Property law
QUESTION 1
Basil was the owner of a property located in the suburb of Paradise in South Australia valued at $500,000. When Basil purchased the property, his father Col, had lent him $100,000 on condition that he guarantee this loan against the property. However Basil had retained the Certificate of Title and Col had never registered the loan on the title.
Basil had decided that it was time for him to tour the world with a number of hiking excursions before he became too old to do this. For this he needed more funds and approached his wealthy friend Din for a loan of $35,000. Din agreed on the condition that Basil provide him with the certificate of title to his property in Paradise. Basil agreed and Din provided the money but Basil forgot to give Din the certificate.
The day before Basil was to leave on his trip he remembered his promise to Din and being short of time he asked his neighbour Ed if he would personally deliver some important papers to Din and Ed agreed. The papers Basil was referring to were the certificate of title to his property and a letter acknowledging the loan from Din.
Unknown to Basil, Ed was under considerable financial pressure at the time and instead of delivering the papers to Din, he forged Basil’s signature on a contract of sale and a Memorandum of Transfer and registered the title in his name. Following this, using the title as evidence, he sold the property to Fran for $450,000 and Fran then registered the title in her name. Ed used the funds to pay some of his debts and then left the country. Meanwhile Din 2
wrote to Basil to remind him that he was still waiting for the certificate of title which Basil had promised. Basil was shocked to hear that Ed had not delivered it and quickly made his way back home. He was even more shocked to find that Fran was about to move into his house!
Using the relevant law and cases, explain the relative interests of Basil, Col, Din, Ed and Fran, together with their priorities and include a discussion of indefeasibility.
QUESTION 2
Mel purchased a large piece of land in Goodtown. To the north of the land was North Road and to the south was South Road. Access was via the very busy South Road as the land was separated from North Road by a narrow strip of land which was not part of the purchase. Mel then sub-divided the southern portion into 2 one acre lots but reserved a six metre strip adjoining the eastern boundary of the eastern lot to enable access to South Road to the otherwise landlocked northern portion of the retained land. On the sub-division plan the six metre strip was described as a “lane”.
Subsequently Mel sold the eastern lot to Nim and a year later Nim sold it to Opie. Two years later Mel was able to purchase the narrow strip of land on North Road allowing access to the previously landlocked northern portion of land. As the piece of land labelled the “lane” was too narrow for sale as a building lot, Mel eventually purchased a block of land adjoining the lane on its eastern side, intending to consolidate the titles and sell the lot as a building block free of any restrictions.
On hearing this Opie objected arguing that he had an unrestricted right to use the lane which he and Nim, had been doing so that the entrance to his lot was on the side rather than directly onto the busy South Road. This angered Mel and he applied for an injunction to stop Opie from using it.
Using the relevant law and cases, discuss the legal issues regarding Mel and Opie’s claims.
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