ByLawyers News and Updates

NSW – Family provision – Interim orders

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Prompted by a recent Supreme Court case, we have added a new section called Interim provision to our 101 Succession Answers Reference Guide, which is included in all of the By Lawyers succession related publications for NSW –  Estates; Wills, Powers of Attorney, Appointment of Enduring Guardian & Advance Care Planning and Family Provision Claims.

Pursuant to s 62 Succession Act 2006 it is possible for a plaintiff who seeks provision from an estate as an eligible person under Chapter 3 to make an application for interim provision,
before – in fact while awaiting – the final hearing. Success in such applications is however very rare.

Before it can make an order for interim provision, the court must be ‘of the opinion that no less provision than that proposed in the interim order would be made in favour of the eligible person concerned in the final order’. The cases suggest this is a very high bar indeed, even for a plaintiff with dire financial need.

We invite you to explore the Family Provision section of 101 Succession Answers to find out more on this interesting topic.

Mortgage Stress

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Whilst there is considerable consistency between the property laws of Victoria and New South Wales, there are also significant differences.

Some differences in practice are:

  • nomination in New South Wales is virtually unheard of as it creates a second duty, but is common in Victoria as it does not; and
  • deposit release is prohibited in New South Wales but common in Victoria.

Some differences in the law are:

  • acquiring an easement by prescription is banned in New South Wales but still available in Victoria; and
  • there is no equivalent in New South Wales to Victoria’s statutory right to clawback fraudulent transactions s 172 Property Law Act 1958.

Perhaps the best known example of the difference was the view previously held in New South Wales that the existence of an illegal structure on land constituted a defect in title and allowed a purchaser to avoid the contract. This was in contrast with the Victorian view that such a defect was merely a quality defect and that the vendor was protected by the principle of caveat emptor. The New South Wales view was ‘corrected’ (that is; brought in line with Victoria) by the Court of Appeal in Carpenter v McGrath 40 NSWLR 39 and consistency has reigned since.

In recent years a significant difference has again occurred with New South Wales taking a ‘radical’ view of the impact of fraud in certain mortgage transactions. In both jurisdictions it is accepted that whilst fraud is an exception to indefeasibility, nevertheless registration of a fraudulent instrument by a party who was not party to the fraud will be indefeasible. Mortgagees have therefore been able to rely on mortgages that have been fraudulently signed provided that the mortgage was registered and the mortgagee was not itself a party to the fraud. However in New South Wales an argument was accepted that it was possible to look ‘behind’ the mortgage at the document that constituted the agreement to repay as it was that document that created the obligation that justified the mortgagee’s security interest and the extent of the mortgagor’s covenant to repay was to be determined by a consideration of the contractual agreement between the parties.

If that contract (loan agreement) created an obligation to repay a specific amount then the covenant to pay protected by the indefeasible mortgage was enforceable. However if the loan agreement referred to an ‘all monies’ mortgage relating to past and future advances then it was said that the mortgagor’s covenant to pay arose contractually from the ancillary documents that related to the actual advances and that if those documents were fraudulent then the covenant to repay arose outside of the protection of the indefeasible mortgage. Essentially, it was said, no money was advanced pursuant to an ‘all monies’ mortgage as the money was advanced pursuant to forged documents.

Victorian mortgagees quaked in trepidation as an army of decisions mounted on the north bank of the Murray River set to wreck havoc on Victorian all money mortgages but Pagone J. in Solak v Bank of Western Australia [2009] VSC 82 manned the ramparts and beat off the hordes by upholding an all monies mortgage and the lenders breathed a sigh of relief. However a Trojan Horse has appeared in the form of Perpetual Trustees Victoria Limited v Xiao [2015] VSC 21. Hargrave J. has adopted the New South Wales analysis of an all monies mortgage and has described the decision in Solak as ‘plainly wrong’.

The scene is now set for a definitive decision by the Victorian Court of Appeal on what is an important point of law. According to Xiao a mortgagee of a forged all monies mortgage is not able to enforce the mortgage or undertake a mortgagee’s sale. Whether confirmation of Xiao will have retrospective repercussions is a matter for the future.

The mortgagor’s victory in Xiao was somewhat pyrrhic as Hargrave J. went on to find that Xiao in fact held the property on trust for the forger (her husband) and that the lender was entitled to judgment against the husband, who had also been joined as a defendant. Hargrave J. was obliged to overcome the presumption of advancement applying to a transfer from husband to wife but did so by finding adequate evidence that it had been the intention of the husband at the time of transfer to retain the beneficial interest in the land.

The mortgagee would therefore be faced with the need to enforce this judgment by way of a Warrant of Execution rather than a mortgagee’s sale. The mortgagee’s possession of the certificate of title would aid that exercise.

FAQs – By Lawyers Contract for the Sale of Land NSW

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By Lawyers introduced a new contract for the sale of land for New South Wales earlier this year and have hosted a number of informational webinars about it for solicitors and conveyancers. Those webinars raised a number of questions which we have published here.

If you have any questions not covered here, please email us at askus@bylawyers.com.au.

2016 edition of the contract was released in May.

General FAQs

Q: Can this contract be used in practice now?

Yes, and its use continues to grow as practitioners become aware of its existence and benefits.

 Q: Given it is alternative to Law Society Contract for Sale, what if the purchaser’s solicitor/conveyancer refuses to use this version?

There is no prescribed contract for the sale of land.

It is for the vendor to decide the contract not the purchaser and it is not for the practitioner acting for the purchaser to jeopardise the transaction due to his personal preferences.

The Law Society contract is not the only one used. Several major firms use their own contract. The Barangaroo contract is an example which we understand has also adopted electronic execution to cater for the Chinese market.

Q: Is this contract available in LEAP Documents if we haven’t changed to LEAP Conveyancer yet?

Yes.

Q: Will LEAP take away access to the Law Society contract at any time?

Most unlikely. This is a matter for LEAP.

Q: Is there a time frame suggested that all parties should move to use the 2015 contract or Law Society contract rather than 2005?

We understand that the Law Society will cease providing 2005 contracts in January. You will need to confirm with them.  The By Lawyers contract is immediately available.

Q: Does the contract include the standard conditions from the law society as well (blue pages)?

No. This contract is a new contract quite separate from the Law Society contract.

Q: Can this contract be used for sale/purchase of properties in Queensland? 

No.

 

FAQ – Email and exchange questions

Q: Even if you do the exchange via email, can’t you still just mail out the contracts to the other side to “formally” complete the exchange and so you are holding the original signed Contracts…

This is a misunderstanding of the process. The exchange takes place when the vendor’s signed contract is emailed back to the purchaser. That emailed contract is the original and the one actually signed and retained in the office is a copy of the electronic original.

Q: If the contracts are exchanged via email do you still send the original paper contract to the other side?

No. The original is the electronic contract.

Q: If part of an exchange is ensuring that the contracts are identical, how is that carried out if they are emailed as part of the exchange and not physically checked in-house?

The purchaser’s electronic contract is checked against the vendor’s before returning the counterpart which can also readily be checked by the purchaser if they wish.

Q: When sending a contract by email on behalf of the purchaser, do you date it before sending and the vendor’s representative dates it when returned?

If the contract is to be exchanged the day that you send it then date it before you scan and send it. The vendor will do likewise. If the exchange may be on another unknown day then send it undated and the vendors copy returned to you will be dated that day and that is the date of exchange. The vendor may print and date the purchaser’s print version if he so chooses.

Q: Further to question about what date to list on contact for electronic exchange, do we list the cooling off date from date vendor send back signed copy?

Exchange is effected on email delivery to the purchaser’s solicitor which is the start of the cooling off period.

Q: What about when the agent does the exchange and it is incorrect, i.e. things which have been agreed between the parties have not been changed in the contract prior to exchange. Do we email a subsequent amended contract? Normally after exchange there are no changes.

The usual rules apply that any changes must be agreed and included in writing in the contract or in a separate document referred to in and supplemental to the contract.

Q: Is there a facility to electronically amend the document to add the date of exchange to the contract signed by the purchaser?

If that was considered necessary then it is printed dated and scanned in.

 

FAQ – Deposits

Q: Normally a deposit is released only if the vendor is purchasing a property; however it appears this contract allows it for any reason, what is the background for this?

Because it can be difficult to recover the deposit paid in a second transaction to which the purchaser is not a party it is not uncommon for such a request to be met by the response – get a deposit bond.

Sometimes the vendor is in need of cash urgently and the deposit is released to secure a price reduction.

As there are many reasons for release it is considered best left to the parties to negotiate.

The important part of the condition is the creation of a charge on the property securing repayment if it is released.

It is worth noting that the deposit release clause, like some other clauses in the terms and conditions, is activated by checking a box in the summary.

Q: With reduced deposits, are you suggesting or recommending that if the vendor will accept a 5% deposit, you just show that as the amount on the front page, rather than 10% and have a special condition dealing with a claw back in the event of default?

Yes. We doubt that a court will see a payment made after the exchange as an earnest for the transaction. There are a number of cases on this issue.

Q: If the release of deposit is ticked, can the deposit be released for any reason? Normally it’s only released for the purchase of another property.

Once the release of the deposit has been negotiated then all that is required is to tick the box which triggers condition 3 (c) in part 2 of the contract. If you wish to add any other conditions to the release then it would be necessary to draft a condition for inclusion as a special condition on page 4 of part 1.

 

FAQ – stamping questions

Q: Can you tell us again what the Office of State Revenue attitude will be to PDF documents.

OSR are well acquainted with stamping documents signed electronically. When sending it to them simply state that it is an original electronic contract.

Q:  If you have a provider who stamps can they stamp a PDF?

Yes.

Q:  You say the PDF exchanged copy becomes the original. For the purpose of stamping, can this be printed and the stamp applied to the printed version?

Yes.

Q: To stamp contract in house under EDR do we just need to print the PDF original and stamp it?

There is little point in doing so as long as the electronically stored contract is available if required by OSR.

Q: You mentioned the OSR requiring the original document for stamping. So how do we deal with that when contracts are exchanged electronically?

The OSR stamps a print version of the original electronic contract.

 

FAQ – Warranties, inclusions, and conditions

Q: What happens if you do not have a survey and have no way of knowing if there is encroachments on the property? One of the warranties appeared to warrant that there was no encroachments, from memory.

This is normally the subject of a special condition which is now included as a warranty in the contract. If the vendor knows of an encroachment and discloses it then the purchaser must accept it. If the purchaser does not get a survey then caveat emptor. If the purchase gets a survey after exchange showing an encroachment other than fencing then the purchaser may rescind the contract provided it is a material breach not known to the purchaser and the purchaser would not have purchased the property had he known of the encroachment and the vendor fails to remedy the encroachment.

Q: There is not much room for additional inclusions, I suppose we would have to have an annexure?

The space expands as words are added.

Q: If we want to amend some of these conditions for example insert a specific interest rate, how do we do that?

Type in the special condition or annex one. See page 5 of the summary.

Q: What about swimming pool clause regarding non-compliance SPA 1992 and Local Government Act and Regulations disclosure and purchaser taking as is and P not entitled to requisitions, objection, etc.?

See the warranties both statutory (reproduced in the summary) and contractual (clause 6). See clause 19(f) for taking as is.

Q: Off Plan Contracts form large part of our work and yet there is no section in LEAP conveyancing precedents or 2015 contract deals with off plan. What our options in this regard?

Within the library of special conditions are precedents for real property subdivision and strata development.

 

Can I copy the contract?

Q: Are we able to copy the contract without affecting the copyright provisions?

The contract is available as one of our precedents to those that use LEAP Conveyancer or subscribe to our Conveyancing Guide through our website.

Q: You said anyone can use the contract and that there is no breach of copyright. Does this apply whether or not you are a LEAP subscriber?

No. you must be using LEAP or have subscribed to our publication. Apologies for any misunderstanding.

 

 

 

 

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