Property Law

1.

The central issue is the rights of all parties as a result of Smith’s loan default by taking into consideration whether the installed air conditioning plant is a fixture or chattel.

Frigid Ltd has full proprietary rights to the plant as it may be classified as a chattel which means it is not part of the property.

The installed plant is a chattel according to the following requirements:

1. Degree of annexation – held by the force of its own weight and was not kept in place by any other permanent means such as pipes or bolts.

2. Purpose of annexation – not part of the layout of the house and was for enjoyment purposes of the plant itself.

In terms of the rights of the mortgagee, Under the Land Title Act 1994, a mortgage does not transfer the property to the mortgagee (ABC Bank) but obtains a charge over the interest of the secured property (s74 LTA). ABC Bank has the right to foreclosure to recover the debt owed under s78 (2)(c)(ii) LTA. The Real Property Act 1900 (NSW) s57(2)(b) states that ABC Bank must serve a valid statutory notice advising Smith of the breach and specify that the default can be rectified or the bank can exercise their right to sell where the true market value should be carefully obtained (Corporations Act 2001 (Cth) s420A). ABC Bank only has the right to recoup the amount owed by Smith and cannot pursue any other remedies.

Foreclosure on the mortgage removes the mortgagor’s equity of redemption and ownership. As the value of the property is higher than the owed amount, the mortgagor has the right to the excess proceeds from the sale and for the mortgage to be discharged.

2.

The central issue to consider is whether David satisfied the necessary requirements to seek the proper legal title to the land by bringing an action in adverse possession, in effect to determine the NSW Government’s right to possess the land.

To establish a successful adverse possession, the adverse possessor (David) must:

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