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Indefeasability Fraud Intro This is a question regarding indefeasibility of title and X. the principle of indefeasibility of title is that it is “the foundation of torrens sysem of title (Bahr v Nicholay). It recognizes and protects the estate of the RP/RO of a land transfer title. In NZ under s62 LTA 1952/s51 LTA 2017, except in situations of fraud and 3 other exceptions the concept protects the RP against claims of competing owners, and against encumberances, estates and interest that do not appear on the register. This section has been described as “the foundation of the [LTA]” (Son v Ko) immediate indefeasibilty with limited judicial discretion (s55) to orderalteration of the registar has been affirmed and added to the new LTA 2017/ Adding s55 was seen by law commission and parliament to provide a fairer and more flexible approach and to allow justice to be done in exceptional cases. Fraud exception Fraud is one of the main exceptions to indefeasibility of title in New Zealand, this is dictated by s62 LTA 1952/s52 LTA 2017). Generally fraud can be separated into two categories Fraud against the RP/RO (see Heron v Broadbent) and fraud against the holder of an unregistered interest in the land (New Zealand Meat Nominees v Sim). Previously, was not defined however it is now defined in s6 LTA 2017 and stipulates: fraud means forgery or other dishonest conduct by the registered owner or the registered owner’s agent in acquiring a registered estate or interest in land. The issue X has is of _____ as … Fraud against a previous registered proprietor There is further complication in the fraud exception to indefeasibility in the case of a subsequent bona fide purchaser for value or bonafide mortgagees. While X’s title was not indefeasible due to their fraud. The two cases that stipulate fraud against …..

Alteration to the register Manifest injustice Under the new 2017 LTA s54(1)(a)(b) … could apply to the court for an order cancelling the lender’s registered mortgage/or name from the title s55 LTA 201. To achieve this … would have to satisfy the court that it would be Manifestly unjust for the lenders mortgage/name to remain on the title.

The previous 1952 LTA provided for immediate indefeasibility as soon as the interest was registered. The advantage of that system was that transactional case, for example a prospective purchaser would have only relied on the register and had to do no further investigation on ownership of other interests affecting the land. The disadvantage of the 1952 act is in the law commission and parliaments eyes was that the purchaser obtains a good title at the expense of the previous RP. (not withstanding their ability to apply for compensation. They viewed that practically this is unfair as in many cases the previous RP would have sentimental value to their property and compensation may not be the best remedy, hence adding s55 where they have the ability to potential reverse the onus and compensate the mortgagee. It would be expected that a body of case will develop in the near future to provide guidelines of what manifest injustice is for the purpose of the Act. These purpose the fact XXXXX will not be devisive but it will be a material consideration for the Court, other factors the court might look into are:  Whether the lender failed to comply with its statutory obligations for example, its vustomer due dilengence under the Anti-Money Laundering and Counter-Financing of Terrorism Act 2009;  The fact that that the lender failed to take reasonable steps to verify XX signature  Whether X has resided at the propetty for a long time made material improvements or had a special relationship with the property  The conduct of the lender in relation to the acquisition of the mortgage. For example, whether the lender had sufficient knowledge about the possibility of fraud or whether the lender acted reasonable, fairly and in good faith.  And any other consideration that court thinks fit. Applying this the present situation  Arguments that support a claim of manifest injustice…  Agruments against a claim… Alteration to the register Under the new 2017 LTA (1)(a)(b) X could apply to the court for an order cancelling the lender’s registred mortgage/or name from title s55 LTA 2017. To achieve this X would need to satisify the court that it would be manifestly unjust for the lender’s mortgage/name to remain in place on the title. Fraud by an agent This is an issue regarding fraud by an agent. In this contest of registration of title and fraud, the law of agency was recognized in Assests Co Ltd where it was emphasized that knowledge must be brought that they became “his agent” Previous uncertainity over imputed knowledge vs vicarious liability were put to rest when Assests Co principle was endorsed in Nathan v Dollars & Sense the SC ruled in favour of vicarious liability and this must now be considered the leading case for fraud by an agent. This case broke down the concrete approach. Dollars and Sense advanced money to Rodney Nathan on the security of a mortgage over his parents’ home. It transpired that unbeknown to D&S or their sollicitors that Mr Nathan forged his mother’s signature on the mortgage document. SC has held

unanimously, upholding the judgement in the earlier courts that the mortgage should be removed from the Land Transfer Register. It has held that Nathan was engaged as D&S agent to obtain a signature of the mortgage and that his act of forgery was sufficiently closely connected with the task engaged to undertakr that it must be treated as done with agency. The fraud committed was therefore the fraud of the agent of D&S and accordingly does not by registration obtain an indefeasible title. Applying Natahn v D&S to establish vicarious liability for fraud by an agent there are two issues.  Whether X was the agent for Y for the purpose of Z. Supervening Fraud (has not carried over) This is an issue regarding supervening fraud/in personam claims. As immediate indefeasibility is gained on registration of a title (s41 LTA 1952; Fraser v Walker) X now holds an indefeasible title. Therefore Y must rely on exceptions to indefeasibility to resolve Z. However, NZ common law indicates that this issue does not fall within the scope of the land transfer fraud exception to indefeasibility under the act. In agreeance with Sutton v O’Kane Blanchard J has stated that the fraud exception to indefeasiblity is limited to cases of actual dishonesty up to the time of registration, and past that cannot apply. In the past courts have dealt with situations of dishonestly after registration under the notion of supervening fraud. Previously this was suitable and attractive to countner dishonest conduct however it is arguably inconsistent with the LTA and has become redundant in the 2017 LTA. Due to similar relief being available under the now well developed in personam claim. The law commission in reviewing the act before implentating the 2017 act has advised that supervening fraudf is outside of the act and relief being should be sought after under the in personam claim remedy. Therefore I would advise that any argument under supervening fraud should be redundant to pursue and a remedy for an in personam claim would be more suitable. In personam Indefeasibility does not bring an end to personal claims at law or equity. The in personam claim is a common law exception to indefeasibility of title allowed by the courts a power expressly reserved in Fraser v Walker.The inpersonam claim allows relief against s RP who has gained indefeasible title and in cases of dishonesty past the point of registration has arguably suspended the supervening fraud argument. While in personam exception should be apprached with caution (Assests Co) andf “confined to cases that truly engage the conscience of the paty whose regisrted priority is challenged” (Cashmere Capital v Crossdale) It is well accepted that this doctrine in equity is not inconsistent with indefeasibility. It requires a form of unconciousable conduct: (notes Bahr v Nicolay – Buyback arrangement sold to 3rd party who was aware of the buyback contract and occupants but claimed they were not bound to that contract.

HC: found they were entitled to enforece their interest under the inpersonam claim. (constructive trust)...