ANSWER GUIDE TRANSFER OF PROPERTY & RISK

Basic structure:

1. Is this a contract for the sale of goods?

a. S4(1) SGA

b. Ramifications of being a SG contract

2. Classification of the goods & the effect of that classification

a. Existing SGA s 8

i. Specific?

ii. Unascertained?

3. When do the goods pass?

a. Intention of the parties SGA s20(1), OR

b. SGA s21 rules

i. Rule 1 specific + deliverable

ii. Rule 2 specific, but not deliverable

iii. Rule 3 specific, deliverable, but price not determined

iv. Rule 4 approval or sale/return

v. Rule 5 unascertained goods

c. Is there a reservation of title clause?

i. SGA s 22

ii. Romalpa clause

4. Risk prima facie passes with property s23 SGA

a. Delayed through fault?

i. Buyer fault?

ii. Seller fault?

5. Conclusion

Heading: Is this a contract for the sale of goods?

ANSWER:

A sale of goods contract (SOGC) exists when the seller transfers property rights to the buyer for a

money consideration called the price, SOGA s 4(1). In a SOGC, the time must be ascertained when

ownership of goods passes from seller to buyer. Here, A SOGC exists as there has been a transfer in

title of goods for a price, SOGA s 4(1).

Heading: Classification of goods & the effect of that classification

ANSWER:

Depending on how goods are classified will determine when property will pass. Goods may be either

existing (SOGA s 8) or future (SOGA s 3),. Goods can be further classified as [specific, SOGA s

3/unascertained].

Here, [SELECT BELOW]:

If existing & specific

ANSWER:

The goods already exist and have been clearly identified when the contract was made, SOGA

s 3. The property will pass when the parties intend the property to pass, SOGA s 20(1).

NOTE: If no clear intention, look at the terms of the agreement, the conduct of the

parties and the circumstances of the case.

If existing & unascertained

ANSWER:

The goods already exist, but have not yet been ascertained because [state why theyre not

ascertained yet], SOGA s 3. Goods will not pass until they are ascertained, irrespective of the

parties intentions, SOGA s 19.

Eg: a specific quantity of a bulk supply of wheat being sold by the seller. The goods

will be unascertained it hasnt been identified which specific tonne youre entitled

to. Whenever you buy goods based on description (eg, on the internet), the goods will

be unascertained!

If future

ANSWER:

The goods do not exist yet, and therefore cannot be ascertained, SOGA s 3. Goods will not

pass until they are ascertained, irrespective of the parties intentions, SOGA s 19.

May be identified and agreed upon at the time of the sale (specific), but the seller may

not be the owner at the time of the contract (eg A agrees to buy from B, but B needs

to buy from C first). Or, they may not exist at all (eg, seller is going to manufacture

the goods).

Heading: When do the goods pass?

ANSWER:

Where no different intention appears, SGA s 21 will determine when property passes. Here, the goods

are:

RULE ONE - Specific & deliverable

ANSWER:

Property will pass to the buyer when the contract is made, regardless of whether payment or

delivery is postponed. Therefore, property will pass when [A] and [B] contracted, on [date].

This is like going to a car yard, selecting a specific car, and signing the contract there

and then.

RULE TWO - Specific, but not deliverable

ANSWER:

Property will pass to the buyer when the thing which needs to be done to the goods is done

and the goods are in a deliverable state, and the buyer has notice thereof. Therefore, property

will pass when [A] [does what he was meant to do] to the [goods] and [B] has notice.

This is like going to a car yard, selecting a specific car, but then asking for the

windows to be tinted. Until the windows are tinted and the buyer knows that the job is

done, the property will not pass.

RULE THREE - Specific, deliverable, but the price has not been determined

ANSWER:

Property will pass when [B] does some act or thing with reference to the goods for the

purpose of ascertaining the price. Therefore, property will pass when [A]

[weighs/measures/tests] the [goods], and has determined a price for the goods.

This is like buying apples from a fruit shop, selecting six apples, but the seller needs

to weigh them to work out the price. Property will not pass until the seller works out

how much the apples cost.

RULE FOUR - On approval/on a sale or return (On consignment)

ANSWER:

Property will pass to [B] when: [SELECT BELOW]

a) [B] signifies approval or acceptance to the seller, or any other act adopting the

transaction; or

a. Eg, ringing the manufacturer and saying I want to buy it, or on-selling

to someone else. ANY act inconsistent with returning the car.

b) If the buyer retains the goods without notice of rejection for a fixed time, or if no

time has been fixed, for a reasonable time (question of fact).

a. If the parties have agreed on 3 months, and the dealer keeps the cars,

property passes after 3 months. If no time, reasonable would be

determined by such a period of time that it would be unreasonable to

send them back.

Therefore, property will pass to [B] when he [adopted the transaction/retained the goods

without notice of rejection beyond the time affixed].

This is like a financier delivering some cars to a motor vehicle dealer on a contract

for sale or return for, say, 3 months. The dealer gets possession and can keep them for

3 months and can think about whether they want to buy them. If a customer comes to

the dealer, the dealer may decide they want to buy from the manufacturer in order to

sell to the consumer.

CONTRARY INTENTION: Weiner v Gill

Dealer delivered to a third party, who stole the goods. Contract stated goods

pass when settled for or charged, but the goods were stolen. Act adopting vs.

term of ownership. HELD: Term of ownership wins parties had expressed

the intention that property would not pass until PAID for. Despite adopting

the transaction, the goods still belonged to the manufacturer manufacturer

beared the loss.

GOODS DAMAGED: Poole v Smiths car sales

August 1960 Owners left a car with a dealer for $325. October owner asked

for return but was told the dealers were holding a deposit on it (about to sell

it). November 3, owner demanded return within 3 days or the price. Returned

at end of November, but damaged through dealer employees unauthorised

use. HELD: The possessor will be liable for damage that occurred through

their own fault, or beyond the time specified for the goods to be returned, or

after a reasonable time. Motor vehicle dealer liable because damaged through

fault + reasonable time expired (after 7th nov = unreasonable).

This means if goods are on a contract for sale/return, and damaged while with

possessor, and not possessors fault, and reasonable time hasnt elapsed, then

the owner will bear the risk unless theres a contrary intention in the contract.

AGENCY RELATIONSHIP OR CONSIGNMENT?

Agency Property will pass from the wholesaler to the customer

through the dealer, as agent. The dealer will never own the goods as

he has no right to buy them hes merely an agent.

Consignment Property will pass to the dealer when the dealer pays

the wholesales, or under rule 4.

RULE FIVE - Unascertained

ANSWER:

Unascertained goods will pass from [A] to [B] once they have been unconditionally

appropriated to the contract, Carlos Federspiel/SOGA s 21. Unconditional appropriation will

occur when the goods are undoubtedly destined for [B], Carlos Federspiel. Mere setting aside

is not sufficient, Carlos Federspiel. Unconditional appropriation can occur via exhaustion,

Karlshamns Olfefabriker.

Here, [A] has unconditionally appropriated the goods to the contract by [exhaustion/placing

the items beyond retrieval]. Therefore, property will pass to [B] when [A] [state how A

unconditionally appropriated the contract].

Carlos Federspiel

Bicycles were sold, buyers paid the price. The goods needed to be shipped. They

were addressed and the shipping space was to be booked, but no shipping space was

available direct. The buyers said to ship to new york. In the interim sellers went bust.

No unconditional appropriation, even through goods were of contractual description,

in deliverable state and marked up for shipping, this was only mere preparatory steps.

Karlshmans Olefabriker

Contract to sell 6000 tonnes of copra, but seller was shipping 22,000 tonnes. Along

the way, 16,000 tonnes was dropped off and 6000 tonnes was left. This was

appropriation by exhaustion.

Also note, appropriation by delivery to buyer, carrier or other bailee for transport to

the buyer:

If the seller delivers goods to the buyer, carrier or other bailee for transport to the

buyer and does not reserve right of disposal then the seller would have

unconditionally appropriated the goods to the contract. Assent must be present.

Assent?

Eg, ordering online, ticking a box saying Australia post is ok, youve

assented to a carrier. Goods will be unconditionally appropriated once seller

delivers to the carrier.

Heading: Is there a reservation of right of disposal clause?

ANSWER:

Property will not pass if a reservation of disposal (Romalpa) clause is present and the conditions of

the clause have not been fulfilled, SGA s 22. This is indicative of an agreement to sell, rather than a

sale (a conditional sale). Here, clause [##] appears to be a Romalpa clause which requires [B] to [state

what the clause requires B to do].

Basic form;

Buyer may take possession of goods sold

Buyer has untilto pay price

Property in the goods will not pass to the buyer until price paid

Risk of loss passes to buyer on delivery

Generally must be kept separate from other stock. Must deposit proceeds in a separate bank

account. Buyer holds the goods or proceeds on behalf of the seller; the buyer is a trustee. If

the buyer sold the goods, then the equitable remedy of tracing will be of use to the seller.

Romalpa Reservation of right of disposal clause

Sellers sold foil to buyer. Buyer went into liquidation owing sellers $122000. $50,000 worth

of foil and a bank account with $35,000 was found in the buyers possession. Seller took back

the $50,000 and claimed a charge on the $35,000 in proceeds. HELD: Seller entitled to trace

the $35,000.

Associated Alloys

AA delivered steel to MEF. MEF used AAs steel to manufacture things and sold to third

parties. MEF did not keep the money separate and it wasnt possible to relate any payment to

AA AA had no evidence to link MEF with their product. Clause in the contract stated if

buyer used goods in some process, then buyer to hold proceeds of manufacturing on trust for

seller. HELD: seller had a trust over payments made by third party buyer, but they couldnt

prove the link with sellers product, so they failed.

Heading: What is the effect of property passing?

ANSWER:

Risk prima facie passes with property, SGA s 23(1).

If no fault-based delay by either party

ANSWER:

Given that no fault-based delay has occurred, the risk in the property passes when [state when

property passed to B].

If fault based delay

By the seller [A]

ANSWER:

However, here [A] has caused a delay by [state how A delayed delivery]. This will

mean that [A] will bear the risk and the loss of the property, SGA s 23(2).

By the buyer [B]

ANSWER:

However, here [B] has caused a delay by [state how A delayed delivery]. This will

mean that [B] will bear the risk and the loss of the property, SGA s 23(2).

Allied Mills v Gwydir Seller delay

Sale of 130 tonnes of linseed meal. Agreed delivery during February, but seller failed to deliver 100

tonnes. In march a fire occurred and destroyed the 100 tonnes. HELD: Specific goods (I want THAT

130 tonnes), property had passed to the buyer. Normally, risk would pass with property, but the seller

had delayed delivery. Seller bore the risk per SGA s 23(2).

Sterns v Vickers Buyer delay

120,000 gallons of spirit purchased from a 200,000 gallon tank. Seller gave buyer a delivery warrant.

Before severance from the 200,000, quality had deteriorated. HELD: unascertained goods (200,000 in

tank, no one knows which 120,000 we get). Because goods unascertained, property had not passed to

buyer risk is still with the seller per s23(1). But, buyers fault they hadnt taken delivery buyer at

fault per s23(2) buyer at risk because they delayed.

Heading: Conclusion

ANSWER:

State:

1. When the property passed and WHY it passed (rule 1/2/3/4/5)

2. Who bears the risk & loss.

ANSWER GUIDE SECURITY INTERESTS

1. Is a security interest present?

a. S 12(1) PPSA

b. s 12(2) PPSA

2. Has there been attachment s19 PPSA

a. A security interest attaches to collateral when:

i. the grantor has rights in the collateral; and

ii. the creditor has given value for the security interest.

3. Is there enforceability s20 PPSA

a. Generally, must be signed and include description of the collateral

i. Serial no. required for cars & boats described as consumer property

4. Is there perfection s 21PPSA?

a. If the security interest has been registered

5. Will [A] take free of the security interest?

a. S 43 unperfected security interests

b. S 44 SN property

c. S45 (1)(2) motor vehicles

d. S 45(3)(4) licensed motor vehicle dealers

e. S 46 ordinary course of business

f. S 47 low value personal, domestic, household property

6. If no taking free, SI continues in the property s32 PPSA

Heading: Has a security interest been created?

ANSWER:

A security interest is an interest in personal property which secures payment or performance of an

obligation, PPSA s 12(1). PPSA s 12(2) details which types of transactions may be deemed security

interests. The transaction here, a [SELECT BELOW]:

a) A fixed charge

b) A floating charge

c) A chattel mortgage

d) A conditional sale agreement

e) A hire purchase agreement

f) A pledge

g) A trust receipt

h) A commercial consignment, PPSA s 10 defn.

i) A lease of goods

j) An assignment

k) A transfer of title

l) A flawed asset arrangement

will be considered a security interest, PPSA s 12(2).

Heading: Can the security interest be enforced against third parties?

ANSWER:

In order for a security interest to be enforceable against third parties, three elements must be satisfied;

attachment (PPSA s 19), enforceability (PPSA s 20), and perfection (PPSA s 21).

Heading: Has there been attachment?

ANSWER:

A security interest will only be enforceable if it attaches to the collateral, PPSA s 19(1). This will

occur when the grantor has rights in the collateral and the secured party has given value for the

security interest, PPSA s 19(2)(a). Here, [person who receives the goods the GRANTOR] has rights

in the collateral and [the person giving the goods the SECURED PARTY] has given value.

NOTE: Grantor has rights in goods leased or consigned when they obtain possession, PPSA s

19(5).

Heading: Has there been enforceability?

ANSWER:

A security interest will be enforceable against third parties if the contract is signed by the grantor and

contains a description of the collateral, PPSA s 20(2)(a)-(b). In the case of consumer property, the

collateral needs to be described by serial number, PPSA s 20(2)(4). Here, the goods have been clearly

described [by serial number], making the SI enforceable against third parties.

Heading: Is the SI perfected?

ANSWER:

Perfection will occur when the collateral has been registered on the PPSR, PPSA s 21(2). Here, this

[has/has not] occurred.

Heading: Will [B] take free of the security interest?

Given that [attachment/enforceability/perfection] has occurred, for [third party] to take free, one of the

taking free rules will need to apply, PPSA s 43-47. [APPLY EACH OF THE RULES, EVEN IF

THEY DONT APPLY]

S 43 UNPERFECTED SECURITY INTERESTS

IF IT DOESNT APPLY:

Here, s43 will not apply because the security interest is perfected.

IF IT APPLIES:

Here, s43 will apply because the security interest has not been perfected. [third party] will

take free under s 43.

EXAMPLE:

X obtains a loan from Bank Y to buy a forklift and gives a mortgage over the

forklift to the bank. The bank does not register the security interest on the

PPS register and lets X have possession. X then sells the forklift to Z. Z will

take free because the interest was unperfected.

NOTE: the next three exceptions do not apply to inventory. Inventory = personal property that

is held for sale or lease, or that have been leased, PPSA s 10.

S44 SERIAL NUMBER INCORRECT OR MISSING

IF IT DOESNT APPLY:

Here, s44 will not apply because the serial number is not incorrect or missing, and searching

the register would have disclosed the registration of the SI.

IF IT APPLIES:

Here, s 44 will apply because the serial number was incorrect or missing searching the

register would not have disclosed the existence of a SI. [third party] will take free under s 44.

EXAMPLE:

Gerry Grantor owns to boats. Fast finance lends to Gerry and perfects its

security interest by registering against all Gerrys boats generally, but does

not register each boast by its serial number. Bob buyer buys a boat, searches

by references to Gerrys name and finds the security interest but thinks it

must be ok for Gerry to sell. Bob will take free because fast finance failed to

take advantage of registering via serial number.

S45 (1)+(2) TAKING MOTOR VEHICLES FREE GENERALLY

IF IT DOESNT APPLY:

Here, s 45(1)-(2) will not apply because [SELECT BELOW]:

a) The item in question is not a motor vehicle;

b) The motor vehicle had been registered + the SI was not incorrect or missing and

searching the register would have disclosed the existence of a SI;

IF IT APPLIES:

Here, s 45(1)-(2) will apply because [SELECT BELOW]:

a) The item in question is a motor vehicle which had not been properly registered;

or

b) Had been registered with an incorrect serial number, and searching the register

would not have disclosed the existence of a SI and the buyer had no knowledge

of the SI.

EXAMPLE:

Gerry Grantor owns a motor vehicle. On Monday, fast finance lends

to Gerry and its security interest attaches to the vehicle. On Tuesday,

Gerry offers to sell the vehicle to Bob. Bob searches by reference to

the serial number on Tuesday afternoon, but its not there. On

Wednesday morning, Fast Finance registers by reference to the serial

number. On Wednesday afternoon, bob pays for the vehicle. Bob will

take free because Fast Finance wasnt quick enough theres 1.5

days before the sale and he searched before that, so he takes free.

S45 (3)+(4) TAKING MOTOR VEHICLES FREE FROM LICENSED DEALERS

IF IT DOESNT APPLY:

Here, s 45(3)-(4) will not apply because;

Buyer failed to give new value

Buyer was taking as inventory

Buyer had constructive knowledge that sale was a breach of the SI.

IF IT APPLIES:

Here, s 45(3)-(4) will apply because;

1. Buyer gave new value;

2. Buyer wasnt taking as inventory; and

3. Buyer did not have constructive knowledge that sale was a breach of the SI.

EXAMPLE:

Gerry is a licensed motor vehicle dealer. Gerry has cars in stock under

contract for sale or return from fast finance. Fast finance registers its security

interest by reference to serial number of each vehicle. Bob buys a vehicle

from Gerry. Bob does not search the register before paying. FF v Bob = Bob

can rely on s 45(3).

S46 ORDINARY COURSE OF BUSINESS

IF IT DOESNT APPLY:

Here, s 46 will not apply because;

1. The transaction did not take place in the ordinary course of business

a. Ordinary course of business will involve a sale within business hours,

within the regular place of business, on usual sales terms for adequate

consideration, Pacific Motor Auctions.

2. The property must be described by serial number and the buyer took as inventory

3. Buyer had actual knowledge the sale was a breach of the grantors security interest.

IF IT APPLIES:

Here, s 46 will apply because

1. the transaction took place in the ordinary course of business

2. The property did not need to be described by serial number and the buyer did not take

as inventory

3. Buyer did not have actual knowledge the sale was a breach of the grantors security

interest.

NOTE:

Its not ordinary course of business per se, its the ordinary course of business for

that seller, selling that kind of property.

EXAMPLE:

Harry is in the business of buying, repairing/improving boats and selling them. Harry

gives a charge over this stock to fast finance. Fast finance registers a security interest

over each both by reference to serial number. Bob buys a boat from Harry without

searching the registers. FF v Bob = Bob takes free.

S47 P/D/H where value

In January, Harry leased a ride-on lawnmower for 2 years from Fast finance. Fast

finance paid $3000 for this mower and registered its security interest over this chattel.

Harry advertised the lawnmower in the trading post for $1000, and bob bought the

mower from Harry to mow Bobs own lawn. Bob bought without searching the

register. FF v Bob = Bob bought for PDH, it cant be described by SN, Bob doesnt

know breach of agreement with FF, bob didnt think worth more than $5000 + wasnt

worth more than $5000. Bob takes free.

Heading: What is the effect of s 32?

[ONLY IF THE THIRD PARTY HAS TAKEN FREE & THE CREDITOR HAS GOT

MONEY FROM THE THIRD PARTY]

S32 PPSA notes that a security interest will continue in the proceeds flowing from the sale of

collateral. As such, the proceeds of [B]s sale of [the collateral] will have now have a SI attached.

ANSWER GUIDE TRANSFER OF TITLE

1. General rule re: transfer of title

a. Nemo dat rule

b. SGA s 24(1)

2. Do any exceptions apply?

a. Sale with owners consent, s24(1) SGA

b. Owner precluded by his/her conduct/estoppel, s24(1) SGA

c. Good faith & without notice

i. Factors act/mercantile agent s3(1), Pacific motor auctions

ii. Subject to act

1. Seller in possession, s27(1) SGA

2. Buyer in possession, s27(2) SGA

3. Voidable title, s25 SGA

__________________________________________________________________________________

Heading: General rule re: transfer of title

ANSWER:

[B] is unable to transfer better title than [he/she] possesses, Hollins v Fowler. Unless excepted, [B]

cannot pass title to [C] if selling without [A]s authority or consent as the true owner, SGA s24(1).

Heading: Do any exceptions apply?

LOOK AT ALL EXCEPTIONS AND CONCLUDE IF THEY APPLY OR NOT

ANSWER:

Sale with owners consent

ANSWER:

If the true owner [A] authorised the sale they will not be entitled to deny [B]s authority to

sell to [C], and [C] will receive title to the goods, SGA s 24(1).

If it doesnt apply:

ANSWER:

Here, [A] has not consented to the sale, and [B] made an unauthorised sale to [C].

If it applies:

ANSWER:

Here, [A] has consented to the sale, and [B] has made an authorised sale to [C]. [A]

will not be able to deny title to [C], SGA s 24(1).

Estoppel

ANSWER:

An owner may be estopped by their own conduct from relying on the nemo dat rule as

expressed in SGA s 24(1), Associated Midlands Corp. If there is a representation from the

true owner to the third party that the seller was the true owner or was entitled to sell, and the

third party relies on that representation to [his/her] detriment, the true owner will be estopped

from denying title to the third party, Eastern Distributors.

1. Bailment/Possession Not a representation of ownership: Central Newbury v Unity Finance

a. Unless: Owner authorised seller to sell and knew that the seller would sell as owner

then the owner has participated in a representation that the seller is the owner, as long as

the innocent buyer believed the seller was the owner.

2. By Owner/Agent Must be made by owner or authorised representative: Moorgate v Twitchings;

3. Document of Title Generally not a representation of ownership;

4. Carelessness Generally not, unless so careless as to raise indicia of title;

5. Non-Compulsory Regn Scheme Failure to register interest generally not representation, cf.

registration of vehicle under anothers name;

6. Failure to Register SI Failure to perfect does not give rise to estoppel as not compulsory, PPSA

preserves CL viz. non-compulsory registration: s 254 PPSA.

a. Examples:

i. [A] hands [C] a completed sale documentation = estoppel by representation;

ii. [A] (financier) mistakenly gave [C] a letter stating loan repaid when it was not;

iii. [A] provided signed document to [C] indicating [B] owned vehicle, which [C]

then bought from [B];

iv. [A] allowed [B] to register car in [B]s name.

If it doesnt apply:

ANSWER:

Here, estoppel will not apply because [A] has not made any representations to [C]

suggesting [B] was the owner or had authority to sell.

If it applies:

ANSWER:

Here, estoppel will apply because [A] represented to [C] that [B] [was the owner/had

authority to sell], as evinced by [state how A represented to C that B was the

owner/could sell]. [C] has relied on this representation, and would suffer detriment if

the representation was not fulfilled. [A] will be estopped from denying title to [C].

EXAMPLES:

1. Owner handed over to prospective buyer a completed notification of sale

form + a letter stating they had sold the car to a buyer

2. Financier/owner by mistake gave a debtor a letter stating a loan was

repaid on a mortgaged vehicle when it was it debtor used letter to sell

vehicle.

3. Owner of a vehicle lent it to a friend friend registered it in his own

name. Owner found out, but did not retake possession. When her friend

sold the car, she was estopped from denying his authority to sell.

Also note PPSA s 254 preserves common law estoppel rules

Good faith & without notice:

ANSWER:

When a buyer buys in good faith and without notice, four potential exceptions arise;

mercantile agent, seller in possession, buyer in possession and voidable title, FA s 3(1).

NOTICE: Actual notice or wilfully closing ones eyes.

GOOD FAITH: Honesty. Being suspicious, refusing to make enquiries = not good

faith.

Mercantile agent

ANSWER:

A mercantile agent is a person entitled to sell goods in customary course of business,

FA s 3. If a mercantile agent is in possession of the true owners goods with consent

and sells those goods in the ordinary course of business to a third party, the third

party will receive title where they acted in good faith and without notice, FA s 3(1).

Ordinary course of business will involve a sale within business hours, within the

regular place of business, on usual sales terms for adequate consideration, Pacific

Motor Auctions.

ORDINARY COURSE OF BUSINESS?

Its not ordinary course of business per se, its the ordinary course

of business for that seller, selling that kind of property.

WITH CONSENT?

Must be given possession in capacity of mercantile agent, Associated

Midland

If it doesnt apply:

ANSWER:

Here, the mercantile agent exception will not apply because [B did not have

owners consent/not in ordinary course of business], as evinced by [justify].

If it applies:

ANSWER:

Here, [C] purchased the [goods] from [B], a mercantile agent who had

consent from the [A]. Furthermore, the sale occurred in the ordinary course

of business. The mercantile agent exception will apply and [A] will therefore

not be able to deny [C]s title to the goods.

Seller in possession

ANSWER:

If [A] sells goods to [B], and then re-sells [B]s goods to [C] while still in possession,

[C] will gain title as if the transaction was valid and authorised by [B] where [C] was

acting in good faith and without notice, SGA s 27(1).

If it doesnt apply:

ANSWER:

This exception will not apply because

B no longer in possession

C not acting in good faith/without notice

If it applies:

ANSWER:

Here, [A] has sold goods to [B], and then sold the goods again to [C]. Further,

there are no indicia that [C] was not in good faith or had notice. This means

that [C] will gain title to the goods as if [B] had authorised the re-sale.

Pacific Motor Auctions

Motor vehicle dealer sold cars to finance company for 90% of price. After sale, motor vehicle

dealer continued to hold them as bailee with authority to sell them for owner. Did dealer

continue in possession within s 27(1)? Yes 27(1) applied good title passed when sold to

third party.

Buyer in possession

ANSWER:

Where a buyer obtains possession of goods, the delivery or transfer by that buyer of

the goods to a third party in good faith and without notice will be valid as if the buyer

was a mercantile agent in possession with consent, SGA s 27(2).

If it doesnt apply:

ANSWER:

This exception will not apply because

The buyer is not in possession

Delivery has not occurred

Not in good faith & without notice

If it applies:

ANSWER:

Here, [B] has obtained goods from [A], where [A] retained title. [B] has then

on-sold the goods to [C], where [C] was acting in good faith and without

notice. Therefore the exception will apply and [A] will not be able to deny

[C]s title to the goods.

Gamers Motor centre v NatWest

E agreed to buy motor vehicles from Gamer + to pay 7 days after delivery. Gamer delivered

possession to E, but retained property rights. E sold vehicle to finance company NatWest for

90% value; E retained possession of vehicles as bailee but sent NatWest delivery receipt

giving details of vehicles. E then tried to sell vehicles to customers. Issue was whether E had

delivered constructive delivery was enough for s27(2) to operate sending the delivery

receipts served the dual purpose of selling to NatWest, and delivering to NatWest. NatWest

got good title under 27(2).

Voidable title

ANSWER:

If an owner sells goods to a buyer under a voidable title, and the buyer then on-sells

to a third party prior to the owners election to terminate, the third party will acquire

title in the goods where they are acting in good faith and without notice, SGA s 25.

If it doesnt apply:

ANSWER:

This exception will not apply because [the mentioned scenario has not

occurred/third party did not take in good faith & without notice, as evinced

by].

If it applies:

ANSWER:

Here, [B] has obtained the goods from [A] under a voidable title (right to

terminate misrep, fraud, etc), and has then on-sold to [C] before [A] could

elect to terminate. Furthermore, [C] acquired the title to the goods in good

faith and without notice. The exception will apply and [A] will not be able to

deny [C]s title in the goods.

EXAMPLE:

A solicitor influences an elderly client to sell them their car for cheap,

and the owner sells. The title will be voidable. Solicitor then sells

before previous owner rescinds.

Or perhaps a fraudulent cheque is sent a fraudulent

misrepresentation. Buyer re-sells before previous owner can discover

the fraud.

CAR V CALDWELL.

Caldwell owned a Jaguar sold to thief N whose cheque was dishonoured on Jan 13

Caldwell notified police and Automobile association. Jan 13 N sold to M (M know of fraud).

Jan 15 M sold to G & C in good faith. Was the transaction rescinded before 15 Jan? HELD: it

was enough to notify the police and automobile association Caldwell took all possible steps

to regain the goods. G & C did not get good title.

ANSWER GUIDE REAL PROPERTY

1. What interest does [A] take?

a. Fee simple

b. Life estate

c. Fee tail (fee simple)

2. Are there any limits on duration?

a. Determinable interest?

b. Conditional interest?

c. Void conditions?

3. Are there any future interests?

a. Reversionary or remainder?

b. Vested or contingent?

4. Does the doctrine of waste apply?

a. Ameliorating waste

b. Permissive waste

c. Equitable waste

__________________________________________________________________________________

Heading: What interest does [A] take?

ANSWER:

Tenure is the skeleton which gives our land law its shape and consistency, Mabo v Qld. The doctrine

of tenure raises the question how is the land held? [SELECT ONLY THE RELEVANT ANSWER]

IF FEE SIMPLE

ANSWER:

A fee simple is the largest estate someone may have - A disposition of freehold land without

words of limitation shall pass the whole interest the disponor had unless a contrary intention

appears, PLA s 29(1). Here, the property will pass in fee simple to [A] due to the effect of the

words [SELECT BELOW]. S 33K of the succession act will presume that [the testator]

intended to pass the whole of their interest in the land [unless a contrary intention appears in

the will]

Examples:

1. To [A]

2. To [A] in fee simple

3. To [A] and his/her heirs

IF LIFE ESTATE

ANSWER:

A life estate is created where the disposition has limiting words to the effect of for the life of

[A], PLA s 29(1). A life estate may also be created Pur Autre Vie - limited to the term of life

of another. When a life estate ends, the interest can either revert back to the grantor, or be

passed to a remainder. Here, [SELECT BELOW]

If straight life estate without remainder

ANSWER:

[A] will have attained a life estate, upon death reverting back to the grantor due to the

effect of the words [SELECT BELOW]:

1. To A for life

2. For the life of A

If straight life estate with remainder

ANSWER:

[A] will have attained a life estate, upon death passing to the remainder [B] due to the

effect of the words [SELECT BELOW]:

1. To A for life, remainder B

2. For the life of A, remainder B

If Pur Autre Vie without remainder

ANSWER:

[A] will have attained a life estate for the life of [B], upon death reverting back to the

grantor due to the effect of the words [SELECT BELOW]:

1. To A for the life of B

2. For the life of B, to A

If Pur Autre Vie with remainder

ANSWER:

[A] will have attained a life estate for the life of [B], upon death passing to the

remainder, [C] due to the effect of the words [SELECT BELOW]:

1. To A for the life of B, remainder C

2. For the life of B, to A, remainder C

IF FEE TAIL

ANSWER:

The concept of fee tail has been abolished in Queensland. Any instrument granting fee tail

will be deemed to grant estate in fee simple, PLA s 22(1). As such, [A] will attain the property

in fee simple due to the effect of the words [SELECT BELOW]:

1. In fee tail

2. In fee tail, remainder..

Heading: Are there any limits of the duration of the estate?

ANSWER:

Imposed limits on duration may either be determinable or conditional, or may be void.

If determinable estate

ANSWER:

A determinable estate limits the duration of the estate by the occurrence, or non-occurrence,

of a certain event. Here, the effect of the words [as long as/while/during/until etcthe land

continues to be used for X purposes] would indicate a determinable estate. This means that

for [A] to retain [fee simple/a life estate] in the land, [he/she] will [need to/stop] [doing what

the limitation says]. When the estate ends, it will revert back to the grantor unless they have

made provisions for a remainder.

NOTE: Uses words like while, during or until ie words that relate to time

If conditional estate

ANSWER:

A conditional estate limits the duration of the estate in absolute terms, but is defeasible the

condition subsequent. Here, the effect of the words [but/if/on condition thatthe land

continues to be used for X purposes] would indicate a conditional estate. This means for [A]

to retain [fee simple/a life estate] in the land, [he/she] will continue fulfilling the conditions

under which the interest was granted.

NOTE: Uses words like but if or on the condition that ie words that relate to conditions

under which the interest is granted.

If void

ANSWER:

Restrictions and limitations can apply to imposed conditions when they bring about either an

undue restraint on marriage, a total restraint on alienation, or a partial restraint on alienation if

it substantially restricts alienation. Here, the effect of the words [state the words which would

make the clause void for one of the above reasons] would likely void the clause as it causes

an [undue restraint on marriage/a total restraint on alienation/a partial restraint on alienation if

it substantially restricts alienation.

Heading: Are there any future interests?

ANSWER:

An interest will be future if it is either vested or contingent. Future interests may also be either

reversionary or remainder.

If vested in interest

ANSWER:

When a property is vested in interest, it means there is a present right to take possession at a

future time. For this to occur, two elements must be established: the identity of the person to

is to take must be known, and there must be no condition precedent other than the end of the

prior estate. If not applicable, go to if contingent interest.

If applicable:

Here, [B] is vested in interest because [his/her] identity is known, and the only

condition precedent for [him/her] to take the estate is the death of [A].

If contingent interest

ANSWER:

Interests which are not vested are contingent some condition still applies to them which may

not eventuate, so theres uncertainty as to whether they will take the estate. For instance, the

identity of the person may be unknown or there may be a condition precedent, such as

reaching a particular age. Here, [B] will have a contingent interest in the property because

there are conditions precedent to them attaining the life estate other than the death of [A],

being [turn a certain age/get married/etc]

If reversionary

ANSWER:

A reversionary interest occurs when there is a gift of life estate with no remainder. Here, [A]

has a life estate, and upon [A]s death no remainder is mentioned. As such, if [A] dies before

the grantor, the possession will revert to the grantor. If the grantor dies before [A], the

possession will revert back to [G]s estate upon. A reversion will always be vested in interest.

If remainder

ANSWER:

A remainder interest is an instrument which grants an estate to a person and after

determination of that persons estate, to another (the remainder). Here, [A] has a life estate

remainder in [B], who will have a future interest. Upon the death of [A], the property will go

as remainder to [B], who [has a contingent interest/is vested in interest].

Heading: Will the doctrine of waste apply?

ANSWER:

The doctrine of waste relates to any action or inaction on the part of the estate owner which

permanently alters the physical character of the land. The doctrine of waste places limits on the

tenants use of land and gives rights to those who have a vested interest in the land. The liability of

tenants will depend on the category of waste; ameliorating, permissive, voluntary and equitable waste.

Here, [ameliorating/permissive/voluntary/equitable] waste will apply.

If ameliorating waste

ANSWER:

Ameliorating waste involves alterations which enhance the value of the land. For example,

converting a disused storehouse into dwelling houses. Given that the no actual damage or loss

will arise from ameliorating waste, the only remedies available are nominal damages or

injunction. Here, ameliorating waste has occurred because [B] has improved the value of the

land by [state what they did]. [A] will be able to elect for nominal damages or an injunction

only.

If permissive waste

ANSWER:

Permissive waste is a failure to keep the land in satisfactory repair, focusing on omissions

rather than positive acts. For example, leaving a farm uncultivated or letting a house fall into

disrepair, Mancetter v Garmanson. The life tenant will not be liable in permissive waste

unless the instrument creating the life estate creates an obligation to repair. If found liable, the

life tenant will be required to pay damages for the diminution in value of property. Here,

permissive waste has occurred because [B] has [failed to keep the property in repair]. [A] will

be able to elect for damages valued at the diminution of the property.

If voluntary waste

ANSWER:

Voluntary waste involves positive and deliberate acts which cause change to a property. For

example, demolishing buildings (Marsden v Edward), or cutting trees (Honywood v

Honywood). A life tenant will be liable for voluntary waste unless the instrument creating the

tenancy makes the tenant unimpeachable, PLA s 24. If found liable, the life tenant will be

required to pay damages for the diminution in value of property. Here, voluntary waste has

occurred because [B] has [state the positive acts B has done]. [A] will be able to elect for

damages valued at the diminution of the property.

If equitable waste

ANSWER:

Equitable waste involves voluntary acts of destruction and wanton damage or vandalism. For

example, deliberate acts which devalue the property for the remainder, Turner v Wright. Even

if a life tenant is unimpeachable for waste, PLA s 25 strictly prohibits equitable waste. If

found liable, the life tenant will be required to pay damages for the diminution in value of

property. Here, equitable waste has occurred because [B] has [state the malicious acts B has

done]. [A] will be able to elect for damages valued at the diminution of the property.

ANSWER GUIDE ADVERSE POSSESSION

1. What is adverse possession?

a. Definition

b. Rationale

2. When did the action to recover accrue?

a. Present interest s14

b. Future interest

i. Adverse possession commenced after previous estate s 15(1)

ii. Adverse possession commenced during previous estate s 15(2)

3. Is there an adverse possessor?

a. Intention to possess

b. Factual possession

i. Adverse (without consent)

ii. Open & visible

iii. Single & exclusive control

4. Was there continuous adverse possession for the required time period

a. Gaps in possession?

b. Extension of time period s29?

Heading: What is adverse possession?

ANSWER:

An action shall not be brought by a person to recover land after the expiration of 12 years from the

date on which the right of action accrued, LOA s 13. When the period of limitation for bringing an

action to recover has expired, the title to land shall expire, allowing the adverse possessor to become

the rightful owner, LOA s 24. The rationale of this is to protect people from stale claims and to ensure

their rights are not called into possession, Marquis Cholmondeley. The doctrine also ensures true

owners assert their rights in a timely manner, Marquis Cholmondeley. Here, [B] would be wanting to

claim adverse possession.

Heading: When did the action to recover accrue?

ANSWER:

Where a person has been dispossessed of land or has discontinued possession, the right to recover

possession accrues on the date of dispossession or discontinuance, LOA s 14(1). A right of action to

recover land shall be deemed not to accrue unless the land is in the possession of some person in

whose favour the period of limitation can run an adverse possessor, LOA s 19(1). Here, time would

begin to run when [state when the time started to run].

NOTE: s14(2) where person bringing action to recover the land of a deceased person, and the

deceased person was in possession of the land at the time of their death, account will be

deemed to accrue on the date of their death. S19 still applies.

IF THE OWNER IS DISABLED:

Where the owner has a disability, the limitation period may be extended by 6 years from the

date the disability ceased or the owner died, LOA s 29. However, an action may not be

brought after a period of 30 years, LOA s 29(2)(b). Where fraud or mistake has occurred, the

time will run from, when the owner discovered, or could have reasonably discovered, the

error, LOA s 38. If

The limitation period will stop running when either;

1. The true owner retakes possession peacefully

2. The true owner commences action to reclaim possession

3. The occupier acknowledges title of the true owner (s 35).

STOPPING THE CLOCK

The limitation period will stop running when;

1. True owner retakes possession peacefully;

2. True owner commences action to reclaim possession; or

3. Occupier acknowledges title of true owner (s35) time will stop running and action

deemed to accrue as of date of acknowledgement.

IF THERE IS A FUTURE INTEREST IN THE LAND:

S15(1) LOA states that where the adverse possession began after the expiry of the previous

interest, the right of action will accrue on the expiry of the previous interest.

S15(2) LOA states that where the adverse possession began during the previous estate, the

limitation period will expire 12 years from the start of adverse possession, or 6 years from the

expiry of the previous estate, whichever is the longer period.

Heading: Is there an adverse possessor?

ANSWER:

Adverse possession contains two elements adverse and possession. Adverse simply means

without the consent of the owner. Here, this is clearly satisfied.

Possession must be open, not secret, peaceful, not by force and adverse, Mulcahy v Curramore per

Bowen CJ. The possession must be actual, constant and visible it must be noticeable; the sort of

possession the true owner would notice, McConaghy v Denmark. Possession involves two elements:

factual possession & an intention to possess.

Sub-heading: Is there factual possession?

ANSWER:

Factual possession involves an appropriate degree of control of the land. This will depend on

the nature of the property and the normal use of the land. It is necessary to show the adverse

possessor is dealing with the land as the owner might be expected to deal with it, Powell v

McFarlane. Sporadic land usage will not be sufficient to establish an appropriate degree of

control, Re Johnson. Here, [B] has [maintained the land etc], and will have factual possession.

Sub-heading: Was there an intention to possess?

ANSWER:

There must be a demonstration of an intention to exclude the world at large, including the true

owner. There is no need to show an intention to acquire ownership, J A Pye v Graham. If the

owner has consented to the occupation, there is no intention to possess. Here, [B] had an

intention to possess, evinced by [SEE BELOW]:

Paying rates (but not conclusive), Monash v Melville

Cultivating the land and fencing, J A Pye v Graham

Sporadic camping (insufficient), Re Johnson

Simple entry into possession (insufficient) , Mulcahy v Curramore.

Fencing & keeping fences locked, Buckinghamshire v Moran

Maintenance, Buckinghamshire v Moran.

Heading: Was there continuous possession?

ANSWER:

If the adverse possessor abandons the land, the limitation period will stop running. If they retake

possession, the time period will restart. However, small breaks in possession may be acceptable so

long as its clear the occupier did not intend to abandon the property.

The question here is whether the gap in possession amounts to ABANDONMENT.

Heading: Was there successive adverse possessors?

ANSWER:

It can be possible to establish the required continuous possession by a series of occupiers, as long as

there is no break in possession, Re Johnson. There must be a smooth transition between possessors,

with no intention to abandon, Re Johnson.

Heading: How can [B] become legally recognised as the owner of the adversely possessed land?

ANSWER:

S 99 of the LTA allows for an adverse possessor to become a legally recognised owner. S 108 LTA

allows a person to register as owner if adverse possession is satisfied. LTA s 108B will cancel the

registration of the previously registered owner.

ANSWER GUIDE CO-OWNERSHIP

1. What type of co-ownership is present? If clearly stated, spend little time on this issue.

a. S 33(1) PLA

b. At common law?

i. Presumed joint tenancy, unless

1. Absence of four unities; or

a. Unity of title

b. Unity of time

c. Unity of possession

d. Unity of interest

2. Words of severance; or

3. Clear intention to create tenancy in common

ii. PLA s35 presumption of tenancy in common

c. At equity?

i. Generally, equity will presume a tenancy in common when;

1. Purchase price provided for in unequal shares

2. The interest concerned is mortgagees interest

3. The land was purchased as a partnership asset

ii. PLA s 35 presumption of tenancy in common

2. What rights do the co-owners have?

a. Right of occupancy

b. Income & profits

c. Claim for improvements

d. Occupation rent

i. Stemming from improvements

ii. Stemming from ouster

2A. Calculating quantum of recovery?

a. Brickwood v Young

b. Forgeard v Shannahan

3. If joint tenancy, has severance occurred?

a. Alienation

i. Transfer of interest by sale or gift to a third party

ii. Transfer to another joint tenant

iii. Alienation by gift

iv. Transfer to oneself

v. Involuntary transfer

b. Mutual agreement

c. Course of dealing

d. Homicide

4. Has there been a termination of the co-ownership?

a. PLA s 38

b. Conversion into severalty

Heading: What kind of co-ownership is present?

ANSWER:

PLA s 33(1) states that any interest in land, legal or equitable, may be held by two or more persons

either at joint tenants or tenants in common. Interests may be legal or equitable. A joint tenancy will

share the property with other joint tenants where both tenants own the whole of the property. A

tenancy in common, however, exists when each co-owner has a separate share in the whole of the land.

Subheading 1.0: What kind of co-ownership is present at law?

ANSWER:

The presumption at common law will be a joint tenancy unless there is an absence of the four

unities, words of severance, or a clear intention to create a tenancy in common. Each joint

tenant has a right, shared with the other joint tenants, to the whole of the property. The shares

in the property are not conceived of as separate shares both tenants will own the WHOLE

of the property.

Subheading 1.1: Are the four unities present?

CHECKLIST - Are the four unities present?

i. Unity of title the owners interests derive from the same source

1. That is, they come from the same conveyance or devise

2. Eg if A leaves property to B & C in a will, B & C will acquire their interest

from the same source.

If no unity of title

ANSWER:

Here, [A] & [B]s interests did not derive from the same source. [A]s

interest was derived from [state where it was derived from], whereas [B]s

interest derived from [state where it was derived from]. There is no unity of

title.

If unity of title

ANSWER:

Here, [A] & [B] derived title from the same source unity of title is

present.

ii. Unity of time Title received at the same time

1. Wont exist where interests vest at different times. Eg, where a gift is

conditional upon two or more recipients reaching a certain age, then the

unity of time will not be there because the unity of time will be acquired a

succession.

2. Exception: Where disposition is made by will and perhaps also where

conveyance to trustee for beneficiaries, MGregor v MGregor.

If no unity of time

ANSWER:

Here, [A] & [B]s interests vested at a different time. [A]s interest vested

on [date], whereas [B]s interest vested on [date]. There is no unity of time.

If unity of time

ANSWER:

Here, [A] & [B] acquire interests at the same time unity of time is

present.

iii. Unity of possession Each owner is entitled to possess the whole of the land,

enjoyed together with other co-owners

1. This also exist for tenancy in common

2. Without unity of possession, there will be no co-ownership.

If no unity of possession [UNLIKELY]

ANSWER:

Here, [A] & [B] do not have unity of possession. [A/B] is not entitled

to possess the whole of the land. Therefore, no co ownership will be

present.

If unity of possession

ANSWER:

Here, [A] & [B] are entitled to possess the whole of the land, enjoyed

together with other co-owners unity of possession is present.

iv. Unity of interest each owner has the same kind of interest, to the same extent,

and for the same duration.

1. Eg, both have fee simple or leasehold

2. Joint tenancy will not exists if interests are different in duration (eg, life

estate v fee simple), or in size (must be equal share).

If no unity of interest

ANSWER:

Here, [A] & [B] have different interests in the land. [A] possesses the

land [in fee simple/as a life estate], and may do so until [date/he dies],

whereas [B] possesses the land [in fee simple/ as a life estate], and

may do so until [other date].

If unity of interest

ANSWER:

Here, [A] & [B] have the same kind of interest, to the same extend

and for the same duration unity of interest is present.

IF ALL FOUR UNITIES ARE PRESENT

ANSWER:

Here, there is unity of title, time, possession & interest. [A] & [B] are prima facie joint tenants.

IF ONE OR MORE OF THE FOUR UNITIES ARE NOT PRESENT

ANSWER:

Given the unity of [time/interest/possession/title][is/are] missing, [A] & [B] will be presumed

tenants in common at law.

Subheading 1.2: Are words of severance used?

CHECKLIST Are words of severance used?

i. If an instrument which creates co-ownership merely says to A & B

presumed to be joint tenants at common law.

ii. But if the instrument uses words of severance, it will be presumed to be a

tenancy in common and not a joint tenancy.

iii. Eg, if As will says I leave my land to C&D in equal shares presumed

they will takes as tenants in common

iv. Other languages include:

1. To be divided between

2. To be distributed among them in joint and equal proportions

3. Respectively

4. Among

5. A share each

v. Indicates that the co-owners are to have different or distinct shares in the land

(even though the shares may be equal in size).

IF WORDS OF SEVERANCE ARE USED

ANSWER:

Here, the effect of the words [to be divided between/to be distributed in equal

proportions/respectively/etc] would act as words of severance. As such, the land will be

presumed to be a tenancy in common at law.

IF WORDS OF SEVERANCE ARE NOT USED

ANSWER:

Here, the effect of the words [to A & B/etc] would not act as words of severance. [A] & [B]

will be presumed joint tenants at law.

Subheading 1.3: Is there a clear intention to create a tenancy in common?

CHECKLIST IS THERE A CLEAR INTENTION TO CREATE A

TENANCY IN COMMON?

1. If its clear that there was an intention to create a tenancy in common,

this will overrule the presumption

2. Might apply where words used are unclear (ie, not obviously words

of severance)

3. Eg Re Rose (deceased) will specific that beneficiaries would take in

equal shares as joint tenants

a. Was held to be a tenancy in common Equal shares

overruled the joint tenants.

IF CLEAR INTENTION TO CREATE A TENANCY IN COMMON

ANSWER:

If it is clear that there was an intention to create a tenancy in common, then this will

overrule the legal joint-tenancy presumption. Here, [C/A&B] [have/has] clearly

intended to create a tenancy in common, as evinced by [state the evidence which

clearly indicates they wanted a tenancy in common].

IF NO CLEAR INTENTION TO CREATE A TENANCY IN COMMON

ANSWER:

Here, there is no clear intention that [C/A&B] wished to create a tenancy in common.

The common law presumption will stand, with [A] & [B] being presumed joint

tenants.

NOTE: RIGHT OF SURVIVORSHIP

When one joint tenant dies, their interest is extinguished and the surviving joint

tenants take over their share. This operates automatically on death, and regardless of

what the deceased owner had specified in their will. Can only be avoided through

severance into a tenancy in common.

Subheading 1.4: Does the Property Law Act have any effect?

ANSWER:

The Property Law Act has modified presumptions at common law and equity. Under

the PLA, the general rule is that co-ownership will be presumed to be a tenancy in

common, PLA s 35(1). PLA s 35(1) will not apply to executors, administrators,

trustees, mortgagees, or where the disposition provides that persons are to take as

joint tenants, PLA s 35(2)(a), nor will it apply to a disposition for partnership

purposes, PLA s 35(2)(b).

If no exceptions apply

ANSWER:

Here, [A] & [B] are none of the above mentioned individuals, and no

exceptions to PLA s 35(1) will apply.

If A and/or B is an executor/administrator/trustee/mortgagee s 35(2)(a)

ANSWER:

Here, [A and/or B] [is/are] [a/an] [executor/administrator/trustee/mortgagee],

and s35(1) PLA will not apply.

If the disposition provides that persons are to take as joint tenants s

35(2)(a)

ANSWER:

Here, the disposition provides that [A] & [B] are to take as joint tenants. As

such, s 35(1) will not apply.

If there is a disposition of partnership assets35(2)(b))

ANSWER:

Here, there is a disposition of partnership assets. As such, PLA s 35(1) will

not apply.

NOTE:

s35 disposition of equitable interest to two or more persons: presumed to be tenants in common in

equity. DELEHUNT v CARMODY Ms D and Mr C. contributed equally to the purchase price of

land but legal title was held by Mr C. alone. In equity, Mr C. should hold his sole legal interest on

trust for those who had paid the purchase price on trust for himself and Ms. D. Question was

whether that equitable interest was held at JT or TIC. Mr C. died and Ms D claimed beneficial title as

joint tenants (where survivorship would apply). Mr Cs estate claimed beneficial title was held as TIC.

In equity, because contributions were equal, joint tenancy would be presumed and rule of

surviviorship would apply. However, had to look at statute s35(1) but only refers to two or more

person could it apply to a single person? court decided that the beneficial interest, even though

created by a disposition to only one person, should be held as a TIC. The result was that Ms C. was

only entitled to her own share of the property, and Mr Ds share was inherited by his estranged wife.

S35 EXAMPLE:

X transfers land to her brother as trustee for E F G. s35: E F G take beneficial

interest as TIC. Trustee then transfers legal interest to E F G. s36: E F G will hold

legal interest as TIC.

PLA s 36

Where two or more persons entitled beneficially as tenants in common to an equitable estate become

entitled to the legal estate co-extensive with the equitable estate, whether as joint tenants or tenants in

common, they will hold the legal and equitable interests as tenants in common, unless they agree

otherwise.

This means if two people hold the equitable interest under s 35 as TIC, and they come to hold the

legal interest, it too will be presumed to be a TIC under s 36.

S36 reverses the common law position for co-extensive legal and equitable interests.

S36 EXAMPLE:

A hold the legal estate in land on trust for B & C as TIC.

A conveys the legal estate to B & C

B & C were beneficially entitled but then acquired legal interest as well

S36: B & C will hold the whole of the estate as TIC, unless they otherwise agree.

Also note registration rules;

LTA s 56(1) owners must be registered as either TIC or JT

LTA s 56(2) if the transfer instrument does not provide how the co-owners are to take, the registrar

must register as TIC.

Subheading 2.0: What kind of co-ownership is present in equity?

ANSWER:

Equity will prefer a tenancy in common as it will generally be fairer cf. joint tenancies. Equity

will generally follow the law, but will presume a tenancy in common where the purchase

price was provided in unequal shares, the interest concerned is the mortgagees interest, and

where the land was purchased as a partnership asset.

Subheading 2.1: Was the purchase price provided in equal share?

If the purchase price was provided in equal shares

ANSWER:

Here, [A] & [B] have both contributed [$$$/%] to the purchase price the

same amount. Equity will presume a tenancy in common.

If the purchase price was provided in unequal shares

ANSWER:

Here, [A] has contributed [$$$/%] to the purchase price, & [B] has

contributed [$$$/%]. Equity will follow the law and not presume a tenancy in

common.

Subheading 2.2: Is the interest concerned a mortgagees interest?

If the interest concerned is a mortgagees

ANSWER:

Here, [A and/or B] [have/has] borrowed money and then taken a shared

interest in the land - [A and/or B] [is/are] [a mortgagee/mortgagees]. As such,

Equity will presume a tenancy in common.

If the interest concerned is not a mortgagees

ANSWER:

Here, [A] & [B] have not borrowed any money in order to take a shared

interest in the land. Equity will follow the law and not presume a tenancy in

common.

Subheading 2.3: Was the land purchased as a partnership asset?

If the land was purchased as a partnership asset

ANSWER:

Here, [A and/or B] [have/has] purchased the land as a partnership asset.

Therefore, equity will presume a tenancy in common.

If the land was not purchased as a partnership asset

ANSWER:

Here, [A] & [B] have not purchased the land as a partnership asset. Equity

will follow the law and not presume a tenancy in common.

Subheading 2.4: Does the Property Law Act have any effect?

ANSWER:

PLA will need to be applied to [A] & [B]s equitable interests as well.

If no exceptions apply

ANSWER:

Here, [A] & [B] are none of the above mentioned individuals, and no

exceptions to PLA s 35(1) will apply.

If A and/or B is an executor/administrator/trustee/mortgagee s 35(2)(a)

ANSWER:

Here, [A and/or B] [is/are] [a/an] [executor/administrator/trustee/mortgagee],

and s35(1) PLA will not apply.

If the disposition provides that persons are to take as joint tenants s

35(2)(a)

ANSWER:

Here, the disposition proves that [A] & [B] are to take as joint tenants. As

such, s 35(1) will not apply.

If there is a disposition of partnership assets35(2)(b))

ANSWER:

Here, there is a disposition of partnership assets. As such, PLA s 35(1) will

not apply.

Heading: What rights do the co-owners have?

ANSWER:

Co-owners will have a right of occupancy, to income & profits stemming from the property and to be

reimbursed for improvements to the property. Any infringement on these rights may lead to

occupation rent being owed by one co-owner to the other, Luke v Luke. Here, relevant issues include

[LIST THEM OUT];

An infringement of occupancy rights

Money earned on the property

Improvements made to the property

If there has been an infringement of occupancy rights

Subheading: has there been an infringement of occupancy rights?

ANSWER:

All co-owners will have a right to occupancy of the whole property, including the right to

invite someone to live on the premises, Thrift v Thrift. Where someone has been wrongfully

ousted from co-owned land by another co-owner, the ousted party may be entitled to

occupation rent.

If someone else is occupying the land with permission from one co-owner

Here, [C] is occupying the land co-owned by [A] & [B]. [A] has given [C] permission

to do so, and [B] will not be able to object to [C]s occupation of the premises, Thrift

v Thrift.

If there has been an ouster

If one co-owner chooses not to occupy, they cannot charge other co-owners

occupation rent. However, if one co-owner is ousted form the property by other co-

owners, those remaining in occupation may be liable to pay occupation rent, Luke v

Luke. Here, [A] has disallowed [B], a fellow co-owner, from occupying the land. [A]

will be liable to pay [B] occupation rent.

Also note special exceptions of constructive ouster;

Dennis v McDonald, where one party had left residence fearing domestic violence, the

occupying party was held liable to pay occupation rent not reasonable to expect non-

occupying party to reside there

Compare Biviano v Natoli, where apprehended violence order which prevented one party

from residing did not constitute ouster.

Subheading: Has any money been earned on the property?

ANSWER:

PLA s 43 relates to money earned on co-owned properties. Where a co-owner takes advantage of

more than their just and proportionate share in the land and profits from that taking advantage,

they will be liable to account to other co-owners. However, a sole occupier of a co-owned

property may not be liable to do the same, Henderson v Eason .

Here, [A] has earned [$$$] on the property which is co-owned by [B] and may be liable to

account to [B] for [his/her] gains on termination of the co-ownership.

NOTE: can gain before end of co-ownership if:

Agreement between co-owners

Co-owners under joint obligation to make improvements, Squire v Rogers.

Joint debts.

Subheading: Has there been any improvements made to the property?

ANSWER:

Upon termination of the co-ownership, a claim may be brought for occupation rent if one co-

owner has made improvements to the property which increased its value, Forgeard v Shanahan.

Co-owners will not be able to claim occupation rent where there has been an agreement between

parties, where co-owners are under a joint obligation to make improvements (Squire v Rogers),

and for joint debts such as mortgages and rates, Forgeard v Shanahan. Because all co-owners are

responsible for general repair and maintenance, a claim can only be made for cost of

improvements, not for repairs or maintenance, Forgeard v Shanahan.

Here, the following actions may be construed as improvements or repairs: [LIST ALL THINGS

THAT COULD BE EITHER, THEN LABEL EACH ONE AND STATE WHAT CAN BE

CLAIMED UNDER OCCUPATION RENT].

NOTE:

-whole of the roof of the building repaired = repair/maintenance

-the garden professionally landscaped = improvement

-garden landscaped so it was more drought friendly = improvement

-the whole of the outside of the house painted = repair/maintenance

-air-conditioning put in = improvement

-repainted the interior = repair/maintenance

- mortgage repayments = improvement (Forgeard)

-insurance and pest control = maintenance (Forgeard)

When comparing expenditure to improve vs. value of improvements, the court will always

compensate the lesser value when a claim is made, Brickwood v Young. Here, the improvements cost

[$$$], whereas the value of the property increased by [$$$]. The court will opt for the lesser amount,

being [$$$].

NOTE:

If improvements have generated income or profits, then other co-owners cannot claim any share of

income or profits until they make a full allowance for the cost of the improvements, Squires v Rogers.

Heading: Has severance occurred? (joint tenancies)

ANSWER:

Severance involves dealing with a joint-tenancy in such a way as to sever it and convert it to a tenancy

in common. This may occur in four ways; alienation, mutual agreement, course of dealings and

homicide. Of relevance here, there may be severance by way of [SELECT BELOW].

If Alienation

ANSWER:

Heading: Alienation

Alienation can occur in five different ways; transfer of interest by sale or gift to a third party,

transfer to another joint tenant, by gift, transfer to oneself and involuntary transfer. Of

relevance here [SELECT BELOW].

If alienation by transfer of interest by sale or gift to third party

ANSWER:

Where one joint tenant sells or transfers their interest to a third party, the four unities

will not be present amongst the previous co-owner and the new co-owner. As such, a

tenancy in common will be present. Here, [A] has sold [his/her] interest in the

property to [third party]. As such, [Third party] will hold as a tenant in common with

[B].

EXAMPLE

A and B are joint tenants of estate in fee simple

A enters into a contract to sell her interest to X

Joint tenancy severed in equity: A and B hold legal estate as joint tenants on

trust for X and B as tenants in common in equity

Then X registers transfer

Joint tenancy severed at law X and B hold as tenants in common

If alienation by transfer to another joint tenant

ANSWER:

Where one joint tenant transfers their interest in the property to another joint tenant,

the joint tenancy between those two parties will be severed, Wright v Gibbons.

EXAMPLE

a. A, B&C are joint tenants of an estate in fee simple. A enters into an agreement to transfer

her interest to X

b. Joint tenancy s severed in equity: A,B&C hold as joint tenants at law fr B,C&X as tenants

in common in equity

c. X registers the transfer: joint tenancy is severed at law

d. X holds as tenant in common with 1/3 share with B&C, who hold 2/3 share tenants in

common with X, and as joint tenants as between themselves

e. Didnt sever the joint tenancy between B&C, only between B&C and A.

Also note Wright v Gibbons;

a. O, E & B were joint tenants.

b. O transferred her interest as joint tenant to E.

c. E gained 1/3 share which she held as tenant in common with E & B, who had 2/3 share in

tenancy in common.

d. E&B were joint tenants in relation to each other in respect of the 2/3 share.

e. E then transferred her interest in joint tenancy to Olinda

f. E was left with 1/3 share as tenant in common, O gained 1/3 share as tenant in common.

g. Bessie was left with no joint tenant, so could only have 1/3 share a tenant in common

with the other two sisters.

If alienation by gift

ANSWER:

A gift is effective in equity when the donor has done everything necessary that needs

to be done by the donor to transfer the property to the assignee, PLA s 200. For this to

happen two processes must occur;

a. Donor executes transfer of land and delivers it to donee with intention of

parting with the land it represents

b. If Certificate of Title has been issued by registry, donor must deliver

certificate to donee; or, makes certificate available to donee without further

assistance from donor (i.e. give the donee authority to collect it from titles

office).

EXAMPLE

i. A&B are joint tenants of estate in fee simple

ii. A executes transfer documents in Xs favour and delivers them to X. no

certificate of title has been issued for the property

iii. As there is nothing else A is required to do, joint tenancy will be severed in

equity:

iv. A&B will hold legal estate as joint tenants on trust for X&B as tenants in

common in equity

v. When A registers the transfer of her interest, joint tenancy is severed at law:

X&B will hold as tenants in common at law.

i. Corin v Patton

1. Mr and Mrs P were joint tenants of land. Mrs P was ill and wanted to

sever the joint tenancy to enable her children to inherit. In order to sever

the joint tenancy, needed to show that equitable interest has passed from

Mrs P to C. If joint tenancy severed, then tenancy in common would be

created and Mr P would not benefit from rule of survivorship upon Mrs

Ps death. Mrs P executed a transfer of her interest to C (her brother).

Land was subject to a mortgage and bank held the certificate of title. Mrs

P did not ask the bank, or authorise C to ask the bank, to release the

certificate of title to enable registration of transfer. HELD: Not severed as

Mrs P has not done everything required to effect transfer.

If alienation by transfer to oneself

ANSWER:

A person may sever joint tenancy by transferring their interest to themselves, LTA s 59.

(1) A registered owner may sever joint tenancy by registration of a transfer executed

by themselves

(2) Must give copy to other joint tenants

(3) On registration of the instrument of transfer, the registered owner becomes

entitled as a tenant in common with the other owners

(4) If there are more than 2 joint tenants, their joint tenancy is unaffected

On transferring the interest to themselves the owner becomes a tenant in common with the

other registered owners (s59 (3))

Where the registered owner dies during the process of transferring interest to themselves, the

best authority indicates that such registration can be stopped by the surviving members of the

joint tenancy: McCoy v Estate of Caelli

If Alienation by involuntary transfer

ANSWER:

Bankruptcy: interest of bankrupt joint tenant vests in trustee in bankruptcy

If mutual agreement

Heading: Mutual agreement

ANSWER:

A joint tenancy can be severed by an agreement between all of the joint tenants. The

agreement would be to the effect that the parties thereafter hold their interests as tenants in

common: Williams v Hensman.

STATE IF RELEVANT:

i. Need not be in writing because such an agreement automatically effects a severance

in equity: Burgess v Rawnsley

ii. An agreement to sell the whole property to a third party or for all the joint tenants

to sell their interest to one does not effect a severance unless an intention to sever can

be discerned: Magill v Magill

iii. The severance is final and irrevocable at the time of the agreement and cannot be

repudiated later: Abela v Public Trustee. Where such an agreement is conditional on

some future event which has not yet occurred, there is the possibility of repudiation:

McVey v Denis

If course of dealings

Heading: Course of dealings

ANSWER:

There may be severance where the joint tenants conduct indicates that they all see their

relationship as a tenancy in common: Williams v Hensman. The course of dealing must be

common to all the joint tenants: Sprott v Harper.

Sprott v Harper: The real question is whether the parties have acted in a way that the law

regards as inconsistent with the maintenance of a joint tenancy

Case analogies

Lennon v Bell

The husband and wife were negotiating a severance of the joint tenancy when the

wife died. It was held that unconcluded negotiations which had not progressed to

any significant extent were not a course of dealing inconsistent with the continuation

of a joint tenancy.

Sprott v Harper

An informal property settlement agreement between a husband and wife to divide

their assets was found to have been concluded so as to permit a severance after the

wifes death

If homicide

Heading: Homicide

ANSWER:

Where one joint tenant murders the other, the operation of survivorship will not be prevented,

Re Thorpe. However, equity will impose a constructive trust so that the murderer will hold

legal interest on trust for him/herself and the beneficiary of constructive trust, who will hold

as equitable tenants in common.

Eg A&B are joint tenants. A kills B. Bs estate passes by survivorship to A. C named

as beneficiary of constructive trust. A will hold legal estate on trust for A&C as

tenants in common in equity in equal shares.

Heading: Has there been a termination of co-ownership?

Subheading: PLA s 38

By Court Order

ANSWER:

Joint tenancies and tenancies in common may be terminated under the property law act. Once the sale

or partition takes place the co-ownership will be terminated. In the case of a partition, each co-owner

will become to sole owner of their portion.

The court may, on the application of one or more co-owners, appoint trustees of the property and vest

it in the trustee to be held on the statutory trust for sale or on the statutory trust for partition, PLA s

38(1). The court will have to decide whether it is to be divided or sold, PLA s 38(4).

Partition or Sale? s 38(4)

Partition:

Where a co-owner is seeking an order for sale, another co-owner may attempt to convince the

court that an order for partition is more beneficial to the co-owners, PLA s38(4). The onus is

on the co-owner alleging that a partition is more beneficial for the majority of the co-owners

(the majority is determined based on their respective shares): Pannizutti v Trask. What is more

beneficial is determined objectively and is directed primarily to economic benefits though

emotional and other considerations might be relevant: Panizutti)

NOTE: Where there is a partition for numerous jointly owned properties, parties may

simply be given whole properties instead of subdividing each individually (Witchard v

Witchard)

Order for Sale

State: On the vesting of property in trustees, the co-owners lose their interest in the land: s

38(3A); Re Della-Francas Caveat. Their interest is converted into an interest in the proceeds

of the sale upon the appointment of the trustees.

N.B. Trustee appoint for the statutory sale must sell the land and out of the proceeds

pay the costs and the expenses: s 37A

N.B. Trustee appointed for statutory partition must get the consent of any mortgagee

(i.e. bank) to the partition and give effect to the partition once it is done by

transferring the property to the single ownership of the person entitled to it: s 37B

Action for an Account

In action for partition or sale under s 38, a court can direct accounts be taken to determine and

adjust rights of parties, PLA s 42(b)

Rights to occupy property

Right to income and profits from the property

To be reimbursed for money and effort expended on improving and repairing the

property

Issues with s 38 APPLY QUESTIONS BELOW

If parties agree not to apply for partition or sale of the land, is such a covenant:

Void as a restraint on alienation? OR

In Permanent Trustee Nominees, CI6: Agreed neither would apply to court for appointment

of statutory trustees for sale unless gave other 12 months prior notice: Held: this does not

amount to a restraint on alienation, it just imposed a time period of waiting for the remedy.

Void as ouster of/ fetter on jurisdiction of court so that it would be contrary to public

policy?

In Permanent Trustee Nominees, CI6: Agreed neither would apply to court for appointment

of statutory trustees for sale unless gave other 12 months prior notice: Held: that clause 6

was not an ouster of the jurisdiction of the court; it was a requirement to give 12 months

notice before they sought a remedy.

May - must court make order on application of co-owner or has court a discretion?

In Permanent Trustee Nominees, Held: If a party applied straight away without giving 12

months notice, the Court would unlikely make the order. However, the discretion to not

award an order is limited (so in most cases, they will grant an order).

STATE IF RELEVANT:

In Nullargine, there was an implied covenant which stated that when either of the tenants in common

was to sell to a third party, the third party needs to sign the deed that they can only sell to the other

party this would possibly lead to property never being sold. Held: This is just an agreement about

your share, it doesnt say anything about the sale of the whole of land, and therefore either party can

go to the Court and get the land sold under s 38.

Subheading: Conversion into severalty

A conversion into severalty will occur when all co-owners transfer their shares in the property

to one person. NOTE: uncontroversial issue; probably wont be on exam.

(For instance, both agreeing to sell your portions to a single person)