Last time I wrote about legal theory- how to recognise a valid law.
Just in case you thought it was a strange theoretical question, only last week a United Nations official has been criticising the current "intervention" in Aboriginal communities in northern Australia as illegal- he says its discriminatory and against international law. What he will do about it is unclear but a Queensland Shire council wants to use his finding in their case to renew an Aboriginal community’s tavern’s liquor license.
And this week ex Vice President Cheney has been criticising a probe into whether the CIA used torture in interrogating people as being ‘political’ because he says its directed to see whether President Bush authorised it. But the probe is designed to find whether the CIA breached human right standards.
Now neither of these fit into the two models of laws I have written about so far.
First of all the intervention. Taking the first model- what the sovereign commands is law: Australia is a nation- Australia’s parliament is (under the constitution) sovereign so whatever Parliament says is law is indeed law (subject to constitutional challenges) .So in turn whatever the United Nations has to say shouldn’t affect us. Its just not law. Taking the second model –law is what officials recognise as law: Australian officials recognise the Parliament has made laws for the Aboriginal communities and act accordingly. Indeed it’s the very actions that are being criticised as illegal-as against international law..
Now look at the CIA actions. Likewise the USA is a nation- its constitution is a bit more complicated because of the differing functions of the President and the Congress but at least to do with the CIA we can say that whatever the "Executive" (the President) says is law providing it complies with prior Acts of Congress is law. Taking the second model again , one of the main purposes (And the purpose Mr Cheney was complaining about) of the enquiry is to see whether the CIA officials recognised the President’s orders and tortured the prisoners Under both these models its only if the CIA staff tortured the prisoners on their own initiative or if what they did was contrary to a law passed by Congress would they be liable. If the President (or someone like Mr Cheney) ordered the torture, then the president or Mr Cheney would be liable.
But that’s not the case, that is not how law in fact works. And the best example of this is ‘war crimes.’ Whether it be the Nuremburg trials of Nazis after world war two, or whether it be the current trials in The Hague concerning the former Yugoslavia the law appeals to something external. Whether the German law authorised the killing of the disabled, Freemasons, Gypsies, Jews or whether President Miloslevic authorised the paramilitary groups in Bosnia to do what they did, someone – is saying it was legally wrong.
And so whoever it is who is accused – General Jodl at Nuremburg in 1946 or Ramush Haradinaj at the Hague last week, - is standing trial with prosectors and defence lawyers, rules of evidence, examination of witnesses and in short the whole system we know as ‘criminal justice.’
But it cannot be criminal justice if law is what the sovereign commands. At the time the acts were committed what passed for law in Germany, and (probably)in Bosnia allowed all the acts. Nor can it be justice if law is directed to officials and the test for law is what the officials recognise as law- because in Germany at the time the acts were committed the officials recognised the Nazi laws (it might be a bit harder to say that about Bosnia- if only because there don’t seem to have been many officials left apart from the armies and paramilitaries).
So to be able to bring war criminals to trial there has to be an appeal to something outside the normal legal system-some underlying principle of right and wrong. And here is where the proposed Victorian laws I wrote about last time has it the wrong way round. Those people are trying to make the law make moral decisions. Its really morality that makes the law.
So that because we humans recognise that killing people because of their religion or race or killing handicapped people is wrong we have laws that say that that is wrong.
Next fortnight I shall give some more examples of how morality has made the law and then try to draw some conclusions from all of this.
Links
ABC news reporting the UN’s finding http://www.abc.net.au/news/stories/2009/08/27/2668915.htm?site=news
ABC news reporting Arakun shire council’s appeal http://www.abc.net.au/news/stories/2009/08/31/2671913.htm?site=news
ABC news reporting Cheney’s comments (also note that Sen McCain says torture gets you nowhere and is a bad policy) http://www.abc.net.au/news/stories/2009/08/31/2671247.htm
The Bosnian War Crimes Tribunal http://www.icty.org/
Monday, September 7, 2009
Monday, August 31, 2009
What is a law anyway?
The Victorian government proposed a law that would prevent men only clubs, (though not women only clubs) and prevent religious organisations (not only churches but Islamic mosques, synagoges and temples from refusing to employ people who either disagree with the religion or live in ways that are not acceptable to the religion concerned. This the Victorians say is to prevent discrimination. They say further that it will only affect the religious organisations in ‘non core’ activities –such as schools and hospitals.
This would mean that a Muslim school would not be able to insist that only Muslim teachers taught, or even that non Muslim lady teachers wore long sleeved shirts and skirts down to about the knee (Which the Koran prescribes for women in public).
I am not writing more about whether the proposed law is good or bad- other commentators including Peter and Tim Costello have done this (they both say it’s a bad law). But any such law- which tries to enforce a particular moral pattern on others – reverses the relationship between law and morality. To see this we need to first look at the basic question-what is a valid law and how do we recognise a law.
The most common view in England for many years was that a law was what "the Sovereign commanded as law". It didn’t matter whether the Sovereign was the King or Queen or whether it was parliament so that for the last 200 years of so a law was what the English parliament said was the law. Court decisions were law because the Sovereign had established the courts and made laws that enforced the courts decisions. This idea came across to Australia. But it ran into two problems.
The first was that Australia (and for that matter Canada and many other Commonwealth countries) had written constitutions. And even the otherwise sovereign parliaments had to comply with the constitution.
The second problem was as one legal theorist (H L A Hart) put it- to say the law is what the sovereign commands is a bit like saying the law is what an armed gangster commands- might is right. Say that there is a morally repulsive law – if the Sovereign said it is the law then it is the law. To take a real example: were the Nazi Nuremburg laws confiscating Jewish property, and in the end sending Jews, Gypsies, Freemasons and many others to death valid laws? Yes if what the Sovereign (in this case the Nazi state) commanded was law.
Hart (and my lecturers at university) answered these two problems by saying that law was ultimately directed at officials- whether the officials were police, public servants, or even people who –while not part of the government applied the laws. Here they meant people like accountants who lodge your tax returns in accordance with the tax laws, solicitors who handle your property sale in accordance with the conveyancing laws.
So Hart said a valid law was one that was recognised by these officials as law. And so there was an overriding ‘recognition rule.’ The officials accept the rule’s criteria as binding on them. And then they accept as law whatever matches the criteria. An outsider can see what the law is from how the officials behave.
This solves the first problem- parliament, the courts and so on all recognise the constitution governs them, they also recognise the laws made under the constitution.
But it doesn’t solve the second problem. And it is that second problem and how it is solved which I will write about next time. And then you will be able to see whether you think the Victorian proposals are proper laws.
Some Links
Peter Costello on the Victorian laws http://www.theage.com.au/news/opinion/pursuing-the-churches-over-human-rights-is-contradictory/2009/07/28/1248546725162.html
Some responses to Costello's article http://www.theage.com.au/news/opinion/letters/democracy-first-then-christianity/2009/07/29/1248546773934.html
The Community Legal Centres views http://www.theage.com.au/opinion/equality-loses-out-to-freedom-20090802-e5sm.html (in my view they have rather missed the point, they are arguing that a particular viewpoint should be enforced in the courts and not by lobbying your member of parliament and if need be voting against him or her. That is they are talking about the way of enforcing a particular law.)
This would mean that a Muslim school would not be able to insist that only Muslim teachers taught, or even that non Muslim lady teachers wore long sleeved shirts and skirts down to about the knee (Which the Koran prescribes for women in public).
I am not writing more about whether the proposed law is good or bad- other commentators including Peter and Tim Costello have done this (they both say it’s a bad law). But any such law- which tries to enforce a particular moral pattern on others – reverses the relationship between law and morality. To see this we need to first look at the basic question-what is a valid law and how do we recognise a law.
The most common view in England for many years was that a law was what "the Sovereign commanded as law". It didn’t matter whether the Sovereign was the King or Queen or whether it was parliament so that for the last 200 years of so a law was what the English parliament said was the law. Court decisions were law because the Sovereign had established the courts and made laws that enforced the courts decisions. This idea came across to Australia. But it ran into two problems.
The first was that Australia (and for that matter Canada and many other Commonwealth countries) had written constitutions. And even the otherwise sovereign parliaments had to comply with the constitution.
The second problem was as one legal theorist (H L A Hart) put it- to say the law is what the sovereign commands is a bit like saying the law is what an armed gangster commands- might is right. Say that there is a morally repulsive law – if the Sovereign said it is the law then it is the law. To take a real example: were the Nazi Nuremburg laws confiscating Jewish property, and in the end sending Jews, Gypsies, Freemasons and many others to death valid laws? Yes if what the Sovereign (in this case the Nazi state) commanded was law.
Hart (and my lecturers at university) answered these two problems by saying that law was ultimately directed at officials- whether the officials were police, public servants, or even people who –while not part of the government applied the laws. Here they meant people like accountants who lodge your tax returns in accordance with the tax laws, solicitors who handle your property sale in accordance with the conveyancing laws.
So Hart said a valid law was one that was recognised by these officials as law. And so there was an overriding ‘recognition rule.’ The officials accept the rule’s criteria as binding on them. And then they accept as law whatever matches the criteria. An outsider can see what the law is from how the officials behave.
This solves the first problem- parliament, the courts and so on all recognise the constitution governs them, they also recognise the laws made under the constitution.
But it doesn’t solve the second problem. And it is that second problem and how it is solved which I will write about next time. And then you will be able to see whether you think the Victorian proposals are proper laws.
Some Links
Peter Costello on the Victorian laws http://www.theage.com.au/news/opinion/pursuing-the-churches-over-human-rights-is-contradictory/2009/07/28/1248546725162.html
Some responses to Costello's article http://www.theage.com.au/news/opinion/letters/democracy-first-then-christianity/2009/07/29/1248546773934.html
The Community Legal Centres views http://www.theage.com.au/opinion/equality-loses-out-to-freedom-20090802-e5sm.html (in my view they have rather missed the point, they are arguing that a particular viewpoint should be enforced in the courts and not by lobbying your member of parliament and if need be voting against him or her. That is they are talking about the way of enforcing a particular law.)
Monday, August 10, 2009
Making a contract
I’ve written on this before but there’s been a recent example of an unusual sort of contract –the contract where the ‘consideration’ does not go to a party to the contract. Normally it does- to use same example I used before I pay the butcher, he gives me the meat I have purchased. My consideration to him is the money his consideration to me is the meat.
But sometimes the consideration can be paid to third person, or sometimes it can be by doing something.
But first a bit of history. In 1892 the Carbolic Smoke Ball Company advertised its smoke balls as a flu remedy. Its ads were imaginative –that it would pay anyone who caught flu after using its smoke balls would be ‘rewarded’ with £100, (then a lot of money by comparision a skilled factory workers wage was about £240 per year) Its ads went on to say the company had paid £1000 into its bank as security.
Mrs Carlill used the ball but caught flu. She claimed the reward. The company said it was only an advertising trick. Mrs Carlill sued. The company’s barrister was H H Asquith –later prime minister but despite having a ‘top gun’ the company lost. It appealed. It lost again. The judges said
(1) that the advert was a unilateral offer to all the world
(2) that satisfying conditions for using the smokeball constituted acceptance of the offer
(3) that purchasing or merely using the smokeball constituted good consideration, because it was a distinct detriment incurred at the behest of the company and, furthermore, more people buying smokeballs by relying on the advert was a clear benefit to Carbolic
(4) that the company's claim that £1000 was deposited at the Alliance Bank showed the serious intention to be legally bound
And so you had the four things needed for a legal contract.
The aftermath of the case is that the company failed about four years later (having in the meantime used the whole case to its advantage –its new adverts referring to the case which had got a lot of publicity and saying that only Mrs Carlill and two other people out of the thousands who had bought the smoke ball had claimed the reward so that the rest must be very satisfied customers). Mrs Carlill lived many more years dieing at the age of 92. Her death certificate gave two reasons for her death –old age and influenza.
Now to bring this up to date. Skiwing leased a coffee shop in the Imperial Arcade in Sydney. The coffee shop was on the first floor looking over and down into the Pitt Street Mall. Skiwing wanted to extend by building a balcony out onto the mall (it had a long lease so it thought –wrongly for reasons I might write about another day- that any money it spent on the extensions would be a good investment). It approached Stocklands the owner of the Arcade.It wrote back that it would not object to Skiwing’s ‘pursuing Sydney City Council to obtain approval’ for erection of a balcony so long as some conditions were satisfied.
Skiwing applied for that approval. It spent money paying planners, archietects and so on. Then Stocklands had a change of heart. IT revoked the consent and said that Skiwing could not alter the coffee shop in any way- invoking a clause in the lease to that effect..
As part of an expensive saga of litigation Skiwing claimed the letter from Stocklands was an offer. The Appeal Panel of the Administrative Decisions Tribunal (which deals with retail lease cases) agreed . It said Skiwing did not have to ‘pursue’ this approval. It could, ignore the offer entirely. But if it accepted the offer by submitting an application to the Council in compliance with these conditions, Stockland would be bound by its promise not to raise any objection. Skiwing’s expenditure of time and money in preparing and submitting the application would be "consideration’ even though there was no direct benefit to Stockland. The balcony, when constructed, would undoubtedly have been of benefit to Stockland.
Further once Stockland’s staff knew that Skiwing was proceeding with the application, and had encouraged Skiwing (it did so in further letters) to engage planners and to spend more on the project, the offer became one which (like the lessor’s offer of a new lease in an option) cannot be revoked.
This all shows not all contracts are as simple as me buying my meat.
But sometimes the consideration can be paid to third person, or sometimes it can be by doing something.
But first a bit of history. In 1892 the Carbolic Smoke Ball Company advertised its smoke balls as a flu remedy. Its ads were imaginative –that it would pay anyone who caught flu after using its smoke balls would be ‘rewarded’ with £100, (then a lot of money by comparision a skilled factory workers wage was about £240 per year) Its ads went on to say the company had paid £1000 into its bank as security.
Mrs Carlill used the ball but caught flu. She claimed the reward. The company said it was only an advertising trick. Mrs Carlill sued. The company’s barrister was H H Asquith –later prime minister but despite having a ‘top gun’ the company lost. It appealed. It lost again. The judges said
(1) that the advert was a unilateral offer to all the world
(2) that satisfying conditions for using the smokeball constituted acceptance of the offer
(3) that purchasing or merely using the smokeball constituted good consideration, because it was a distinct detriment incurred at the behest of the company and, furthermore, more people buying smokeballs by relying on the advert was a clear benefit to Carbolic
(4) that the company's claim that £1000 was deposited at the Alliance Bank showed the serious intention to be legally bound
And so you had the four things needed for a legal contract.
The aftermath of the case is that the company failed about four years later (having in the meantime used the whole case to its advantage –its new adverts referring to the case which had got a lot of publicity and saying that only Mrs Carlill and two other people out of the thousands who had bought the smoke ball had claimed the reward so that the rest must be very satisfied customers). Mrs Carlill lived many more years dieing at the age of 92. Her death certificate gave two reasons for her death –old age and influenza.
Now to bring this up to date. Skiwing leased a coffee shop in the Imperial Arcade in Sydney. The coffee shop was on the first floor looking over and down into the Pitt Street Mall. Skiwing wanted to extend by building a balcony out onto the mall (it had a long lease so it thought –wrongly for reasons I might write about another day- that any money it spent on the extensions would be a good investment). It approached Stocklands the owner of the Arcade.It wrote back that it would not object to Skiwing’s ‘pursuing Sydney City Council to obtain approval’ for erection of a balcony so long as some conditions were satisfied.
Skiwing applied for that approval. It spent money paying planners, archietects and so on. Then Stocklands had a change of heart. IT revoked the consent and said that Skiwing could not alter the coffee shop in any way- invoking a clause in the lease to that effect..
As part of an expensive saga of litigation Skiwing claimed the letter from Stocklands was an offer. The Appeal Panel of the Administrative Decisions Tribunal (which deals with retail lease cases) agreed . It said Skiwing did not have to ‘pursue’ this approval. It could, ignore the offer entirely. But if it accepted the offer by submitting an application to the Council in compliance with these conditions, Stockland would be bound by its promise not to raise any objection. Skiwing’s expenditure of time and money in preparing and submitting the application would be "consideration’ even though there was no direct benefit to Stockland. The balcony, when constructed, would undoubtedly have been of benefit to Stockland.
Further once Stockland’s staff knew that Skiwing was proceeding with the application, and had encouraged Skiwing (it did so in further letters) to engage planners and to spend more on the project, the offer became one which (like the lessor’s offer of a new lease in an option) cannot be revoked.
This all shows not all contracts are as simple as me buying my meat.
Monday, May 4, 2009
Real Property And Conveyancing Legislation Amendment Bill 2009
This fortnight I want to warn you about a bill which is on its way through State Parliament which will if passed means your mortgage repayments will probably increase. It also has other nasty surprises.
The bill is the Real Property And Conveyancing Legislation Amendment Bill 2009. Its first object according to the governments’ explanatory note is to affirm the principle of indefeasibility of title which is at the heart of the Torrens system. Or as Sir Garfield Barwick said many years ago (And as I have quoted often) the Torrens system is not a system of registration of title but of title by registration But the Bill doesn’t do that. What it does is make a rather bland statement that by providing that the Torrens principle prevails over any inconsistent provision of any other Act or law unless the inconsistent provision expressly provides that it is to have effect despite anything contained in section 42. So far well and good. Then it exempts a whole range of laws from that principle- indeed almost all the laws from which challenges to the Torrens system have arisen. So far then the new bill is pretty pointless.
But the next object is what causes the problem and will cost you and me more. The next object is said to be to limit the amounts recoverable from the Torrens Assurance Fund and thecircumstances in which compensation will be available
The Assurance Fund is a sort of insurance scheme where people who have lost land or money because of the Torrens scheme can make a claim. Its funded by a $2 levy on every land transaction registered at the Department of lands (those fees start at $92 and go up).
The government says the Fund has had to pay out on mortgage frauds and that most of these frauds come from ‘low doc’ mortgages which are at high interest rates. IT does two things. The first is to limit interest and costs that a mortgagee can recover if the mortgage was obtained by fraud in particular the government says in its explanatory note the interest and costs component of a claim will be limited to be be 2 per cent above the interest rate charged on most loans by reputable lenders in Australia. But in fact the rate is pegged at 2 per cent above the official cash rate. Most banks charge at least that if not higher (At the moment the cash rate is 3% the big 4 banks all charge about 5.44%
The second thing the bill does is to make lenders check more thoroughly on who the borrowers are. The bill says that ‘as a minimum" lenders will have to undertake the 100 –point check that the Federal government already requires. That’s a worry- what else will the state want? That is not known. And the next worry is that the lender will have to keep the records for the life of the loan. IF the lender doesn’t keep those records and produce them when the Department of Lands wants then the Department can cancel the recording of the mortgage (what happens if the lenders office is damaged by fire or flood?)
All of this will add to the lenders charges and if it cant recover the cost of mortgage frauds then the cost to the rest of us will rise.
There are other changes
It’s a bad bill. There are other changes which affect easements which I will write about next time.
In the meantime read more about the bill and its effects: the New South Wales Parliament website has a full text of the bill http://www.parliament.nsw.gov.au/prod/parlment/nswbills.nsf/0/2d6ce9ccb4d3a56dca2575830021a477/$FILE/real.pdf
It also has its legislation review committee’s comments (which criticise the bill in quite another way which I will also write about next time)
http://www.parliament.nsw.gov.au/prod/PARLMENT/committee.nsf/0/39dedc97f2f6a09cca25758a000cc771/$FILE/2009.4%20Legislation%20Review%20Digest.pdf
(local papers article for week of 20.4.09
The bill is the Real Property And Conveyancing Legislation Amendment Bill 2009. Its first object according to the governments’ explanatory note is to affirm the principle of indefeasibility of title which is at the heart of the Torrens system. Or as Sir Garfield Barwick said many years ago (And as I have quoted often) the Torrens system is not a system of registration of title but of title by registration But the Bill doesn’t do that. What it does is make a rather bland statement that by providing that the Torrens principle prevails over any inconsistent provision of any other Act or law unless the inconsistent provision expressly provides that it is to have effect despite anything contained in section 42. So far well and good. Then it exempts a whole range of laws from that principle- indeed almost all the laws from which challenges to the Torrens system have arisen. So far then the new bill is pretty pointless.
But the next object is what causes the problem and will cost you and me more. The next object is said to be to limit the amounts recoverable from the Torrens Assurance Fund and thecircumstances in which compensation will be available
The Assurance Fund is a sort of insurance scheme where people who have lost land or money because of the Torrens scheme can make a claim. Its funded by a $2 levy on every land transaction registered at the Department of lands (those fees start at $92 and go up).
The government says the Fund has had to pay out on mortgage frauds and that most of these frauds come from ‘low doc’ mortgages which are at high interest rates. IT does two things. The first is to limit interest and costs that a mortgagee can recover if the mortgage was obtained by fraud in particular the government says in its explanatory note the interest and costs component of a claim will be limited to be be 2 per cent above the interest rate charged on most loans by reputable lenders in Australia. But in fact the rate is pegged at 2 per cent above the official cash rate. Most banks charge at least that if not higher (At the moment the cash rate is 3% the big 4 banks all charge about 5.44%
The second thing the bill does is to make lenders check more thoroughly on who the borrowers are. The bill says that ‘as a minimum" lenders will have to undertake the 100 –point check that the Federal government already requires. That’s a worry- what else will the state want? That is not known. And the next worry is that the lender will have to keep the records for the life of the loan. IF the lender doesn’t keep those records and produce them when the Department of Lands wants then the Department can cancel the recording of the mortgage (what happens if the lenders office is damaged by fire or flood?)
All of this will add to the lenders charges and if it cant recover the cost of mortgage frauds then the cost to the rest of us will rise.
There are other changes
It’s a bad bill. There are other changes which affect easements which I will write about next time.
In the meantime read more about the bill and its effects: the New South Wales Parliament website has a full text of the bill http://www.parliament.nsw.gov.au/prod/parlment/nswbills.nsf/0/2d6ce9ccb4d3a56dca2575830021a477/$FILE/real.pdf
It also has its legislation review committee’s comments (which criticise the bill in quite another way which I will also write about next time)
http://www.parliament.nsw.gov.au/prod/PARLMENT/committee.nsf/0/39dedc97f2f6a09cca25758a000cc771/$FILE/2009.4%20Legislation%20Review%20Digest.pdf
(local papers article for week of 20.4.09
The Real Property and Conveyancing Legislation Amendment Bill (2)
Last time I wrote of some of the bad features of the Real Property And Conveyancing Legislation Amendment Bill 2009.
I wrote mainly about the Bill’s restrictions on the Assurance Fund and its effect on mortgages. I have a bit more to say about this before I turn to the Bill’s effect on easements.
Already some mortgagees are turning to private "title insurers." I wrote about these people a long time ago but briefly they are American companies which arose because of the very peculiar title system in the USA which has the worst features of the old system title we inherited from England and nothing much else. The American title insurers insure against defects in title and things like encroachments and some breaches of laws – e g a breach of the building codes.
There are three problems with these. The first is that they are very expensive. The American lenders (most of which are now in financial problems themselves) insist on title insurance- except in Iowa where there is a state government scheme very much like the Assurance Fund our state government runs. Conveyanceing in Iowa is an average of $1000 (that’s US and the equivilent here is about $1500) cheaper then anywhere else in the USA. That is title insurance adds a huge amount to the cost of conveyancing- perhaps more than the average total solicitor or conveyenacers fees in this state.
The second is that only about 4.3% of the premiums are ever paid out in claims. The rest is used in kickbacks (the US Senate had an investigation into these practices last year; two years ago Conneticut fined title insurers $700,000 for the kickbacks), maintaining their own multiple land registries (which the government does here and in Iowa at a fraction of the cost) and most of all in profits. It’s a very inefficient scheme because so much money goes on other purposes. Perhaps that’s really just another way in which title insurance is expensive.
The third –and only just emerging now is that despite the high profits the companies are almost bankrupt. The third largest company in America Land America is bankrupt and the receivers are selling off the assets. What happens if you want to make a claim under the policy remains to be seen. The other four main title companies all reported huge losses (most over 100 million US dollars) last year.
The problem with the Bill is that mortgagees may seek the ‘protection’ that the private title insurers advertise. And that will increase conveyancing costs. After all that is exactly what happened when the government turned the home building insurance scheme over to private enterprise. Ever since builders had to be licensed (the early 1970s) the government had a scheme which covered people for major building faults. IT cost $200 per building –a fee levied by local councils on each building approval and it covered people for most problems. IT was replaced by private insurance in the mid 90s. Since then the cost has increased enormously (in fairness though so has the cost of living) and the cover is now much less..
Perhaps that’s enough for this week and I will write about easements next week. But in the meantime I urge you if you want cheap conveyancing tell your state MP that you want him to vote against Real Property And Conveyancing Legislation Amendment Bill 2009.
Further reading on title insurance
A critical look at the whole idea
http://www.mtgprofessor.com/A%20-%20Title%20Insurance/what's_wrong_with_the_title_insurance_industry.htm
The kickbacks in Conneticut http://www.ct.gov/cid/lib/cid/Reinerkickbacksettlement.pdf
The financial crisis http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUKN2346783320081023?pageNumber=2&virtualBrandChannel=0&sp=true
(local papers article for week of 4.5.09
I wrote mainly about the Bill’s restrictions on the Assurance Fund and its effect on mortgages. I have a bit more to say about this before I turn to the Bill’s effect on easements.
Already some mortgagees are turning to private "title insurers." I wrote about these people a long time ago but briefly they are American companies which arose because of the very peculiar title system in the USA which has the worst features of the old system title we inherited from England and nothing much else. The American title insurers insure against defects in title and things like encroachments and some breaches of laws – e g a breach of the building codes.
There are three problems with these. The first is that they are very expensive. The American lenders (most of which are now in financial problems themselves) insist on title insurance- except in Iowa where there is a state government scheme very much like the Assurance Fund our state government runs. Conveyanceing in Iowa is an average of $1000 (that’s US and the equivilent here is about $1500) cheaper then anywhere else in the USA. That is title insurance adds a huge amount to the cost of conveyancing- perhaps more than the average total solicitor or conveyenacers fees in this state.
The second is that only about 4.3% of the premiums are ever paid out in claims. The rest is used in kickbacks (the US Senate had an investigation into these practices last year; two years ago Conneticut fined title insurers $700,000 for the kickbacks), maintaining their own multiple land registries (which the government does here and in Iowa at a fraction of the cost) and most of all in profits. It’s a very inefficient scheme because so much money goes on other purposes. Perhaps that’s really just another way in which title insurance is expensive.
The third –and only just emerging now is that despite the high profits the companies are almost bankrupt. The third largest company in America Land America is bankrupt and the receivers are selling off the assets. What happens if you want to make a claim under the policy remains to be seen. The other four main title companies all reported huge losses (most over 100 million US dollars) last year.
The problem with the Bill is that mortgagees may seek the ‘protection’ that the private title insurers advertise. And that will increase conveyancing costs. After all that is exactly what happened when the government turned the home building insurance scheme over to private enterprise. Ever since builders had to be licensed (the early 1970s) the government had a scheme which covered people for major building faults. IT cost $200 per building –a fee levied by local councils on each building approval and it covered people for most problems. IT was replaced by private insurance in the mid 90s. Since then the cost has increased enormously (in fairness though so has the cost of living) and the cover is now much less..
Perhaps that’s enough for this week and I will write about easements next week. But in the meantime I urge you if you want cheap conveyancing tell your state MP that you want him to vote against Real Property And Conveyancing Legislation Amendment Bill 2009.
Further reading on title insurance
A critical look at the whole idea
http://www.mtgprofessor.com/A%20-%20Title%20Insurance/what's_wrong_with_the_title_insurance_industry.htm
The kickbacks in Conneticut http://www.ct.gov/cid/lib/cid/Reinerkickbacksettlement.pdf
The financial crisis http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUKN2346783320081023?pageNumber=2&virtualBrandChannel=0&sp=true
(local papers article for week of 4.5.09
Monday, March 2, 2009
Federalism
Federalism
A much more general topic than my usual property law issues this week.
There’s talk again of constitutional reform. Some want another turn at becoming a republic, some want to abolish the states. Our federation has existed now for over 100 years. This is a relatively long period for a federation to subsist. History tends to show that federations either split apart or else absorb the constituent parts in fairly quick time. So for example Norway and Denmark were a federation for much of the 19th Century, then split apart in 1905, Czechoslovakia was another federation and has split into two countries.
But will the federation survive? Canberra controls the money for two reasons First the Commonwealth has priority in collecting taxes. This happened in World War Two and was originally supposed to be a wartime emergency measure. IT just became accepted. Second the Commonwealth uses the money to make grants to states so it can call the shots even in areas where a stranger reading the Constitution might consider the Commonwealth has no place and probably where the founding fathers thought the Commonwealth had no place.
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The problem is that the original State boundaries which were mainly an historical accident- its hard to explain all the straight lines on the map by any geographical reason may have had relevance in the 19th century are no longer necessarily the best arrangement for regional administration in the 21st century. So for example it might be best that the Murray Darling basin would be run by one authority.
One solution is just to abolish the States, but regional and climatic differences mean that it is very difficult to administer the country from one national centre. And the Murray River is just one example of a special area that needs special control.
But there is another reason altogether. And that is summed up in the saying "Power corrupts absolute power corrupts absolutely"(You might be interested to know that phrase was originally used by Lord Acton an English Catholic in response to the Pope declaring himself infalliable on matters of faith and morals). IF there is one big government then it has more power, we can see how the state government controls local government – again theres an example just the other day with Huntlee. Is it better to divide power between federal and state- and perhaps give local government more power?
Local papers 16.2.09
A much more general topic than my usual property law issues this week.
There’s talk again of constitutional reform. Some want another turn at becoming a republic, some want to abolish the states. Our federation has existed now for over 100 years. This is a relatively long period for a federation to subsist. History tends to show that federations either split apart or else absorb the constituent parts in fairly quick time. So for example Norway and Denmark were a federation for much of the 19th Century, then split apart in 1905, Czechoslovakia was another federation and has split into two countries.
But will the federation survive? Canberra controls the money for two reasons First the Commonwealth has priority in collecting taxes. This happened in World War Two and was originally supposed to be a wartime emergency measure. IT just became accepted. Second the Commonwealth uses the money to make grants to states so it can call the shots even in areas where a stranger reading the Constitution might consider the Commonwealth has no place and probably where the founding fathers thought the Commonwealth had no place.
.
The problem is that the original State boundaries which were mainly an historical accident- its hard to explain all the straight lines on the map by any geographical reason may have had relevance in the 19th century are no longer necessarily the best arrangement for regional administration in the 21st century. So for example it might be best that the Murray Darling basin would be run by one authority.
One solution is just to abolish the States, but regional and climatic differences mean that it is very difficult to administer the country from one national centre. And the Murray River is just one example of a special area that needs special control.
But there is another reason altogether. And that is summed up in the saying "Power corrupts absolute power corrupts absolutely"(You might be interested to know that phrase was originally used by Lord Acton an English Catholic in response to the Pope declaring himself infalliable on matters of faith and morals). IF there is one big government then it has more power, we can see how the state government controls local government – again theres an example just the other day with Huntlee. Is it better to divide power between federal and state- and perhaps give local government more power?
Local papers 16.2.09
Vendor disclosure 1
For over twenty years sellers of real estate have had to give a lot of information. If you want to sell your house you need to have a complete (if draft) contract ready so purchasers can look at it. If you want to sell industrial or commercial property you need to give the purchaser the information before the contract is exchanged (which is when the contract becomes binding).
Probably the most important information the vendor has to give is what most people know as the zoning certificate – but it really gives a lot more information than just the zoning. For example it tells you if the council wants to widen the road next to the property , whether the land is affected by mine subsidence, by bush fires (which as you may have seen on the news doesn’t just affect houses in forested areas) or by land slip.
One of the locally important pieces of information it gives is if the land is flood affected and if so to what extent. So for example in the northern part Branxton and in Central Maitland the certificate will tell you that the land was within the 100 year flood area (which is generally thought of as being the area inundated in the 1956 flood). In parts of Central Maitland the certificate goes further and tells you that you can’t build a new house on the land –that zoning is because the land is believed is even more likely to be flooded or a house on it is more likely to be damaged in a major flood The difference in Maitland can be seen between the railway end of Church St (which was within the 100 year flood and was affected by the 1955 flood but where you can build a house) and Horseshoe Bend where you cant build a house (much of that area was also affected by other floods).
One problem is that the certificate can only tell you what the council knows. So again for example the certificates didn’t tell you that much of newcastle was subject to earthquakes before 1989. Now they do.
Another problem is that the certificates don’t tell you about adjoining land. So –to take an example from a recent court case- the purchasers wanted to buy a house in Pymble in Sydney. The certificate disclosed that the state government had a Planning Policy which over rode local council powers (we have them in the area too- so for example the Bengalla mine near Muswellbrook and the Sweetwater development near Branxton was approved by the State government over the council’s objections). It didn’t say that the adjoining block was affected by this state policy and that that adjoining block had been selected for medium density housing.
Often – perhaps usually –what is going to happen next door may not matter but sometimes it does. And so the state government should change the zoning certificates (it determines the information that is to be provided in them) so that first it notifies council of its decisions in advance (according to the Mercury Cessnock Council wasn’t notified of the Sweetwater approval) and second those decisions are included in zoning certificates.
Probably the most important information the vendor has to give is what most people know as the zoning certificate – but it really gives a lot more information than just the zoning. For example it tells you if the council wants to widen the road next to the property , whether the land is affected by mine subsidence, by bush fires (which as you may have seen on the news doesn’t just affect houses in forested areas) or by land slip.
One of the locally important pieces of information it gives is if the land is flood affected and if so to what extent. So for example in the northern part Branxton and in Central Maitland the certificate will tell you that the land was within the 100 year flood area (which is generally thought of as being the area inundated in the 1956 flood). In parts of Central Maitland the certificate goes further and tells you that you can’t build a new house on the land –that zoning is because the land is believed is even more likely to be flooded or a house on it is more likely to be damaged in a major flood The difference in Maitland can be seen between the railway end of Church St (which was within the 100 year flood and was affected by the 1955 flood but where you can build a house) and Horseshoe Bend where you cant build a house (much of that area was also affected by other floods).
One problem is that the certificate can only tell you what the council knows. So again for example the certificates didn’t tell you that much of newcastle was subject to earthquakes before 1989. Now they do.
Another problem is that the certificates don’t tell you about adjoining land. So –to take an example from a recent court case- the purchasers wanted to buy a house in Pymble in Sydney. The certificate disclosed that the state government had a Planning Policy which over rode local council powers (we have them in the area too- so for example the Bengalla mine near Muswellbrook and the Sweetwater development near Branxton was approved by the State government over the council’s objections). It didn’t say that the adjoining block was affected by this state policy and that that adjoining block had been selected for medium density housing.
Often – perhaps usually –what is going to happen next door may not matter but sometimes it does. And so the state government should change the zoning certificates (it determines the information that is to be provided in them) so that first it notifies council of its decisions in advance (according to the Mercury Cessnock Council wasn’t notified of the Sweetwater approval) and second those decisions are included in zoning certificates.
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