QUESTION ONE
The court in Moore v Regents of the University of California defines property as real, personal and everything else that a person can own. Therefore property is divided into two categories, real and personal property. From our given fact pattern the case in point is dealing with land which is classified as real property. There are various property rights which include; ownership, which is the highest form of ownership, possession and security interest. Further, real property has several subdivisions which are fee simple, easement, profits a prendre and a mortgage.
The doctrine of estate is a doctrine that seeks to clarify the nature of the bundle of rights owners of land could exercise. Under this doctrine, an owner of land is entitled to possession of the land. Additionally, it was the doctrine of tenure that clearly outlined that a land owner owned a bundle of right in respect of the land but not the land itself. The issue arising from this scenario is who has the strongest equitable interest between the parties namely, Sasha and the bank who is the mortgagor in this case. To establish this, it is important to note that registered land is land registered under the Land Title Act 1994. The right to ownership means that an owner has residuary right to the thing owned. Knapp v Knapp adds that the general right of ownership includes exclusive enjoyment, a right to destroy, to alter, to alienate and the right to recover possession and to maintain the property. Possession is a prima facie evidence of ownership of property.
Under the Torrens system, an owner of property can transfer ownership through sale, succession, creation of an express trust and by gifting another. The Torrens system has fundamental principles which include the mirror principle, the insurance principle and the curtain principle. The mirror principle in the Torrens system seeks to protect third parties who are victims of fraud or some other irregularity. Under this principle a third party who buys land in good faith and in full reliance of the registered title could be successful in case if he proves that the party who sold the land to him had his name properly registered in the title document. The original owner of the land therefore is entitled to compensation for the misdeeds of the fraudulent vendor. The insurance principle states that the government ought to compensate persons who suffer losses caused by the system. The mirror principle outlines that a bona fide purchaser is not affected by a defect in the registered proprietor’s chain of title. The Torrens registration of title removes the necessity of investigating the chain of title. It does so by establishing a maintaining a proper record existing facts relating to the parcel from time to time. The Torrens system introduced dishonesty as a requirement that ought to be proven in fraud cases. In Friedman v Barrett, fraud under the Torrens system was very narrow thus need to prove dishonesty.
Section 42(1), the registrar must issue a certificate of title containing the indefeasibility title for a lot if requested in writing by the registered owner. Section 181, an instrument does not transfer or create an interest at law until it is registered. An unregistered interest is enforceable only between the parties to the contract and not to third parties. Abigail v Lapin establishes that the execution of an instrument that can be registered gives rise to an equitable interest. Barry v Heider proved that a contract underlying an unregistered instrument gives rise to an equitable interest. Section 184 of the Land Titles Act provides that indefeasibility of a title is the shield which wards off all attacks on a title. Exceptions to indefeasibility as per section 185 of the Land Titles Act include, failure to cancel prior certificate of title, adverse possession, earlier title, equity, short lease error in boundaries and omitted easement.
In relation to the Tallai property, I would advise the three parties, Sasha to sue Mike Cross for fraud. From the fact pattern Mike Cross is the registered owner of the Tallai property despite Sasha contributing a largest amount required to buy the property, her name was not included. A registered owner has an indefeasible title unless it can be established that he acquired the title fraudulently. Sasha should sue him for fraud and misrepresentation because she relied on his words to the extent of suffering a detriment. Sasha stands to lose the house since the bank plans on taking the house. It is stated in the fact pattern that Mike Cross contacted Ready Bank and the manager who had previously dealt with the couple agreed to to loan Mike $500,000 secured by a mortgage on the property. The position of the court in Assets Co v Mere Roihi is that fraud means actual fraud. It requires personal dishonesty, moral turpitude, designed cheating and willful blindness to be established. Willful Blindness is defined in Young v Hoger as a careless belief. To determine who had a superior equitable interest, between Sasha and the Bank, the court in Barry v Heider held that priorities for unregistered equitable interest arise where there exists a caveat. This caveat is lodged by one interest holder in order to freeze the register. Equitable interests take priority in the order in which they are created. This may be displaced if there is need to postpone prior interest based upon the equities situation. This position was clarified by the court in Abigail v Lapin. Sasha through the help of her lawyer placed a caveat on the property before the bank could register the mortgage the following day. Between the two parties, Sasha has a superior equitable interest because her interest was created first. The court in Frazer v Walker held that a purchaser who without fraud becomes registered as a proprietor of an interest in land acquires an indefeasible title in land immediately after registration. This immediate Indefeasibility exists even if the instrument is void or voidable. This means that immediately after the bank registered the mortgage the following day, they would have acquired an indefeasible title.
Sections 188-190 state that a claimant who seeks to get compensation must show that his/her land or an interest on the land has been deprived. The claimant must establish that they occasioned losses or damage as a result of the deprivation. Compensation does not include personal injury. Sasha sufficiently qualifies for the claimant’s test for compensation.
(b) The two gold bars
The court in National Provincial Bank v Ainsworth laid out characteristics of property. Definability, identifiability, assignability and durability constitute such characteristics. The two gold bars therefore are regarded s property. They are chooses in possession because they are tangible, movable and capable of physical acquisition. Section 3(1) of the Sale of Goods Act 1896 deals with transactions relating to chattels personal. A rightful owner of land has the right to enjoy the rights resulting from the property exclusively. Since the gold bars were discovered in the Tallai property, they form part and parcel of the property. Therefore, however owns the house owns all other property in the house including the gold bars. Sasha should sue Mike Cross to recover the gold bars since she is the rightful owner of the property. Once Sasha was able to prove Mike’s fraudulent activities with respect to the property in court, she should also acquire and indefeasible title to the gold bars as well.
Total words for question 1, 1238.
QUESTION 2
A security is defined as a thing that is either pledged or deposited that acts as a guarantee for the fulfillment and repayment of a loan. Further, the thing deposited may be forfeited if there is default in loan repayment. Section 12 of the Personal Property Securities Act of 2009 defines a security interest as an interest that arises in relation to personal property. The personal property in question is provided in a transaction which in substance secures either payment or the performance of certain obligations. A security interest may be legal or equitable according to Canadian Imperial Bank of Commerce. In relation to Section 12(2) of the Personal Property Securities Act a pledge, a hire purchase agreement, a conditional sale agreement, a transfer of title and a lease of goods are examples of transactions giving rise to security interests. A secured party is defined in section 10 of the Personal Property Securities Act as a secured creditor or as one who holds the security interest. The agreement created from this transaction is known as a security agreement. A security agreement does not necessarily have to be formal but there must be a consensual relationship between the parties. It can be written or oral. For a security interest to be enforceable; the security interest needs to have attached to the personal property In other words, the collateral. Secured creditors have the following advantages; priority over other creditors in case of the debtor’s insolvency. Second, the debtor’s assets are available to be forfeited by the creditor upon default and it increases the possibility of loan repayment. Prime Wheat Ltd is a secured creditor. Secured creditors are creditors who have securable interest. A secured interest is defined in section 12(1) of the Personal Property Act 2009 as an interest in personal property that is provided in a transaction that in substance secures the performance of an obligation or the full payment. Section 12(2) highlights instances that give rise to security interest and these include, a fixed charge, a chattel mortgage, a conditional sale agreement a transfer of title and a hire purchase are some of the examples listed. Prime wheat (operations) Pty Ltd and John Grain Brokers Pty ltd are parties to a security agreement. From the attached search result, the collateral type set for the agreement was commercial property class and wheat and other grains to be precise. Now that it has been established that Prime Wheat (operations) Pty ltd is a secured creditor, he has certain advantages. For instance, a secured creditor is entitled to forfeit the grantor’s personal property for upon default. The fact pattern and search result has clearly established the existence of a security agreement. Following the agreement, Prime Wheat Ltd made three deliveries were made to Johnson Grain Brokers ltd. This means therefore, that possession is what was passed to Johnson Grain Brokers. A clause in the agreement required Johnson Brokers to market the wheat and give an account of all wheat sold. Consequently, the Brokers Ltd was paid a15% commission on the gross sale price. Button v Cooper defines possession as the relationship between an individual and personal property or an object. The elements of possession include mental element which is the intention to possess the object or goods and control element which is the physical aspect that mainly requires some degree of power over the object or goods in question. Section 19(5) of the Personal Property Securities Act states that a grantor has rights to goods that are leased or sold under a bailment agreement or a conditional sale agreement after he gives out possession of the goods.
Section 12(2) of the Personal property Security Act outlines various instances that give rise to a security interest. for instance, a fixed charge, a floating charge, a pledge, a conditional sale agreement, a hire purchase agreement, a lease of goods, a transfer of title, an assignment and a flawed asset arrangement. Section 19(1) of the Personal Property Security Act provides that a security interest is only enforceable against a grantor in regards to particular collateral if the secured interest has attached to the collateral. The attachment rule further states that it is the grantor who has the powers to transfer rights in the collateral to a secured creditor. A grantor exercises this power in several ways such as giving a value for the security interest or performing an act that gives rise to security interest. Section 32(1) states that unless expressly or impliedly stated, security interest passes along with the collateral. In Lason v Saskatchewan Valley Credit Union, a clause in the security agreement the grantor expressly consented to deal with mobile home on sale.
Purchase Money Security interest is defined in section 14 of the Personal Property Securities Act as a security interest in collateral to secure all or part of purchase price (seller). PMSI is also the security interest in collateral by provision of value to enable the grantor to acquire rights in collateral. It is also defined as an interest of a bailor or a lessor in a Personal Property lease. PMSI is also the interest of consignor providing goods for consignment under a commercial consignment. In Re Clark Equipment of Canada v Bank of Montreal the substance of a security agreement of more important that the form of the agreement.
Section 62 of the Personal Property Securities Act lists instances when a Purchase Money interest holder gets super priority. First, is the inventory and non-inventory classification. If the collateral in an agreement is the inventory or its proceeds, an agreement that was registered before, the secured creditor can possess the goods and if they are not goods, security attaches to the inventory. If the collateral is not inventory, if it registered within 15 working days if goods, the secured creditor acquires possession and if they are not goods he can exercise attachment. Priority among Purchase Money Security Interest holders is regulated by section 63 of the Personal Property Securities Act. A seller or a lessor holding a PMSI that is perfected has priority over other perfected PMSI’s granted by the same grantor. In the given case, Prime Wheat Ltd has priority over other sellers because he has a perfected Purchase Money Security Interest. This position was laid down in Graham v Portcom NZ Ltd.
When a secured party has a secured interest and the grantor goes ahead to sell the collateral they have two options. To either trace their interests into the proceeds or try to claim an interest in the collateral itself. Proceeds are defined in section 31 of the Personal Property Securities Act as any traceable and identifiable personal property that is derived directly or indirectly from dealing with collateral. Section 32 of the Personal Property Security Act states that since collateral gives rise to proceeds, then the security interests are passed along the collateral. The Prime Wheat Pty Ltd had wheat and grains serving as collateral for the agreement. The collateral in question is comingled property since their identity is lost when other distributors produce is added to the existing produce. Unisource Canada Inc v Hong Kong Bank of Canada plain paper used in printing and binding had lost its originality.
The Prime Wheat Ltd can recover against Johnson Brokers Breach of contract by tracing the collateral. Agricultural Finance Services Corp v XH sales defines tracing involves following an item of property as it passes to other hands. During the tracing, it is important to ensure that a close and substantial connection is established between the two items. This is to enable the rights of the original property to flow through the new property.
1275 words for question 2.
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