‘Title’: ‘ownership’ and various acts and events that go towards proving ownership. Title is giving you title to the estate in fee simple. 

Ownership under old system is established through series of instruments going back to many years, called altogether ‘title deeds’

Proof of title
Good root of title

Proof of ownership has 2 key features:
1. land having once been granted by Crown
2. the ‘chain’ of documents and events being unbroken

Because early title documents are difficult to find, a documentary starting point (‘good root of title’) of no less than 30 yrs was adopted by Conveyancing (Amendment) Act 1930 (s53(1) of Conveyancing Act 1919) meaning that vendor of old system title must trace good root no less than 30 yrs old. It is quite common for banks to ask for good root more than 30 yrs, but legally only 30 yrs

Abstract of title

Vendor of old title supplies purchaser with summary of instruments/events necessary to establish title back to good root of title - this summary is abstract of title
Insecurity of old system title

Tracing title back to good root does not guarantee a secure title e.g. May be outstanding interest in land like a restrictive covenant

• Purchaser who discover defect in title before completion of contract can refuse to complete.
• Vendor’s task of proving title is facilitated by the following section, and the obligations and rights of vendor and purchaser shall be regulated as follows:

Conveyancing Act 1919, s53(2)(a)-
Recitals, statements, and descriptions of facts, matters, and parties contained in instruments or statutory declarations twenty years old at the date of the contract shall, unless and except so far as they are proved to be inaccurate, be taken to be sufficient evidence of the truth of such facts, matters, and descriptions; but no recital shall affect the period of commencement of title under the last preceding subsection.

Covenants for title

It was very difficult to prove title so ‘covenants for title’ were created to give purchasers right to require to do all in their power to remedy defects discovered in the title or else pay damages - s78(1) Conveyancing Act 1919

Four covenants for title in a conveyance

• Under s78(1)(A) of CA 1919 , 4 covenants are implied:
-in a mortgage s78(1)(C)
-mortgage of a leasehold s78(1)(D)
-settlement s78(1)(E)
-conveyance by trustee or mortgagee s78(1)(F)

Reliance on covenants is no substitute for investigation of title before complete contract for sale.

• Full power to convey: does not give good root of title, simply says that they haven’t done anything to title. Covenant that vendor has full power to convey property, but the covenant does not warrant a good title to the property, rather the vendor covenants that they have not done anything to make title defective (Meek v Clarke) it is breached at date of conveyance by covenantor (Spoor v Green)

• Quiet enjoyment: purchaser will enjoy the property without lawful disturbance. There is no breach of covenant unless disturbance is ‘lawful’. If disturbance is unlawful, purchaser may have remedies against wrongdoer in tort but not under covenant (Malzy v Eichholz) not breached until disturbance actually occurs (Spoor v Green)

• Freedom from encumbrances: purchaser will receive property free from encumbrances, except those to which the conveyance is expressly made subject. Covenant only applies to encumbrances ‘made, occasioned, or suffered’ by the vendor (Stock v Meakin) breached at date of conveyance (Turner v Moon)

• Further assurance: vendor will execute assurances and do other things that are reasonably requested in order to perfect conveyance eg. Ensure that outstanding mortgage is discharged (Re Jones 1893) not breached until request is made under covenant for something to be done and request is refused (Halsbury’s laws of England vol 40)

Benefit of the covenants

S75 CA 1919: benefit runs with the land and is enforceable by owner, even benefits from previous conveyances. From date of conveyance, purchaser has 12 yrs to seek remedy for breach, Statute of Limitations

Burden of the covenants

S78(1)(A) CA qualifies the liability of person conveying as beneficial owner (the covenantor).
• Covenantor only liable for full power to convey where covenant is breached:
i) by conveyor personally;
ii) by person through whom conveyor derives title other than by purchase for value.

• Only liable for covenants for quiet enjoyment, freedom from encumbrance and further assurance where covenant is breached:
i) by conveyor personally or by person conveying by conveyor’s directions;
ii) by person claiming in trust for the persons in i) ;
iii) by a person through whom conveyor derives title other than by purchase for value.

• Onus is on person alleging breach of covenant to establish that breach was committed by one of specified persons

Forms of Conveyance

Early methods of conveyance
Feoffment with livery of seisin

• Feoffment was form of words spoken on/near land indicating intention to convey land

• ‘livery of seisin’ was induction of grantee into possession + was required by s20 Registration Act 1842 (NSW)  which made deed of feoffment equivalent to livery of seisin.

•  Livery on land (by deed) was performed on land where conveyor delivered seisin by handing over the hasp/ring of the door , or if no building then by handing over a rod or glove.  Sometimes conveyor dug clod of land and handed it to conveyee

• Practice developed of executing ‘charter of feoffment’, confirming the transaction.
Since 1931 in NSW the writing must be in form of deed to pass as legal interest in land, s23B CA 1919

Grant
• Could be no livery of seisin in assurance of an incorporeal interest in land eg. Reversion because seisin was in person who held possession. Required to be a grant by deed, s23B CA 1919

Indentures
• Deeds etc were susceptible to theft/forgery so ‘indenture’ introduced. They cut the deeds in a way to match them up with other copy of deeds

The fine
• Reduced forgery. The grantee brought fictitious personal action against proposed grantor. Parties then ‘compromised the action, with proposed grantor admitting land belonged to proposed grantee. Terms of compromise recorded in court records—called ‘levying a fine’

Lease and release at common law
• Intending vendor leased land to intending purchaser for eg. 1 yr
• Vendor then granted purchaser reversion expectant on the lease, by way of ‘deed of release’. By merger, purchaser’s interest was enlarged into fee simple

Effect of statute of uses

• Statute of Uses 1535 deemed cestui que use to be ‘in lawful seisin, estate and possession’ of the land for equivalent legal estate, making livery of seisin unnecessary, making 3 modes of assurance possible:

Bargain and sale

• Intending vendor entered into contract to sell land to purchaser. Although legal estate remained in vendor, equity treated the purchaser as beneficially entitled to the land. Statute of Uses then executed the use, vesting legal estate to purchaser

• Conveyancers hoped that land could be conveyed with secrecy by this method, however deed was required by Statute of Enrolments 1535
Covenant to stand seised

• Device only employed between relatives, becoming normal method for making family settlements in England.

• Required no enrolment under Statute of Enrolments. Consideration in this purchase was not money, but love/affection
Lease and release under statute of uses

• Combined lease + release under common law with bargain and sale, ensured secrecy in transactions

• Vendor bargained and sold land to purchaser for leasehold term, therefore didn’t require enrolments under Statute of Enrolments, equity regarding vendor as seised

• Vendor then executed ‘deed of release’. Since neither entry onto land nor enrolment was required, all publicity avoided

• Lease + release under statute became standard method of assuring land in England and Australia

The Conveyancing Act, 1919

• Attempted to simplify conveyancing
• Ever since July 1920, a grant has been a sufficient form of conveyance
• S46 provided in conveyance the word ‘grant’ should not be necessary, but any words proper to convey land shall be sufficient
• 1930 amendments to CA 1919 said no conveyance under old system valid unless under deed. To be valid in equity, conveyances must be in writing, not necessarily by deed
• S23B CA 1919- to pass legal title in conveyance, it MUST be in form of deed. However, s23C(1), to be valid in equity, it must be in writing but not necessarily in a deed. 23C(2)- if it is a trust I have passed equitable title and doesn’t need to be in writing, and by law of part performance, even if not in writing, if it is ‘unequivocally referable’, then title can stand under equity  23D(2)

Priorities between competing interests

Firstly have to identify what interest it is

1. Competing legal interests
• Priority depends on date of creation of interests by deed, the rule is ‘nemo dat quod non habet’ (a person cannot convey an interest that he/she does not have)
• If A has sold it to B, he cant sell it to C as he doesn’t have an interest to give
• Earlier date wins

2. Competing equitable interests
• Earlier interest generally has stronger claim: ‘qui prior est tempore potior est jure’ but this is a court of conscience so they seek decision ‘best in equity’
• Equity considers all circumstances of case eg. Manner of acquisition, whole conduct of parties to determine merits of parties and falls back in ‘first in time’ principle (earlier interest, stronger claim) principle only when merits are equal
• Heid v Reliance Finance: Mason and Deane JJ said priority between competing equitable interests is to be determined by a ‘more general and flexible principle’
• Earlier equitable interest will be postponed to a later one where conduct of earlier has led or allowed later interest holder to acquire interest in mistaken belief that earlier interest did not exist (Heid v Reliance)
• Equity looked to commercial realities in determining priority eg. One has signed a contract directly attached to property before other has, a mortgage eg.
• Rice v Rice: ‘search for the better equity, if equal, first in time prevails’
No ‘purchase for value without notice’ doctrine
• In competition between earlier equitable interest and a later legal interest, legal prevails if acquired for value and without notice of the equitable

Beneficiaries under trusts
• A beneficiary’s equitable interest under a trust is not postponed to a later equitable interest created by the trustees in breach of trust
• This only justified where trustees have possession of title deeds. If  trustees neglect to obtain title deeds and this allows equitable interested to be created in favour of third party, beneficiary’s rights under trust are no better than those of trustees
• Beneficiary’s interest will be postponed where trustee with power of sale exercises that power to create equitable interest in favour of a purchaser

‘Equities’
• An equity is sometimes referred to as person’s right to bring action to enforce remedy in respect of land
• Mere equities: 2 meanings:
1. right that has no present proprietary characteristics: conduct that would normally postpone earlier equitable interest to later equitable interest does not postpone the earlier interest to the later mere equity
2. proprietary but somehow less than a ‘full’ equitable interest: later equitable interest prevails over an earlier mere equity if acquired for value + without notice of the mere equity (Latec Investments v Hotel Terrigal)

3.Earlier legal interest, later equitable interest

• Legal interest generally prevails, in accordance with maxim ‘where the equities are equal, the law prevails’
• Postponement may occur where:
1. legal interest holder was party to fraud that led equitable interest being created (Northern Counties of England Fire Insurance v Whipp)
2. where legal interest holder was ‘grossly negligent’ in failing to inquire after, obtain or retain possession of title deeds to land (Walker v Linom). Negligence must be so culpable as to make it inequitable for legal holder to rely on legal interest
3. where legal interest holder entrusted deeds to an agent who exceeds their authority and leads to equitable interest (with limited authority to raise money by giving a security intended to bind legal interest)
4. where legal interest holder handed another person a document appearing to give interest in land, the person taking on faith of the document (Barry v Heider)

4.Earlier equitable interest, later legal interest

• Legal interest prevails if acquired by a ‘purchaser’: i) for value (they paid for it); and ii) in good faith (bona fide); and iii) without notice of earlier equitable interest (Pilcher v Rawlins)

The rule in Wilkes v Spooner

• Priority enjoyed by bona fide purchaser of legal estate for value without notice extends also to persons claiming through that purchaser
• Purchaser who buys with notice from a purchaser who bought without notice ‘may shelter himself under the first purchaser’

Notice

Actual notice: actual knowledge of facts. E.g. Actual knowledge that earlier interest exists.

Constructive notice: knowledge of facts that would have come to person’s attention had that person made enquires that a ‘reasonably prudent’ person would have made.

• The rule in Hunt v Luck: a purchaser who knows that a tenant is in possession of property, is on notice of tenant’s proprietary rights and takes subject to them. If you don’t ask question (e.g. of who the person is in the house (i.e. if they r tenant)) then you are bound by your ignorance. Principles in this case not limited to tenant’s rights, if purchaser knows that any person is occupying property, purchaser is on notice.

• Purchaser of old system who fails to search title back to good root of title at leats 30 yrs is fixed with notice of interests that would have been discoverable is search had been made

• s164(1)(a) CA 1919 provides that a purchaser is not affected prejudicially by notice of any instrument, fact or thing, unless it is within purchaser’s own knowledge or would have come to purchaser’s knowledge had purchaser made inquiries as she/he ought to have reasonably made. Requires purchasers to do reasonable searches.

• s53(3) gives purchasers some protection against constructive notice. Purchaser not affect with notice of matters that would be discoverable by an investigation into the title earlier than the good root of title at least 30 yrs. If you didn’t search, and on search it came with something more than 30 yrs old, the purchaser is not liable.
Imputed notice:  s164(1)(b) the agency rule. If your agent is given actual or constructive notice, you are bound.

Wilkes v Spooner: legal interest holder gives property as a gift (passes it on properly) to son. Earlier equitable interest tries to get property from the 2nd legal interest (the son). the original legal interest holder purchased for value, in good faith  without notice therefore the benefits of that legal interest gets passed onto the 2nd holder (the son) even though equitable interest is earlier. The son wins.

Tabula in naufragio (‘plank in a shipwreck’)

• if later equitable interest was acquired for value and without notice of the earlier, and if the holder of later interest subsequently acquires the legal estate in the land, then that holder can ‘squeeze out’ the earlier equitable interest by ‘tacking’ the later equitable interest onto the legal estate, allowing equitable interest to invoke priority. Usually applies to mortgages.

• exceptions: does not apply where later equitable interest holder knows that the transaction by which he or she acquires legal estate constitutes breach of trust by holder of legal estate (Saunders v Dehew)

Priority by registration
Scope of legislative provisions
General Register of Deeds

• s184C CA 1919: Requires Registrar-General to maintain a General Register of Deeds, open to public inspection (s199)

• To register instrument, original and copy are delivered to Registrar-General, the R-G gives instrument a reference, registration copy is retained by R-G and becomes part of register (s184C).

What can be registered?

Under s184D of CA 1919 the R-G may register ‘any instrument whatever, whether affecting or relating to land or not’, instrument defined in s7(1) to include deeds, wills and Acts of Parliament. However instrument that does not affect land is effective for purposes of record only (Re Christie 1968) this legislation only applies to old system title.

184E- if you give original copy to R-G they will register it according to register identification number.

184G(1)- first one on register wins, even if they had later interest.

Relevance of registration

Registration for validity: Div 1 of Pt 23 of CA 1919 does not require instruments to be registered for validity, but other legislation may require certain instruments to be registered

Registration for priority:

• CA 1919, s184G(1): registration may give an interest priority over a competing interest. S184G(1): an interest that would have taken priority over another interest under the general principles above will generally lose that priority if that other interest is registered first.

• Competing instruments: an interest created without an instrument being brought into existence is not defeated by later registration of an instrument affecting the same land.

• Wills: wills may be registered under the Act. However, registration confers no priority on a will (s184G(1)).

• Bona fides and notice: instrument claiming priority by registration must have been ‘executed and made bona fide’ under s184G(1). Bona fides means more than mere personal integrity or honesty (Wilde v Spratt); it also means absence of notice (Scholes v Blunt). Notice received after instrument is executed but before it is registered does not preclude priority by registration (Burrows v Crimp).

• Contracts for sale of land: in contract for sale, by paying the deposit the purchaser acquires an equitable interest only,  until purchase price paid.

• Valuable consideration: s184G(1) confers priority only on instruments executed or made for ‘valuable consideration’ (which includes marriage, but not nominal consideration). Nominal consideration is consideration so low as to be manifestly illusory (Bullen v a’Beckett)  eg. Not in fact paid or payable (Midland Bank v Green).
 
• Effect of registration: registration confers on the latter instrument a retroactive operation as against the earlier, giving the latter an efficacy that it would not otherwise have (Doe d Peacock v King). There is a limit: only for the purposes of priority does registration give a registered instrument greater efficacy, registration does not render effective an instrument impugned for fraud, mistake etc.

• Registered v unregistered: registered instrument takes priority over competing unregistered instrument.

• Registration as notice: registration does not give ‘notice’ of that instrument to the rest of the world (Mills v Renwick).

Registration of company charges

• Ch2K of Corporations Act provides for registration of charges over ‘property of a company’. Priority generally determined by order of registration with ASIC.

Deeds, s38 CA 1919

Common law requirements
• ‘a deed is a writing i) on paper, vellum or parchment, ii)sealed and iii)delivered, whereby an interest, right, or property passes, or an obligation binding on some person is created, or which is in affirmance of some act whereby an interest, right or property has passed’ (Norton, Deeds. Applied in Scook v Premier Building Solutions).

Sealing
• Any mark or impression on the paper sufficed if made with the intention of affixing a seal (Re Sandilands 1871).

Statutory provisions
Execution of deeds by individuals

• Manner of execution: s38(1) CA 1919: ‘Every deed…shall be signed as well as sealed, and shall be attested at least one witness not being a party to the deed; but not particular form of words shall be requisite for the attestation’.

• Witnessing: signature of each must be attested by someone who is not party to deed (Mostyn v Mostyn) + must be present when deed is executed.

• Sealing: can be satisfied without any seal actually affixed, s38(3) deems instrument sealed if it is :
 i) signed and attested in accordance with s38; and
 ii) expressed to be an indenture( a deed with 2 or more parties) or a deed, or expressed to be sealed.

• Delegation: an agent may be given authority to execute a deed on behalf of the principal, at common law this authority must be given by deed (Steiglitz v Egginton) but there is exception where authority is conferred by using short-form power of attorney under Powers of Attorney Act 2003 (NSW).

Execution of deeds by corporations

Manner of execution

• Under Corporations Act 2001 (Cth) corporations may continue to execute deeds under common seal. Under common seal, s127(2) of Corporations Act provides that document should be countersigned by 2 directors, or a director and company secretary.

• Under s127(1) a corporation may execute a document without using a common seal if document is signed by 2 directors or director and company secretary.

Protection of third parties

• Common law: ‘indoor management rule’ (Royal British Bank v Turquand) says if person dealing with corporation receives document bearing common seal, then person can rely on document’s validity (Re County Life Assurance Co) as company adheres to its constitution.

• S51A, CA 1919: S51A(1) protects a purchaser in good faith against the irregular execution of deeds by corporations. Deems a deed to have been duly executed by corporation if company’s seal has been affixed in presence of + attested by persons who purport to be company’s ‘clerk, secretary or other permanent officer…and a member of the board of directors…’

• Corporations Act, s129: this is like s51A but applies to all instruments and not solely deeds. S129(1) says person may assume that corporation’s constitution has been complied with. S129(6): person may assume that document has been duly executed by corporation if the corporation’s common seal appears fixed and fixing of common seal has been witnessed.

• Delegation: s126(1) read with s127(4) of Corporations Act permit a corporation to empower a person to execute deeds on its behalf, and a deed signed by that person on corporation’s behalf would bind corporation . under s51A(3) of CA 1919 a person authorised to assure property may assure property by executing deed (as provided by s38 CA), being as effective as if corporation had itself executed deed.

Delivery of deeds

• Deed only takes effect when ‘delivered’ (Styles v Wardle), which is any act/words showing that party executing deed regards it as a ‘presently binding’ (Xenos v Wickham), any act showing ‘an intention to be bound’ by the deed ( Vincent v Premo Enterprises).

Actual or constructive delivery

• Actual delivery: physically handing over the deed, being a question of whether grantor intended to part with dominion and vest that dominion and control in the grantee (Carson v Wilson).

• Constructive: without ever leaving executing party’s possession (Doe d Garnons v Knight).

Binding Effect

• Once delivered, party delivering cannot withdraw (Beesly v Hallwood Estates)
Date of deed.

• Where deed has date, presumed to operate from that date (Styles v Wardle).

• Where no date, presumed to operate from date of delivery (Glebe Administration Board v Tifan).

Conditional delivery: escrows

• A deed delivered unconditionally comes into effect immediately. Deed delivered conditionally-an ‘escrow’- does not come into effect until condition fulfilled.

• Condition need not be expressed in deed itself, can be imposed orally (Scook v Premier Building Solutions) or implied as where a deed of conveyance is delivered on implied condition purchase price be paid (Walker v The Ware).

• Where condition remains unfulfilled after a ‘reasonable time’, the appropriate remedy is to seek aid of equity to have deed delivered up to be cancelled (Federal Commissioner of Taxation v Taylor).

Delivery by agent

Deed may be delivered through agency of third person

Delivery by corporations

In recent decision, Bolton Metropolitan Borough Council v Torkington 2004, English Court of Appeal left question open as to whether sealing of deed by corporation prima facie imports delivery of the deed, but commented that by allowing seal to constitute delivery ‘may go too far’.

In NSW in Hooker Industrial Developments v Trustees of the Christian Brothers 1977 Helsham CJ in Eq held that s51A of CA merely protects purchasers against formal defects in the corporation’s constitution and that it neither dispenses need for delivery nor signifies that by sealing a deed a corporation delivers it, therefore this question of law remains a grey area.

Identifying documents as deeds

Whether instrument is deed depends on whether parties intended it to be a deed, seen from considering instrument’s form, substance and object as a whole. E.g. Whether document reflects phraseology + structure commonly found in deeds, and whether cast in most solemn form (Domb v Owler).

CASES

Walker (trust) v Linom
Early legal v later equitable

Walker sells property to trust. Beneficiaries were Walker for life then Mrs Walker. Solicitors acted for both Walker and the Walker trust. Solicitors took deeds from Walker but they didn’t get all of them. The last deed, the one that gave it to Walker, Walker kept it.
• Walker used the deed as security (which is not legal title being passed, it is not a contract for sale of land, just a security therefore equitable interest) to get loan. Loan was with Linom.
• Walker (early legal interest), Linom (later equitable interest)
- Legal wins unless there’s fraud, gross neg etc
- Fraud: did legal interest holder create fraud?  No because Walker trust didn’t commit fraud, Walker did (who was not current legal interest holder).
- Grossly negligent: Walker trust grossly negligent because they didn’t check for deeds
• Postponement awarded to Linom, equitable interest wins. 
• Even with agency, walker is still liable for actions of agent (i.e. solicitors)

Latec Investments v Hotel Terrigal

• Hotel Terrigal (mortgagor) have a loan with Latec Investments (mortgagee)
• Hotel defaulted on loan. Latec repossess and sell it (mortgagee sale). Sold it to Southern Hotels
• Latec broke the mortgagee sale rules. Held auction on wrong day, didn’t advertise properly, Latec sole owner of Southern Hotel and sold the property undervalue to Southern
• Southern then got a loan with MLC (mortgagee)
• Southern defaulted
• MLC wants to repossess
• Latec - don’t have legal interest, don’t have equitable interest
• Southern has legal title
• MLC has equitable interest (they have mortgage contract, not contract for sale of land, its just a security as there hasn’t been a title)
• Are MLC and Southern competing interests? No, because they are not in a competition, MLC should get property due to contract.
• MLC is later equitable
• Hotel Terrigal has no legal interest
• Terrigal have a right to sue (a chosen action in personum) Latec. It is not a proprietary right. Terrigal don’t have any proprietary interest (not legal or equitable)
• Hotel Terrigal, in mere equity, has been wronged by Latec. Right to sue in equity, but until you’ve actually sued and won in equity you cannot have equitable interest.
• MLC win, because there’s no competing interest.