Land Law and Equity Notes

Doctrine of Tenure

  • Two Revolutions
    1. Battle of Hastings (1066)
    • Duke of Normandy claimed ownership of all land in England.
    • Granted estates to knights for service.
    • Introduced sub-tenures (sub-infeudation) creating the tenure system.
    1. Reforms of Tenure System
    • Quia Emptores (1290): Early legislation prohibited sub-infeudation, allowing land to be held only of the king.
    • Over time:
      • Excessive feudal dues transitioned into monetary payments.
      • Burdensome tenure incidents abolished (Tenures Abolition Act 1660).
      • Different forms of tenure converted into freehold tenure via the Tenures Abolition Act & Law of Property Acts (1922, 1925).
  • Key Features
    • Interests in land are held of the Crown.
    • Title traced back to the supreme overlord (the Crown).
    • This framework is referred to as the doctrine of tenure.

Doctrine of Tenure in New Zealand

  • English laws were applied in New Zealand circa 1840.
  • Feudal principles include:
    • Land in NZ held of the Crown (Veale v Brown (1868)).
    • Crown's underlying title is subject to Māori customary rights (AG v Ngati Apa (2003)).
    • Land will escheat to the Crown under certain conditions:
    • If a person dies without heirs (Administration Act 1969, s 77(8)).
    • If a company is removed from the register without property distribution (Companies Act 1993, s 324(1)).

Tenure and Estates

  • Doctrine of Tenure
    • All interests in land are held of the Crown.
    • Titles traced back to the Crown.
  • Doctrine of Estates
    • Owner does not own the physical land but rather an estate representing certain rights.
    • Estate allows for exclusive possession of land.
  • Interests in Land
    • Rights that do not grant exclusive possession are termed 'interests in land'.
    • Examples include:
    • Easements
    • Covenants
    • Mortgages

Types of Estates

  • Four estates in New Zealand based on possession duration:
    1. Fee Simple Estate
    2. Life Estate
    3. Stratum Estate
    4. Leasehold
    • Leasehold is not freehold as its duration is defined or limited.
    • Defined as a legal right to possess for a specific time.

Estates and the Right to Possession

  • Possession Enjoyment
    • May be enjoyed currently or in the future.
    • Example: Fee simple owner has beneficial enjoyment even if leased.
  • Stratum Estate Specifics
    • Common law: Ownership includes all above and below.
    • In NZ, governed by Unit Titles Act 2010.

Equity in Brief

  • Definition of Equity
    • A body of principles developed to address common law injustices.
    • Originated during Medieval times under the “conscience” of the Chancellor.
    • Eventually systematized within the Courts of Chancery.
  • Common Law vs. Equity
    • Estates and interests may be legal or equitable.
    • Historic coexistence: Common law courts enforced estates while equity courts recognized estates common law wouldn’t.

Equity and Land Law

  • Equitable Interest Creation
    • Arises when:
    • Unregistered or unregistrable interests exist.
  • Significance in Land Law includes:
    1. Interests arising from contracts
    2. Trusts over land
    3. Mortgagor’s equity of redemption
    4. Restrictive covenants.

Equitable Interest from Contracts

  • Equitable interests can arise from enforceable contracts involving:
    • Valuable consideration
    • Specific performance remedy availability.
  • Contractual Requirements
    • Must be in writing or part performance of the agreement.
  • Example: Purchaser's interest under a sale and purchase agreement becomes an equitable interest if conditions are met.

Legal & Equitable Interests Comparison

  • Creation:
    • Legal requires formal creation, while equitable may be informal.
  • Transfer:
    • Legal must align with statutory requirements; equitable may transfer informally.
  • Enforceability:
    • Legal interests bind third parties; equitable interests bind original parties unless third parties had notice.
  • Priorities:
    • Legal interests are prioritized by registration; equitable interests are generally based on creation time.

The Concept of Title

  • Maintaining Possession
    • Title holders can maintain or recover possession through legal action.
    • Title is relative; adverse possession may give better title.

Dealing with Titles

  • Three Conveyancing Systems
    1. Private conveyancing
    2. The Deeds Registration System
    3. The Land Transfer System (Torrens system)
    • Land Transfer Act: Ensures title indefeasibility and protects registered holders.

Adverse Possession

  • Adverse possessor holds land without permission; may have better title than rightful owner.
  • Limited circumstances for title acquisition in modern NZ law:
    • Title by limitation
    • Title by prescription (requires 20 years of uninterrupted use).

Bringing Land under LT System

  • Options include:
    • Ordinary title
    • Limited as to title
    • Limited as to parcels
    • Limited as to both.

Registered and Equitable Interests

  • Legal interest arises upon instrument registration; priority determined by registration time.
  • Equitable interest holds when consideration is valuable, and specific performance is possible.

Caveats

  • Caveat: Notice issued by an interested party cautioning against actions taken regarding the property until heard.
  • Role: Protects interest but doesn’t improve existing rights.

Equitable Priorities

  • Prima Facie Rule: First in time generally prevails.
  • Conduct Consideration: First interest may lose priority due to misleading actions.

Notable Cases

  • Honeybone v National Bank: Examined competing equitable interests and priority loss due to misleading conduct.
  • AGC v CFC: Established mortgage priority issues due to lack of caveat.
  • O'Leary v Sentiero: Established notice rules in equity.

Indefeasibility Concept

  • Kerr (1926) & Land Transfer Act 2017 establish that registration grants indefeasibility of title against claims, with exceptions for fraud.
  • Two Ways to Fail Title:
    1. Vendor not holding good title (resolved by registration under LTA).
    2. Invalidating defects in the instrument.

Conclusion

  • The framework of land law in NZ is structured around the concepts of tenure, estates, and equitable principles, ensuring a system that addresses fairness while protecting established rights.