LAW316 Hypothetical 1) Michael has an equitable interest in the Bowral property that is in competition with Barrys later legal

interest. This nature of the equitable interest is the life estate orally made by Petrea that she intended to allow Michael to live in the property for the rest of his life. This is arguably contractual in nature due to the fact that he is providing valuable consideration for this privilege. The validity of such a contract raises the issue of part performance.1 If Michael can prove that he would not have done these things if Petrea had not made this promise, then there is satisfactory part performance per Lighting by Design v Cannington Nominees.2 The fact that he is her second husband detracts from this argument, but it is countered by his financial contribution and sacrifices to renovating the house and caring for Petrea.3 Thus there are evidently acts of part performance on the part of Michael. However, Michael may not have an actionable claim to the property itself. This is because Barry is the registered proprietor of the property, which gives him an indefeasible claim to it.4 There is insufficient evidence to overcome this indefeasibility by way of fraud. Based on the conduct of Barry, there is nothing to suggest that fraud has occurred during or prior to the transfer of his mothers estate. He knew about the promise Petrea had made, but this was merely a notice of prior equitable interest, which in itself does not attract fraud.5 Thus Michael does not have any claim to the property itself. The issues of an in personam claim or knowing receipt of trust is not within the scope of this question. 2) The resale agreement between Charles and Barry, though contractual in nature, is unregistered, thus it is an equitable interest. However, the later transaction between Diane and Charles for the transfer of property is a written and legal interest. These equitable and legal interests are in conflict with each other. A point of contention is whether the original verbal promise is legally enforceable from the start. The Conveyancing Act requires any disposition in land to be made in writing; hence the resale agreement is unenforceable as a condition of the sale contract.6 However, there may be an issue of part performance. This issue is whether Barry would have stayed on the property to work on building the vineyard had the agreement
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Ogilvie v Ryan [1976] 2 NSWLR 504. Lighting by Design Pty Ltd v Cannington Nominees [2008] WASCA 23. 3 Watson v Delaney (1991) 22 NSWLR 358. 4 Frazer v Walker [1967] 1 AC 569. 5 Real Property Act 1900 (NSW) s 43. 6 Conveyancing Act 1919 (NSW) s 23C.

to resell it not existed. If this can be proven in the affirmative, then Barry has undertaken part performance of a contract which is not restricted by the Conveyancing Acts writing restrictions.7 The implication of this contract is that Charles did not buy the property outright; he made an investment into Barrys business which was to pay him back 30% over the next 2 years. The property was held as security to this investment should Barry have been unable to repay the $260,000. Given that the verbal resale agreement is a clause of Dianes contract, this is evidence that she has actual notice of this prior agreement.8 Thus in the system of equity, she cannot be seen as a bona fide purchaser. However, this arguably does not fulfil the requirements of fraud. Fraudulent behaviour would involve either a degree of dishonesty, moral turpitude, or wilful blindness to a fraud.9 Dianes unwillingness to recognise the prior equitable interest does not constitute fraud, in any case, she did not undertake any fraudulent behaviour prior to gaining or in order to gain registration of the property. Thus her ownership of the property is not defeasible for fraud. Failure by Barry to lodge caveat regarding his unregistered interest prior to Dianes purchase may be considered postponing conduct and deprive his equitable interest of priority. However, in J & H Just Holdings v Bank of New South Wales, failure to lodge a caveat was not in itself sufficient to postpone a prior interest.10 Even though Diane would not have been able to find the resale agreement on a title search, she had actual notice of it in her purchase contract. There was no mistaken assumption of there being no prior interests. In addition, there is the possibility of an in personam cause of action for Dianes knowing receipt of a constructive trust. When she expressly acknowledged the prior agreement between Barry and Charles in her purchase, she became a constructive trustee for Barry. This conclusion is dependent on a matrix of circumstances discussed by Mason CJ and Dawson J in Bahr v Nicolay.11 Applying these considerations, Charles would not have sold the property to Diane if he did not intend the acknowledgement of the resale agreement to create a trust. The absence of such would have exposed Charles to an action for breach of contract. Subject to this constructive trust, Diane is required to sell the property to Barry for $260,000. However, she would have not provided any valuable consideration for this transaction since
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Conveyancing Act 1919 (NSW) s 23E(d). Ibid s164. 9 Bahr v Nicolay (No 2) (1988) 164 CLR 604. 10 J & H Just Holdings Pty Ltd v Bank of New South Wales (1971) 125 CLR 546. 11 Bahr v Nicolay (No 2) (1988) 164 CLR 604, 18.

she paid the same amount to Charles. Hence specific performance cannot be used to compel her to transfer the property, although she is open to an in personam cause of action for refusing to do so. If the irrigation pump is part of the property, it would allow Diane to exercise ownership over it. Based on the principle "whatever is affixed to the soil belongs to the soil", the pump can be considered a chattel which has been affixed to the land, thereby becoming a fixture of the property.12 The objective intention of the affixor and degree of annexation are required to identify a fixture.13 The intention of the affixor, Barry, in installing the pump was to grow the vineyard, an integral feature of the property. Furthermore, being cemented to the land, the pump is quite firmly affixed, requiring significant effort and damage to the property in its removal. Thus the pump mechanism, including its constituent pipes and sprinklers,14 are owned by Diane. 3) The diamond ring was evidently a lost item found on Barrys premises. Even though he does not own the property, under a contractual license he is in occupation of the land. Since nobody came forward as the true owner, the visitor as an honest finder has a stronger claim to the ring than Barry.15 His relationship with the finder is also significant. In National Crime Authority v Flack, it was found that ordinarily the occupier of a home would have the right to claim ownership of chattels in it.16 Despite this, the finder was a customer to the property, and the ring was found in the wine tasting room, a commercial area of the business open to the public. This means that Barry cannot claim possession of the ring. However, he may be able to exercise good claim on the ring if he can demonstrate an intention to control the land and everything on it, including lost items.17 Such an assertion would require that he had taken actions to prove this intention, such as routinely searching the property for lost items or maintaining a rigorous lost property policy. Unless he can validate this, he is not entitled to claim the ring.

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Litz v National Australia Bank (1986) Q ConR 54. Reid v Smith (1905) 3 CLR 656. 14 National Dairies WA Ltd v Commissioner of State Revenue (2001) 24 WAR 70. 15 Tamworth Industries Ltd v Attorney General [1991] 3 NZLR 616. 16 National Crime Authority v Flack (1998) 156 ALR 501, 511. 17 Parker v British Airways Board [1892] 1 QB 1004.