ByLawyers News and Updates

Recent property cases – VIC

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Recent property cases have been added to the By Lawyers reference manual 1001 Conveyancing Answers (VIC).

This publication has been extensively reviewed and updated by our esteemed author Russell Cocks.

Helpful recent property cases added to the publication in this review include:

1001 Conveyancing Answers (VIC) is available in all By Lawyers Victorian property law guides – Sale of real property, Purchase of real property, Leases, and Mortgages.

This comprehensive publication assists property practitioners to understand deeper issues in conveyancing and solve problems for clients when they arise.

Property law updates – QLD

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Various property law updates have been incorporated in the comprehensive By Lawyers reference manual 1001 Conveyancing Answers (QLD)

Recent judgments which have been added include:

• Contempree v BS Investments Pty Ltd & Anor [2020] QCA 255 – A long term lease that is not registered can still be enforced.
• Legal Services Commissioner v Sheehy [2018] 1 QCA 151 – Solicitors acting on behalf of two people, such as a married couple, require authority from both clients.
• Woolford v Oliver [2017] QMC 14 – Instalment contracts carry additional obligations and duties.
• K7 Developments Pty Ltd v Abbotsford Estates Pty Ltd [2021] VSC 422 – Judicial consideration of the consequences of a contract ceasing to be a Going Concern for GST purposes after contract and before settlement.
• Re Tucker; Nunan v Aylward [2019] VSC 210 – affirming that the younger joint tenant is presumed to have survived the older joint tenant, if time of death cannot be ascertained.

1001 Conveyancing Answers (QLD) is available in all By Lawyers Queensland conveyancing and property law guides. It assists property lawyers and conveyancers to understand the conveyancing process and to solve problems for their clients. The publication receives regular property law updates.

1 January updates – All states

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1 January updates are always a big focus for By Lawyers. While the profession takes a well-earned break By Lawyers remains hard at work ensuring our publications are updated for legislative and regulatory changes that take effect from the new year.

Updates

This year’s 1 January updates for relevant jurisdictions include:

Land tax

In New South Wales and Victoria, land tax is calculated for the calendar year. Threshold values increase annually.

In New South Wales, the 2022 threshold combined land value has increased to $822,000 for all liable land. Special trusts and non-concessional companies are excepted. A marginal tax rate of 1.6% of the aggregate taxable value above the tax-free threshold, plus $100 applies from 1 January. If the aggregate taxable value exceeds the premium rate threshold of $5,026,000 then $61,876 is payable, plus a marginal tax rate of 2% over that amount.

In Victoria, the tax-free threshold for general land tax has increased to $300,000. The trust surcharge threshold remains at $25,000.

All relevant commentary and precedents in the By Lawyers Conveyancing and Property and Trusts guides for each relevant state will be updated for these new threshold amounts from 1 January.

By Lawyers Contract of sale of land

The 2022 edition of the By Lawyers contract will be available 1 January in the Sale of real property publications for Victoria and New South Wales. The contract is located in the Contract folder on the matter plan.

Leases and subleases

In New South Wales, Victoria, Queensland, South Australia and Western Australia the 2022 editions of lease and sub-lease precedents will be available from 1 January. these are found in the Leases – Act for Lessor section of each Leases publication.

Keeping up to date

In addition to our 1 January updates, By Lawyers updates our publications for 1 June and other regulated adjustments where necessary.

Of course we always update our content for relevant legislative amendments and other legal developments throughout the year, in all jurisdictions, as required.

Keeping up to date is one of the ways By Lawyers help our subscribers enjoy practice – and holidays – more!

The team at By Lawyers wishes everyone a prosperous and safe 2022.

Title reform – Conveyancing – NSW

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Title reform – involving the cancellation of certificates of title and other changes to the NSW land titles system – commenced on 11 October 2021. Certificates of title are abolished and the Torrens Register is the single source of truth as to a person’s interest or estate in land. All documents to be registered on the Torrens Register must be lodged by a subscriber, who must verify the identity of the client and establish that they have the right to deal with the land.

These significant changes were introduced in part by the Real Property Amendment (Certificates of Title) Act 2021. The Act provides for the cancellation of certificates of title (CTs) and progression towards 100% electronic lodgment of land transactions.

Title reform  – Cancellation of certificates of title

From 11 October 2021:

  • All certificates of title have been cancelled and will no longer be issued.
  • Existing CTs cannot be required to be produced to have a dealing or plan lodged for registration.
  • Practitioners no longer need to obtain a copy of the CT from their client for a property dealing.
  • Banks are no longer issued with ‘control of the right to deal’ (CoRD) and all recordings relating to CoRD holders have been removed from the Register.
  • Banks can no longer be asked to provide CoRD holder consent in a workspace when a mortgagor wants to lodge a dealing for registration, including a subsequent mortgage.
  • Mortgagee consent still needs to be obtained for the registration of certain dealings.
  • Subscribers are no longer requested to enter the CAC (Certificate Authentication Code) details taken from a CT for consent purposes in the workspace. The concept of the CAC is redundant and is no longer required to be kept securely.
  • Where a subscriber has relied on a CT to establish a right to deal in a transaction conducted before 11 October 2021, the CT or a copy of it must be retained, in line with the requirements for retaining supporting evidence in the NSW Participation Rules.
  • Otherwise, firms holding CTs in safe custody after commencement of this title reform have the following options:
    • seek instructions from each client on what to do with their CT;
    • return all CTs to clients;
    • take a ‘do nothing’ approach.

It is not necessary for firms to stamp a CT as cancelled or mark it in any way if returning it to their client.

Information Notice

From 11 October 2021, in all instances of property ownership, an Information Notice will issue. Details on this notice will include the folio identifier, the dealings registered including registration numbers, the subscriber’s reference and the date of registration. As an Information Notice is not a definitive statement of the state of the Register, a title search will be necessary to acquire accurate title information.

All land dealings must be lodged electronically

From 11 October 2021:

  • Lodging land dealings in paper is no longer permitted. All land dealings are to be lodged with NSW Land Registry Services electronically by a subscriber to an Electronic Lodgment Network such as Sympli or PEXA.
  • The Lodgment Rules specify when out-of-scope electronic dealings can depart from the usual manner of preparing an electronic dealing.
  • Paper dealing prepared before 11 October 2021 can still be lodged with NSW Land Registry Services electronically. They are uploaded as a PDF attachment to the electronic dealing known as ‘Dealing with Exception’. Once lodged, NSW Land Registry Services will examine the paper dealing.

All By Lawyers NSW Conveyancing & Property publications have been updated to reflect these changes.

A full description – Conveyancing – NSW

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The popular By Lawyers resources A full description of the purchase process in NSW and A full description of the sale process in NSW have recently been reviewed.

As a result of the review a new active hyperlink has been included in the sale version, leading to the Revenue NSW land tax page. This helps practitioners easily access the current threshold for the unimproved value of the land, to determine whether a client is liable for land tax. Land tax is generally only payable on investment properties, as there is a primary residence exemption.

These two helpful resources can be found in the Reference materials folder located at the top of the Sale of Real Property (NSW) and Purchase of Real Property (NSW) matter plans.  They provide a detailed summary of the typical progression of residential sale or purchase matter. Also available in the Reference materials folder is A brief explanation of the transition to E-conveyancing and how to get connected.

These resources, especially the two A full description… summaries, can provide valuable practical assistance for anyone new to conveyancing transactions, for practitioners and support staff  who only conduct conveyancing matters occasionally, or for team members inexperienced in conveyancing who have to step in at short notice in the unexpected absence of a colleague to look after a conveyancing file which is already on foot.

This review is part of by Lawyers continuing commitment to updating and enhancing our publications. All By Lawyers content is kept up to date by our dedicated editorial team and our specialist authors.

1 January updates – All states

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The By Lawyers has attended to the following 1 January updates required by legislation and practice in all relevant jurisdictions:

Land tax – Increases to threshold values – NSW

Land tax thresholds in NSW are indexed to rise on 1 January each year.

The 2021 threshold combined land value has increased to $755,000 for all liable land. Special trusts and non-concessional companies are excepted.

A marginal tax rate of 1.6% of the aggregate taxable value above the tax-free threshold plus $100 applies.

If the aggregate taxable value exceeds the premium rate threshold of $4,616,000 then $60,164 is payable plus a marginal tax rate of 2% over that amount.

All relevant commentary and precedents in the By Lawyers Conveyancing & Property and Trusts guides have been updated accordingly.

By Lawyers Contract for sale of land

The 2021 edition is now available on the Sale of real property matter plan in the Contract section.

Leases and subleases – NSW, VIC, QLD, SA and WA

The 2021 editions are now available on the Leases – Act for Lessor matter plan for each jurisdiction.

These additions form part of our continuing commitment to enhancing our content and helping our subscribers enjoy practice more.

Bankruptcy

In response to the COVID-19 pandemic temporary changes were made to bankruptcy law, increasing the debt threshold to $20,000 from $5,000 and increasing the time frame for a debtor to respond to a bankruptcy notice to 6 months from 21 days.

As of 1 January 2021 these changes have ceased and a new permanent bankruptcy threshold has been implemented.

The current debt requirement for bankruptcy is a minimum debt of $10,000 and the current time to respond to a bankruptcy notice is 21 days.

The By Lawyers Insolvency – Bankruptcy of individuals publication has been updated accordingly.

Always up to date

In addition to our annual 1 January updates, By Lawyers ensures our publications are updated for 1 June and any other statutory or regulated adjustments where necessary. We also promptly  update our content for all relevant legislative amendments and other legal developments throughout the year, in all jurisdictions.

The team at By Lawyers wishes everyone a prosperous and safe 2021.

Rescission – Consequences of rescission 2

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By Russell Cocks, Solicitor
First published in the Law Institute Journal

A caveator’s arguments in support of the contract upon which his caveat was based were not well received by the court in the recent case of Damco Nominees P/L v Moxham [2012] VSC 79, with the result that the contract was found to have been terminated. Consequently the caveatable interest based on the contract no longer existed and the court ordered the caveat to be removed. It could reasonably be anticipated that final orders, when formulated, would have included a costs order against the purchaser, so the exercise would have been an expensive one.

The arguments made by the caveator are reasonably common and are discussed in 1001 Conveyancing Answers – indeed, they may have sourced from that publication – so the case serves as a guide as to how the court may regard those arguments in the future.

The facts

The caveator had entered into a contract to purchase the property for $1.9m. The property was a potential residential development site and the contract gave the purchaser nearly one year to complete, with a view to allowing the purchaser to seek planning approval et cetera, a reasonably common scenario. The contract was not in the standard form commonly in use but rather was in a form specifically created by the solicitor for the vendor. Whilst not all of the terms of the contract are recited in the judgment, it is possible to conclude that the contract adopted many of the standard conditions, some with subtle changes, and added further conditions. Thus the contract included ‘general condition 40’ whereas the standard contract only has 28 general conditions.

This issue formed the first point of contention between the parties in that the caveator claimed to have signed an earlier contract in standard form and that the ‘second’ contract had only been signed one month later for the purpose of ‘cleaning up’ the ‘first’ contract. The second contract was vaguely attacked on the grounds of ‘unconscionability’ but the court gave short shrift to this argument, partly because to have accepted those arguments would have entirely undermined the caveator’s defence of the caveat as that defence was entirely based on the rights said to arise from the second contract. Thus the dispute was limited to the second, non-standard contract.

Nomination

The first indication that the purchaser might be in ‘trouble’ came two months prior to the date for settlement. The purchaser asked the vendor to give a second mortgage for 10% of the purchase price, but the vendor declined. One month prior to settlement the purchaser notified the vendor that he intended to nominate an associated company. The contract included a general condition setting out a nomination procedure involving submission of a deed and payment of a fee. The purchaser did not submit a deed in accordance with the general condition and objected to payment of the fee. Here the purchaser adopted two arguments set out in 1001 Conveyancing Answers.

The purchaser claimed not to be bound by the nomination provisions of the contract as the purchaser was nominating pursuant to its ‘common law right’. The vendor argued that no such right existed in this case as ‘the contract contained a complete code for nomination’. The point does not appear to have been argued in detail and no cases supporting the common law right are cited in the judgment, however Mukhtar AsJ was inclined to accept the vendor’s argument. However this is not authority to support the proposition that the standard form contract contains such a code. This contract was not in standard form and general condition 31 setting out the nomination procedure specifically stated ‘Nomination only under this condition’, whereas the standard contract merely provides that ‘the purchaser may nominate’.

The second attack on the nomination process in the contract related to the fee. Section 42(3) Property Law Act prohibits the imposition by a vendor on a purchaser of ‘any costs and expenses’ other than those arising from a default. The standard form contract does not provide for a fee for nomination and an attempt by a vendor to impose such a fee on the purchaser as a precondition to a nomination could be met with this s 42(3) prohibition. However this particular contract included as part of the specified nomination process an obligation by the nominee to pay the fee. By this method the vendor sidestepped the prohibition as the fee was not imposed on the purchaser. Such a fee could not be enforced by the vendor against the nominee, who is not a party to the contract, but failure by the nominee to pay the fee would give the vendor the right, as against the purchaser, to refuse the nomination.

Nomination is a common event in Victorian conveyancing. The approach of the drafters of the standard contract was to keep it as simple as possible. Therefore s 42(3) applies to the standard contract. That does not prevent individual vendors imposing a different nomination regime, as was done in this case.

Default notice

The purchaser failed to settle and the vendor issued a notice. It is fair to say that the notice was more detailed than the standard one page notice usually employed and revealed that considerable care had been taken in drafting. In addition to interest, it claimed costs on default, which were specified in the contract as $385, and costs on rescission of $1,100, including a courier fee for personal service. The notice was unsuccessfully attacked on a number of fronts:

  1. that it had been served on the nominee as well as the purchaser;
  2. that it contained an incorrect arithmetic addition resulting in an error of $310;
  3. that the notice claimed ‘proper legal costs’ rather than ‘reasonable costs’ referred to in the contract;
  4. that the $1,100 costs claimed in respect of the notice were excessive. Extensive evidence was called on this point and Mukhtar AsJ was satisfied that, in this case, that amount was a reasonable reflection of the costs arising from the purchaser’s failure to settle;
  5. that the interest claimed was calculated on the balance of purchase price plus adjustments, GST and default interest agreed to be paid in return for an extension of time. This failed as the judge held that this was the amount, however constituted, that was owed by the purchaser to the vendor at the time the notice was issued and the vendor was entitled to interest on that amount;
  6. that the termination condition in the contract incorrectly referred to the ‘buyer’s’ costs. This was rejected as an obvious error. It should have said ‘seller’s’.

The court concluded by proclaiming ‘the caveator’s claim as baseless’, having previously described the attacks on the notice as designed to ‘expose compositional errors’ and one of the letters from the solicitor for the purchaser to the solicitor for the vendor as ‘bumptious’. All in all – NOT WELL RECEIVED.

Tip Box

Whilst written for Victoria this article has interest and relevance for practitioners in all states.

1001 Conveyancing Answers – VIC

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The very popular By Lawyers reference manual 1001 Conveyancing Answers (VIC) has received an extensive review by our author Russell Cocks.

As part of Russell’s review, many relevant 2019 and 2020 cases have been added. These include:

1001 Conveyancing Answers (VIC) is available in all of our Victorian property law guides. This comprehensive reference work assists property lawyers and conveyancers to understand the conveyancing process and to solve problems for their clients as and when they arise. The publication includes detailed information to address issues quickly and clarify areas of uncertainty.

This cornerstone By Lawyers publication is a must have for all lawyers and conveyancers dealing with property matters and the conveyancing process in Victoria.

 

Inspection – Right to inspect

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By Russell Cocks

First published in the Law Institute Journal

Contracts for the sale of land are known as executory contracts, as there is a time delay between entering into the contract and final performance. Consequently, the condition of the property may change between contract and settlement and the contract will usually give the purchaser the right to inspect the property as settlement approaches.

The right to inspect the property prior to settlement has been General Condition 22 of the LIV. contract of sale since 2008 but is General Condition 29 of the 2019 version of that contract and provides:

The purchaser and/or another person authorised by the purchaser may inspect the property at any reasonable time during the 7 days preceding and including the settlement day.

This General Condition was the subject of close examination in the case of Mediratta v Clark [2019] VSC 685. The purchaser failed to settle and the vendor rescinded. The purchaser claimed that the vendor was not entitled to rescind as the vendor:

  • was in breach of GC 22 by refusing to permit the purchaser and/or a nominee of the purchaser to inspect the property; and
  • was in breach of an implied term by refusing to permit a valuer authorised by the purchaser to inspect the property.

The contract provided for an extended settlement period of 14 months but the purchaser, who had paid a 5% deposit, had not accepted the vendor’s invitation to complete the Duties Online form, had not submitted a Transfer (paper settlement), nor a statement of adjustments. Days from settlement the purchaser requested an extension, which was denied. In those circumstances, the vendor refused to provide the agent with keys to allow the purchaser to inspect the property.

On the day that settlement was due the agent requested keys to allow a valuer to inspect the property. The vendor refused and issued a Default & Rescission Notice alleging failure to deliver the Transfer at least 10 days before settlement (GC 6) and failure to settle (GC 28). The vendor allowed the valuer to inspect within the 14-day default period but settlement did not take place prior to the expiration of the default period and the vendor regarded the contract as terminated. The purchaser requested an inspection after the expiration of the default period, but the vendor refused on the basis that the contract had been terminated and refused subsequent attempts to arrange a settlement.

The court considered the meaning of GC 22. The purchaser argued that the condition was wide enough to allow the purchaser to nominate a valuer to inspect the property for the purpose of obtaining finance. The vendor argued that the purpose of the condition was to allow the purchaser to establish whether the property was in ‘the state commensurate with the Vendor’s contractual obligation’. Derham AsJ traced the history of GC 22 and concluded that its purpose GC 22 is to allow a purchaser who is ready, willing and able to complete the contract to inspect the property for the purpose of being satisfied as to the condition of the property. It is not available to a purchaser who is not in a position to settle on the settlement day, nor for the purpose of valuation, particularly when the contract is not subject to finance.

The purchaser’s alternative argument was that, because it was a fundamental obligation of the purchaser to pay the balance due at settlement, the contract was subject to an implied condition that the vendor would co-operate with the purchaser to allow inspection of the property by a valuer. So much had been held in earlier cases but, as Derham AsJ pointed out, those contracts were subject to finance. Whilst acknowledging that a court might imply a general duty on the vendor to co-operate with the purchaser for the purpose of allowing the purchaser to satisfy the purchaser’s obligations pursuant to the contract, such an implied condition would not be ‘open-ended’. Citing a quote from Simcevski v Dixon [2017] VSC 197 His Honour confirmed that there ‘cannot be a duty to co-operate in bringing about something which a contract does not require to happen’. This contract required the purchaser to settle, it did not require the purchaser to obtain finance. Even if a duty to co-operate by making the property available for valuation were to be implied, it ‘would be limited in time and would not enable inspection at the 12th Hour’.

The purchaser’s final argument was that the vendor’s conduct was unconscientious. This was dismissed on the basis that the vendor was entitled to refuse inspection as the purchaser was in breach of GC 6 and had failed to sign the Duties Online form.

Tip Box

•GC 22 (now 29) entitles the purchaser to a pre-settlement inspection.

•If the contract is subject to finance, the vendor must co operate.

•If not subject to finance, the vendor’s duty is limited.

Contract of Sale of Land – VIC

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With the LIV contract not currently available through LEAP, the By Lawyers Contract of Sale of Land is available to all LEAP users until 1 March 2020. Beyond that date it will remain available to LEAP users who have By Lawyers as a companion product to their LEAP subscription. It can also be accessed by non-LEAP users through the By Lawyers website by subscribing to our Victorian Conveyancing Guide, which has many associated benefits such as full access to 1001 Conveyancing Answers.

Adapting to the use of the Russell Cocks authored By Lawyers contract should present few problems as Russell was the principal author of the LIV contracts, including the 2008 version which effectively overhauled the previous contract and established the current format, making the terms of the By Lawyers contract familiar and making numerous improvements.

The By Lawyers Contract of Sale of Land for Victoria was introduced on 1 March 2018 and its use has been increasing steadily among Victorian legal practitioners and conveyancers. The By Lawyers contract removes the need for special conditions other than those covering special circumstances. It has a number of other advances over the LIV contract which further simplify the conveyancing process.

The By Lawyers legal and editorial teams ensure that the contract is immediately brought up to date with any changes in law or practice.

Recent amendments to the By Lawyers Contract of Sale of Land – Parts 1 and 2.

  • The ‘Payments’ section in Part 1 of the By Lawyers Contract of Sale of Land (VIC) has been amended for clarity regarding payment of GST;
  • A new clause has been added to Special Condition 14(f) of Part 2 which attaches a Flight v Booth type test to the purchaser’s ability to end the contract for unsatisfactory pest or building report;
  • The time for settlement has been moved from 3 pm to 4 pm to reflect current practice.

For further information see our previous post Seven reasons to use the By Lawyers contract.

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