Property Law notes

Intro reasons why Torrens Title came into being old system very complex tracing title back security of title the registration of deeds doesn’t fix the above issues especially security General Register of deeds difficult to search General Register does not fix any defect Under Torrens Title indefeasibility of title started with Robert Torrens in SA NSW started 1963 Since then all grants under Torrens Title At conveyance of old property transferred to Torrens US and UK did not adopt Torrens Title Real Property Act 1900 (NSW).

Though some provisions of Conveyancing Act still apply Elements of Torrens Title Torrens register ? Registrar General Is public Available to public for searching Doesn’t have to be the owner Not expensive Can be done over the net consists of folio’s each folio relates to an interest in one parcel of land each describes the land who is the registered proprietor (owner) lists any other interests or estate each page has its own reference ? each new linked up with that reference certificate of title copy of the folio that goes to registered proprietor lists everything ?

Easements and restricted covenants dealings broad term applies to any instrument able to be registered except caveats there are approved forms for any transaction some scope for amendment but cannot change the substance of the form once registered has the effect of a deed (RPA s36) registration creates the legal interest RG is entitled to refuse to register the dealing without certificate of title Is practice to do so Not positively legislated for but the practice offers some protection what is on the register is central to the idea of Torrens Gibbs v Messer ?

“The object is to save persons dealing with registered proprietors from the trouble and expense of going behind the register in order to investigate the history of their author’s title, and to satisfy themselves of its validity” pg 357 CB what is on the register is conclusive as to the situation of a parcel of land title by registration priority when dealing only with registered interests ? first in time prevails dealings are registered in the order of lodgement which dictates priority not when signed only when registered Indefeasibility once registered can no longer be challenged on the basis of defects or by earlier not registered interest basically purchaser can rely on the register RPA s42(1)

Estate of registered proprietor paramount Hold the property only subject to listed interests Except in cases of fraud ? there are further exceptions listed OVERHEAD Deferred indefeasibility no longer current C’s title will still be tainted since created by void instrument Can pass indefeasibility to the next purchaser despite not having it D had to be bona fide purchaser for value without notice, not knowing or being involved in forgery Nowadays C would have immediate indefeasibilit.

Gibbs v Messer Hugh Cameron became registered proprietor Creswell engineered a mortgage which was registered thus legal Contest between McIntyre’s Can she get title free from mortgage? Earlier instances would have to pay out the mortgage Deferred indefeasibility didn’t exist since Hugh Cameron didn’t exist Hugh Cameron’s title will be tainted but create later interests which will be indefeasible (if real person) Chain broken due to non-existence so could not pass on, Messer had priority, McIntyre’s could claim money back/.

MORAL: deferred no longer exists now immediate indefeasibility on registration remember deferred indefeasibility no longer valid orthodox approach immediate indefeasibility on remigration of the transfer, get indefeasibility straight away the new registrant must not be part of the fraud Fraser v Walker (NZ) established immediate indefeasibility established registration of void instrument as longa s not involved fine Mrs Fraser forged husbands signature on a mortgage to a 3rd party Payments not made in default, exercised power of sale to Walker Void instrument, registration cured the defect.

Couldn’t get land back MORAL: Can register void instrument as longa s not involved in the fraud Breskvars v Wall (Australia) for security of loan gave over a duplicate certificate of title (CT) and a blank signed transfer ? transferee’s name not listed Mr Petrie put grandson’s name on transfer Mr Wall registered transfer and then contracted to sell the property Transfer was not registered when Breskvars caught on and placed a caveat on the transfer (freezes the register) Who can become registered?

Court determined whether transfer to Mr Wall conferred an indefeasible title Was it necessary to sell to another before indefeasibility? High Court found Wall could have gained immediate indefeasibility vitiated MORAL: Immediate indefeasibility and fraud qualifications Alban had an equitable interest after Breskvars earlier equitable Did Breskvars engage in postponing conduct? Handing over duplicate and signed blank transfer Therefore Alban interest prevailed could proceed to registration Unregistered Interest (extension of indefeasibility).

s41 RPA (dealings not effectual until recorded in register) no dealing passes any estate or interest until registration originally arguments meant that any unregistered dealing no significance in Torrens Title land ? put to rest quite quickly only no effect in terms of passing an interest should read as applying to legal registration but doesn’t mean unregistered are completing meaningless registered legal, unregistered equitable in order to find equitable interest still need to satisfy the requirements of CA (s23C, s23E (d)).

Barry v Heider usually cited as authority for equitable interest in Torrens Title Barry RP tricked into executing a transfer in favour of Mr Schmidt An undervalued transfer ? defeasible for the fraud Schmidt in receipt of transfer raised a mortgage Neither mortgage or transfer was registered thus both equitable Barry sought injunction to stop transfer and declaration property not incumbered by the mortgage High Court started with argument, no equitable and then rejected and found s41 should not be read in that way Does not preclude the existence of equity.

Consistent with earlier cases, also and in particular RPA eludes to equitable in certain provisions S82 RPA ? no registration of trusts on register, trust instrument can be deposited and Registrar-General places a caveat that stops registration of any transfer inconsistent with the trust Trusts are equitable by nature caveat system ? contemplates the existence of unregistered interests MORAL: Equitable interests can exist in Torrens Title land earlier legal, later equitable lead court to bring in old system rules comes down to postponing conduct.

Mrs Heider had no notice of previous dealings at all Finding: Barry had engaged in postponing conduct in handing over transfer Mr Barry had “armed” Schmidt Vickers v Hurst quoted “when…one person arms another with a symbol of property, he should be the sufferer, and not the person who gives credit to the operation and is misled by it” pg 272 Mrs Heider found to have priority Fraud is a separate issue against Schmidt Mr Barry hasn’t lost property just gained a mortgage.

Where equitable interest earlier, later legal registration of legal will extinguish any earlier (ss42, 43) Equitable interests are vulnerable to later registration of a legal interest Indefeasibility corresponds with bona fide purchaser for value without notice doctrine from old system One exception in relation to caveats on an earlier equitable interest since caveat freezes the register Does not apply to Barry since always legal, equitable came later Exceptions to Indefeasibility 1. Fraud under RPA OVERHEAD No definition of fraud only a partial definition (s3) Involving fictitious persons This is the extent and thus needs to go to common law s42 explicitly says “except in cases of fraud” still very much about involvement Actual Fraud Dishonesty.

Trickery Moral turpitude Wilful blindness or reckless indifference (obscure concept) agent fraud brought home to the principal must occur in the case of acquiring the property Loke Yew (1913) PC property in Malaysia (Torrens Title) person representing a company hearing of indefeasibility in Malaysia, Mr Glass take advantage to trick someone out of their land purchased a large parcel of property, part understood to be belonging to Loke Yew Mr Glass assured Loke Yew would be paid separately.

On registration sought to remove Loke Yew PC acknowledged exception to indefeasibility for fraud Assurances where trickery, thus fraud, only owned property subject to Loke Yew’s interest Pyramid v Scorpion? wilful blindness or reckless indifference invalid execution, attestation of a mortgage Pyramid mortgagee Attestation incorrect since not signed by the directors Pyramid in accepting and registration wilfully blind fixed with knowledge Extract sets out all the concepts On evidence Pyramid didn’t have actual knowledge and no suspicion raised Therefore not wilful blindness.

Just because would have discovered with further enquires not enough to make out fraud “the enquiry is an enquiry for actual dishonesty not for want of due care” pg 384CB Solicitor was probably negligent in failing to make sufficient enquiries MORAL: to prove wilful blindness must have proof of raised suspicious otherwise not fraud thus benefit of registration, thus indefeasibility if suspicions raised would have been fraud negligent enquires is not wilful blindness, since not dishonest not fraud Schultz v Cowell misbehaviour of solicitor acting as an agent for both sides forged a mortgage over land owned by Cowell.

Schultz mortgagee mortgage registered and the solicitor receives the money solicitor orchestrated discharge of the mortgage and removed from register and took off with the money both arguing indefeasibility whether solicitors fraud able to be brought home to either party solicitor acting in own interests, neither party implicated they didn’t know and were not involved solicitor outside scope of authority and apparent authority the mortgage held to be indefeasible the discharge was also indefeasible, essentially taking mortgage off the title MORAL: agent must be acting in scope of authority or apparent for fraud to be brought home to principal OVERHEAD Not Fraud new RP not involved in the fraud negligence in not making proper enquiries.

(Pyramid v Scorpion) notice of earlier unregistered interests before registration: s43(1) registration effectively extinguishes earlier interests statute explicitly excludes this point 3 ? s43 is authority for this point last two points are vital not doctrine of bona fide purchaser for value without notice, in relation to competing equitable if read that way offering something you don’t really need creation of register, knowing extinguishing earlier interest NOT fraud thus nit an exception of indefeasibility Bahr v Nicolay (No. 2)

1985 relevant fraud must occur after registration notice of unregistered Bahr sold land Nicolay ? leased some of it back with right of re-purchase Before re-purchase land sold on, acknowledged this (Thompson) Bahr tried to exercise, Thompson being RP indefeasibility wouldn’t sell Having become RP honestly and acknowledging deal had they been fraudulent in changing their mind? Mason and Dawson (minority) Could amount to fraud.

Broader view ? wanted to see version of equitable fraud Agreed registration with notice not fraud Extending to acts after registration ? if dishonest repudiation of something agreed to before registration would be fraud Implicit in their finding had been some dishonesty * Different to Loke Yew ? registration with trickery before registration* not orthodox position Wilson and Toohey More orthodox position Knowledge of earlier not point At registration cut off certain issues surrounding registration What happens after registration not relevant Fraud that is committed in the act of acquiring registered title No evidence of dishonesty at point of agreement at worst after and as such does not qualify as fraud Might have situation.

Thompson purchase with knowledge hoping couldn’t repurchase but it eventuated and changed their mind No evidence they always wanted to say no Brennan No fraud MORAL: knowledge of earlier interest and dishonest conduct after registration do not qualify as fraud 2. Unregistered Short term leases derives from s42(1)(d) protection for an unregistered short term lease situation: short term lease with new owner who registers then protected by the legislation criteria unregistered short term ?

Less than 3 years including options if option can be severed then can probably save the initial term of the lease tenant must be in possession RP must have had notice before becoming RP where met, the new RP takes title subject to the rest of the term of the lease new owner will take title subject to tenancy thus should be careful to clarify what other persons possession essentially means if don’t know tenancy but knows someone else in possession still constructive notice for failure to enquire transfer a dealing registrable point handed over that legal interest is taken to pass s 43A that typically occurs at settlement ?

Since a gap usually exists between settlement and registration at transfer is where owner must have notice no requirement for a lease less than 3 years to be registered but may do so can place a caveat on the title that gives some protection in practice neither tends to happen especially residential leases Usually the new owner will have actual knowledge eg.

With advertisements more likely common with commercial lease ? though usually long term parole lease s23D(2) CA an undocumented lease ? though a legal lease What if it conflicts with an equitable unregistered interest? OS rules would apply If legal later victorious except bona fide ……. If legal earlier victorious unless postponing conduct if otherwise satisfies s 42(1)(d) will get further protection 3.

Rights in Personam often classified as exceptions (technically they operate as a limit) personal claims or rights of action other people may have against a RP being a RP is not always an answer to all claims despite RP had indefeasibility, does not release from personal obligation examines how indefeasibility is adjusted against personal actions as a result of contracts, may have to give up indefeasibility Fraser v Walker “This principle in now ay denies the right of a plaintiff to bring against a registered proprietor a claim in personam, founded in law or in equity, for such a relief as a court acting in personam may grant” pg 360 provided this action is recognised at law or in equity court can order RP to give up that right.

Contract Contract to sell, vendor RP throughout conveyance or settlement transfer is handed over and that transfer is registered, get title Vendor receives money but wishes to deny transfer since RP Equity would order specific performance Thereby ordering the transfer indefeasibility does not mean trustee can ignore their obligations beneficiary can enforce trust against trustee unlike fraud exceptions to indefeasibility, not limited to what happens before registration Bahr v Nicolay where Bahr’s couldn’t prove fraud were successful on their in personam argument ?

Were able to re-purchase the property when Thompson purchased the land and acknowledged the lease made themselves constructive trustees to the Bahr’s * express trust ? documents completed Constructive trust ? where court decides trust for various reasons* Thompson conduct breached constructive trust and court could make orders to uphold the trust Mason and Dawson More on a contract basis and nature of it Contracted to purchase title subject to Bahr’s.

MORAL: where indefeasibility exists, RP must still abide by personal obligations regardless of when they arise in personam not a free floating exception but recognition of other rights of action? at law or in equity Grugik involved both fraud arguments and in personam (fraud unsuccessful) son and daughter in law caused mortgage on fathers property to get loan did this with duplicate CT and brought impersonator of father clearly fraudulent conduct, but bank had documents and attestation of employees ?

Then registered with document initial action was against the bank to argue the mortgage was defeasible whether the bank or its employees engaged in actual fraud employees have been “less then meticulous” however that did not amount to fraud ? it requires dishonesty not negligence hadn’t been reckless indifference rather “lack of thorough enquiries” in absence of dishonest belief have to see they dishonestly signed the document in personam not free floating attaching where suitable need to identify an existing right of action argued action in deceit ?bank had also been tricked misleading and deceptive s 52TPA ?

Bank hadn’t made a misrepresentation no breach of statutory duty (at the time) the bank was under a duty but the standard of care had been met family was known to the bank, had signatures to compare, legal assistance was offered and suggested overall no grounds against the bank MORAL: in personam requires an existing right of action recognised at law or in equity s 117 RPA does deal with this and places stringent requirements to identify the signatories damages available where not met trust issues and their impact on indefeasibility.

Macquarie Bank v Sixty-Four Throne Trust property as security for a loan Tarashire Council Sale of land both dealt with interests over trust property what were the circumstances where beneficiary have a right of action against new RP the RP must not know in breach of trust may know trust property breach is the key Sixty-Four Throne ? not known in breach thus indefeasibility Tarashire? knowledge of both ? indefeasibility vitiated Contains good revision material of fraud and knowledge of aspect Can be constructive knowledge.

Caveats dealings and recordings dealings usually all the approved forms and essentially create Torrens interest recordings are notification, does not create interest caveats are recordings primary role to protect unregistered interests on the property it does not create an interest or bolster the claim of having an interest falls for decision elsewhere of whether the interest claimed is valid the interests must centrally operate with property or land ? proprietary interest is essential How does it work? Notification is enough.

The register is effectively frozen in relation to relevant parcel The Register- General is precluded from registering later in time dealings that conflict with the caveat Until an action can be brought to work out whether there is a valid interest and priority issues Only later interests that will impact THEY DON’T CREATE THE INTEREST The RG does not check whether valid ? purely notification Exceptions to the way the system works in particular prohibition of registration 1.

Caveator can consent to the registration 2. the freeze, later dealings that will impact on the caveat 3.need to be clear of the scope of the interest being claimed ? needs to be broad 4. s74H (sets out caveats) specifies a range of dealings that can always go through unless caveat expressly prohibits it a. applications by executors b. applications by surviving joint tenants c. there are further dealings listed 5. any dealings before caveat proceed through to registration ? anything awaiting registration will go through Examples of Caveatable interests unregistered mortgage (EQ), other unregistered interests (EQ), purchaser under contract for sale RG has a general power to place caveats on own authority.

In particular in cases of legal disability Trusts, stops inconsistent dealings other dealings that come along and want to be registered these “legal” dealings will take priority over equitable applying indefeasibility thereby extinguishing equitable caveat blocks the registration of dealings thereby leaving them unregistered and thus equitable if caveator can prove based on old system rules has priority would be registered first and others after registration would make it legal caveat might also be placed because of fear mortgagee will exercise a power of sale over the property RP may want to use a caveat to protect their property.

Not Caveatable any interest not proprietary in nature statute barred interests cannot be caveated, limitation of action issues when limited period runs out will extinguish the interest right to bring an action ? only a personal right even though it will ultimately have an impact on land family law issue ?

Settlement over land mere equities is essentially a right to bring an action there is some debate if purely right of action or may have some proprietary nature for caveats considered not to be proprietary Procedural Aspects RG does not investigate or check the claim is valid or exists Caveat isn’t an indicator of an existence of right Approved form must be used S74L ? minor defects can be ignored once lodged in correct form, RP is notified it is then recorded and goes on folio detail (Kerribee Park v Davey) when documenting a caveat need to specify the extent of the interest claimed accurately Are there any supporting instruments?

How much and what facts support that claim, so RP can be notified of the claim, and so RG can decide whether later dealings will be adverse to the interest Failure to do so will undermine the rationale of the system only protects against dealings lodged after caveat is lodged not before is operational once the caveat has been lodged Lapsing and removal of caveats terminology is unusually lapsing 3 issues to consider (text) but really 4 Caveator may voluntarily remove the caveat: s74M RPA Lapsing notices.

Dealing that is adverse wants registration, on receipt of lodgement caveator is notified and 21 day notice period Has 21 days to get caveat extended If not extended then it lapses at the end of 21 days Extension: go to SC to get order for caveat to remain in place Court makes preliminary/interlocutory decision on the basis claim may have some merit Caveator needs to establish a serious question to be tried and secondly must show balance of convenience favours the extension (onus on caveator)(an injunction type of test).

Serious question: reasonably arguable or a prima facie case, having some merit or substance ? not a high threshold Balance of convenience: caveator must show better for caveat to remain in place and a priority based decision to be made usual that where not granted or contested, caveat only lapses to the extent necessary to allow the adverse dealing through to registration Where RP has applied to have caveat removed Sets off 21 day notice period Same procedure as other lapsing notice Unlike the previous category, the whole caveat lapses SC can order removal in suitable circumstances No 21 day notice period not available to re-lodge a caveat that has been removed same person, same caveat, same interest, same facts will have no effect at all:

s74O some exceptions leave from the court consent of the owner caveat taken off voluntarily by caveator Without Reasonable Cause s74P ? compensation for RP who has suffered a loss attributable to unreasonable caveat essentially no need to prove the interest ? leaves open to corruption s74P if later claimed interest cant be supported isn’t lodgement without reasonable cause placed caveat without honest belief they had an interest and honest belief that is based on reasonable grounds if fail the test there is a risk of being liable for attributable loss test contains objective and subjective tests objective:

Honest belief subjective: reasonable grounds attributable not specific as foreseeable or causation not that technical or tortious realistically (everyday concept) Competing Unregistered Interest unregistered interest over Torrens Title are usually equitable and thus vulnerable can be extinguished by later registered interest equitable mortgage and owner of property later contracts to sell property to a 3rd party has a transfer and on registration will extinguish mortgage who can place a caveat transfer cant be registered because of caveat so 3rd person has an unregistered equitable interest (hello priority)

If mortgage wins out will be able to register and 3rd party then registers ownership subject to mortgage Mere Equity v Equitable Double Bay Newspapers similar situation to Latec defective mortgage competing unregistered equitable mortgage but one wasn’t properly document approved form used but content in annexe but went missing no evidence as to substance of the agreement without details even equity couldn’t recognise the agreement needs the help of court of equity in rectification of the document would become proper equitable mortgage (s23C) bring in bona fide purchaser for value without notice doctrine have a weaker mere equity vs. stronger equitable did later have knowledge of existence of mere equity if yes, later would only take subject to mere equity if no, later takes free of any other earlier priority in this case no notice no caveat ?

Wasn’t available for defective mortgagee because mere equities don’t have a proprietary interest Competing Equitable equitable interests can be caveated for (whole purpose of system) Double Bay has good discussion of the rules though not applied involves a search for better equity if equal first in time prevails commonly look to whether there has been postponing conduct Is it postponing conduct not to caveat equitable interest? Sometimes it can ? not an absolute position A mere failure to caveat will usually not be postponing.

But if a part of all the circumstances it may Key here is other postponing involved ? must be overall what looking for in addition would be some actions that would contribute to an assumption to later that the first didn’t exist notice is not about equitable so not being listed on register is not enough would only give notice FIRST IN TIME AND POSTPONING CONDUCT Abigail v Lapin Privy Council agreed with Full Court, High Court decision in the middle High Court was incorrect decision Was muddied by too much consideration of what the 2nd in time did.

Lapin handed over CT and transfer documents to Mrs H who registered transfer in own land ? created mortgage to Abigail Lapins argued mortgage by conveyance and gave them right of re-conveyance/redemption Abigail mortgage was able to be registered ? waited 6 months, was a further delay and then Lapins lodged caveat Made 2 equitable interests Did Lapins engage in postponing conduct? Failure to caveat earlier combined with fact armed her with documents to register them in her own name therefore Abigail was given priority.

High Court considered whether Abigail searched register, failure to prove then an argument failed to avail himself of knowledge Privy Council said he would only have seen Mrs H anyway, but it was the wrong enquiry in the first place MORAL: Failure to place a caveat requires additional conduct that would amount to postponing conduct. First in time is the right test not notice. Jacob v Platt Nominees reasonable belief didn’t need a caveat Platt sold hotel to his daughter (Mrs Jacobs) and then sold it to Perpetual trustees Mrs Jacobs had an unregistered equitable (could have a caveat) 1st in time has priority unless postponing conduct.

No caveat doesn’t amount to postponing conduct Jacobs gave plausible reason why didn’t place a caveat Not practice in Vic to place caveat on purchased property Tense family situation didn’t want to show distrust to father Believed impossible to create other interest because believed mother had to co-sign any sale since a director thus a reasonable belief albeit a mistaken one as brother could co-sign thus no postponing conduct and since Mrs Jacobs 1st in time her interest prevailed MORAL: reasonable belief impossible to create further interests, reasonable not to caveat and thus not postponing conduct.

Protections other than caveat could go into possession ? puts later purchasers on notice J&H Just Holding v Bank NSW Bank 1st mortgagee, J&H 2nd mortgagee Taking possession of CT ? stops later interest becoming legal Practice: to register dealing must present CT Bank possessed CT in mortgage but haven’t registered a caveat Could rely on practice to protect them Holding CT wont protect against later unregistered mortgage Later wouldn’t take priority over an earlier protecting self with CT later, RP created a 2nd mortgage and lied to them about CT discusses the better equity all round.

CJ Barwick Good discussion of Abigail v Lapin Emphasis on caveat failure not enough Windeyer Abigail v Lapin discussion Emphasising 1st in time ? right test MORAL: holding CT of title but no caveat will protect against later interests especially in light of RG practice S43A RPA CompletionRegistration potentially apply to other legal interests less than full ownership at settlement of sale purchaser gets registrable transfer and at registration become full owner before registration purchaser remains equitable up to point of registration gap between completion and registration earlier equitable pops up in that gap and puts caveat turning into argument over competing equitable no notice prior to completion but gets notice after generally earlier equitable prevails unless postponing and failure to caveat not postponing might show a weakness in Torrens.

Title compared to Old System s 43A address the gap orthodox reading Essentially incorporates bona fide …. as a way of dealing deems legal to have passed at point of completion ? dealing registrable becomes legal v earlier equitable bringing in bona fide… doctrine If no notice of earlier at time of completion will protect purchaser alternative view.

Kitto Treating completion and registration as occurring simultaneously Registration backdated to completion acquiring indefeasibility and thus extinguishing earlier unregistered interest Dealing registrable 2 requirements Necessary person in receipt of documents must have or immediately compel to get CT The dealing must be immediately registrable ? without other having to be registered 1st Eg purchaser not yet registered but mortgage taken out, transfer registered before mortgage ? so transfer dealing registrable but mortgage not because it has to wait.