Buying and Selling Land Flashcards
(37 cards)
Re Richards
BUYING AND SELLING LAND
Mr R leaves in his Will Opie Street house to his wife. Mr R decides to sell Opie Street and purchase another house. After properties became unconditional but prior to settlement, Mr R dies.
Held wife is not entitled to the purchase money because gift was adeemed and she could not trace into the money because at law purchase money is different to the house, so the money belongs to his estate.
At time of death Mr R was a trustee of the house for Mr E and therefore could not leave it to his wife.
When contract becomes unconditional equitable title passes and purchaser can seek specific performance for transfer - therefore even though vendor has died contract still go to settlement.
Re Rudge
BUYING AND SELLING LAND
Unconditional contract gives rise to an equitable interest.
Clarke v Ramuz
VENDOR DUTIES
There is a duty on the vendor in the in between stage to take reasonable care and keep property in a reasonable state of preservation.
Analogy to trustee is accepted - Blanchard J observes that a vendor is in some senses a trustee.
Vendor knew that someone was coming in and removing soil (trespass) and done nothing about it - this would be included in DOC.
Englewood Properties v Patel
VENDOR DUTIES
Vendor trustee obligations are limited to preserve the property in the state it was at the time the contract was made.
Vendor can still entitled to some benefits.
Southland District Council v McClean
ADLS UNTENABILITY
Purchaser only wanted to buy the forestry block due to the age variation of the trees which meant they could harvest over a number of years. A storm then destroyed the trees prior to settlement.
Held that purchaser could get out of contract because the forestry block was deemed untenantable because the purpose they purchased the land for had been affected.
The test of tenantable considers the whole property and is subjective by taking into consideration the purpose of the purchase. Something is untenantable when there is substantial interference with the ability to enjoy, use and operate, the premise.
Ask: Can what they brought it for still be achieved? If not then untenable.
Hamilton Snowball
Distinguishes between owners personal benefits and benefits of the land.
Bevin v Smith
VENDOR DUTIES
Sale of farm by Bevin to Smith. A paper road through the farm was not owned by B and belonged to the Crown and B had a license to occupy. B and S had a falling out and when Crown offered freehold of paper road B brought it but refused to include it in sale to S in an attempt to bring contract of sale to an end.
Held that vendor could not get out of contract because the vendor is in some way a trustee and it would be a breach of their duty not to profit to get ownership of the paper road. The purchase of the road should be for the benefit of the “beneficiaries” and ultimately they have purchased it on trust for the purchaser (imposed a constructive trust).
Using ownership to profit when purchaser had equitable interest is a breach of duty not to profit.
B had represented that Smiths were buying the whole farm. Denying ownership of strip would disrupt occupation. But for the delays in settlement caused by B the Crowns offer to purchase paper road would have been made to Smiths.
Vendor as trustee still entitled to some benefits but not entitled to take advantage of remaining legal ownership in a way that prejudices equitable owner.
Bevin v Smith extended Nicholson v Fowler reasoning if ASP is conditional is upon statutory requirement purchaser can be regarded as having equitable interest.
Batchelar Center Ltd v Westpac NZ
VENDOR DUTIES
Westpac (owner of mortgage) entered into ASP with B conditional to the purchaser getting finance and no better offer being made to the vendor. Westpac continued to advertise the property, got another offer and cancelled agreement with B.
B argues that Westpac owed a duty to advice them they had received another offer to give them the option to reconsider and raise a counter offer.
Held that vendor duties do not extend to a good faith/loyalty duty because ASP agreements are routine commercial situation and purchasers can look after themselves. A clause should have been added that the were obliged to advise when received better offer.
Palm Gardens Consolidated v PG Properties
OPTION TO PURCHASE
Palm gardens were granted an option to buy various units in a village but this right to buy only arose when all units were build and occupation licenses were granted. The developers build some units but then decided to sell them out right to someone else. Palm Gardens sought to lodge caveat to prevent someone else from registering ownership.
Issue was whether Palm Gardens actually had a covetable interest allowing them to do this (e.g., do they have an equitable interest)?
Court held that they do not have equitable interest because the option to purchase was a condition precedent therefore developer had full freedom to sell until such conditions were met (conditions were not met because not all units were build and occupation licenses not yet issued). Thus there wasn’t even a contract and for sure no equitable interest.
Nicholson v Fowler
If a contract is conditional based on a condition for the sole benefit of the purchaser they can waive it at any time. Therefore, equitable interest likely gained on contract agreement rather than when unconditional.
Motor Works Ltd v Westminster Auto Services
Four stage of option to purchaser:
(1) = right granted
(2) = triggering event
(3) = offer made to grantee
(4) = ASP
1 and 2 merely contractual, unless know exact terms of when the right will be granted.
3 and 4 give equitable interest
Cousins v Wilson
Neighbor cut down trees prior to settlement of property. Court concluded that the damage to the trees did not reduce the value of the land therefore ADLS clause (old) no applicable as no financial loss.
Held that purchaser has no claim because cannot make a trespass claim against third party without having possession of the property and cannot make a reversionary claim because an equitable interest is not a common law interest.
Purchaser has no claim against vendor as no breach of DOC and ADLS clause no applicable.
Vendor would be able to sue trespasser but because no loss damages will be nominal.
Rice v Rice
ONUS of rebutting priority is on the second in time interest - must prove equities were not equal with regard to conduct and knowledge.
Emslie v Genuine Investments
COMPETING EQUITIES
Emslie transferred property as part of an investment scheme to Maxwells/Genuine, but remained in occupation of the property. Contract included a buy back agreement after scheme was complete. Emslies instructed solicitor to lodge caveat (Court held that buy back agreement was an equitable interest). Solicitor did not lodge caveat. Property was transferred to R S Trust.
Emslie held to have priority as equitable interest from buy back agreement was first in time to R S Trust equitable interest from unconditional ASP.
Onus on Trust to rebut.
Trust knew about occupation but had no knowledge of buy back. No duty for them to check on a just in case basis with previous owners because that defeats the purpose of Torrens System.
Emslie should have caveated because it was an unusual interest that a purchaser would not expect. The fact that solicitor failed to caveat is irrelevant (Emslie can sue solicitor).
Held that failure to caveat is just one consideration but the nature of the interest may result in failure to caveat being fatal - here that was the case.
Priority reversed and R S Trust can register their interest.
Dixon
Said that if you give someone else the power to act like they own something, then their action can result in you losing your right/interest.
This was cited in Emslie because their consensually decision to give Maxwell/Genuine ownership represented that they no longer had an interest and to prevent this representation they needed to caveat.
Perkins v Purea
COMPETING EQUITIES
Mr and Mrs Purea agreed that their daughter June can inherit their property that she occupies conditional to discharging the mortgage.
Mother dies and her insurance policy discharges the mortgage. Father moves into property with June, they have falling out and then he sells property.
Immediately after falling out June instructs solicitor to lodge caveat but solicitor fails to do so until after ASP (too late to put purchasers on notice).
Junes right to purchase was first in time to the Perkins unconditional ASP.
Perkins did not have actual knowledge of caveat but held they did have constructive knowledge due to knowing about Junes occupation and the fathers comment that “daughter kicked me out” should have alerted them to a dispute about ownership and gave rise to duty to make inquiries.
Held the failure to lodge caveat was not determinative because in a family relationship no expected to be necessary and when the risk did arise June took all necessary steps to protect her interest.
Priority not reversed = June can register interest.
Mercury v McLachlan
COMPETING EQUITIES
McLachlan has equitable lease to continue grazing on some of his land he has sold to Mercury for a power plant. Mercury goes into receivership and receivers sell land to Contact Energy.
McLachlan caveats after the ASP (too late to give notice).
Contact had constructive knowledge because knew of M occupation and thus that he had some kind of interest.
Contact did make inquiries to receives but this did not reveal the lease. Contact did not make reasonable inquiries to the right people and could have asked McLachlan because was on property.
Priority not reversed = McLachlan can register interest.
AGC V CFC
COMPETING EQUITIES
Director of company wanted a new Mercedes on finance. Got loan agreement from AGC conditional to them have security over his land, so gave AGC mortgage. Did not get duplicate of title and did not caveat immediately.
The next day also gave CFC mortgage over land and they got duplicate certificate of mortgage (prior to electronic registration) and intended to register but AGC caveats before they do.
CFC has priority but took so long to go to court to remove AGC caveat.
AGC failed to reverse priority due to not caveating immediately and had they done so CFC would not have got mortgage (they checked the register and saw nothing). Therefore, CFC can register interest.
You can look at both parties conduct and subsequent conduct may be relevant.
Frazer v Walker
INDEFEASIBILITY / MORTGAGE FRAUD
Mrs F forged husbands signature on a mortgage for 3rd party who then sell property to Walkers.
Mr F claims that because he never signed anything Walkers do not have indefeasible title.
Held that fraud must be against the previous RO, thus in this case the fraudulent act was too far removed from Walkers to be LTA fraud. Rationale being that a purchaser should not bear the risk of all previous owners conduct.
Established there is immediate indefeasibility upon registration (means as soon as you are no longer RO you loose indefeasibility).
Assets Co
Has to be actual fraud or constructive fraud but not constructive knowledge or equitable fraud.
The mere fact that he might have found out fraud if he had been more vigilant and had made further inquiries which he omitted to make, does not of itself prove fraud on his part. But if it can be shown that his suspicions were aroused, and that he abstained from making inquiries for fear of learning the truth, the case is very different, and fraud may be properly ascribed to him (= Wilful Blindness).
Waimea Swamilling
Test of dishonesty - if you have reason to think that their may be another interest then you are required to make enquiries, if you do not then you are consciously turning a blind eye to the fact (wilful blindness is equivalent to actual knowledge).
Wilful blindness is very fact dependant.
Has to be object of transfer to cheat the person - intent at time of registration has to be to deprive other person of their interest.
Burmeister v O’Brien
Elderly couple were subjects of a complex scam - they were cheated into thinking they were placing home on family trust but they actually transferred home to O’Brien. New RO (O’Brien Trust) granted a mortgage to ASB.
O’Brien held to be guilty of fraud because object of registrtaion was to cheat and knew B were not willing sellers. Court imposed a constructive trust and obligated O to transfer title back to B.
ASB kept mortgage because they were bona fide and B granted compensation for this.
Efstatiou
Husband and wife jointly held house on trust but it was registered solely under husbands name. There was a breakdown in relationship and husband moved away. He returned a year later to find wife living in house with a new man. Husband then instructs agent to urgently sell the house. Purchase settled within in 3 days, for a cheap price and sight unseen.
Held that purchasers guilty of LTA fraud because they had reasonable notice that something was wrong because sale was so out of the ordinary and thus acted wilfully blind.
Also a possible claim for dishonest assistance of the real estate agent.
Satnam Investments v Worger
Satnam had an unregistered lease and ROFR over post shop. The post shop was sold to Worger Family Trust who knew of their occupation but not of the ROFR.
Held that Satnam had equitable interest from ROFR once decision to sell property was made. S caveats.
Worger sees caveat, so pauses process of purchase, goes on hoilday and leaves S and previous RO to sort it out. When S returned advised by solicitor that the caveat was no longer on register (it had lapsed). Thus presume issue been sorted out and could register their interest.
Held that purchasers did not commit LTA fraud because they truely believed there was no competing interest, thus had no intention to deprive S of their rights. Not reasonable to say they needed to make inquiries.
Didn’t want to register if there was going to be any problems - investment property.
It is reasonable for a layperson to rely on the advice of a solicitor.
