LEGAL AND EQUITABLE INTEREST

Question 0

What is an equitable lease?

Answer 0

An equitable lease ARISES OUT OF a binding contract or agreement FOR a lease that is enforced out of an order for Specific performance.

Question 1

When does a person get an equitable Fee simple?

Answer 1

A purchaser gets an equitable Fee simple on the signing of the contract of sale because the purchaser HAS A RIGHT TO SPECIFIC PERFORMANCE. (Tanwar Enterprises).
Where the Landlord breaches, the Purchaser can get damages, and also Specific performance

Question 2

What are the requirements for an equitable lease?

Answer 2

1. It must be in writing
2. There must be consideration
3. There must be a binding contract or agreement that is capable of Specific Performance.

Where these fulfillments are fulfilled, the tenant holds that equity estate as if a legal lease was granted - Walsh v Lonsdale.

Question 3

What are the facts in Walsh v Lonsdale?

Answer 3

Lonsdale agreed in writing to grant a lease of his mill to Walsh for 7 years. It was provided rent to be paid in advance however no formal legal lease was ever signed.
Walsh paid rent quarterly but was in arrears of rent.
Lonsdale levied distress for rent. (goes onto property and sells goods).
Walsh claimed distress was a legal remedy and since no formal lease had signed, it was unlawful.

Courts held: Equity treated the parties as if a legal lease had been granted because of the availability of Specific performance. Therefore distress was a legal remedy.

Question 4

How do you create a LEGAL interest?

Answer 4

Under s10 of the PLA:

1. It must be in writing
2. Signed by the person granting
3. If it’s a deed, signed, sealed and delivered.

No need to be “delivered” anymore: s45 PLA
It is deemed to be delivered when “the maker of the deed shows an intention that it’s regarded as binding” : s47 PLA

Question 5

How do you create an equitable interest?

Answer 5

Under s11 PLA:

1. It must be in writing; and
2. Signed by the person
3. Must be valuable consideration (equity will not assist a volunteer).

Question 6

What does s12(2) of the PLA deal with?

Answer 6

Short term (3 years) leases, that are created by parol (orally).

Question 7

How do you enforce a contract for the transfer of land?

Answer 7

S59 PLA:

1. Must be in writing
2. Anyone who has an obligation under the contract must sign it
3. Must be a memorandum or note of the contract

Question 8

What do you need for a complete memorandum under s59?

Answer 8

1. Essential terms of: Price, Property, Parties, Promises.
2. Evidence of a concluded agreement.

Where this is incomplete, it doesn’t mean it’s invalid.
The contract may still be valid, but it is unenforceable.

Question 9

What happens if you have an oral contract that doesn’t fit the requirements of s10 and s11?

Answer 9

You can use:

1. The Equitable Doctrine of Part performance; or
2. Doctrine of Proprietary Estoppel.

Question 10

How do we know the Doctrine of Part Performance (PP) still applies?

Answer 10

S6(d) PLA: recognises and preserves the PP.

Question 11

What is required to establish PP?

Answer 11

1. The P must establish that it would be fraud for the defendant to shelter behind the Statute of Fraud provisions
2. The P must establish the acts of part performance are explicable only by reference to a contract generally of the type alleged to exist
   a. There are sub parts
3. There must be evidence of a concluded agreement.
4. Proof of the terms of the agreement by oral evidence must be possible
5. The contract must be capable of specific performance.

Question 12

What are the subparts to the point that the plaintiff must establish acts of PP are explicable only by reference to a contract generally of the type alleged?

Answer 12

1. Acts of PP must refer to a contract of the type alleged, not just a contract of any description
2. The Acts of PP must be unequivocally referable to the agreement. It must be “beyond reasonable doubt” that the parties entered into a contract concerning land.
3. Acts of PP have to be carried out for the purpose of the contract and in the course of performing the contract

Question 13

What case established the second test for PP - to do with Acts of PP explicable to a contract generally of the type alleged to exist?

Answer 13

Maddison v Alderson which was endorsed in Regent v Millet.

Regent v Millet
Husband and wife entered into agreement with parents. House to be transferred by parents if the husband and wife paid mortgage.
H and W go into possession and a further agreement is made between parties to renovate.
Husband and wife carry out significant renovations, but house is still not transferred.
Was there Part Performance of an oral agreement?

Courts held:
Taking possession of the house was sufficient act of P.
The acts they relief on as PP were unequivocally referable to some agreement as was alleged.

Question 14

Sub Part 1: PP refer to a contract generally of the type alleged to exist authority?

Answer 14

Regent v Millet.

Also there is NO NEED to show the certain terms of the contract

Question 15

Second part: unequivocally refers to that agreement authority?

Answer 15

McBride v Sandland
Sandland was in possession, but the possession was explicable to other agreement such as leases. Oral agreement was an option to purchase, so this was not a sufficient act of PP.

Southcoast Oils v Look enterprises
D owned a land which was being developed as a service station
P entered into oral agreement with D for lease of land.
On the basis of that oral agreement, P made arrangements with two other companies to fit out land for a service station.
Courts held: sufficient acts of PP as it was done in relation to the contractual relations regarding that agreement and land

Question 16

Third subpart: Acts of PP carried out for purpose of contract

Answer 16

Ogilvie v Ryan
Tenant moved into possession and paid rent.
These were regarded as sufficient acts of PP.
Generally, in relation to lease, if tenant pays rent, it’s generally a good indication of PP.

Question 17

What happens if Part Performance is established?

Answer 17

The Person has a mere equity (right to go to court to seek enforcement of an agreement). Upon the order of Specific Performance, the P then has good equitable interest.
Upon signing of the actual terms, there will THEN be legal interest.

Question 18

What are the requirements for Specific Performance?

Answer 18

1. There must be a valid and binding contract (including consideration)
2. Damages must not be an adequate remedy
3. P must be ready and willing to perform his/her obligations under the contract.