Memorandum Template To: Supervising Partner From: STUDENT Date: 6 May 2021 Client: David Re: Advice for existing and new leases of the Art Express property Our client requests advice about the necessity to honour leases in the Art Express property, if any amounts are recoverable for Fabio from our client, and to draft special conditions for a license with Stella Finesse. Part 1 - Client Advice 1. Honouring existing leases The current registered proprietor is David. Therefore, good legal title exists and, prima facie, is indefeasible unless an exception applies.1 1.1. Celia Short Lease Legislation suggests an exception exists for short leases.2 If a lease is three years or less, then it is enforceable under the lease, even if the interest is not registered by the lease holder.3 On the facts, Celia's lease has an aggregate of 4 years including the renewal options. Therefore, the exception does not apply. Fraud: s 184(3)(b) 1 Land Title Act 1994 (Qld) ss 181, 184 ('LTA'); Breskvar v Wall (1971) 126 CLR 376, 384-385 ('Breskvar'). 2 LTA (n 1) s 185(1)(b). 3 Ibid, sch 2 (definition of 'short lease').
LLB301 Real Property Law, Assignment 2 Grade: 17 out of 30 Word Count: 1494 'Fraud' is not defined in legislation. However, the common law defines it as 'personal dishonesty or moral turpitude'.4 As the registered proprietor, David's change of intention against Celia as the holder of an unregistered interest, prima facie, looks like fraud.5 David acknowledged Celia's rights set out in the contract and accepted these rights by signing. On the facts, David did not intent to dishonour the agreement at the time of signing. Contrasting David's actions to the party in Loke Yew v Port Swettenham Rubber Co Ltd,6 who never intended to honour the interest. Therefore, the question remains on whether fraud that manifests after the acquisition of the interest (ie. supervening fraud) is still considered fraud. No appellate authority exists in Queensland, however, there is an argument that David's actions are similar to the facts in some case law where undertaking was given and then reneged on.7 Common law in Bahr v Nicolay (No 2)8 did not reach a final decision on whether supervening fraud is captured in the exception.9 The Courts may rule that David's actions were fraud, but this is uncertain. In Personam All five judges in Bahr held that the obligation accepted by the proprietor could be enforced in personam.10 Applying the scenario in Bahr to David's situation, David agreed to be bound by the interest stipulated in the contract to support the lease for Celia's coffee shop. The courts will likely hold David to that interest.11 Conclusion Therefore, on the facts, Celia does not have legal title to the interest but will have a strong argument for in personam remedy from general law. It is likely that David will be subject to be bound to the obligation stipulated in the contract. 4 Bahr v Nicolay (No 2) (1988) 164 CLR 604, 614 ('Bahr'); Butler v Fairclough (1917) 23