Published on 14/05/2007

Torrens Title

•   Governed by Real Property Act 1900
•   Fundamental principal is conclusiveness of the register
•   Title by registration
•   Does not alter common law, merely simplifies land transactions

Priority Rules
Priority of Competing registered interests Governed by Order of registration, not by date of execution
•   Section 36(9)

Registered interest prevails over unregistered interest except when fraud or other exceptions

Competing unregistered interests generally regarded as equitable interests, and treated as under old system title rules
•   BUT, some unregistered interests are legal interests
o   Accepted by real property act through reference to ‘legal or equitable interest’ in s74F(1)
o   Eg: Unregistered lease complying with s23D(2) of Conveyancing Act
•   Tenancy at will under s127 of Conveyancing Act
•   Easement implied under Wheeldon v Burrows
•   Give regard to caveat provisions

Assurance Fund
•   Section 133A Real Property Act
•   Established to compensate those who lose out due to failings of system:
o   Register General sometimes makes mistakes
o   Easy to defraud people under Torrens system

Trusts
•   In old system, problems as purchaser or mortgagee who deals with trustee has obligations to beneficiaries of trust
•   For Torrens system
o   Trusts do not affect the register
•   Registered owner is owner
•   Trusts not recorded on register – s82
•   Exceptions in s12(1)(f)

Mortgagees
•   Check this
•   Under old system, mortgage required conveyance of property
•   Whenever Torrens land intended to be made security for debt, owner is to execute approved form of mortgage (s56)
o   Registered mortgage of Torrens title is statutory charge or security only, not as conveyance (s57)
Unregistered Interests

No dealing, until registered in the manner provided by the act, shall be effectual to pass any estate or interest in any land under this act…
o   Dealing must be registered for the interest to pass
•   Section 41(1) Real Property Act
o   Note:
    -    When read with caveat provisions, there is some scope for unregistered interests

Although the instrument itself is ineffective under 41(1), the agreement itself remains effective in accordance with the general principles of equity
•   Barry v Heider (1914)
o   FACTS
    -    B was registered proprietor of land
•   Certificate with R-G, as land being sub-divided
•   Signed transfer to S, who failed to pay purchase price agreed to
o   Gave B right to have transfer set aside
•   S granted mortgage to H before B acted on that right
o   H possessed all necessary evidence and information about mortgage – had done everything possible to protect interest
    -    At this point, H and S have equitable interests
    -    B argued that under s 41(1), he is only registered title holder, and thus only he could confer interest to H, not S
o   HELD - Bs registered interest set aside to equitable interests. H and S have equitable interests
•   S41 denies the instrument conveying the transfer, but not the contractual and equitable interests in the land
    -    B’s conduct of handing over a signed transfer to S empowered S to act as owner
•   Bs conduct led to the mortgage, and thus he is responsible for it

Unregistered interest is a valid equitable interest, but not a legal interest
•   Chan v Cresdon Pty Ltd (1989)
o   FACTS
    -    Sarcourt signed agreement for lease with owner.
    -    Unregistered lease provided that Chan would guarantee performance of S
•   No registered guarantee of performance
   S defaulted in payments, respondents proceeded against Chan
o   HELD - Sarcourt ought to succeed as guarantee operated only in respect of obligations ‘under the lease’
•   Only a lease at law would satisfy that description
•   Agreement to lease treated as equitable lease
    -    Provisions of indemnity and guarantee strictly construed in favour of party giving guarantee
    -    No justification to extend obligations to an equitable lease that is not a lease at law

Indefeasibility of Title

The register is conclusive
o   The register confers on the registered proprietor:
    -    An interest in land
    -    Indefeasible title to that land
•   Meaning that title cannot be set aside on the ground of a defect existing in the title before it was registered
•   Section 40 Real Property Act

Person with registered interest holds that interest free of any other unregistered interests
•   Section 42 Real Property Act
o   Exceptions discussed later

Registered person can ignore the notice of an unregistered interest (unlike Old System)
•   Section 43 Real Property Act

A registered proprietor of Torrens title land may not be ejected from the land: title is conclusive
•   Section 124 Real Property Act

Person who purchases Torrens title interest (purchaser or mortgagee) and becomes registered is not affected by irregularities in the preceding title
•   Section 135 Real Property Act
o   Prohibits recovery from the present registered proprietor, where the took as purchaser or mortgagee bona fide for valuable consideration
   Doesn’t matter if A’s vendor or mortgagor was registered through fraud, error, or under a void or voidable interest

Deferred indefeasibility: no longer accepted
•   Theory that indefeasibility did not take effect immediately in cases where the instrument was void or voidable
•   Theory now largely discarded
•   Arose out of decision in Gibbs v Messer
o   FACTS
    -    Owner of land left certificate of title with solicitor
    -    Solicitor forged owner’s signature to transfer possession in favour of fictitious person, who became registered owner
    -    Solicitor forged mortgage from Cameron to innocent mortgagee, who took for value and without fraud, and became registered proprietor of mortgage
o   HELD - Owner could have registration set aside – innocent mortgagee did not have indefeasible title
•   Court said that if innocent mortgagee dealt with another person who acted on the existing state of the register, and purchased for value without fraud, that person would have indefeasible title
    -    Reason
•   Did not deal with registered proprietor under s43, as dealt with forger, and so did not get protection
    -    NOTE – This is not the current approach: Modern view is to look at section 42, which does not need deal to be with registered proprietor

Immediate Indefeasibility: Current approach
•   Eg if A is registered proprietor
o   B steals A’s certificate of title
o   B poses as A to sell land to C
o   B forges A’s signature to transfer land to C, and hands certificate of title
o   On registration, C acquires a title that A cannot set aside
    -    C’s Title is immediately indefeasible
    -    A could only take personal action against B, or maybe have a right to compensation under assurance fund

Purchaser has immediate indefeasible title even though there was fraud
•   Frazer v Walker [1967]
o   FACTS
    -    Mr and Mrs Frazer own Torrens title land
•   Mrs Frazer forges husband’s signature and mortgages property
•   Mrs Frazer fails to meet repayments
•   Mortgagee sells property to purchaser, who registers it
o   HELD - Purchaser has immediate indefeasible title even though there was fraud by Mrs Frazer
    -    Significant case where Privy Council came down in favour of immediate indefeasibility

Indefeasibility for registrable dealing
•   Breskvar v Wall (1972)
o   FACTS
    -    Plaintiffs registered owners of Torrens title land
    -    As security for loan from M, they gave him certificate of title
    -    M fraudulently inserted the name of X in the transfer, who knew of the fraud
    -    X sold land to A Pty Ltd
•   Purchaser for value without notice of plaintiffs claim
•   Bought land in reliance on what was on register
    -    Before A Pty Ltd lodged the transfer for registration, plaintiff lodged a caveat
o   HELD
    -    Right of A Pty Ltd to be registered had priority over any rights of the plaintiff
    -    A acquired the right to register and obtain immediate indefeasibility
    -    Note: Could have set aside X’s interest if got there before he sold it, as X knew of fraud
    -    High Court referred approvingly to doctrine of immediate indefeasibility

Registered mortgage is extinguished by a registered discharge of a mortgage, even where the discharge is a forgery
•   Shultz v Corwill Properties Pty Ltd (1969)

Caveats and unregistered interests

•   Three relevant aspects:
o   Legislative scheme
o   Effect of lodging a caveat
o   Effect of Not lodging a caveat

•   Legislative Scheme

•   Unregistered interest in Torrens title land may be protected by a caveat lodged with the Registrar General
o   Caveat protects unregistered interest by freezing register – prohibits the recording of any dealing affecting the estate or interest

Person who claims to be entitled to a ‘legal or equitable’ interest or estate in Torrens title through an unregistered dealing or devolution of law may lodge a caveat
•   Section 74F(1)
o   Cannot be lodged to protect a mere contractual or personal right, or a right based on statute not also conferring an interest in land
    -    Linden v Wigg

Examples of caveat-able interests
•   Interests of purchaser under a contract of sale
o   Kuper v Keywest Constructions
•   Interest of mortgagee (including mortgagee by deposit of title deeds)
o   Re Victorian Farmers’ Loan and Agency Co Ltd
•   Interests of person arising from contributions made to the purchase price of the property
o   Morling v Morling
•   Option to buy land (As is equitable interest in land on option holder)
o   Laybutt v Amoco Australia
•   Right of pre-emption is NOT caveat-able
o   Walker Corp v WR Pateman
    -    Although will be once act occurs that triggers exercise of that right
•   Sterns Trading v Shteinman
•   Contractual rights are elevated into proprietary interest by creating interest in land to secure contractual obligations
o   Builder given charge over land to secure repayments of amounts owing under building agreement
    -    Griffith v Hodge
o   Lender given charge over land of borrower or guarantor to secure repayment of debt
    -    Murphy v Wright

Any registered proprietor who fears improper dealing with his or her title may lodge a caveat prohibiting any dealings being recorded on it
•   Section 74F(2)

A caveat can not be lodged to protect an interest that can only arise in the future (ie must have caveat-able interest
•   Martin v Official Trustee in Bankruptcy

•   Effect of lodging a caveat
o   Caveat does not give interest in land any greater priority than it otherwise would, it merely freezes the register
o   Failure to lodge a caveat may lead to loss of priority that interest may have had
o   Failure to caveat is merely one factor which will be taken into account when searching for the better equity
•   Butler v Fairclough (1917)

•   Effect of Failure to Lodge A Caveat

Failure to lodge caveat before later interest is acquired means that prior interest is postponed
•   Butler v Fairclough (1917) 23 CLR 78
o   FACTS
    -    June 30
•   Good (Registered proprietor of Torrens land) gave unregistered mortgage to Butler
    -    July 2
•   Good sells property to Fairclough
o   Fairclough searched register and found nothing
    -    July 8
•   Butler lodged caveat claiming equitable interest in land as equitable mortgagee
    -    July 12
•   Fairclough attempts to register the property – stopped by caveat
o   HELD - Fairclough wins, as defendant paid purchase price before caveat lodged

Anyone who gets an interest in land should lodge a caveat
•   Rose’s Case: Osmanoski v Rose [1974]
o   FACTS
    -    X sells to A who does not register
    -    X t hen sells to B who searches the register and finds no interest lodged
o   HELD - B prevails over A, as B searched register

Priorities regarding unregistered equitable interests
•   Generally first in time prevails, but court will consider:
1.   Whether conduct of prior interest holder might lead subsequent interest holders to purchase in belief that prior interest did not exist
2.   Whether reasonably foreseeable that conduct of prior interest holder might lead another to acquire subsequent interest
3.   Whether holder of interest omitted any precaution that a prudent purchaser would have taken that may have disclosed the prior interest
4.   Whether holder of subsequent interest suffered loss or detriment

Continued on page 2

Continued

•   Conduct of prior interest holder leading to belief that did not exist

Will lose out if own action led to the wrongful transfer: ie arm third person with ‘power to go into world under false colours’
Failure to lodge caveat also relevant, as lodging would ‘disarm’ the person
•   Abigail v Lapin [1934]
o   FACTS
    -    Respondents owed money to solicitor, so executed an instrument of transfer in favour of solicitor’s wife
•   Gave transfer and duplicate of certificate of title to solicitor as security for payment of costs
    -    Solicitor’s wife used documents to become registered proprietor of the land
•   Also, wrongfully mortgaged land to appellant (in breach of agreement)
    -    Conflict between earlier equitable interest of respondents with later equitable interest of appellant
o   HELD (Privy Council) - Later unregistered interest has priority
•   Respondents ‘bound by the natural consequences of their acts in arming…the power to go out in the world as absolute owners of lands, and thus execute transfers and mortgages of lands to other persons”
•   “They ought to be postponed to the equitable rights of Abigail”
•   Failure to lodge a caveat reinforced Solicitor’s wife’s apparent ownership of the land

•   Heid v Reliance Finance Corporation Pty Ltd (1983)
o   FACTS
    -    Appellant agreed to sell company
•   Contract arranged for part of purchase price to be:
o   Paid in cash
o   And some Settled by mortgage in favour of the appellant
o   And some Deposited with finance company
•   Appellant gave nominated employee of company a signed instrument of transfer, and arranged certificate of title to be forwarded to him
•   Appellant told consideration provided, BUT
o   Mortgage never registered
o   Cash not deposited with finance company
    -    Purchasing company used certificate of title and signed instrument of transfer to borrow money from unknowing respondent on security of the land
    -    Court had to decide which unregistered interest would gain priority
o   HELD - Unregistered interest of appellant deferred to later unregistered interests of respondent
•   Appellant armed third person ‘with the power of going into the world under false colours’
•   Failure to lodge a caveat significant, as could have disarmed the capacity of the third party to deceive others
    -    Outcome would have been different if caveat lodged before respondent lent money, as respondent would then have acquired interests with notice

Reasonably foreseeable

Failure to lodge a caveat will not see interest defeated if it was not reasonably foreseeable that the interest would be adversely affected by failure to lodge
•   Jacobs v Platt Nominees Pty Ltd [1990]
o   Appeal Division of Supreme Court of Victoria
o   FACTS
    Father and mother controlled company which owned motel
•   Had company grant an option (for valuable consideration) to their daughter to purchase the motel
    -    Daughter did not lodge caveat, as relied on mother to ensure that company did not dispose of the land
    -    Unknown to mother and daughter, father sold the land to a trustee company
o   HELD - ‘In fairness and justice the daughter should not be deprived of her prima facie priority’
•   Not reasonably foreseeable to the daughter that the trustee company would be adversely affected by her failure to lodge a caveat
•   Failure to lodge a caveat was reasonable as it would have been a deceit to her family to lodge one

•   Omission of precaution of prudent purchaser
•   Must search the register
There is a duty to make enquiries into the ownership: Failure to lodge caveat will not postpone if search of title was not sufficient
•   Prior interest will not be deferred to subsequent interest who refrains from making those enquiries which a prudent purchaser would make
•   J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971)
o   FACTS
    -    Equitable mortgagee did not lodge caveat, but did obtain possession of duplicate certificate of title
    -    Another mortgagee subsequently searched the original certificate of title at the registrar’s office, but did not seel production of the duplicate certificate
•   Gave owners a second equitable mortgage
o   HELD - First equitable mortgagee not postponed to later mortgagee
•   No duty to lodge a caveat
•   On the facts, duplicate of certificate of title was sufficient to protect interests, as appellant ought not to have settled without obtaining possession of the duplicate
•   Butler v Fairclough (1917) 23 CLR 78
o   Search of register was sufficient, showed no caveats, so interest prevailed

•   Avco v Fishman [1993]
o   Doubt about the way this case would be decided in NSW
o   FACTS
    -    A gives registered mortgage to Avco, who also gets certificate of title
    -    Avco gets second mortgage from A, but second mortgage is unregistered and uncaveated
    -    A grants third mortgage to Fishman, who searches register and found only one mortgage
    -    When A defaulted, court had to decide priorities
o   HELD
    -    It seems that Fishman would have priority over second mortgage, but court found Fishman should have asked possessors of certificate of title to tell him of all the interests they have over the land
    -    Note: doubt as to if case was in NSW

Must search register just before granting mortgage
•   Drulroad Pty Ltd v Gibson (1992)
o   FACTS
    -    RP gives unregistered mortgage to A
•   A ineffectively lodges caveat
    -    RP negotiates mortgage to B
•   B searches register and finds no record of A’s interest
    -    The day before mortgage granted to B, A successfully lodges caveat
    -    B grants mortgage without making final search
o   HELD - There was constructive notice – a prudent purchaser would have checked the register just prior to the granting of a mortgage

Have to look at document itself, and not just rely on summary of registrar general
•   Bursill Enterprises Pty Ltd v Berger Bros Trading Pty Ltd (1971)
o   FACTS
    -    B submits registered transfer to grant right of way over certain land, and to transfer a fee simple interest in airspace above part of the land to a neighbour A
    -    Registrar general’s notification of the transfer described the right of way, but made no reference to the airspace
    -    Years later, C buys Bs land after having checked the register
•   C tries to get airspace as well
o   HELD
    -    Prudent purchaser should have looked at past summary of the transfer, and should have continued search and discovered that airspace also considered
    -    Requires Similar search as for old title land

Person only needs to search the Torrens register
•   Section 43A(2)
•   Finlay v R&I Bank [1993]
o   Windeyer J
o   FACTS
    -    Company put charge over land to A.
•   A did not lodge caveat, but did register charge in Companies register
    -    Company gave charge to B
•   B searched Torrens register and found no caveat
•   Did not check companies register
o   HELD
    -    B prevailed because a failed to lodge caveat
    -    Only need to search Torrens register

Section 43A Real Property Act
•   Purchaser under Torrens Title only has equitable interest until registration
o   No deed of conveyancing giving legal title as in old system
o   So, is subject to any earlier equitable interests in the absence of postponing conduct
o   Section 43A(1) attempts to fill this gap

A person who acquires an interest in Torrens title land need not be concerned about notice of an unregistered interest they may have received in the course of the transaction
•   Section 43, Real property act
o   Although courts have read this down to only apply to registered interests, thus section 43A

A purchaser (between the transfer and registration) with a dealing registrable has a legal interest in land
o   Legal estate
•   Makes you free of earlier equitable interest
•   Is not the equivalent of registered estate
o   Dealing which is registrable
•   Must be able to be registered immediately
o   Only gives protection until registration – once this occurs, they enjoy indefeasibility
o   Only gives protection to later interest from earlier interest
•   Does not afford protection to earlier interest from later one
•   Section 43A(1), Real property act
o   No other state has equivalent to s43A (although ACT and NT do)

Section 43A gives the same measure of protection given at common law to a person who has acquired a legal estate in land without notice of some prior equitable interest
•   Ie Wilkes v Spooner applies to Section 43A:
o   If the first purchaser does not have notice of an earlier equitable interest, the second purchaser is given the same protection
o   Legal interest is not the same as registration
o   If there is notice, it is a case of competing unregistered equitable interests
•   Jonray (Sydney) Pty Ltd v Partridge Bros Pty Ltd (1969) 89 WN (Pt 1) (NSW)

Ie, No protection for purchaser who has notice of prior equitable interest.
o   Jonray (Sydney) Pty Ltd v Partridge Bros Pty Ltd (1969) 89 WN (Pt 1) (NSW)

1. Transfer by direction has protection of section 43A (point 1 in case).
2. Successive effect (point 2)
•   Jonray (Sydney) Pty Ltd v Partridge Bros Pty Ltd (1969) 89 WN (Pt 1) (NSW)
o   FACTS
    -    Registered proprietor of land subject to registered mortgage
•   Entered into contract to sell land to P
    -    Before sale completed to P, P entered into contract to sell same land to Jonray (J)
•   There was insufficient time for P to get his interest registered
o   Usual practice would be for the three parties to get together, and J would leave with two transfers – from the registered proprietor to P, and from P to J
•   Upon settlement to J, Partridge (P) proposed to hand J a memo of transfer by direction, together with an unregistered discharge of As mortgage
    -    J tried to get out of contract, delayed performance of the contract for two reasons, claiming that:
1.   Under the traditional method, J would not get a dealing from P that is immediately registrable, and thus there is not protection under section 43A
2.   If there was a irregularity in the mortgage (ie a defect in the discharge), J would owe an equitable interest to the mortgagee, as J would receive no protection under s43A, as he was not taking the discharge (an interest) directly from registered proprietor, and thus did not have a dealing registrable
o   HELD
1.   J is effectively taking a transfer from the registered proprietor, and thus will receive the benefits provided by section 42, 43, 43A
2.   Evoked rule from Wilkes v Spooner: Someone who takes an interest without notice hands the land on to subsequent holders free of that interest
•   Thus, J is given the protection of s43, and is not entitled to require that discharge of mortgage be registered by P before settlement

Continued on page 3

Continued

There is constructive notice if there is a failure to search the register as a prudent purchaser
•   Drulroad Pty Ltd v Gibson (1992)
o   FACTS
    -    RP gives unregistered mortgage to A
•   A ineffectively lodges caveat
    -    RP negotiates mortgage to B
•   B searches register and finds no record of A’s interest
    -    The day before mortgage granted to B, A successfully lodges caveat
    -    B grants mortgage without making final search
o   HELD
    -    There was constructive notice – a prudent purchaser would have checked the register just prior to the granting of a mortgage

Must have a dealing registrable to gain the protection of section 43A. Requires possession or control of the certificate of title. Must also be registrable without any intermediate dealings having to be carried out
•   Finlay v R & I Bank of WA (1993) NSW
o   FACTS
    -    Registered proprietor gave registered mortgage to A
•   Mortgage registered, and A held certificate of title
    -    Registered proprietor gave unregistered mortgage to B, then another unregistered mortgage to C
    -    Issue whether B or C prevails
•   B argued had earlier interest, therefore should prevail
•   C argued protection under s43A
o   HELD
    -    No protection under s43A, as no possession or control over certificate of title
    -    Registered proprietor owned land in Taree and Nelson Bay
    -    Commonwealth Bank registered first mortgage over Taree land, and held certificate of title

No protection under 43A for a void dealing (eg forgery)
•   Jonray (Sydney) Pty Ltd v Partridge Bros Pty Ltd (1969)
o   NSW Court of Appeal
    -    A registered proprietor who title is threatened by a yet to be registered void dealing can “probably prevent registration of the instrument, whether or not the transferee had notice of it”
o   Thus, they get no protection under 43A(1) or Wilkes v Spooner

Statutory Exceptions to Indefeasibility

•   Built in exceptions
o   Fraud
o   Earlier recorded interests
o   Listed exceptions in s42(1)
o   Volunteers (possibly)
•   Exceptions through general principles
o   In personam/personal equity
o   Later statute

Fraud
•   Fraud is an exception under section 42(1)

(i) What is fraud in the Torrens system?
(ii) What is the relationship between fraud and notice?

What is fraud in the Torrens’ system?

o   Must be actual fraud
    -    Dishonesty of some kind
    -    Constructive fraud not sufficient
o   Must relate to current state of title
    -    Person to be impeached for fraud must have been fraudulent
•   Fact that vendor fraudulent is irrelevant to purchaser
o   Fraud by agent of purchaser can affect title
o   Mere fact that you might have found out vendor had committed fraud if were more vigilant is not fraud
    -    But, if shut eyes in fear of learning the truth, it is fraud
•   Assets Co Ltd v Mere Roihi [1905]

Fraud when registered proprietor, when lodging for registration, either intentionally misrepresented the Register-General that statutory requirements for executing dealing were complied with, or was recklessly careless whether or not they were complied with:
o   Misrepresentation
o   Recklessly careless
•   AGC v De Jager [1984]
o   Tadgell J
o   FACTS
    -    Bank gave mortgage to customer to sign
    -    Applicant’s signature was forged
    -    Witness to signature contacted bank and said that he was not there when signature signed
    -    Mortgage still registered by bank
o   HELD - Mortgage was not indefeasible, as fraudulent for bank to lodge registration knowing that mortgage was improperly witnessed

Fraud must be made by the registered proprietor
•   Grgic v Australian and New Zealand Banking Group Ltd (1994)

Refusing to acknowledge B’s rights constituted fraud within the meaning of s 134
•   Bahr v Nicolay (No 2) (1988) 62 ALJR 268
o   Mason and Dawson (not majority)
o   FACTS
    -    Mr and Mrs Bahr sold land to Nicolay, subject to right to repurchase land at time and price stated in contract
    -    Nicolay sold land to Mr and Mrs Thompson under contract that effectively provided that sale was subject to right of Bahr’s to repurchase
    -    Thompsons became registered, and regused to give effect to rights of Bahrs
o   HELD
    -    Mason and Dawson (not majority)
•   T’s conduct in refusing to acknowledge B’s rights constituted fraud within the meaning of s 134
•   Agreement between Nicolay and Thompsons created an express trust of benefit of the agreement in favour of the Bahrs
•   Registration of Thompsons as proprietors did not present enforcement of that trust by
o   The indefeasibility provisions in legislation as repudiation of agreement that Bahr’s should be entitled to re-purchase the land amounted to fraud

Relationship between Fraud and Notice

Mere notice is not fraud
•   Section 43(1) Real Property Act
o   Confers protection for registered holder against notice, except in case of fraud
    -    Means that knowledge itself is not fraud

Notice of prior interest does not affect Indefeasible title once registered
•   Oertel v Horden (1902)
o   FACTS
    -    A leases property to B, who goes into possession but does not register
    -    A sells to C, who registers
o   HELD
    -    C can kick out B, as notice is not fraud
•   C has indefeasible title, as mere notice of someone else’s interest is not fraud
o   C takes land free of earlier equitable interests

Not bound by contract and notice
•   Munroe v Stuart (1924)
o   FACTS
    -    A grants unregistered lease to B
    -    A sells to C, who registers
•   C has knowledge of Bs lease
•   Contract states contract subject to any leases
o   HELD
    -    C has indefeasible title, as mere notice of someone else’s interest is not fraud
    -    Contract put C on notice of Bs interest, but does not bind him
    -    NOTE: Bahr v Nicolay suggests that this may be reconsidered

Mere notice is not fraud, but when other factors it may be fraud
•   Loke Yew v Port Swettenham Rubber Co Ltd [1913] AC 491
o   FACTS
    -    A gives unregistered lease to B
    -    A sells to C, who registers
    -    C negotiated lower price off A due to fact B had lease over property
    -    Upon registration, C attempts to evict B

o   HELD
    -    C guilty of fraud
•   Only gets defeasible title
•   Does not prevail over B, and thus cannot kick B off

It is fraud to lull interest holder into not registering, and then relying on registered title to defeat that interest
•   Mock v Thompson (1982)
o   FACTS
    -    A grants lease to B that requires registration
    -    A sells to C
    -    C asks B if C can register first, as it would be easier, but promises to lodge the lease straight afterwards
    -    C does not lodge B’s registration, and then tries to kick him out
o   HELD - C guilty of fraud, as lulled B into false sense of security

Fraud to frustrate registration of unregistered interest to acquire and register one’s own interest
•   Costin v Costin

Fraud to become registered as proprietor under course of conduct engineered to deprive a beneficiary of his or her beneficial interest in a trust property
•   Brun v Brun

*Earlier interest recorded

Have to look at document itself, and not just rely on summary of registrar general
•   Bursill Enterprises Pty Ltd v Berger Bros Trading Pty Ltd (1971)
o   FACTS
    -    B submits registered transfer to grant right of way over certain land, and to transfer a fee simple interest in airspace above part of the land to a neighbour A
    -    Registrar general’s notification of the transfer described the right of way, but made no reference to the airspace
    -    Years later, C buys Bs land after having checked the register
•   C tries to get airspace as well
o   HELD
    -    Prudent purchaser should have looked at past summary of the transfer, and should have continued search and discovered that airspace also considered
    -    Requires Similar search as for old title land

Listed Exceptions under s42(1)
•   Easements
Protection for easements if:
1.   Existing immediately before converted to Torrens title
•   Ie easement left off register
2.   Validly created easements after conversion to Torrens system
•   Unlikely to apply when parties do everything formally required but have left it unregistered, as it is not validly created
•   Section 42(1)(a1) Real Property Act

Continued on page 4

Continued

1. Easement exception applies where there was easement when land was under old system title, but it was left off when converted to Torrens title
•   Dobbie v Davidson (1991)
o   FACTS
    -    Easement by prescription created by using land for 20 years, created under old system title
    -    When land converted to Torrens title, omitted
o   HELD - Easement was ‘omitted’ under the scope of the legislation
•   Auerbach v Beck [1985]
o   FACTS
    -    V owns 2 adjoining houses, and had overhanging eaves and gutters
    -    V subdivided, one property sold
•   Eaves and gutters projected into airspace next door
    -    Was there a quasi easement due to continuos and apparent use?
o   HELD
    -    Easement by implication arose on sale of houses
o   Torrens title relevance
    -    Later conversion of land, R-G failed to discover the existing easement
    -    As easement granted before transition, fits under exception

2. Implied easements that are not put on the register are likely to be destroyed under the new s42(1)(a1)
o   Under the old section 42(1)(b), an implied easement is enforceable between the two parties under the rights in personam exception
o   When servient tenement is sold, the new purchaser is not subject to the easement
    -    Thus, must make sure that implied easement is formally granted
•   Australian Hi-Fi Publications Pty Ltd v Gehl [1979]
o   Case under old s 42(1)(b), but likely to hold under the new section 42(1)(a1)
o   FACTS
    -    Originally, whole site owned by Savage, and easement existed
    -    When divided and sold, easement not noted on either certificate of title
o   HELD - Was only equitable easement, and could only be enforced by the original parties
    -    Third party purchaser gets indefeasible title
    -    To be ‘omitted’ under the old act means that the Registrar General has not done what ought to be done, it does not allow for party’s mistakes

To make implied lease enforceable under Torrens, need to force owner of servient land to sign a transfer granting an easement, and lodge it for registration
•   Australian Hi-Fi Publications Pty Ltd v Gehl [1979] 2 NSWLR 618

•   Auerbach v Beck [1985]
o   FACTS
    -    V owns 2 adjoining houses, and had overhanging eaves and gutters
    -    V subdivided, one property sold
•   Eaves and gutters projected into airspace next door
    -    Was there a quasi easement due to continuos and apparent use?
o   HELD - Easement by implication arose on sale of houses
o   Torrens title relevance
    -    Later conversion of land, R-G failed to discover the existing easement
    -    As easement granted before transition, fits under exception

•   Short Term Leases

Exception to indefeasibility for short term tenant when tenant:
o   If in Possession or entitled to immediate possession
o   Purchaser had notice of tenancy ‘against which they are not protected
    -    Similarly to old system title rules of notice
    -    Possession is notice
    -    Constructive notice sufficient (Kline v Lowe 1969)
o   Term of tenancy, including option for additional terms, does not exceed three years
•   Section 42(1)(d)

If Original lease less than three years, and option takes it over 3 years, original lease may still be protected (but question left open)
•   Likely that the whole thing is unprotected
•   Alcova Holdings Pty Ltd v Pandarlo Pty Ltd (1988) 15 NSWLR 53
o   FACTS
    -    A gives B unregistered lease for 2 years with option for further 2 years
    -    A sells to C who registers

When lease exceeds 3 years, legal tenancy at will may be implied under section 127 of Conveyancing Act, which attracts protection of 42(1)(d), and requires one months notice
•   Application of Chan v Cresdon
Personal Equities/Rights in Personam

•   Implied into the act as a way in which title can be set aside without relying on the strictly interpreted fraud provisions

“Indefeasibility in no way denies the right of a plaintiff to bring against a registered proprietor a claim in personam”
•   Frazer v Walker (1967)
o   Lord Wilberforce

To establish a right in personam, must find a common law or equitable cause of action, not merely a sense of wrongfulness
•   Lissa v Cianci (1993)
o   FACTS
•   Husband and wife take on mortgage to guarantee loan for son
•   Husband in accident at time of signing, had no idea what he was doing
•   Wife had only 3 years of schooling and spoke little English
o   HELD
•   Mortgage could be set aside
•   Was a case of non-est factum, common law contract notion of not knowing what you are signing
•   Logue v Shoalhaven Shire Council (1979)
o   FACTS
    -    Logue behind in rates.
    -    Council sought to sell him up
    -    In advertisement, council misrepresented sum of outstanding rates
    -    Council could find no buyer, bought it back themselves
    -    Logue sought to rely on personal equity – advertising wrong amount invalidated the sale
o   HELD - Failed

Personal rights must have arisen out of acts, words and events to which the person whose title is being challenged must have been a party to
•   Garafano v Reliance Fin Corp (1992)
•   PT Ltd v Maradona Pty Ltd (1992)

Registered title may be set aside if registered proprietor purchased in circumstances where vendor bound by unregistered interest of third party, and had contracted (express or implied) that it would recognise the third party’s interest
•   Bahr v Nicolay (No 2) (1988)
o   FACTS
    -    Bahrs sold to Nicolay, subject to right to repurchase at time and price.
    -    Nicolay sold to Thompsons under contract providing for rights of Bahrs
    -    Thompsons became registered and refused to give effect to rights of Bahrs
o   HELD
    -    Found Personal equity and Fraud
    -    Registered title may be set aside if registered proprietor purchased in circumstances where vendor bound by unregistered interest of third party, and had contracted (express or implied) that it would recognise the third party’s interest
•   Whilst purchase with mere notice is not enough to raise personal equity, additional factors indicating purchaser’s agreement to be bound by unregistered interest

Personal equities can create interests that did not actually exist before
•   Snowlong Pty Ltd v Choe (1991)
o   FACTS
    -    Landlord gives lease to tenant for 5 years
•   Lease remains unregistered
    -    Landlord sells property to purchaser who registers the transfer
    -    He sells to purchaser 2 ‘subject to the 5 year lease’
    -    Purchaser 2 tries to evict tenant
o   HELD - Purchaser 1 got indefeasible title by registering, giving tenant a lease at will determinable at 1 months notice
    -    BUT, agreement between P1 and P2 means that tenant can enforce the full 5 year lease
•   Justice Wood

Other factors in addition to forgery may create personal equity
•   Mercantile Mutual Life Insurance Co Ltd v Gosper (1991)
o   FACTS
    -    Mrs Gosper got mortgage from Mercantile which she is able to very easily
    -    Mr Gosper forges Mrs Gosper’s signature to increase mortgage, and variation registered
•   No evidence that signature was forgey, but they did not attempt to communicate with her
    -    Mr Gosper dies, and Mrs Gosper finds out
o   HELD
    -    Production of certificate of title without Mrs G was breach of obligations
    -    Kirby J held only had to repay original amount
    -    Mahoney J held that she gained a personal equity through the bank using the certificate of title without her permission
    -    Judgements criticised due to lack of cause of action (Kirby’s), and difficulty in checking everything (Mahoney)
    -    Dissenting judge says that as registered without fraud by bank, usual indefeasibility of title results

Continued on page 5

Continued

Forgery alone is not enough
•   Storey v Advance Bank (1993)]
o   FACTS
    -    Husband and Wife formed company
    -    Company was registered proprietor of torrens land
    -    Husband, without knowledge of wife, gave bank a mortgage on property by forging wife’s signature
    -    Bank registered mortgage
    -    Company tried to have mortgage put aside on basis of personal equity
o   HELD
    -    Bank was able to rely on the mortgage, as they should not have been expected to see through the forgery and the husband’s rouse
    -    If all you can show is forgery, cannot establish cause of action against innocent mortgagee
•   Bank gets indefeasible title

Personal equities and rights
•   Grgic v Australian and New Zealand Banking Group Ltd (1994)
o   REALLY NOT SURE ABOUT THIS CASE< DON’T USE IT
o   Powell JA
o   FACTS
    -    ANZ officer attested to signature of person impersonating the registered proprietor
    -    Mortgage payments not met
o   HELD - G lost – bank did not know him personally, and so did not act improperly

Registrar-General’s Power of Correction

Registrar general is authorised to ‘correct errors and omissions in the Register
•   Section 12(1)(d)
o   In practice, exercised only to correct obvious clerical and administrative errors
    -    Accords with settled view that it is not for the Registrar-General to settle conflicting claims to land

RG can call in certificate of title to make amendments
•   Section 136(1) (b) Real Property Act

•   James v Registrar-General (1967) 69 SR (NSW) 361
o   FACTS
    -    Easement properly created and proper forms lodged and registered, and appeared on certificate of title
    -    When page was full, a new page started, and easement accidentally left off
    -    RG realized mistake, and requested certificate of title to amend mistake
    -    James refused
    -    When James went to mortgage land some time later, Registrar general amended the certificate of title
    -    Question whether RG had power to do this
o    HELD - RG simply doing what law required
•   Has power to correct as long as can prove it was an omission

Used to be that power to correct under s12(1)(d) is lost once a bona fide purchaser or mortgagee has acquired an interest on the faith of the uncorrected register, and becomes registered
•   Frazer v Walker
•   James v Registrar General
•   BUT: This was overturned by section 12(3) in 1970
o   RG can make corrections to the register at any time, although correction is not to prejudice rights of a person who has registered a right before the change is made
    -    Odd: how can a subsequent correction not affect the present owner?
    -    Even if not enforced until next owner, affects price of sale

Error must be one of the registrar general, not the parties
•   Scallion v RG (1988)

Overriding Statutes

•   Like any legislation, the Real Property act is subject to later legislation
o   Principle that later statute impliedly overrules older statute to the extent that they conflict

•   Later statutes can create interests that bind the land, even if they are not registered, because:
o   It is not an interest that can be registered
    -    Miller v Minister of Mines (1963)
o   It is not a proprietary interest
    -    Linden v Wagg (1968)
•   Rent control legislation, when protected tenant died, close family could stay in possession of premises
o   No procedure in the Real Property Act by which it may be registered or recorded
•   Thus, the Register is not an exhaustive list of interests in land

Legislation later than Real Property Act 1900 overrules it
•   Pratten v Warringah Shire Council (1969) 90 WN (Pt 1) (NSW) 134
o   FACTS
    -    Block of land crossed by underground drainage pipes which were owned by the council
    -    Council becomes owner of land, but drainage pipes not registered
    -    Pratten wants to buy land from council, so searches register
    -    Also writes twice to the council to check whether they own the pipes
•   Council says they do not own pipes
    -    Further, lawyers write to Registrar general and ask him to do an official search of the register which confirms that no interests in the drainage pipes are registered
    -    Pratten finally buys land
    -    Council later realises that it does own the pipes
•   Under 1919 statute
o   HELD
    -    Legislation which gives ownership to council is 1919 statute, which therefore overrules the Real Property Act
    -    Estoppel raised, but could not be applied because statutory authorities who have obligations over land cannot be estopped from performing those duties

Estoppel and possessory title may be relevant defence to later statutory
•   Quach v Marrickville Municipal Council (1991)
o   FACTS
    -    Drainage reserve not shown on register
    -    Quach makes search, finds nothing, buys land and registers
    -    Years later, council sought to assert ownership over reserve
•   Given under 1919 statute
o   HELD - Later statute overrides RPA (as in Pratten)
    -    BUT:
•   Estoppel available as Mr Quach had paid rates for years for whole land
•   Possessory title
o   Had possession for 12 years and so acquired the title
o   Council’s title extinguished
o   Although possibly lucky on this point, as under s45D of Real Property Act, cant acquire title to strips of land, only to the whole block

Volunteers
•   Volunteer:
o   Someone who has not paid valuable consideration for an interest
•   Question whether volunteers, once registered, get same indefeasibility as those that give consideration
o   Not specifically referred to as exception in legislation
o   But, they are not a bona fide purchaser for value, as have provided no value
•   Law may be different for NSW and Victoria
•   Maybe no different: Section 42 does not discriminate
•   May be less indefeasible:
o   Not a purchaser as referred to in section 43

In NSW, volunteer gets exactly the same title and indefeasibility as those who pay value
•   Section 42 does not say that you need to pay value to get indefeasibility, and so is indiscriminate as to whether you gave consideration or not
•   Bogdanovic v Koteff (1988)
o   FACTS
    -    Koteff senior invites Bogdanovics to live
•   Gives Mrs B a life estate
o   Equitable interest under constructive trust
    -    When he dies, house given to son, who knew nothing of equitable or contractual interest to B – wants her out
    -    He became registered proprietor without knowledge of equitable or contractual rights
o   HELD
    -    Indefeasibility provisions apply same to registered proprietor of land who takes interest in land as volunteer
•   Allows rp to take title free from prior equitable interests which she had no notice of
    -    The oral promise to her would be sufficient, however in this case, Koteff’s son became registered proprietor without prior knowledge of contractual or equitable right, and obtained indefeasible title
    -    King v Smail (Victorian Case) should no longer be followed, as Breskvar v Wall, following Frazer v Walker, established that the title of each registered proprietor arises from registration

In Victoria, Registered proprietor of torrens title land who took without value could have no better title than their predecessor
•   IE they are bound by the equitable interests that stood under the old ownership
•   Rasmussen v Rasmussen [1995]
o   Victorian decision

•   King v Smail (Victorian)

o   Similar proposition to Rasmussen
o   NOTE: In NSW, in Bogdanovic v Koteff, court said that King v Smail (Victorian Case) should no longer be followed, as Breskvar v Wall, following Frazer v Walker, established that the title of each registered proprietor arises from registration