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Conveyancing Amendment Bill 1997
Explanatory note
This explanatory note relates to this Bill as introduced into Parliament.*
to abolish the rule of the common law known as the rule in Bain v
Fothergill which, in some circumstances, limits the damages that might
otherwise be awarded for a breach of contract resulting from a defect
in the title of a vendor of land, and
to remove the need for an option for the sale of residential property to
be signed in duplicate by both parties and to provide instead that such
an option is to be granted by the usual method used to make a contract
for the sale of residential property (that is, the purchaser signs one
copy, the vendor signs another copy and the copies are exchanged),
and
to extend the existing power to create easements in gross (that is, an
easement without a dominant tenement) in favour of the Crown or a
public or local authority to other corporations prescribed by the
regulations (for example, private corporations providing public utility
services).
Amended in committee--see table at end of volume.
sets out the name (also called the short title) of the proposed Act.
Clause 2 provides for the commencement of the proposed Act on a day or
days to be appointed by proclamation.
Clause 3 is a formal provision giving effect to the amendments to the
Conveyancing Act 1919 set out in Schedule 1.
Clause 4 is a formal provision giving effect to the consequential
amendments to other Acts set out in Schedule 2.
Clause 5 is a formal provision giving effect to the consequential
amendments to the Conveyancing (General) Regulation 1992 set out in
Schedule 3.
Schedule 1
Amendment of Conveyancing Act 1919
Schedule 1 [1] Abolition of the rule in Bain v Rothergill (1874)
LR 7 HL 158
At common law, the rule known as the rule in Bain v Fothergill is (with some
exceptions) to the effect that, in a proposed purchase of land, the intending
purchaser is not entitled to expectation damages for loss of bargain if the
vendor cannot make a good title. At present, the proposed purchaser can
recover only reliance damages for expenses incurred as a result of the
agreement.
Abolition of the rule was recommended by the Law Reform Commission in
its report Damages for Vendor's Inability to Convey Good Title (LRC 64,
1990). The amendment made by Schedule 1 [l] will give effect to that
recommendation. Accordingly, the result of the amendment will be that a
proposed purchaser can recover both expectation and reliance damages if the
vendor is unable to make a good title.
The amendment, however, does not give effect to the further recommendation
of the Commission that the parties to the contract should be able to reinstate
the rule by a provision in their contract and thereby deny the prospective
purchaser the entitlement to expectation damages.
Explanatory note page 2
Schedule 1 [2] Alteration of method of granting options for
sale of residential property
At present, section 66ZG (1) (a) of the Conveyancing Act 1919 requires an
option for the sale of residential property to be signed in duplicate by both
parties. The existing provision has been criticised for causing inconvenience
to the parties and uncertainty as to the precise time at which the option is
granted (See Lindsay v Balgi and Anor (1993) NSW Conv R 55-658). The
existing provision seeks to prevent an option coming into effect under the
general law when the option document is signed by the person giving the
option (and without any signature of the person who is granted the option). In
order to overcome the inconvenience and uncertainty caused by the existing
provision, Schedule l [2] amends section 66ZG to alter the method of
granting an option by adopting the usual method used for making a contract
to sell residential property. The standard conveyancing practice for making a
contract for sale is for the vendor to sign one copy of the contract, the
purchaser to sign another copy, and for those copies to be exchanged. The
conveyancing practice for effecting an exchange includes physical exchange,
exchange by post, exchange through the document exchange and exchange
by telephone.
Schedule 1 [3][11] Granting of easements in gross in favour
of prescribed corporations
An easement is a right annexed to land to utilise other land of different
ownership in a particular manner- the land benefited by the easement is the
dominant tenement and the land burdened by the easement is the servient
tenement. Section 88A of the Conveyancing Act 1919 provides an exception
to the requirement for a dominant tenement by allowing an easement without
a dominant tenement to be created in favour of the Crown or a public or local
authority constituted by an Act (known as an "easement in gross"). This
enables the Crown or such an authority to accept an easement that allows
public access to a service (for example, a water main or other utility service)
without owning any neighbouring land that is benefited by the easement (that
is, there is no dominant tenement). The class of authorities concerned has
been extended by amendments to section 88A to cover various State owned
corporations, namely, Hunter Water Corporation Limited, Sydney Water
Corporation Limited, irrigation corporations, energy services corporations
and Rail Access Corporation.
Schedule 1 [5] amends section 88A to extend the section to other
corporations prescribed by the regulations (for example, a private corporation
Explanatory note page 3
providing gas or other public utility services). A power to prescribe other
corporations has already been included in the Act in respect of the power of
public and local authorities to impose restrictions on the use of or impose
public positive covenants on their own lands (section 88D) and in respect of
the power to accept a restriction on the use of or public positive covenant on
other land without that restriction being annexed to any particular land
(section 88E).
Schedule l [3] is consequential on the amendments made by Schedule 1 [5]
and [9].
Schedule 1 [4] is consequential on the amendment made by Schedule l [5]. It
transfers to a separate section a provision in section 88A that is not limited to
the Crown or public or local authorities, being a provision relating to other
easements, or the benefit of a restriction on the use of land, being made
appurtenant or annexed to an easement.
Schedule 1 [6] and [7] are consequential on the amendment made by
Schedule 1 [5].
Schedule 1 [8] continues the retrospective operation of section 88A, but
enables the extension of the section to prescribed corporations not to have
retrospective effect.
Schedule 1 [9] omits provisions in section 88A that deem the State owned
corporations to be public authorities for the purposes of obtaining the benefit
of that section. The prescription of those corporations is to be continued by
the regulations made under the proposed power conferred by Schedule
1 [5]--see Schedule 3.
Schedule l 10] and [11] are consequential on the amendment made by
Schedule 1 [5].
Schedule 2
Consequential amendment of other Acts
Schedules 2.1, 2.2, 2.3, 2.4 and 2.6 amend the Bicentennial Park Trust Act
1987, the Centennial Park and Moore Park Trust Act 1983, the Crown Lands
Act 1989, the Darling Harbour Authority Act I984 and the Royal Botanic
Gardens and Domain Trust Act 1980 as a consequence of the amendment
made by Schedule 1 [5]. The amendments to those Acts revise definitions of
easements in gross as referred to in section 88A of the Conveyancing Act
1919 so as to extend those definitions to easements in gross in favour of
prescribed corporations under section 88A, as amended by Schedule 1 [5].
Explanatory note page 4
Schedule 2.5 repeals section 62 of the Pipelines Act 1967 which confers the
benefit of section 88A of the Conveyancing Act 1919 on holders of permits
and licences under that Act to construct and use pipelines. The provision
enables easements in gross to be created in favour of those permittees and
licensees in connection with the construction and use of pipelines and
associated matters. As a result of the extension of section 88A by the
amendments made in Schedule 1, it will no longer be necessary to make a
special extension of section 88A in the Pipelines Act 1967. The prescription
of the permittees and licensees in connection with pipelines is to be
continued by the regulations made under the proposed power conferred by
Schedule 1 [5]--see Schedule 3.
Schedule 3
Consequential amendment of Conveyancing
(General) Regulation 1992
The Schedule amends the regulation to insert a clause to continue the
prescription of the State owned corporations that currently have the benefit of
section 88A (as a consequence of the omission by Schedule 1 of the express
reference to those corporations in section 88A). The Schedule also continues
the prescription of permittees and licensees under the Pipelines Act 1967 that
currently have the benefit of section 88A in connection with pipelines (as a
consequence of the repeal of section 62 of the Pipelines Act 1967 by
Schedule 2).
Explanatory note page 5