, as did the Son, who took a legal interest from the Landlord (the new Lease). The Son could “shelter” behind the protection of the Landlord even though the Son did have notice of the Apprentice’s equitable interest.

● Prior equitable v later equitable

o Court searches for better equity – which claim has more merit?

o Important factor is whether holder of earlier interest has lodged a caveat. Caveat announces to world that they claim an interest in the land, and prohibits registration of another interest in land.

o Postponement occurs only where earlier holder’s act or neglect contributed to later holder acquiring its interest w/o notice, or where it was “reasonably foreseeable” that, as a

consequence of acts or omissions of earlier owner, a later equitable interest might be created

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o Not every equitable interest holder will be postponed for failure to obtain/retain title deeds.

▪ Some equitable interest holders have no right to deeds – e.g. purchaser under uncompleted contract for sale of land, and equitable mortgagee where there is an existing legal mortgage. Even if there is a right to deeds, there may be a good reason in circs for failing to obtain them. Or if loss of deeds after obtaining them if no evidence that loss was due to carelessness.

o Notice is not merely a factor in search for better equity, but distinct ground for disqualification

● Prior mere equity v later equitable (or legal)

o Where holder of later interest has notice of earlier interest, earlier interest has priority. The one exception is where a caveat is lodged giving notice of the interest, and then withdrawn,

suggesting the interest no longer exists.

o 3 types of notice:

▪ Actual = knowledge of the facts which give rise to the interest

▪ Constructive = actual notice if reasonable inquiries had been made

▪ Imputed = agent has actual or constructive notice of the interest

● CA, s 164 Restriction on constructive notice

o (1) A purchaser shall not be prejudicially affected by notice of any instrument, fact, or thing, unless:

▪ (a) it is within the purchaser’s own knowledge, or would have come to the purchaser’s knowledge, if such searches as to instruments registered or deposited under any Act of Parliament, inquiries, and inspections had been made as ought reasonably to have been made by the purchaser, or

▪ (b) in the same transaction with respect to which a question of notice to the purchaser arises, it has come to the knowledge of the purchaser’s counsel as such, or of the purchaser’s solicitor or other agent as such, or would have to come to the knowledge of the purchaser’s solicitor or other agent as such, if such searches, inquiries, and

inspections had been made as ought reasonably to have been made by the solicitor or other agent

● Constructive notice

o “searches… inquiries… and inspections… [that] ought reasonably to have been made by the purchaser…”

o Search of title docs

▪ For old system land, search of title deeds back to a good root of title at least 30 years old: CA, s 53

▪ For Torrens, search register – see what interests are recorded there, or if there is a caveat that asserts the existence of some form of unregistered interest in the land

▪ Inspection of land to ascertain who is in possession (e.g. a tenant) or who is using it (e.g.

holder of an easement): rule in Hunt v Luck [1902] 1 Ch 428

▪ NB: Rule in Hunt v Luck is of general law, and evolved in context of old system title.

Where land is Torrens, principle of indefeasibility of title may allow registered holder to take free of interests of occupants or users, despite notice. E.g. in some circs, registered purchasers or mortgagees of Torrens title may take free of a lease over the land, despite notice; and if they take free of the lease, they necessarily take free of tenant’s rights.

● Beneficiaries under trusts

o Generally, beneficiary’s equitable interest under trust is not postponed to a later equitable interest created by trustees in breach of trust. This is b/c a beneficiary is entitled to assume, in absence of reason to contrary, that trustees will not abuse their position to create interests inconsistent with that of beneficiary. Where trustees hold title deeds to trust property,

beneficiary is entitled to assume that trustees will not use the deeds in breach of trust to create equitable interests in favour of a third party; if the trustees do so, the beneficiary’s equitable interest under the trust will not generally be postponed to that of the third party.

o Beneficiary’s assumption is justified only where trustees have possession of title deeds. If trustees neglect to obtain title deeds and their neglect allows equitable interests to be created in favour of a third party, beneficiary’s rights under trust are no better than those of trustees; so that if trustee’s legal estate is subject to third party’s equitable interest, so too is beneficiary’s equitable interest. (Walker v Linom)

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Torrens Title

Historical introduction

● Dobbie v Davidson (1991)

Previous title systems – Old System and Registration of Title

● CA, s 184G – Instruments affecting land to take effect according to priority of registration

o (1) All instruments (wills excepted) affecting, or intended to affect, any lands in New South Wales which are executed or made bona fide, and for valuable consideration, and are duly registered under the provisions of this Division, the Registration of Deeds Act 1897, or any Act repealed by the Registration of Deeds Act 1897, shall have and take priority not according to their respective dates but according to the priority of the registration thereof only.

o (2) No instrument registered under the provisions of this Division or the Registration of Deeds Act 1897 shall lose any priority to which it would be entitled by virtue of registration thereunder by reason only of bad faith in the conveying party, if the party beneficially taking under the instrument acted bona fide, and there was valuable consideration given therefor.

● Old system – registration of a pre-existing title that arises out of the validity of the transfer, and that is registered to gain priority advantages.

● General Register; registration copies – no standardization

● Legal consequences: priority, not validity (defeasible title) (CA, s 184G)

Torrens title – Title-by-Registration

● Title derives from Registrar-General’s act in registering an instrument – the act of a statutory official acting under statutory authority – not from parties’ act in executing the instrument

o Registration not only confers title but also determines priority. As b/w registered dealings, priority is governed by order of registration, not by date of execution (s 36(9)). Order of registration is determined by order of lodgment in “registrable form” (s 36(5)).

o “mirror” principle – for every parcel of land held under Torrens title, there is a folio of the register (doc which perfectly mirrors the state of the title)

o “curtain” principle – a curtain is drawn around the register; only need to look at the register o “insurance” principle – b/c you have lost out through the operation of Torrens scheme, the state

will compensate you; utilitarian in its philosophy

● Torrens Register: RPA, s 31B

o Folios (s 32), which make a record of:

▪ Description of land; description of proprietor; particulars of estates & interests affecting land; distinctive reference

▪ Can be either a “manual folio” (wholly in written form) or a “computer folio” (a folio that is not a manual folio): s 4(1)(a)

o Dealings etc – e.g. if a lease is granted over the land, a dealing in the appropriate standardized form needs to be lodged for registration

o Kept in various mediums capable of having information recorded o Must lodge the dealing in registrable form, and the CT

● Certificate of Title (s 33)

o R-G (Registrar-General) may issue for land comprised in any folio of Register: s 33(1) o R-G must issue at written request of registered proprietor or registered mortgagee: s 33(5) o R-G must endorse with distinctive reference allocated to relevant folio of register: s 33(3) o R-G must cancel superseded Certificate of Title: s 33(4)

o New regime of eCTs: ss 33AAA, 33AA, 33AB

▪ Right to deal and control of right to deal (‘CoRD’)

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