Queensland's property law regime is about to change and be 'modernised' with the introduction of the Property Law Bill 2023 (the Bill). When passed, the Bill will replace the nearly 50 year old Property Law Act 1974 (Qld) (the PLA).
The Bill will operate as a full replacement of the PLA and includes a vast array of minor and major proposed changes. It is expected to be passed in the upcoming months.
This snapshot looks at changes to the limitation period for deeds and the effect of positive covenants in easements.
Key benefit of Deeds to be lost?
PLA gives more time to claim under deeds v contracts
The time limitation for an action based on a contract is 6 years under the PLA. By contrast, actions based on deeds have double that period, with 12 years to make a claim. Other jurisdictions in Australia also give more time for claims under deeds, ranging from 12 to 15 years.
New Bill will level the playing field
Under the proposed changes, the time limitation for an action based upon a deed will drop from 12 years to 6 years. This change will apply prospectively and will not affect the limitation periods under existing deeds (or variations of them).
There are various reasons to use a deed instead of an agreement, but shortening the limitation period will take away one of the main distinctions between the two and one of the key benefits in using a deed as opposed to an agreement.
Helping new owners enforce repair and maintenance covenants in easements
Current law makes repair and maintenance covenants tricky to enforce
One area which has generated plenty of case law involves the ability of subsequent owners to enforce positive covenants in easements, especially those that do not touch and concern the land.
A classic example of this is an easement that requires a party to spend money or take an action to repair. Promises to repair are usually binding on the initial parties to the easement, but subsequent landowners may find themselves in trouble when they seek to enforce these promises.
There are many cases where the courts have rejected the contention that the burden of a positive covenant should run with the land. This means that subsequent landowners (successors in title) are unable to enforce covenants in easements such as repair and maintenance covenants.
The PLA has provisions which attempt to address this issue.1 However, they do not have the effect of passing the burden of a positive covenant to a subsequent landowner. By contrast, some states do have legislation that plugs the gap left by common law and equity. New South Wales for example has a section dealing with the passing of the burden of positive covenants in easements – although this is limited in its scope to covenants for maintenance or repair only.2
New Bill gives purchasers more certainty about enforcement
Clause 65 of the Bill will help address the issue of enforceability of positive covenants in Queensland. If a covenant in a registered easement imposes an obligation, whether positive or negative, in relation to the use, ownership or maintenance of the burdened land for the benefit of other land, this covenant will be binding on subsequent owners of the burdened land UNLESS those covenants are expressed to be personal to the original parties.
The legislation also provides examples of obligations that can be imposed in easements, including:
- covenants relating to maintenance or repair;
- covenants relating to payment of rates or taxes; and
- covenants relating to building, maintenance or repair of infrastructure used in connection with the easement.
Unusually, clause 65 will operate retrospectively3 and may in some cases result in previously unenforceable covenants in easements becoming enforceable and therefore altering the previously settled rights of parties.
How effective are the changes for subsequent owners?
Only certain types of covenants get the benefit of the new regime
Since the Bill's introduction, there has been stakeholder feedback that the Bill needs to go further with covenants that bind successors in title. It was submitted that the words 'use, ownership or maintenance' and the examples provided in the new clause will be difficult to apply to covenants found in modern easements.4
An example was given of a landowner with a gas pipeline running through their land. The landowner and the pipeline owner have an agreement where the pipeline owner will take out public liability insurance for the pipeline and indemnify the landowner for any damages caused by the pipeline. The landowner then sells their land.
Under the PLA, that new landowner can't enforce the insurance and indemnity provisions. The Bill is intended to fix this issue. But does it? Some submitters say not, arguing that insurance and indemnity obligations goes beyond the meaning of the words 'use, ownership or maintenance'.
Review of Bill after 12 months
Given the stakeholder feedback, the Department of Justice and Attorney-General will review the easement and covenant provisions of the Bill within 12 months of commencement to ensure that all non-abusive covenants found in modern easements will still bind subsequent landowners.
As you can see above, there are some major changes to the existing law. Property lawyers need to be on top of all changes, particularly where the operation of some new provisions can operate retrospectively and may unsettle previously settled positions.
Stay tuned for the next Property Law Snapshot outlining upcoming changes to land sale contracts and disclosure statements and signing requirements for deeds and agreements.
1. Section 53 PLA.
2. Section 88BA Conveyancing Act 1919 (NSW).
3. Section 247 reads: 'Section 65 applies in relation to a covenant contained in a registered easement over land for the benefit of other land whether the easement is created or registered before or after the commencement.'.
4. Inquiry into Property Law Bill 2023, Report No.45, 57th Parliament, Legal Affairs and Safety Committee, April 2023.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.