UPDATE 148 OCTOBER 2016 PROPERTY LAW AND PRACTICE QUEENSLAND. W Duncan & R Vann. Editors: W Duncan & A Wallace

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1 UPDATE 148 OCTOBER 2016 PROPERTY LAW AND PRACTICE QUEENSLAND W Duncan & R Vann Editors: W Duncan & A Wallace Material Code Print Post Approved PP255003/00335 Thomson Reuters (Professional) Australia Limited 2016 Looseleaf Support Service You can now access the current list of page numbers at If you have any questions or comments, or to order missing pages, please contact Customer Care LTA ANZ on Fax: Care.ANZ@thomsonreuters.com

2 NEW AND UPDATED COMMENTARY Property Law Act 1974 Anne Wallace has provided new annotations to the following sections of the Property Law Act 1974: [PLA.85.30], [PLA.85.60], [PLA.85.90], [PLA ], [PLA ], [PLA ], [PLA ] Upton v Westpac Banking Corporation [2016] QCA 220 is included in the commentary to s 85 in relation to the following points: (1) Under s 85(1), as amended in 2008, a mortgagee will be liable for damages under s 85(3) where the exercise of a power of sale is by a receiver acting under a power delegated to the receiver by a mortgagee. The evident intent of s 85 is to impose the same duty upon a receiver as would be imposed upon the mortgagee exercising the power of sale and to make the mortgagee liable for any breach by the receiver: Upton v Westpac Banking Corporation [2016] QCA 220 at [30] per Philip McMurdo JA (Holmes CJ and Fraser AJ agreeing). (2) Section 85 does not impose any duty on the mortgagee to sell the property either at all or at a certain time. It does not change the general law that a mortgagee is not obliged to exercise its power of sale. The duty imposed by s 85 is engaged only when the mortgagee actually exercises power of sale. The entry into a contract of sale is an act in the exercise of the power of sale. It is the sale which is the exercise of the power and the act by which, in the circumstances of the mortgagee s omission, duty is breached. Accordingly, the Court of Appeal rejected the appellants argument that the mortgagee had breached the duty imposed by s 85 by not selling the mortgaged property in circumstances where the mortgaged property had been put to auction by a receiver appointed by the mortgagee but had failed to sell. (3) A guarantor of the mortgagor s obligation is capable of being a person damnified within the meaning of s 85(3) and entitled to damages for breach of duty imposed by s 85(1) if a breach is established: Higton Enterprises Pty Ltd v BFC finance Ltd [1997] 1 Qd R 168 followed. [PLA.85.90] The commentary to s 85(1A) has been updated to note the increase in the value of a penalty unit to $ under the Penalties and Sentences Act Property Law & Practice QLD 2

3 [PLA.89.30], [PLA ] Upton v Westpac Banking Corporation [2016] QCA 220 is also included in the commentary to s 89(1) in relation to the holding by the Queensland Court of Appeal that s 89(1) does not apply to a person who has been appointed as agent by the mortgagee to sell the mortgaged property and receive and give a discharge of the any monies owing but is intended to apply only to those persons who are either mortgagees or have vested in them the property of the mortgagees, such as executors. The Court of Appeal followed the English Court of Appeal in Re Dowson and Jenkin's Contract [1904] 2 Ch 219 at 223. [PLA ], [PLA ] The commentary to s 199 (Statutory assignment of things in action) has been revised and the decision of the Court of Appeal of Queensland in Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2016] QCA 148 included in the commentary. The Court of Appeal unanimously upheld the decision of Philip McMurdo J at first instance that a Security Agreement was to be properly construed as creating an interest akin to a floating charge whereby any assignment was conditional upon the future happening of an event of default, rather than an absolute assignment and consequently not within the section. Amongst other matters relied upon, the Security Agreement contained numerous clauses giving the chargee rights in the property upon the occurrence of an event of default rather than conferring immediate rights in the property. The Court of Appeal also agreed with the obiter comments at first instance that even if the security agreement had created an absolute assignment an with attachments sent to the assignee, by way of information only by a third party unconnected with the assignment, did not satisfy the statutory requirement of express notice in writing of the assignment. [PLA ], [PLA ] [PLA ] The revised commentary to s 199 also includes a more detailed discussion of Bluebottle UK Ltd v Deputy Commissioner of Taxation (2007) 232 CLR 598; [2007] HCA 54. [PLA.PT.14.30], [PLA ], [PLA ], [PLA ], [PLA.206A.30], [PLA.206B.30], [PLA ], [PLA ], [PLA ], [PLA ] The commentary to ss 206, 206A, 206B, 207, 209, 211 and 213 (relating to the rule against perpetuities) has been revised and Domazet v Jure Investments Pty Ltd [2016] ACTSC 33 footnoted as a recent example of a royal lives clause. [PLA ] The commentary to s 228 (Voidable dispositions) has been revised and Ashala Model Agency Pty Ltd (in liq) v Featherstone [2016] QSC 121, [150]-[156] has been footnoted. The case concerned a claim under s 588FF and s 588FE of the Corporations Act 2001 (Cth), however, Jackson J Property Law & Practice QLD 3

4 examined the history of s 228 of the Property Law Act 1974 and referred to select judicial considerations of that section and its counterpart in other jurisdictions to assist in interpreting the Commonwealth provisions. Bill Duncan has provided new annotations to the following sections of the Property Law Act 1974: [PLA.11.60], [PLA ], [PLA.12.90], [PLA.15.30] Part 2 of the Property Law Act 1974 relating to General Rules affecting property has been revised and brought up to date. Particular additional commentary has been incorporated in s 11(1)(a) relating to the creation of interest in land and the distinction between this subsection and s 59 concerning their disposition and s 11(1)(c) relating to the disposition of trust property or equitable interests. Secondly, the commentary to s 12 relating to the creation of oral tenancies for a period not exceeding three years has been reviewed and enhanced. Further amendments and additions have been made to s 15 (rights of husband and wife), s 15A (rights of aliens to hold and deal in land) and s 16 (presumption that parties dealing in property are of full age). [PLA.PT.6.DIV ] Baiada Poultry Pty Ltd v Sztrochlic [2015] NSWSC 885 has been noted on the question as to whether a guarantee had been executed as a deed. Fagan J in dictum found that an agreement in writing purporting to be a deed of guarantee did not operate as a deed because of a number of factors, including the manner in which it was expressed and executed thus not meeting the requirements of a guarantee in those circumstances. [PLA ] Segboer v Richardson Properties Pty Ltd [2012] NSWCA 253 has been noted upon the issue of whether a deed had been delivered and come into effect. Here a deed of guarantee in favour of a bank was held to have been delivered after signing and sealing with the bank s seal in the presence of a witness. The bank then sent the signed documents by facsimile to the project manager of the principal debtor at whose request the guarantee had been issued who was held to be authorised to receive it. The bank had been instructed to forward the signed guarantee to the project developer on behalf of the developer in this way which action objectively signified the communication of its intention to be bound by the deed of guarantee it had just executed (at[62]-[63] per Sackville AJA). Property Law & Practice QLD 4

5 [PLA ] The case of Neilsen v Capital Finance Australia Ltd [2014] 2 Qd R 459 (CA), [2014] QCA 139 has been digested relating to the execution of a guarantee by a donee of an enduring power of attorney. The authority of my attorney is subject to no conditions or restrictions. A guarantee and indemnity which was included in the form of a deed of a chattel mortgage was executed by the attorney separately on behalf of the donor by the donee signing his name next to the words "signed sealed and delivered and the donor s full name. Although the signature by the done did not comply with s 69(2) of the Power of Attorney Act 1998, the signature was sufficient to bind the guarantor to the guarantee as an agent at common law and complied with s 56(1).The donee was lawfully authorised to sign the guarantee on behalf of the donor and the guarantee was thus enforceable against the guarantor. [PLA ] The case of Perry Park Pty Ltd v City of Darwin [2016] NTSC 27 has been noted with respect to the application of s 121(2). A lease contained a provision requiring the lessee to undertake Upgrade Works with the prior consent of the lessor to a value of not less than $1 million on such terms and conditions as the lessor might specify or give as a condition to its consent". The issue for the Court concerned the extent to which the court could have regard to the express provisions of the lease in making a decision to withhold consent or not. Kelly J, acknowledging that the section had to be applied despite any provision in the lease to the contrary in the lease took a common sense approach to its construction. His Honour found that nothing in the express terms of the lease purported to exclude the application of s 121(2) and considered that the Court could take account of the express terms of the lease to determine what might be reasonable or unreasonable withholding of consent in the circumstances (at [38]).Thus, where a lease is explicit in relation to the improvements contemplated by the parties, this factor should be taken into account when applying the section and such material is not to be overridden by the sole consideration of what may be the lessor s best property interests (at [46]-[48]). PLA ] The decision of Meridian Airlie Beach Pty Ltd (in liq) v Karmist Pty Ltd [2015] QCA 192 exemplifies the principle that the discretion to be exercised by the court in an application to relieve against forfeiture is at large. The Court made it clear that the persuasive onus was upon the lessee seeking relief to demonstrate why relief should be given, for example, that in this case the breach had been remedied and that the lessee fell into arrears due to a temporary loss of liquidity. The lessor asserted in reply that the failure to pay the arrears over such a long period was evidence of wilful and deliberate breach which the Court found in its discretion was not sustainable on the evidence. The verbiage in s 124(2) to the effect that the court may grant or refuse relief, as it thinks fit permits the court to balance considerations put forward in evidence without having to make explicit findings upon each issue raised provided it is Property Law & Practice QLD 5

6 clear from the judgment that the court has dealt with the evidence adduced by both parties satisfactorily. [PLA180.90] The decision of 2040 Logan Road Pty Ltd v Body Corporate for Paddington Mews CTS [2016] QSC 40 has been included under the commentary to s 180. Here a statutory right of user was sought to enable two car parks to be constructed to permit off street parking for two owners where they would otherwise have to park their cars on the side of a busy arterial road. Whilst this would be convenient for those owners, it was not held to be reasonably necessary in the effective use of the proposed burdened land which was being used as courtyards. This was a case where desirability and convenience" was held not to have risen to the level of reasonable necessity (at [34] per Burns J). [PLA ] The decision of 2040 Logan Road Pty Ltd v Body Corporate for Paddington Mews CTS [2016] QSC 40 was also referred to with respect to awards of costs under s 180 applications. Here, the successful party, upon whose land the easement would have been imposed, claimed indemnity costs against the failed applicant. This was argued upon the basis that there were deficiencies in the applicant s material which changed as the proceedings moved toward a hearing causing more cost an expense to the respondent and that a reasonable offer of compromise, held out for some time, had been refused by the applicant. Burns J, whilst acknowledging these factors, considered that they did not amount to sufficiently unreasonable conduct so as to warrant an indemnity costs order. His Honour awarded costs on a standard basis to follow the event. AMENDED LEGISLATION Property Law Regulation 2013 Purpose of amendments To amend the Regulation in relation to fees. Amended provisions Amended: Sch 1 Amending legislation Justice Legislation (Fees) Amendment Regulation (No 1) 2016 (Qld) (SL No 85 of 2016) with effect from 1 July Property Law & Practice QLD 6