WEEK 5 Property Torrens Title WEEK 5 PDF

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Some notes on torrens title...

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WEEK 5 PROPERTY LAW – TORRENS TITLE OLD SYSTEM TITLE -

Old System title existed before Torrens title All Crown grants prior to 1 January 1863 were old system title Old system title remains as such until converted to Torrens title o Either by application or through government conversion projects

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Old system title requires a ‘good root of title’ to be established o Go back through an unbroken chain of title deeds o Needs to go back 30 years to establish a good root of title (Conveyancing Act 1919 (NSW) General register of deeds: Conveyancing act s184C o Not a guarantee of title o Time of registration determines priority interests

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ISSUES WITH OLD SYSTEM TITLE 1. Difficulty of searches a. Old deeds may have been lost or destroyed b. Deeds may be hard to decipher or interpret 2. Problems with title may not be evident a. Fraudulent dealings b. Loss of title through adverse possession DEVLOPMENT OF THE TORRENS TITLE SYSTEM -

Attempted to rectify the problems of the old system Modified the old system The Real Property Act 1958 (SA) commence 1 July 1858 Torrens became the first registrar in South Australia

THE TORRENS SYSTEM There are three principles under the Torrens system 1. Mirror principle a. ‘The registrar is everything’ Waimiha Sawmilling Co v Waione Timber Co b. Register = central component of the Torrens system – ‘reflects all interests in the land for the time being 2. Curtain principle a. No need to go behind the register Gibbs v Messer b. Register’s proprieter’s title is indefeasible (subject to limited exceptions) 3. Insurance principle

a. Persons who lose an interest in land as a result of the operation of the Torren’s system may claim against the Torren’s Assurance Fund THE TORRENS REGISTER -

The register is central to the Torrens system The register consists of folios and dealings A folio consists of o A description of land o A description of the estate or interest in the land for which the folio is created o A description of the ‘proprietor’ of the estate o Particulars of all other estates and interests affecting the land (RPA S32(1)

THE TORRENS REGISTER – CONVERSION OF OLD SYSTEM TITLE -

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Conversion from old system title to Torren’s has to be done through prime application o Hold fee simple o Life tenant o Mortgager Two forms of special folios regarding converted land o Qualified folios – there is a notation (caution) that there may be interests in the land which are not recorded in the folio, which the land is held subject to (RPA pt 4A) o Limited folios – the boundaries of the land ‘are not sufficiently defined to enable the Registrar-General to create an ordinary folio’ (RPA ss 28T(1A), (1))  Limitation can later be cancelled by lodging a survey plan defining the land boundaries or certain other evidence (RPA s 28V)

DEALINGS -

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A Dealing constitutes any instrument except a Crown grant or caveat that in the words of s3(1)(a) of the Real Property act o Registrable or capable of being made registrable under the provisions of this Act, or in respect of which any recording in the Register is by this or any other Act A dealing must be in approved form pursuant to s 104(1) of the Real Property Act Dealings may include o Transfers o Mortgages o Easements The register general can register a dealing even if there is an error or omission s39(2)

THE TORRENS SYSTEM – INDEFEASIBILITY -

Indefeasibility = registered proprietor title is conclusive – subject to limited exceptions (eg fraud brought home to the RP), it cannot be challenged RPA S42(1)

INDEFEASIBILITY DEFFERED VS IMMEDIATE -

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Immediate indefeasibility o An (innocent) person who gains an interest via fraud (to which they are not a party) has indefeasible title on registration Frazer v Walker Deferred indefeasibility o A innocent person who gains an interest via fraud (to which they are not a party) does not gain indefeasible title, but can pass indefeasible title onto the next registered interest Gibbs v Messer

AUSTRLIAN POSITION ON INDEFEASIBILITY -

The current position is immediate indefeasibility Registration of fraudulent dealings will give the RP indefeasible title, in absence of fraud which can be brought home to the Rp

EXCEPTIONS TO INDEFEASIBILITY FRAUD -

Fraud is an exception to indefeasibility RPA s42(1) No definition of fraud in the RPA There is a lot of conduct which can determine fraud

DEINING FRAUD -

Fraud under the Torren’s system means ‘actual fraud’ which is ‘dishonesty of some sort’ Assets Co Ltd v Mere Roihi It requires ‘personal dishonesty or moral turpitude Butler v Fairclough Fraud must be ‘brought home’ to the current Registered Proprietor to invalidate the title Assets Co Ltd v Mere Roihi; Cassegrain

NOTICE -

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Mere notice of an interest that isn’t registered Old system title specific set of rules between different interests in land o Equitable interest o Legal interest Priority rule old system title o Notice of equitable interest takes it subject to that interest o Denial of that interest could amount to fraud

TORRENS SYSTEM NOTICE -

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Mere notice of an unregistered interest does not amount to fraud under Torren’s title o Not fraud under Torrens to have notice of an unregistered interest, register, and then claim indefeasible title to defeat an unregistered interest. RP ‘may shut their eyes’ to the unregistered interest: Munro v Stuart (1924) 41 SR (NSW) 203 RPA s 43(1): o ‘Except in the case of fraud no person contracting or dealing with or taking or proposing to take a transfer from the registered proprietor … shall be affected by notice direct or constructive of any trust or unregistered interest, any rule of law or equity to the contrary notwithstanding; and the knowledge that any such trust or unregistered interest is in existence shall not of itself be imputed as fraud.’

NOTICE AND FRAUD -

Notice of an unregistered interest alone not fraud, but notice combined with other factors may constitute fraud Examples of situations held to constitute fraud: o Notice of the unregistered interest before registration and giving a dishonest assurance that the interest would be preserved, then relying on registration to defeat the interest: Loke Yew v Port Swettenham Rubber Co Ltd [1913] AC 491; see also Bahr v Nicolay (No 2) (1988) 164 CLR 604 o Deliberately frustrating another’s efforts to register: Costin v Costin (1994) NSW Conv R 55-715

FRAUD AND WILLFULL BLINDNESS -

Assets Co Ltd v Mere Roihi: o ‘the mere fact that [the purchaser] 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 shown 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 EQUITABLE FRAUD -

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is equitable fraud sufficient to establish fraud under the Torrens system for the purposes of invalidating title? ‘Equitable fraud’ (or ‘constructive fraud’) involves the breach of an obligation imposed in equity for which a court of equity would intervene o Conduct does not have to involve intention to deceive: Nocton v Lord Ashburton o Includes eg undue influence, unconscionable dealings and resiling from promises about property rights Equitable fraud in terms of having mere notice of an unregistered (‘equitable’) interest and then registering an interest which defeats that person’s interest is not fraud under the Torrens system

Bahr v Nicolay (No 2) (1988) 164 CLR 604: ‘not … all species of equitable fraud stand outside the statutory concept of fraud’ Bank of South Australia v Ferguson (1998) 192 CLR 248 – High Court commented that ‘not all species of fraud’ which might give rise to equitable remedies will be statutory fraud, which implies some may be Later cases have held that dishonesty/moral turpitude is required: Grgic v Australia and New Zealand Banking Group Ltd (1994) 33 NSWLR 202

FRAUD BY AGENTS -

Fraud must be ‘brought home’ to the registered proprietor or their agent if title is to be defeasible or their agent if title is to be defeasible Assets Co Ltd v Roihi; Cassegrain There must be some fraudulent act by the Agent Fraud by RP’s Agent o Has agency been created? o Did the agent (acting fraudulently) act within the scope of their actual or apparent authority? o If the agent has knowledge of fraud -> can the agent’s knowledge be imputed to principal? Generally, it will be Schultz v Corwill Properties

Volunteers -

In NSW volunteers gain indefeasible title upon registration (Bogdanovic v Koteff (1988) 12 NSWLR 472), EXCEPT as provided by specific statutory exceptions o eg the statutory exception relating to fraud and volunteers in s 118(1)(d)(ii)

Volunteers, Indefeasibility and Fraud: RPA s 118(1)(d)(ii) RPA s 118(1)(d)(ii): 118 Registered proprietor protected except in certain cases (1) Proceedings for the possession or recovery of land do not lie against the registered proprietor of the land, except as follows: … (d) proceedings brought by a person deprived of land by fraud against: (i) a person who has been registered as proprietor of the land through fraud, or (ii) a person deriving (otherwise than as a transferee bona fide for valuable consideration) from or through a person registered as proprietor of the land through fraud, … Effect of s 118(1)(d)(ii) = if the RP was a volunteer (ie not a bona fide purchaser for valuable consideration) and derived their title from a person who had become the RP through fraud, their (ie the volunteer’s) title is defeasible...