Reference no: EM133620568

Problem

On 18 March 2018, Kirra Wright became registered proprietor of the fee simple in 8 Anderson St, Thornbury. Kirra was a fashion designer, with plans to use the premises as a warehouse and distribution centre for her new clothing label, 'Maali'. Kirra contributed $800,000 of her own savings to the purchase. She borrowed the remaining $800,000 of the purchase price from Wattle Bank, assuming liability for repayment of the loan plus interest. The investment began well, with the release of an adventurous spring collection in September 2018. The business showed strong growth prospects, and Kirra hired an assistant designer, Grace Khan. Unfortunately, sales from a second collection stagnated in late 2019 and it was difficult to accommodate the additional expense of a second salary. To finance this expense and support the business at this early stage, Kirra approached her old friend, Charlotte Lee, with a request for a loan. Instead, Charlotte proposed a different strategy. She suggested that Kirra enter into a contract to sell the property to Charlotte, on the understanding that Kirra would immediately lease the property and have the right to repurchase it after two years had elapsed. The contract included the following clauses:

Cl. 3. In this contract, 'the property' is defined as Lot 2303, 8 Anderson Street, Thornbury, Victoria, 3071.

Cl. 5. Upon execution of this instrument of transfer, the transferee agrees to provide a two year (24 month) lease of the property to the transferor.

Cl. 6. At the expiration of the lease period stipulated in clause 5, the transferee agrees to immediately enter into a contract of sale of with the transferor to transfer the property to the transferor for a price of $1.3 million. Kirra agreed that this would alleviate the immediate financial pressure, relieving her of the need to service the mortgage while building the business. On 3 February 2020, Kirra and Charlotte executed a written contract that included the above clauses, and shortly thereafter Charlotte became registered proprietor of 8 Anderson St. The mortgage to Wattle Bank was discharged. However, an unexpected and severe illness in the ensuing months left Charlotte frail, and on 1 December 2020 she transferred the property to her son, Edwin. Although the property was transferred without consideration, Charlotte diligently executed an instrument of transfer that contained a clause (clause 2) reaffirming the obligation contained in clause 6 of the original contract with Kirra. The transfer was registered. Kirra's business prospered under this arrangement. At the expiration of the lease period, on 3 February 2022, Kirra contacted Edwin to arrange for the transfer of 8 Anderson St, according to the terms of the original contract. Edwin refused, stating that he had no intention of selling. 6 Answer the following questions, explaining your answers fully:

1. What interest, if any, does Edwin have in 8 Anderson St?

2. What interest, if any, does Kirra have in 8 Anderson St?

3. Is Kirra's interest enforceable against Edwin?