Indefeasibility notes PDF

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LAWS301 INDEFEASIBILITY Read question thoroughly – make sure you pick out the issues correctly  Identify what is relevant and what is not for the questions – issue spotting  Do not copy lecture notes  1. Identify issue  2. Answer the question that is asked  3. Use a clear structure – show mast...

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LAWS301 INDEFEASIBILITY          

Read question thoroughly – make sure you pick out the issues correctly Identify what is relevant and what is not for the questions – issue spotting Do not copy lecture notes 1. Identify issue 2. Answer the question that is asked 3. Use a clear structure – show mastery of material, critical thinking, analytical skills Use statutory/case authority (extra marks) Define key terms: immediate indefeasibility, title by registration, indefeasibility (use authority) Signpost your answers – let market know what you are going to bring up, set out basis for exception: Is their title indefeasible? If so, what exceptions might apply? Are the exceptions made out? Analogise to cases: What was fraud in other case? What was the cause of action in in personam case?

STRUCTURES Give a roadmap of what issues you will discuss. If one exception is not relevant, explain why. 1. Define key terms  

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Indefeasibility denotes the effect of land registration whereby once you are the registered owner of a property, your title is said to be indefeasible. This means it is unchallengeable, not subject to being lost, annulled or overruled. Immediate indefeasibility camp suggests once the instrument of transfer is registered, in the absence of fraud, you get indefeasible title even if the instrument is void or voidable. (Assets by implication, Boyd, Frazer, Breskvar – goes even further and finds that registration not ony perfects existing title but confers/creates good title). The LTA 2017 confirms immediate indefeasibility. Title by registration: The Torrens system removed the nemo dat rule and focuses on the parcel of land and title. A registered title cannot be set aside (s 51(1)). It is the act of registration that constitutes legal interests in property but this is indeed subject to conditions. o “Registration is conclusive and confers unimpeachable title on the registered owner except in certain specified cases” which include fraud, statutory conflict, in personam, manifest injustice. (Assets) Deferred indefeasibility: registration of a void or voidable instrument does not give indefeasible title immediately, it is only the root of indefeasible title. Indefeasible title only arises upon a further transaction (i.e. the next purchaser will get indefeasible title: s 183) (Gibbs, Boyd minority)

2. What is the status of their title? Is their title indefeasible?  

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Section 24(1) LTA 2017: contract does not pass title, it is registration that passes title o Show difference between LTA and CL position  previously under common law, it was the contract that passed title, but the LTA clarifies in s 24 that registration passes title. Section 51(4)(a) and (b) o Title by registration, immediate indefeasibility applies to void instruments upon registration o We don’t apply nemo dat rule because now registration perfects any defects in the title o Section 51(4)(a): a person’s title if registered will remain indefeasible whether or not there is valuable consideration (e.g. selling property for $1 is fine) o Section 51(4)(b): A person’s title, if registered ,will remain indefeasible whether or not it is from a fictitious person (Gibbs: doesn’t matter, title still valid when registered under LTA) Money no longer has to be exchanged to be protected under s 56 of LTA 2017 Voidable instruments are indefeasible upon registration, we apply under s 51 and as supported by cases (Assets) Case analogies:

3. Exceptions to indefeasibility (Section 52)  which of the four exceptions are viable on the facts? Void/Voidable instrument  Manifest injustice (sections 54-56)      

No hard and fast test as to what is void but could include forged, registered accidentally or registered in contravention of a statute Only if there is a void/voidable instrument (s54(1)) and interest has not been transferred to third party acting in good faith (s 56) Section 54: power to apply to the court to have it remedied Any argument you can make that fits in the wording will be fine - think about what seems really unfair. Section 55: factors to consider Section 56: can't be invoked where there has been an on-sale to a bona fide purchaser

Discuss manifest injustice exception generally

1. Can person A apply to the court? a. Section 54(1): Who is person A and B and what are their estates/interests?  (a) is for a person deprived of an estate or interest in land by registration under void or voidable instrument e.g. B’s entire fee simple estate transferred away from them (b) someone who is owner of estate that’s suffered loss by registration under void or voidable instrument e.g. void or voidable instrument creating easement put on property b. What is the void/voidable instrument? c. Section 54(2): person A can apply to the court for manifest injustice order d. Section 54(3): person A has to apply no later than 6 months after they have become aware of B’s actions

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This provision empowers person A (person who has suffered loss by virtue of registration under TS) to make an application to court for an order of MI Under (a) and (b) you need to have an interest in land that has been registered under a void/voidable instrument (noncompliance with a statute Void/voidable instruments still indefeasible upon registration Diff between a and b -- you would apply under a) if you are a person who had been deprived of entire fee simple estate. You would apply under b) if you retained your fee simple estate but your interest now burdened by registration of another interest e.g. mortgage Distinction between two not essential - Ruiping interested in knowing you need a void/voidable instrument before you can apply it. If you don't then manifest injustice does not apply Note the time limit

2. Can court make an order? a. Section 55(1): Court’s power to make an order b. Injustice cannot be addressed by damages (section 55(3)) c. Cannot apply if bona fide purchaser (s 56) – if there is a third party, the road stops here, do not continue d. section 55(3) – not if the injustice could be addressed with compensation or damages

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S 55 gives court power to make order of cancellation of B's registered interest - will only order cancellation where it would be MU for B to remain the owner Court can make cancellation -- dept from indefeasibility Qualifications o Subs 2 -- forgery or dishonest conduct not MI --> even though there might be dishonest conduct, doesn't mean it will be MI o Subs 3 -- court only make order where the injustice cannot be addresssed by compensation or damages  Objectives of TS -- to provide security of title  People who suffer loss out of registration should be comepnsated rather than being able to get land back because we want to uphold fundamental principle of indefeasibility and ensure security of title o Subs 4 -- don't list all, pick up ones that are relevant to the facts o What are the obejctives of TS and what is best going to serve those objectives on the facts?  What are the criticisms we have made about the TS and how it operates  E.g., give (c) more weight when coming to a conclusion as long as you can reason through why  Talk about criticisms of the TS  (i) ties in to this maori freehold interest  Don't make one factor determinative  use others to support your point  MI provides an opp for the court to be able to cancel registration of interest and give land back

S 56 -- court cannot make order if B transfers to a BFP o If there is a BFP and they haven't enagged in any fraudulent conduct, then you can't apply MI o Consider s 56 alongside s 54 e.g., s 54 (allows person to apply) then look at s 56 (is courts jurisdiction barred because there is a subsequent BFP) o S 56 does not apply to unregistered or equitable interests because s 54 says that interest must be registered so it doesn't apply to equitable interests

3. Is it manifest injustice? * set the standard of manifest injustice however high you want as no precedent for that a. Court can cancel registration of person B if satisfied it would be manifestly unjust for them to remain the registered owner (s 55(1): this is what gives the court jurisdiction to make this order) b. Section 55(4) factors  E.g. whether or not the estate or interest is Māori freehold land, length of time, improvements to land  (a) and (j) the way the land was acquired can always be talked about  (f) – (j): length of time, value of land, improvements to both A and B (consider both parties) c. Section 55(2) – forgery or dishonest conduct not enough itself for manifest injustice d. Court can’t make an order if they think the injustice could be remedied by compensation or damages 

 4. Conclusion Court would make an order under s 55 and then under s 57 Registrar would be amended.

Fraud (s 52(1)(a), statutorily defined in section 6)    

Someone who is fraudulent does not get indefeasible title against the person they defrauded because they fall within the exception (s 52 – even though they registered their interest, someone can apply to challenge that) Fraudster’s title is good against the rest of the world (Breskvar) If property is sold to a bona find purchaser, their title won’t be affected by the fraud If you think they are fraudulent, have to meet LTA fraud before you can say their title is defeasible – it will be defeasible just against the party they have defrauded, still good against rest of the world

Discuss fraud exception generally 1. Which type of fraud is it?  Type A: against the registered proprietor (s 6(2)(a)) o Actual dishonesty (Assets) o Not making inquiry is not fraud (Assets) o Mistaken belief is not fraud because you need something more – need an intention to deprive someone of their interest under fraud (Harris) o Gibbs, Frazer, Breskvar  Type B: against unregistered estate or interest (s 6(2(b))

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Need actual knowledge (subjectively) of unregistered interest or willful blindness to the existence of unregistered interest (s 6(2)(b)(i))  Assets: Not enough to say that might have found fraud if had been more vigilant / made more enquiries OF THE EXISTENCE OF AN UNREGISTERED INTEREST . However, failure to act on suspicion might be fraud if it can be shown his suspicions were aroused and he abstained from making enquiries because feared of learning the truth.  BUT D&S CA 2007: “wilful blindness to the lack of proper attestation could amount to LTA fraud (even without any suspicion of forgery) – talking about how the lawyer had been wilfully blind regarding the lack of proper witnessing. (Obiter)  Efratsiou: fact E knew the price was undervalue, the speed of the sale, E did not inspect and would allow jilted husband to continue living in it = wilfully blind.  = arguable if need to have suspicion of an unregistered interest in order to be wilfully blind. + intention at the time of registration to defeat the unregistered interest (s 6(2)(b)(ii))  Waimiha: not enough to know that your registration would defeat the unregistered interest. must have an intention to cheat. How can you have intention to defeat the unregistered interest if you do not even know of the existence of the unregistered interest (c.f. (i) including WB). Willful blindness: not making enquiry is not fraud, but willful blindness may be fraud (fearing they may find out truth if they enquire and decide not to), might have a suspicion or inkling there is some sort of interest there but you don’t look any further as you fear you might find an unregistered interest that would then bind you – this can be enough for knowledge element of type B fraud Intention to defeat that interest: knowledge of an unregistered interest alone is not sufficient to be fraud (Assets), often not an email saying yes I really want to defeat it so have to infer it from the circumstances and that can be difficult (example in Bunt) Lock Yew, Harris, Bunt, Assets

2. Statutory requirements of section 6:  Fraud requires actual dishonesty (Assets) o Inquiring into actual state of mind of registered proprietor or agent o S6(1) forgery or other dishonest conduct o Point out what the alleged fraudulent behavior is o Assets: actual dishonesty – subjective. Constructive not enough. Not enough to say that might have found fraud if had been more vigilant / made more enquiries. However, failure to act on suspicion might be fraud if it can be shown his suspicions were aroused and he abstained from making enquiries because feared of learning the truth. wilful blindness = suspicion has been aroused. RP must know of fraud or irregularities – or suspicious of such – by someone else. o BUT Dollars and Sense 2007: “wilful blindness to the lack of proper attestation could amount to LTA fraud (even without any suspicion of forgery) – talking about how the lawyer had been wilfully blind regarding the lack of proper witnessing. (Obiter) o Beale: fact Beale knew Māori had an unregistered interest not enough – would need to know of Cooper’s fraud. Harris: adopts Assets. issue of fraud “a pure question of fact”. o PC Waimiha in Bahr: must have a “designed object to cheat”. (HIGH THRESHOLD) CA Waimiha in Estratiou: whether the purchaser knew enough to make it his duty as an honest man to stay on his land.  By the registered proprietor or their agent (Assets, s 6(1)) against the previous registered proprietor or owner of unregistered interest o If agent is, agent’s fraud will effect the RP’s title (Breskvar: even if Wall wasn’t party to fraud, P’s fraud was going to effect his title regardless)  No supervening fraud (s 6(1), s 6(2)(b)(ii)  fraud must occur in the process of acquiring or registering the estate or interest o Needs to be before or at the time of registration o If someone forms dishonest intent after registration, not going to be fraud for intent of LTA o Harris: fact H found out it was a 5-year tenancy after the purchase, subsequently challenged, is insufficient. H, at time of purchase, despite thinking it was a weekly tenancy, nevertheless wanted to honour that.  Can question this: H lived next door, had known F had been there for awhile. Is it really reasonable to think F was on a weekly lease. However, this argument would be at best constructive fraud (something you should have known).  Timing is the difference between Harris and Loke Yew: while both purchasers gave an undertaking to protect unregistered interest. But LY had an intention defeat before the registration. Whereas, Harris made the undertaking based on a mistake belief regarding the unregistered interest.  No constructive notice (s 6(4)) o Idea that what would a reasonable person have known and done in this situation, would a reasonable person have investigated further – we don’t care about what the reasonable person would have done, it is about what the actual individual knew or intended with their actions

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Efratsiou? There was no conclusive evidence E knew Mr G or knew about Mrs G, or Mrs G unregistered interest. Are the four factors just going to constructive fraud – RP would not have purchased. ME: is this because of the test they applied (CA Waimiha, not the PC Waimiha).

Assets:  “fraud is meant actual fraud i.e. dishonesty of some sort, not what is called constructive or equitable fraud”  “the fraud which must be proved in order to invalidate the title of a registered purchaser for value, whether he buys from a prior registered owner or from a person claiming under a title certified under the Native Land Acts must be brought home to the person whose registered title is impeached or to his agents. Fraud by persons from whom he claims does not affect him unless knowledge of it is brought home to him or his agents”  “The mere fact that he might have found out fraud if he had been more vigilant and had made further inquiries which he omitted to make does not of itself prove fraud on his part. But if it be shewn that his suspicions were aroused and that he abstained from making inquiries for fear of learning the truth, the case is very different and fraud may be properly ascribed to him”  “A person who presents for registration a document which is forged or has been fraudulently or improperly obtained is not guilty of fraud if he honestly believes it to be a genuine document which can be properly acted upon”  “Their Lordships base their judgment on the conclusiveness of the registered title in the absence of fraud” Fraud by agency? 1. Fraud needs to be brought home to registered proprietor or the registered proprietor’s agent (Assets, s 6(1))  “The fraud which must be proved in order to invalidate the title of a registered purchaser for value” (Assets) “Fraud by persons from whom he claims does not affect him unless knowledge of it is brought home to him or his agents” (Assets)  Efratsiou: Mr G (husband) – clear fraud  G was a constructive trustee for his wife (knew $ owed to her), selling land clearly intended to defeat wife’s equitable interest, spent the proceeds, deprived wife of the value of the property. RE agent – party to the fraud  knew the problems between the couple, the fight (had paid for husband’s flight), knew of wife’s interest in land, knew the house’s value and knew offering it undervalue.  Mr E – the test applied did not require actual knowledge of Mrs G’s adverse right but enough for Mr E (in his duty as an honest man) to know enough to enquire further, refrain from purchasing or purchase subject to the rights)  Factors: price (significantly undervalue), speed of sale (3 days), inspection (E did not inspect the house), continued living (E allowed Mr G to continue living there) = E knew enough  Harris emphasised how fraud is a matter of fact and subjective. But this analysis looks like we are finding E fraudulent as a matter of circumstances (objectivity/RP in shoes of E). 2. Draw on Dollars and Sense  Two issues in Dollars and Sense: o 1. Agency: although the court knew it was clear Rodney had been fraudulent, that fraud had to be brought home to Dollars and Sense as the registered proprietor  court said that Mr T who was the lawyer was Dollar and Sense’s agent and Mr T, in departing from the commercial standard of practice, by giving Rodney blank documents, he had allowed Rodney to forge the document so that meant that the fraud could be attributed to Dollars and Sense through the agency of Mr T o 2. Whether Mr T’s conduct was also fraudulent – CA said not enough for wilful blindness Nathan v Dollars and Sense 1. Agency issue: Was Rodney Dollars and Sense’s agent? A. Actual authority – given authority to act as agent? o Commercially unrealistic not to view this as agency B. Apparent authority (none here) – behave in front of third party as though you are an agent, the third party relies on his representation as agent *The authority in question therefore must be ACTUAL authority o No clear contract/wording asking for them to be agent o Agent has more substantive tasks [25]  RN undertook substantive rights that affected his parents’ rights o HC, COA, and SC all agree this is agency o Artificial and commercially unrealistic to view RN as not being am agent [26] 2. Was there fraud committed within the agency? a) Authorised act – did they create the agency and prescribe the scope ○ What act has the P authorised? ○ Here fraud was not authorised ○ Dollars and Sense  Yes: tasked with getting the signature, obtaining the certificate of title, insurance policy document, fulfilling statutory duties of initial disclosure, statement of covenantor. All solicitor’s communications went via Rodney.

There is a distinction between acting as an agent and being a mere conduit for delivering documents ○ This is a finding of fact – what did the fraudster have to do on the facts? b) Authorised mode: close connection between agents act and task ○ SC says that the main thing is not to look at whether they have the authority to commit fraud but whether the conduct falls within the scope of the task which the agent was engaged to perform ○ Fraud closely related to th...