Tutorial 5 – Old-System Title, Priority Rules & Conveyancing Act (NSW)

Core Terminology & Doctrinal Foundations

• Seisin / “Seized” - 17th-century common-law language referring to the legal possession of land by freehold. It signifies present possessory rights to a freehold estate.

  • In NSW fee-simple land, it now simply signals current exclusive possession of the land by the person holding the fee simple estate.

• Fee Simple - The largest possible common-law estate in land, representing the closest thing to absolute ownership that can be held. It is virtually “100 %” ownership, alienable and inheritable without specific limitation, but always subject to statute (e.g., planning laws, environmental laws) and the Crown's radical title (the ultimate ownership of all land resting with the Crown).

• Easement / Right of Way - A non-possessory, proprietary right that allows the owner of a dominant tenement (e.g., Alexander’s “Hawthorne”) to use, or restrict the use of, land owned by another party, the servient tenement (e.g., Amanda/John’s “Bulimba”).

  • To be valid, it must satisfy the four classic Re Ellenborough Park elements: (1) there must be a dominant and a servient tenement; (2) the easement must accommodate the dominant tenement (benefit it); (3) the dominant and servient owners must be different persons; and (4) the right must be capable of forming the subject matter of a grant (not too vague, not a right of mere recreation). It is almost always created by deed in old system land, due to the requirement for legal interests in land to be created by deed (Conveyancing Act 1919 (NSW) s 23B) ⇒ usually legal.

• Lease - A proprietary interest involving the transfer of exclusive possession of land, typically for a term certain (fixed or periodic duration) and usually at rent. The essential elements are exclusive possession, for a term certain, and often rent.

  • A short oral lease of land for a term not exceeding $3$ years at market rent and where the lessee takes actual possession can be legal without a deed, by virtue of s 23D(2) of the Conveyancing Act 1919 (NSW). This is an exception to the general rule requiring deeds for legal interests.

• Deed v Contract - A Deed is a formal written document that, when properly executed, conveys a legal estate even without consideration. Under s 23B of the Conveyancing Act, a deed for land requires signed, sealed (historically, now generally replaced by an intention to operate as a deed and attestation by a witness) & witnessed writing. It immediately passes legal title upon delivery.

  • A Contract for the sale of land, by contrast, needs the standard elements of offer, acceptance, consideration, and intention to create legal relations. If it merely satisfies the writing requirements of s 23C of the Conveyancing Act (in writing, signed by the party to be charged), it creates an equitable interest (e.g., an equitable fee simple for the purchaser, per Lysaght v Edwards) but does not transfer legal title until perfected by deed and settlement. The equitable interest arises from the principle that “equity looks on that as done which ought to be done.”

• Trust Rescue Provisions (s 23C(2) Conveyancing Act) - This provision ensures that resulting, implied, and constructive trusts are exempt from statutory writing requirements for land interests. Equity can therefore intervene and remedy failures of strict formal requirements (like a deed or s 23C writing) to prevent fraud or unconscionable conduct. For example, a constructive trust might be imposed where it would be unconscionable for a party to deny an interest in land because of their conduct, even if there's no formal written agreement.

Classification of Interests

Priority Rules (Old-System Land)

These rules determine which interest prevails when there are competing claims over the same land, particularly where the Torrens system of registration does not apply.

1. Legal v Legal - The common-law principle of nemo dat quod non habet (no one can give what they do not have) applies. Generally, the first in time prevails. A later legal interest cannot be created if the grantor has already parted with that legal interest.

2. Equitable v Equitable - When competing equitable interests exist, the court examines which party has the better equity. This involves considering factors such as notice, conduct, and diligence of each party. Factors that may postpone a prior equitable interest include: failure to get or retain title deeds, arming another with the indicia of title, or allowing the creation of a later interest without protest. If the equities are deemed equal, the general rule is that the first in time prevails (Rice v Rice).

3. Legal (earlier) v Equitable (later) - An earlier legal interest generally wins unless the later equitable purchaser is:

   • A bona-fide purchaser for value without notice (meaning they bought the interest in good faith, provided valuable consideration, and had no actual or constructive knowledge of the earlier legal interest); or

   • There was fraud or gross negligence by the earlier legal holder that contributed to the creation of the later equitable interest, making it unconscionable for the earlier legal interest to prevail.
     This is a rare exception, as legal interests are robust.

4. Equitable (earlier) v Legal (later) - A later legal interest will displace an earlier equitable interest if the legal interest holder is a bona-fide purchaser for value without notice of the earlier equitable interest (Pilcher v Rawlins). This is the most significant exception to the