What is a ‘tenant in possession”: s42(2)(e) of TLA

In Victoria a purchaser of land takes the land subject to “the interests of a tenant in possession of the land”. See: s.42(2)(e) of the Transfer of Land Act 1958.  The section protects a person who is in actual occupation of the land. Finkelstein J said the following  in  Money for Living (Aust) Pty Ltd (Administrators Appointed) v Money for Living (Aust) Pty Ltd (Administrators Appointed) (No 2) [2006] FCA 1285 at [24]–[25]:

“…..The effect of s 42(2)(e) is that the estate of a registered proprietor of land (including the proprietor of a mortgage) is subject to the rights of a tenant in possession. In this area the relevant principles are clearly established. The first is that the possession of a tenant is notice of any right of the tenant affecting the land: McMahon v Swan [1924] VLR 397 at 406. The second is that, as Dixon J confirmed in Burke v Dawes (1938) 59 CLR 1 at 17–18, s 72 of the Transfer of Land Act 1928 (Vic) (which is the forerunner of s 42) was not intended to apply merely to a tenancy as commonly understood. See also Downie v Lockwood [1965] VR 257 at 259 where Smith J said “As appears from the cases the exception in s 42 (2) (e) is to be widely construed; and it is to be treated as producing the result that “any person in actual occupation of the land obtains as against any inconsistent registered dealing protection and priority for any equitable interest to which his occupation is incident, provided that at law his occupation is referable to a tenancy of sort, whether at will or for years”. Thus, for the purposes of the section a purchaser under a contract, who is given possession by the vendor and is only a tenant at will, is protected in respect of his equitable ownership: Robertson v Keith (1870) 1 VLR(E) 11. So, too, is a vendor who remains in possession until the purchase price is paid: he is a tenant “whatever might be the legal denomination of the tenancy”: The Commercial Bank of Australia Limited v McCaskill (1897) 23 VLR 10 at 12. It has also been held that an equitable life estate will prevail over a subsequent registered interest: Black v Poole (1895) 16 ALT 155.”

(See also Haslam v Money for Living (Aust) Pty Ltd [2008] FCA 1536 at [19])

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