Torrens Title System & Indefeasibility

TORRENS TITLE * System of title by registration rather than registration by title (Breskvar v Wall (1971) 126 CLR 376. * Indefeasibility- The registered proprietor holds the title free of all unregistered interests. S42 Real Property Act 1900 (NSW). * Registration of a void instrument confers immediate indefeasibility in the absence of fraud (Frazer v Walker [1967]] 1 AC 569. * Sir Garfield Barwick sitting on the Privy Council in Frazer v Walker described it as: “a convenient description of the immunity from attack by adverse claim to the land or interest in respect of which he is registered, which a registered proprietor enjoys”

EXCEPTIONS TO INDEFEASABILITY * FRAUD- in the case of fraud a proprietor can be removed from the register.

Fraud is not notice, it is dishonesty or moral turpitude (Assets v Mere Roihi [1905] AC 176 “Fraud must be brought home to the person whose registered interest in sought to be impeached, or to his or her agents acting within their authority. ” Fraud must take place before registration. Anything that takes place after is subject to an in personam claim.

EXPRESS EXCEPTIONS- Leases- s42(1)(d) RPA- less than 3 years * Easements- s 42(1)(a1) * IN PERSONAM- The registered proprietor is subject to unregistered interests that they have created, such as contracts, trusts and estoppel. (Barry v Heider (1914) 19 CLR 197 Bahr v Nicolay (1988) 164 CLR 603 * In 1979 the Bahrs obtained a licence of Crown Land in Western Australia. On the building of commercial premises the Bahr’s could transform the licence into a Crown Grant and so become the proprietors of the property. The Bahr’s sold to Nicolay.

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Nicolay was resell the property to them at the end of the 3 years. * During the 3 year term Nicolay sold the property to the Thompson’s. * The contract between Nicolay and the Thompsons contained an acknowledgment of the agreement between Nicolay and the Bahr’s (Clause 4 of the contract. * After the Thompsons’s became registered as proprietors they commenced negotiations for the resale of the property in accordance with their agreement with Nicolay but later refused to transfer the property. The Thompson’s argued that they had mere notice of the Bahr’s interest and so were not obliged to resell and were not guilty of statutory fraud. * Mason and Dawson JJ. Fraud, a “dishonest repudiation of a prior interest which the registered proprietor has acknowledged or agreed to recognize as the basis for obtaining title. * Wilson and Toohey JJ. No statutory fraud – in any case it occurred after registration. Conduct does give rise to a constructive trust. * Brennan J collateral contract and constructive trust.

The Torrens Assurance Fund * Section 129 of the RPA gives a remedy to a person for loss or damage against the Torrens Assurance Fund in respect of an interest in land, suffered as a result of the operation of the RPA, where the loss or damage arise from: * the registration of some other person as proprietor of the land or an interest in the land (s 129(1) (b));   * the person having been deprived of the land or an interest in the land through fraud (s129(1)(e)). VOLUNTEERS

King v Smail [1958] VR 273- doctrine of indefeasibility only protects bona fide purchasers. Volunteers not covered. Bogdanovic v Koteff (1988) 12 NSWLR 472 – NSW volunteers covered Mrs B looked after Mr K on the basis of a promise that she would be given an interest in the house which would allow her to stay for life. Son inherited house. Breskvar v Wall applied – no distinction is made between volunteers and purchasers hence indefeasibility is given to the son SHORT TERM LEASES

Under 42(1)(d) of the Real Property Act, a registered interest is subject to a short-term lease if: * The term of the lease is less than 3 years including any options, * The tenant is in possession or entitled to immediate possession, * The registered proprietor before he or she became registered as proprietor had notice against which he or she was not protected: OVERRIDING STATUTES Pratten v Warringah Shire Council (1969) 90 WN (NSW) (Pt 1) 134, Barry v Heider (1914) 19 CLR 197 Barry was the registered proprietor of Torrens land. He had signed a document of transfer under which he agreed to transfer his interest in the land to Schmidt for consideration of ? 1,200. * The transfer stated that this had been paid, but Barry’s evidence was that he had received nothing. He claimed that he thought he was signing a contract, not a transfer and that the agreed sale price was ? 4,000. * Evidence was brought that the witness to Barry’s signature, a solicitor named Peterson, was not present when Barry signed. The Certificate of Title not given to Schmidt because the land had been subdivided and a new CT was to be issued nor had the documents been registered because they were waiting on the final subdivision. Barry signed a letter authorising the RG to deliver the new CT to Schmidt when it issued. * Using the letter and signed Transfer as evidence of his title to the land Schmidt created mortgages over the property to Heider and Gale. PRIORITY DISPUTES Registered v Registered Under s 36(9) priority between registered interests is determined by the order of registration, not by the date of execution. Order of registration is determined by the order of lodgment in “registrable form:” 36 (5) * “nemo dat quo non habet” Registered v Unregistered * Although equitable interests are recognized under Torrens title they are somewhat fragile in a priority dispute. They may be extinguished by registered interests unless they have been protected by the lodgment of a caveat, or they exist as an exception to indefeasibility.

Unregistered v Unregistered * Since unregistered interests are generally thought to be in the nature of equitable interests priority is generally determined by the application of the principles used in deciding priority disputes between competing equitable interests over old system land. It involves the search for the best equity (Rice v Rice). THREE STEP PROCESS * Look at the conduct of the holder of the first interest and decide whether they have done anything that should result in their interest being postponed.

The major thing to look for is conduct that may mislead the later comer into thinking that there is no earlier interest in existence; * If the holder of the first interest has committed some act or omission that has had this effect then look at the conduct of the second holder. First look to see if they have notice of the earlier interests. If they do they cannot take priority. If they don’t then you need to see who has the better equity by weighing up the conduct of both. * If the equities are equal first in time will prevail.

POSTPONING CONDUCT * not taking care of documents creating the right * taking too long to bring an action to protect a right * not speaking up to give notice of your claim of an interest * Making misleading statements * Otherwise misleading the second comer into thinking that you no longer have an interest MERE EQUITY * Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liquidation) 113 CLR 265 THE RULE IN WALSH V LONSDALE * “Equity regards as done that which ought to be done” RULE IN LYSAGHT V EDWARDS The general principle of this rule is that in the absence of express agreement between the vendor and purchaser the vendor becomes a trustee of the property for the purchaser once there is a valid and binding contract between the parties. * This is known as the ‘doctrine of conversion’. The rule in Hunt v Luck [1902] 1 Ch “.. possession of the tenant is notice that he has some interest in the land, and that a purchaser having notice of that fact is bound, according to the ordinary rule, either to enquire what the interest is, or to give effect to it, whatever it may be. ”

CONSTRUCTIVE NOTICE * S 164 Conveyancing Act 1919 NSW The kind of enquiries that a purchaser ought reasonably to make depend on current good practices. This means that a purchaser should at least undertake 2 types of enquiries: * The purchaser has a duty to physically inspect the land (Barnhart v Greenshields, Hunt v Luck), and, * The purchaser should search the documents of title and the register. CAVEATS S74F RPA- Lodgment of caveats against dealings, possessory applications, plans and applications for cancellation of easements or extinguishment of restrictive covenants.

A caveat may be lodged: * Where a person claims to be entitled to a legal or equitable estate or interest in the land; * Where the registered proprietor has lost the certificate of title and fears an improper dealing with the land; * To prevent the granting of a possessory application;. * To prevent the improper exercise by a mortgagee of a power of sale; * By the Registrar-General to protect interest of a person under a legal disability or on behalf of the Queen Rule in Person-to-Person Finances Pty Ltd v Sharari [1984] 1 NSWLR 745 [I]t s the settled practice of competent solicitors … acting for second or subsequent mortgagees, to ensure either the prompt registration of the mortgage or lodgement of a caveat ACTION| LEGAL EFFECT – TORRENS TITLE| Negotiation| None unless doctrines such as estoppel apply| Exchange of Contracts| Purchaser receives equitable interest providing contract is enforceable Lysaght v Edwards (1876)| Settlement (completion) and payment of Consideration| Purchaser receives approved form of transfer.

Until registration interest is still equitable but may be deemed legal if s43A applies| Registration| Purchaser receives indefeasible title under s 42, RPA and is protected against notice of prior interests under s43. Voidness is “cured” by registration| S43A REQUIREMENTS * The person receiving the dealing should have possession of the certificate of title or be in a position to compel its production. (Court of Appeal in J & H Just Holdings v Bank of NSW) * It must be immediately registrable in the sense that no intermediate dealings need to be registered before it. The person claiming the protection of the section should have dealt with the registered proprietor. Jonray (Sydney) Pty Ltd v Partridge Bros Pty Ltd (1969) 89 WN (Pt 1) 568 establishes that a transfer by direction fulfils this requirement. * IAC(Finance)PtyLtd v Courtenay-S43A results in a deemed legal estate’ SAMPLE CHECKLIST – TORRENS TITLE 1. What form of title is the land held under? Look for words such as “registered proprietor” or “held under the Real Property Act 1900 NSW” to establish that the land is Torrens title. 2. Ascertain the status of the interests.

Which are registered and which remain unregistered (these, at best, will be equitable BUT an unregistered interest is not always equitable). Remember that a registered interest will generally defeat an unregistered interest. 3. Determine whether the registered interests are susceptible to any of the exceptions to indefeasibility? Make a list of all that might be relevant and have definitions of them available: * fraud (dishonesty, trickery, scheming) * in personam (dishonesty, unconscionability, binding contracts, constructive trust etc) ****REMEMBER, ONLY THE CONDUCT OF THE REGISTERED PROPRIETOR IS RELEVANT FOR THESE EXCEPTIONS*****  * short term leases (s 42(1)(d), * overriding statutes etc. 4. Are there any equitable / unregistered interests? There are a variety of ways in which these can be created: * by writing in accordance with sec 23C and 54A Conveyancing Act; * where a previously registered interest has been wrongfully removed from the register, eg through fraud or the improper exercise of a mortgagee power of sale; * through the application of the law of part performance; * by the application of the doctrine of estoppel; by the application of the doctrine of constructive trusts. 5. Can the holders of the equitable interests use s 43A Real Property Act. This will deem their interest to be legal. 6. Apply the priority rules. In descending order of importance the interests are: * registered * unregistered but falling within sec 43A * unregistered (equitable) with the better equity, or, where the equities are equal, the interest created first in time. * unregistered (equitable). * mere equities CO-OWNERSHIP Two main types of co-ownership -Joint tenancy -Tenancy in common

JOINT TENANCY Each joint tenant is “wholly entitled to the whole” as a ‘collective unity’ or a ‘composite person’. 4 Unities * Unity of Possession * Unity of Interest * Unity of Title * Unity of Time UNITY OF POSSESSION * The land is not physically divided. * Each tenant holds a physically undivided share of the land. * Each co-owner is entitled to possession of the whole of the land. This is called ‘unity of possession’ and it applies irrespective of the shares in which the property is held (eg one tenant holding ? and the other holding ? ).

UNITY OF INTEREST * This follows from the proposition that each joint tenant is ‘wholly entitled to the whole’. The interest held by each joint tenant is necessarily the same in extent nature and duration. UNITY OF TITLE * This means that each joint tenant must derive his or her title from the same document (transfer or deed) or act (adverse possession). * A joint tenant can dispose of their share (notionally) of the land but only during their lifetime UNITY OF TIME * This requires that the interests of all joint tenants vest at the same time. A transfer of land to A & B when they reach 18 years of age, will create a tenancy in common since there is no unity of time The Right of Survivorship * The other distinction feature of joint tenancies is the right of survivorship or the jus accrescendi * The essence of this principle is that when one joint tenant dies the whole of his or her interest automatically passes to the surviving joint tenants until only one is left. * This is unaffected by any contrary provision in a will. Wright v Gibbons (1949) 78 CLR 313 The Principle Of Forfeiture

Rasmanis v Jurewitsch (1969) 70 SR NSW- Man kills wife… will not receive her share of the tenancy. CONVEYANCING ACT 1919 – SECT 35 – If both die at same time it will be presumed that the younger survives the older. * Hickman v Peacey [1945] AC 304. joint tenancy can be severed in 6 ways: 1. By a unilateral act by a joint tenant acting on his or her own share; 2. By a mutual agreement between the joint tenants; 3. By a course of dealing between the joint tenants; 4. By court order, most commonly under the Family Law Act; 5. In cases of unlawful killing; . On the bankruptcy of one joint tenant an involuntary severance will occur. S97 RPA- sever by transfer TENANCY IN COMMON There are 2 major differences between a tenancy in common and a joint tenancy: * There is no right of survivorship between tenants in common, and * Only unity of possession is required * There are 2 ways in which a tenancy in common will come to an end. These are: * When all the tenants in common transfer their interest to one of the tenants; * Where the land is sold or partitioned under s 66G Conveyancing Act. Equity always preferred the tenancy in common because it represented certainty and fairness. * The parties would be treated in equity as if they were tenants in common in 3 situations: * Where co-owners contributed different amounts to the purchase price * Where co-owners advance money on mortgage; * In the case of partnership assets. IF EQUAL CONTRIBUTION THE LAW PRESUMES A JOINT TENANCY PARTITION AND SALE OF LAND In special circumstances court can order Under Div 6 Part 4 Conveyancing Act (sections 66F – 66I)