Sample law assignment Australian Real Property Law Contract Cases and Materials
law assignment australian
Question
CO-OWNERSHIP and RESTRICTIVE COVENANTS
Gerard, Suzie, and Don are keen surfers. They decide that they would like to own a holiday home in the eponymous coastal town of Margaret River as a place to get away from Perth at the weekends. However, after checking out property prices on the Internet, they quickly realize that only by joining together will they be able to afford to purchase a house close to the surf for which Margaret River is world famous. The choice of property within their price range is limited. They agree on the purchase of an old two bedroom weatherboard house. Although in poor condition, the house fronts the beach and it is on a large block. The real estate agent, Bruce, who has the listing, assures them it will be an astute investment, although he points out that the block is burdened by a single dwelling restrictive covenant registered nearly 100 years ago. The restrictive covenant is expressed to be for the benefit of “other neighboring farming lots”, although Bruce admits that nearly all of these lots identified in the restrictive covenant are now used for residential purposes, farming having ceased in the area in the 1970s.
After some negotiation with the vendor, a purchase price of $600,000 is struck. It is agreed between them that Gerard will contribute $300,000 and Suzie and Don will each contribute $150,000 to the purchase price respectively.
Bruce draws up the sale on a standard contract for the sale of land by offer and acceptance form. He inserts the particulars of sale including the land title description, sale price, settlement date and the name and address of the vendor and the purchasers. Bruce records Don, Suzie, and Gerard as holding their interest as purchases as joint tenants. The contract form is then signed by all parties and in the following month, November 2016, Don, Suzie and Gerard are registered as owning the property in fee simple as joint tenants.
For the first few months after settlement, Don, Suzie, and Gerard drive down from Perth each weekend and stay at their Margaret River house, spending the weekend enjoying the excellent surf. Don and Suzie quickly fall in love, not only with the carefree and relaxed surfie lifestyle of Margaret River but also with each other. In May of 2017, Don and Suzie quit their Perth jobs and move down south to live permanently in the Margaret River house, which they now call home. On the other hand, Gerard found it very difficult staying in the house once Don and Suzie had become lovers. He had always fancied Suzie and possibly because of this, Don was increasingly unfriendly toward Gerard. After a bad argument which started over Suzie and had ended with Don telling Gerard to “piss off”, Gerard has not visited the house since June 2017.
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Don, unemployed but a skilled handyman spent much of his time lawfully renovating the house. There was much work to be done on the house, in particular, a new tin roof was needed, and the house needed re-stumping (some of the original stumps were rotten and unsafe). Don also decided to repaint the exterior and interior because the old paintwork was a horrible green color. Don ask Gerard to contribute to half of these costs, but Gerard declines saying “I don’t have the cash to waste on the house an in any event, why should I contribute when I put in most of the purchase price anyway. In fact, you (Don and Suzie) should be paying me to rent for the privilege of living in my half share of the house.”
Fortunately for Don, Suzie is incredibly good at baking. She soon starts selling her homemade chocolate cake to passing surfers, and within a few months is supplying shops and restaurants around Margaret River with her own range of cakes and cookies called “Surfie Slice”, all baked from her home kitchen. With some of this money, Don is able to complete all repairs and renovations to the house, which cost in total $50,000 but which have significantly increased the value of the house well above that amount.
Last month, Gerard wrote to Don and Suzie, demanding that the house be sold and the proceeds shared amongst the three of them in proportion to the contributions made to the purchase price. In fact, Gerard also feels he is entitled to something extra from Don and Suzie since he has not been occupying the house, as well as a share in the profits from Suzie’s business which after all, she runs from the house.
Don is unwilling to agree to any of Gerard’s demands, in fact, he believes that they should all hold on to the house because land prices are rapidly rising in Margaret River and that if the restrictive covenant can be discharged, the land on which the house stands would be worth a lot more than it presently is. Don also tells Gerard that his inquiries with neighbors benefited by their single dwelling restrictive covenant reveal only one neighbor, and old Mrs. Crabtree, who is hostile to the discharge of the restrictive covenant. Don also wants a financial contribution from Gerard for all the repair and renovation works he has done to the house.
Suzie, on the other hand, does not want the house sold to a third party, but she is willing to buy Gerard out. However, she wants an adjustment made in her favor for all her money spent in the repair and renovation of the house. She steadfastly denies any entitlement of Gerard arising because of her shared exclusive occupation of the house with Don since May, nor will she agree to share any profits generated by her cake business with Gerard.
Discussing relevant case law and statutory provisions
(a) Consider the likely success of each Gerard, Don, and Suzie regarding their respective claims and demands.
(b) Advise Gerard, Suzie, and Don on the procedure for discharge of the single dwelling restrictive covenant, and their likely success, given the hostile position of Mrs. Crabtree.
Answer
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Analysis of Legal Provisions:
Sample law assignment Australian Real Property Law Contract Cases and Materials
The restrictive covenants mean a private legal agreement between a landowner and purchaser that is registered on the Certificate of Title. The restrictive covenants bind present as well as future owners of the land. There exists no direct legal provision that deals with restrictive covenants, it is governed by the terms and conditions mentioned in the contract executed between parties accepting the burden and the party having benefits.
In this context, it is important to note that Council is not a party to the restrictive covenants, and hence it cannot initiate legal action either to enforce or terminate covenants on behalf of the legal beneficiary to restrictive covenants.
It should be noted that the law of property provides for modification or alteration in terms and conditions of restrictive covenants. These beneficiaries are able to enforce the restrictions of the covenant through the Supreme Court.
The properly law provides three alternatives for the removal of restrictive covenants. The options available include application to Supreme Court under section 84 of the Property Act 1958, application to the authority under Planning and Environmental Act 1987 for removal of restrictive covenants. The application under planning and environmental Act is the alternative mechanism.
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1. An application under section 84 of the Property Law:
- The application under this section can be preferred by a person interested in land and affected by restrictive covenants.
- The application can be made for whole or partial removal of the restrictive covenants.
- The Supreme Court may issue direction regarding removal of restrictive covenants in following cases:
- If the aggrieved party successfully establishes to the satisfaction of the court that the restrictive covenant is obsolete or its continued existence would impede the reasonable use of the land.
- All persons benefitting from the covenant have agreed to the variation or removal. This can be either expressed or implied.
- c. The variation or removal of the covenant will not substantially injure any persons entitled to the benefit of the covenant.
- The order issued by the court shall have a binding effect on parties to covenants.
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2. An application under the Planning and Environmental Act 1987:
Under this method an application for removal of covenants under 60(2) of the Planning and Environment Act 1987 can be made by a party interested in the land.
The authority, upon receipt of an application, will make a detailed analysis of the facts and may permit removal of restrictive covenants at its discretion.
Section 129C of the Transfer of Land Act empowers Supreme Court to issue a necessary order in this regard. The party interested in land may apply court to discharge covenants if the covenants become useless due to any change in the use of any land or changes in the character of the property or the neighborhood or other circumstances of the case. In Prowse v Johnstone & Or, the court held that in case if restrictive covenants become obsolete, the court may issue an order for its removal.
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Analysis of Fact of the case:
In the given case the Gerard, Suzie, and Don are the co-owner of the residential house having restrictive covenants created 100 years ago. The restrictive covenant was registered. The restrictive covenant is expressed to be for the benefit of “other neighboring farming lots”. It means the parties to the covenant include the owner of the residential property and owners of nearby farming lands. As the covenant is registered covenant it can be removed by any of the methodology provided above.
In this regard following points should be noted:
- Gerard, Suzie, and Don are the co-owner of the premises and hence considered as a party interested in the land. This makes them entitled to file an application before the Supreme Court under Property Act for removal of covenants.
- The restrictive covenant was created to protect neighboring farming.
- The fact of the data reveals that the surrounding area is converted in a residential area and farming was ceased in the 1970s. This means that the area is now not used for the farming purpose.
- One of the old beneficial to the restrictive covenants has shown his unwillingness to discharge covenants.
The aforesaid points make it clear that the purpose for which covenants was introduced has lost with the passage of time. The fact that whole area is converted in a residential area and farming activity has creased long back makes it clear that restrictive covenants become obsolete due to change in the circumstances and character of the property. Moreover, the fact that the surrounding area is developing, it can be established that its continued existence of restrictive covenants would impede the reasonable use of the land.
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Conclusion:
The analysis of the facts of the case and legal provision, we come to the conclusion that the covenants in the present case become obsolete and this is one of the valid ground for making application of removal of restrictive covenants under section 84 of the Property law and section 129C of the Transfer of Land Act. There is exist more probability of success in suit considering the present situation.
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