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BLDG2012 Construction & Property Law

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BLDG2012 Construction & Property Law

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Course Code: BLDG2012
University: University Of New South Wales

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Country: Australia

Question:

Sharon is a property developer who is interested in purchasing land at 38 Blues Drive, Ormeau. As part of her due diligence the following information became available:

Along the back boundary there is a significant amount of native vegetation;
There is a worn down old timber farmhouse built in the 1940s;
A large derelict shed which has asbestos;
The current title search identifies the following interests in the land:

Electricity easement running through the middle of the land;
A covenant preserving the adjoining landowner’s view through restricting development on the land to 3 storeys;

Large steel artwork by the world renown artist Michael Star which Sharon would like to utilise for her proposed development.

Sharon believes that she can still work with the land for her development and therefore progresses purchasing the land. She obtains Finance from her Bank, ABC Loan. She receives a draft Contract of Sale for review from the Seller’s solicitor. Within the draft Contract there was the following Special Condition of the Contract of Sale:
Special Condition
This sale is subject to the Buyer giving written notice to the Seller (or the Seller’s solicitor) that she is satisfied with the terms and conditions of the short team lease agreement within 14 days of the date of contract. If the Buyer gives notice that she is not satisfied, this contract shall be null and void and all money paid hereunder, shall be returned to the Buyer.
Tenancy Details
Tenant’s name: Charlotte Flair
Term and Option: 2 years with a 1 year option Starting date of Term: 1st August 2018
Ending date of Term: 31st July 2020 Rent: $152,000 per year
Sharon did not believe that the short term lease was an issue as it was not registered on title and therefore she could remove Charlotte from the land when she needs to develop. Sharon executes the Contract of Sale. Settlement occurs and the land is transferred into Sharon’s name and she is now the registered owner. Sharon gives Charlotte notice to leave within the week.
After one month, Sharon enters her property and notices the following:

The large steel artwork has been removed from the land;
Charlotte is still occupying the land;

Sharon is initially seeking your advice specifically in relation to the above.
While finalising your advice to Sharon, Sharon has contacted you for advice in relation to the development of a flat plan building development scheme on the land. She wanted to know the applicable legislation and regulation that she will need to comply with and the requirements involved in developing such a scheme.
Sharon has taken your advice into account and continues to progress the development. Due to Sarah becoming extremely busy she has forgotten about fencing the house and shed due to their dilapidated nature. Unfortunately, Roman enters the land in the belief that there is buried treasure in the basement of the house. While on the premises Roman injures himself by falling through the floor of the second level of the house. Roman is not happy and is seeking legal advice to sue Sharon.
Sharon’s development costs are spiralling out of control as well as the costs associated with the legal fight with Roman. Unfortunately, Sharon has not been able to make her mortgage repayments for six months. ABC Loan is concerned about Sharon’s failure to make her mortgage repayments and would like to be advised as to possible action it could take.
Advise as to the following:

Development issues that Sharon would have considered;
Advise Sharon as to her legal responsibility with regards to the other interests in land.

2. Bob is Sharon’s next door neighbour. He has recently returned to his property from a long 12 year working holiday. When he returned he noticed that there were some changes to his property. His house has been repainted, a granny flat has been constructed, and a vegetable garden has been planted. Also, he has noticed that the name on the letterbox is no longer his. He entered the property and found Joseph watching TV in his loungeroom. Joseph told Bob to leave and escorted him out of the house. Bob is left dumbfounded and upset as he has been thrown out of his own property. He contact the police and explained the situation but the police refused to get involved into a legal dispute.
Joseph has issued a caveat over Bob’s property making a claim as an adverse possessor on the following facts:

He claims to have been in possession of the land for 12 years. His friend Mary was in possession of the land from 2005 to 2012 and then he entered the land and lived with Mary for 1 year from 2012 to 2013 and after Mary left in 2013 he has remained in possession up to today (2018).
He claims that himself and Mary while in possession had maintained the land, paid the rates, fenced the land, built improvements, and they had occupied the land without the consent of the true owner.

Answer:

1. Issue 1:
The issue is also associated with the fact that the large steel artwork was removed from the land. Therefore, there was an intention on the part of Sharon to utilize the large steel artwork.
Rule:
Concerning the issue of fixtures, a number of rules ought to be used. As ruled in the case, Blackburn J in Holland v Hodgson (1871 – 72) LR 7 CP 328, the large steel artwork forms parts of the property which Sharon should own. The court held that fixtures constitute anything that had been built into the stone floor in order to provide stability for the machines during fixtures. This is further supported by another ruling in the case, Jordan CJ Australian Provincial Assurance Co v Coroneo, where it was established that fixtures, which are often considered part of the land, are determined if: if any item has been fixed by applying other means different from its own weight then it can be termed as a fixture. In this regard, the burden of proof lies upon the plaintiff. If the plaintiff can establish that the item is not a fixture and has been affixed; then such condition may prevail for an indefinite period of time.
The rule of indefeasibility can be emphasized in this regard. The indefeasibility of title emphasizes that the registered title deed of the real property determines the ownership of the property. The principle of indefeasibility simplifies the process of dealing with land in which a registered interest is given much priority over all interests. In the landmark case of Frazer v Walker [1967] 1 AC 569 (PC), the rule of indefeasibility was established. In this case, it was argued by Mr. Frazer that, the mortgage was forged and therefore it was considered to be void having no effect at all. However, in this case, it was held by the Court that, that previously the property belonged to Walker and the nature of the transfer was such that it was duly registered. Therefore Walker’s title was indefeasible.
Application:
According to the given scenario, it is evident that Sharon was successfully registered on title. In the regard, the provisions of Land Title Act 1994 can be referred. According to this Act, an individual registered to a property shall have the right to enjoy legal right and protection. Therefore, as the land was once registered under the name of Sharon, the principles of the Torrents title system can be applied in her case. The Torrens title system was designed for the purpose of providing adequate protection to the owner of the property.
Conclusion:
In the conclusion, it can be stated that as the steel artwork has been removed. Therefore, there is an authority on the part of Sharon to bring an action of claim against the concerned person. As a result of which she could get back the large steel artwork.
Issue 2:
The first issue facing Sharon is whether she could remove Charlotte from the land when she needs to develop.
Rule:
From the very beginning, a number of rules have been governing the ownership of property in Australia. These rules are depicted in the provisions of Land Title Act 1994. According to the provisions of the Land Title Act 1994, an individual shall enjoy complete legal right of the property and shall also be protected if he is registered under the provisions of the Land Title Act 1994. According to the provisions of Article 185 and 186 of the Land Registration Act, emphasizes on the fact that, after the first registration has been obtained, third parties shall not have any right to the land. In this regard, mention can be made about the Torrens system. The Torrens title system is a land registration system and land transfer system which is applied by the states for the purpose of registering land holdings by serving as a conclusive evidence known as indefeasibility. In this regard, it is worth noting the functioning of the Certificate of Title. The Certificate of Title is a legal document issued by the Registrar of Title. According to the provisions of Article 173 of the Land Registration Law, the Certificate of Title provides a legal recognition to the individual for the purpose of guarantying ownership of paramount interests. Under the Torrens Title system, it would prove to be beneficial for the individual in enhancing certainty of title to land by simplifying the dealings involved with land.
The provisions of Article 70 of the Land Registration Act 1920 can be referred in this context. Applying the provision of Article 70 of the Land Registration Act 1920, the matters involving interest to title shall be resolved the Court. The provisions of Article 70 of the Land Registration Act 1920 entrusts an authority upon the Court to make detailed investigation of the property by emphasizing upon the subject-matter of real rights affecting the ownership of such property. The nature of the affect may be such that it may be subjected to registration, easements and mortgages.
Application:
In the present case study, it can be observed that the land was occupied by Charlotte. In this regard, there is an authority on her part to sue the individual because under the provisions of the Torrens title system, such an act is considered to be legal. The provisions of Article 70 of the Land Registration Act of 1920 can be referred which provides an authority upon the Courts to resolve the matter in issue.
Conclusion:
It can be finally concluded that, as the land has been already occupied by Charlotte therefore; Sharon has the right to sue Charlotte.
Issue 3:
In the second issue, Sharon wants to gain relevant information regarding the development of a flat plan building development scheme on the land. In this regard, she wants to be aware of the appropriate legislation and the regulations for the purpose of complying with the requirements involved in the development of such scheme.
Rules:
According to the provisions of Article 42 of the Laws of Victoria and of New South Wales, Article 68 of Western Australia, Article 40 of Tasmania and Article 44 of Queensland, there is a right to the property on the part of an individual under a concession of the previously registered crown or certificate of title. This double and contradictory registration, referred to as a registration which is inconclusive in nature that takes place when a person is registered with respect to a right, already registered in the Registry on behalf of another. As a result of substantial error in terms of title, and in terms of identity and area or boundaries of the parcels, such the first registration that has been obtained remains conclusive.
Concerning, the issue of mortgage payment and development, a number of rules needs to be taken into be consideration. In Australia, registration of a mortgage takes place for the purpose of complying with the requirements of the Land Title Act 1994. According to the provisions of Section 78(1) (b) of the Property Law Act 1974, one of the most important obligations of the tenant is the return to the lessor of the property or land rented in the same state in which it was received. To check the state in which the farm was at the beginning of the lease of one or more rustic properties, it may be useful to make an inventory of all leased assets. This document, which should be included as an annex to the lease, can be drawn up at the time of signing this contract.
Application:
Applying the provisions of Section 73 Sharon must bear the debt or liability secured by the mortgage. In this regard, the provisions of Article 42 of the Laws of Victoria and of New South Wales, Article 68 of Western Australia, Article 40 of Tasmania and Article 44 of Queensland can be referred. According to these provisions, the individual shall have a right on the property that has been previously registered. In this context, it is worthwhile to refer here that, in regard to developmental issues; it is important on the part of Sharon to ensure that she can gain profits from her property so that she can pay the mortgage.
Conclusion:
In the conclusion, it is important to mention that Sharon being the owner of the property should consider certain developmental issues. She has the right to gain appropriate knowledge regarding the existing provisions, legislations and regulations which would prove to be beneficial for Sharon to get back the fixtures. As a result of it, Sharon would be able to utilize her property in the right way and in such process shall be able to pay the mortgages and get the additional value from the property.
Issue 4:
The fourth issue is regarding the fact that Roman wants to sue Sharon for negligence. The case also shows Sharon had not fenced the property. Roman has entered the land with belief that there must have been buried treasure inside the basement of the house.  However, as a result of such attempt, Roman injures himself by falling from the second floor of the house. Roman is not happy and is seeking legal advice to sue Sharon. It is also revealed that the developmental costs on the part of Sharon are spiraling out of the way and even the costs involved in the legal case ith Roman is increasing considerably.
Rule:
According to the law of torts, it is important on the part of an individual to take reasonable care for the purpose of avoiding injury which is likely to cause damage to the property of the neighbor or result in personal injury. The principle of neighbor was first established in the case of Donoghue v. Stevenson 1932. However, the nature of the injury has to be such which could be foreseeable by any reasonable man of prudent nature. The prediction of foresee ability has been observed in the case of Tame v New South Wales [2002] HCA 35. In this case, it was observed that the police constable owed a duty of care to the driver. However, whether the nature of psychiatric injury was such as it could be foreseeable by any reasonable man of prudent nature was investigated. In this regard, it was held by the Court that the police constable owed a duty of care not only to the driver but also to the general public as a whole.
It is worthwhile to mention the concept of negligence in this context. In order to establish the fact that negligence has occurred, it is important to prove that whether there was a standard duty of care on the part of the defendant. Negligence can be defined as an act on the part of an individual to do something or not to do something which could be done by any reasonable man of ordinary prudence. In the case of Blyth v Birmingham Waterworks Company (1856) 11 Ex Ch 781, it was observed that the defendant was negligent in his act. in this case, it was observed that the defendant installed a fireplug near the house of the claimant. As a result of such installation, it caused damage to the house of the claimant causing injury.
It is noteworthy to mention here that, the more serious is the nature of the risk; the demand of precautions on the part of the defendant increases. The seriousness of the harm was observed in Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13.
It is worthwhile to refer here that, physical possession into someone’s lawful property without their consent becomes trespass to land. However, if an individual enters into someone’s lawful property without any consent then the defendant shall not be held liable which was held in the case Bulli Coal Mining Co v Osborne [1899] AC 351.
Application:
In the present scenario, it can be observed that, Roman injures himself by falling from the second floor of the building. In this regard, Sharon was negligent on her part because she has not constructed the floor of the building in a proper manner which broke down and caused injury to Roman. In this situation, it is important to refer the case of Donoghue v. Stevenson 1932. It is worthwhile to refer here that the nature of the injury was such as any reasonable man could foresee. Therefore, Sharon should have known the consequences of her actions. in this regard, the case of Tame v New South Wales [2002] HCA 35 can be applied. In this case the injury is physical AND Sharon should have taken precautions on her part in order to avoid such injury.
The case of Blyth v Birmingham Waterworks Company (1856) 11 Ex Ch 781, can be referred because Sharon was negligent in her act as she failed to take reasonable safety precautions which caused injury to Roman. Therefore, the concept of negligence is also applicable in the present scenario. The case of Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13 can be referred in the present scenario. This is due to the reason that, Sharon should have known the seriousness of the harm and as a result of it the demand, the demand of precautions on the part of the defendant increases. The concept of trespass of land can also be referred. In this scenario, the case of Bulli Coal Mining Co v Osborne [1899] AC 351 can be referred. This is because, the liability lies upon the individual who has trespassed the property.
Conclusion:
In the conclusion, it can be stated that Sharon was negligent in her act as she failed to take standard duty of care and did not comply with the safety precautions. Roman has caused trespass to the property without her consent; Sharon cannot be held liable. However, as she was negligent in her act, there is a right on the part of Roman to sue Sharon.
Issue 5:
The fifth issue is related to the legal responsibilities on the part of Sharon in relation to the other interests on land.
Rule:
According to the contract of agricultural holdings, it is mandatory that the elaboration of an inventory in which the elements that formulates operation are included.  In this regard, during the lease period most importantly during the first three months of lease, one of the parties may compel the other to draw up a detailed inventory. In the event of a refusal, the justice of the peace, by a judgment that cannot be appealed, may appoint an expert to do so. In the absence of an inventory, the lessee is presumed, unless proved otherwise, to have received the property in the condition in which it is located at the end of the occupation.
Application:
Sharon should apply relevant provisions for the purpose of protecting her in such cases unless she decides to terminate the lease. This is because in Australia, once a person is registered as a lessee, he or she has responsibility to utilize the property and protect.  This means that Sharon has the right, except in the case of valid leave, to build all the buildings left for him to maintain and bear the charges and to do all works and works, including new works and works, works and works for improvement, repair or reconstruction, which are useful to the habitability of the leased property or useful for the exploitation of the property and conform to its destination. Without the lessor being able to impose it on him, the lessee is authorized, at any time, to remove the buildings insofar as they are distinctive goods.
When these constructions, works were made either with the written consent of the owner or, in the event of usufruct, with the written consent of the bare owner and the usufructuary, or with the authorization of the relevant law, the amount of this indemnity may not be less than the costs incurred by the lessee, to the extent that they have not been depreciated, such depreciation being fixed at a flat rate of 4 pc per annum. If the lease terminates at the initiative of the lessee, the compensation provided for in the preceding paragraph may not exceed the amount of rent paid by him in the last five years for all the property he rented to the same owner. If the lease ends at the initiative of the lessee, but exclusively for serious reasons, he is entitled to the indemnity.
Conclusion:
In the conclusion, it can be stated that, In case Sharon feels that she may not utilize the property effectively, she can sublet to a person who can utilize it profitably because according to Australian property law, freehold has the right to exclusive possession and the right to lease. This means that Sharon may sublet the property or exploitation or assign the lease to another person (with the consent of the lessor), unless the landlord expressly prohibits it. This may entail filling a special document related to subletting. Once the document has been completed with the necessary information regarding the conditions of the lease, and the rights, duties and responsibilities of each of the parties, the contract must be signed by the parties or, where appropriate, by their representatives, who must to show the authorization, or in its case notarial power, that enables them to do so at the time of signing. Likewise, if a guarantee or joint guarantee is constituted, the latter must also sign the contract. For a higher level of security, signatures must appear not only in the final section of the document, but also on the left edge of each page that makes up the document , including, where appropriate, the pages of the annexes in which they are included. Sharon should be aware regarding the end of the occupation, the lessee who bears the costs of the constructions, works and works is entitled to compensation equal to the appreciation that the property has acquired thereby.
2. Easement and Caveats
Issue
The issue facing Bob falls under easement and caveats. The interest in the land is Caveats which results in the claiming the interest in the land or giving the notice of the existence of an unregistered interest. In this case, Joseph issues the case based on the existence of an unregistered interest as ADVERSE POSSESSION – SUCCESSIVE ADVERSE POSSESSION. The case clearly reveals that Bobs has registrations of indefeasibility title to the land as the solo person as interest in the land will be indefensible when the registered on the title of Bob if the adverse possession of the land hasn’t been more than 12 years based on the Joseph Caveats (Asher v Whitlock (1865) 1 QB 1).
Rule
Presented with such an issue, the best way of coming up with solution is to determine if there is a caveat based on the adverse possession at common law the following essential characteristics of an adverse possession must be understood and implemented.
Referring to (Asher v Whitlock (1865) 1 QB 1), it is apparent that Mary and Joseph have spent a total of 12 years and hence they meet the requirement of adverse possession – 12 years together in continuous succession.  Besides the adverse possession, it is important to determine whether Mary and Joseph had intentions that are factual. This is because a Caveats must determine the accommodation of the tenement at the property with the intention of the adverse possession based on the factual living and intention. Mary and Joseph have been maintained the land and paid the rates, fenced the land and build improvement which is sufficient enough to show the intention on the land based on the fact (Buckinghamshire Council v Moran & Monash City Council v Melville)
Another rule worth considering is whether Mary and Joseph can legally apply to force the old tenant to leave. This rule is provided in Cholmondeley (Marquis) v Clinton (Lord) (1820) 2 Jac & W 1 at 140. The case reveals that Mary and Joseph lived together for the year when Mary was in continuous possession of the land and after she left Joseph has the solo possession of the continuous possession which total accounts for 12 years. Adverse Possession held 12 years: LAA s 13 are eligible to apply the registered owner of the land under the Torrens system eradicating the registered old entitlement on the same land by statute of limitation.
Application
Based on the rules presented above, it is clear that Bob is likely to lose the property to new tenants. Adverse possession has been the continuous based on the no gaps in the middle as Mary was the first adverse possession of the lad from 2005 to 2013 with one year with the Joseph (2012-2013) accounting to the total number of 7 years. After that Mary left in 2013 and Joseph was still there till 2018 which account to more 5 years. Together it becomes 12 years in succession. Thus, act of possession – based on the succession can act based on the case (Asher v Whitlock (1865) 1 QB 1).
It is also clear that Mary and Joseph meet all tenants requirements and as ruled in Buckinghamshire Council v Moran & Monash City Council v Melville , they stand a chance to be granted as legal tenants if they seek court rulings. This is because in 12 years starting from Mary maintenance of the property has been carried out and the build improvement in the long time like maintenance and fencing along with the maintenance is the key points to be noted for the adverse possession. As Mary leaves, after being with the Joseph, that year 2012-2013 shows the continuity between them and maintenance of the property till 2018 with all factual details for the intention of the acquiring the property as adverse possession. The court has subject to the approval thus providing the valid reason for the caveat based on the adverse possession of the property in succession or continuous duration of 12 years. (Buckinghamshire County Council v Moran &Monash City Council v Melville).
Conclusion
Based on foregoing analysis, Bob cannot claim the property because he is no longer entitlement to the property under the section of the LLA s 24 based on abandoning the property and 12 years of accomplishment of the Joseph at the property. Joseph has done the right thing by putting Caveat under Bob property. Joseph has lodged the caveats based on the person claiming the interest in a property with the subject of application for a title by adverse possession (s104 LTA). One advisable thing for Bob will be meeting Joseph out of the Legal matter and look forward to sort that out with some compensation which Joseph is not going to do it if he is smart enough to know he has secured a win-win situation by lodging the covenant in the legal hand. One thing for sure will be time consuming if they have to go to court and fight the legal matter with the help of lawyer and all those fees associated within the court which will be expensive for both side. If Bob and Joseph agree the outside court mutual agreement between then that will be the great option for the Bob.  The only wise option for Bob is going outside the legal matter and striking a deal with the Joseph based on the compensation as all the legal law will be much unfavorable for him.
References:
Asher v Whitlock (1865) 1 QB 1.
Blackburn J in Holland v Hodgson (1871 – 72) LR 7 CP 328.
Blyth v Birmingham Waterworks Company (1856) 11 Ex Ch 781.
Buckinghamshire County Council v Moran &Monash City Council v Melville.
Bulli Coal Mining Co v Osborne [1899] AC 351.
Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13.
Donoghue v. Stevenson 1932.
Frazer v Walker [1967] 1 AC 569 (PC).
Jordan CJ Australian Provincial Assurance Co v Coroneo.
Tame v New South Wales [2002] HCA 35.

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