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The Torrens System Notes

Law Notes > Property and Equity 2 Notes

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Property & Equity 2 - Super Summaries (Torrens System) Indefeasibility of Title Concept

Key Cases

Issue

Immediate indefeasibility

Frazer v Walker

Which view is to be preferred

Principle

*

Ratio

Registration is conclusive to confer

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unimpeachable title; - this is so whether or not the RP acquires registration pursuant to a void instrument

Recognized in s 135 of the Conveyancin g Act

o

This is in line with the general

Even though the signature made the instrument void, it would confer indefeasible title unless brought within a specific statutory exception

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The claim was bound to fail - the first respondents being bona fide purchasers and the appellants not being able to bring the second respondents into one of the statutory exceptions

principle that an RP is immune from adverse claims except those specifically excepted but this in no ways denies the right of a plaintiff to bring an action against an RP in personam

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Comments

'blank = void under stamp act - Petrie puts walls name'

Whether the right to have a transfer set aside for fraud prevails over a subsequent SP contract

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A registered mortgagee is a registered

Clements v Ellis was not correctly

Daniell v Paradiso - The mere fact that the RP entrusts the COT to another doesn't create ostensible authority to deal with the land or estop the true owner from denying this is the case

Menzies J in Breskvar thought it was the breach of the Stamp Act in executing the blank transfer (and handing it over with the COT) that enabled Wall to, in disregard of the Stamp Act, become registered

proprietor for the purpose of the paramountcy sections Breskvar v Wall

Even though immediate indefeasibility is the confirmed theory - there remains the theoretical possibility that "the non-existence of a real person to accept the transfer" like in Gibbs v Messer renders title defeasible

*

decided - Frazer v Walker implies this

If there was no transaction to the third party, the appellants would have prevailed and set aside the transfer; it is the intervention of a BFPFVWN and the creation of their equitable right that changes this

Other void instruments come within the rule:

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solicitor (Morton v Black)

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*

*

Here there is a competition between equitable interests to be resolved according to settled principles of equity as per Rice v Rice

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Priority in time will only be lost by some conduct on the part of the appellants which have contributed to the false assumption that the competing equity

o

*

Mortgage given by minor that was void by force of statute (Horvath v CBA)

They executed a memo of transfer without inserting the name of the purchaser

o

Registration purporting to be created by POA created after execution of the document (Broadlands v Sly)

The appellants armed the second respondents with the means of placing himself on the register:

Unauthorized alteration by mortgagor's

They handed over the duplicate COT and thus authorized the second defendant to act as a mortgagee

*

Registration of invalidly executed mortgage (Co-op Property Dev v Cth Bank)

Property & Equity 2 - Super Summaries (Torrens System) holder acted upon This case falls into Lapin v Abigail - it is also a case where 'an agent exceeding the limits of his authority but acting within its apparent indicia'

Property & Equity 2 - Super Summaries (Torrens System) Indefeasibility for what and for whom?
Concept

Key Cases

Issue

Principle

Ratio

Indefeasibility of terms

Mercantil e Credits

Is a right to renew indefeasible

Gibbs J - It must be "rightly said to be a part of the estate or interest"

"the right of renewal is so intimately connected with the term granted to the lessee, which it qualifies and defines, that it should be regarded as part of the estate or interest"

5+5+S defaults +
not touching

Menzies J - What will be protected by indefeasibility "is a right conferred by covenant which touches and concerns the land and runs with the land"

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Comments

A right to purchase on the other hand would not be - it is collateral and does not affect the estate or interest in land

Barwick CJ - it depends on whether or not the right is specifically performable (no other adequate remedies, court capable, no inequitable conduct etc.) Yazgi v PC

The extent of indefeasibility of a facility mortgage

Housing loan contract

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The question is 'indefeasibility for

*

*

Where there is no statement as to the

Here the mortgage agreement referred to 'moneys...owing...under the Housing Loan Contract" which meant a contract between the husband and wife as 'Borrower' and the mortgagee

In the case of a traditional mortgage the statement of the sum lent was prima facie evidence of the existence of a debt

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Since Sabah's signature was forged, there was no loan agreement to which the schedule referred ('non est factum')

amount lent, the indebtedness secured must be established in some other way Perpetual Trustees Victoria v English

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In the trial court Simpson J says the reference to "I" in the definition of secured agreement was not apt to refer to either Mr or Mrs English - hence both were needed to acknowledge it for there to be a secured agreement

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In the appeal court their honours thought the offer was never accepted in the first place - the agreement required "all of you must sign a return" which was not done.

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But what happens to Mr English?

Benmar v Makucha - lease registered in breach of LGA not defeasible (indefeasible) Karacominiakis v Big Country - covenant to pay rent intimately related to lessee's title upon registration even if it was contrary to the rule in Pigot's Case that the deed was materially altered after execution and hence void

what' and the answer depends on the wording of the covenants in the particular mortgage

*

By force of statute Gibbs J's obiter is irrelevant - s 53(3) Conveyancing Act provides that an option to purchase can be included in a registered lease and if exercised the lessor is bound to the extent it is indefeasible.

Travinto Nominees - registration can't validate an option that was illegal Caleo Bros v Lyon Bros - option is a contingent interest which though can be registered and indefeasible can expire Re Eastdoro - series of options to renew enforceable even though original lease expired and the subsequent lease not being registered (this is relevant where the lease expires - else Mercantile operates) Cf Amber v Herman - lease arising from exercise of option may

Property & Equity 2 - Super Summaries (Torrens System) o

not be indefeasible

An equitable mortgage is enforceable against him by way of an estoppel or an implied contract

Mortgages Traditional mortgage - includes a statement of the principal sum lent and acknowledgement that it was advanced Facility mortgage - mortgage secures money advanced as an independent and identified loan agreement or expressed to be an 'all moneys' mortgage intended to secure all moneys payable from time to time by the mortgagor under any future loan agreement

Personal covenants

Note: It is also important to check the instrument of discharge - this is because a charge can persist even if it is empty until the discharge is called for. Practical effect of this is probably NIL but a discharge can remove the charge on the land but still keep the personal obligation intact (Grundy v Ley) or it can kill both (Groongal Pastoral v Falkner)

French v QLD Premier Mines - Though contained in the same agreement the personal covenant to pay and mortgage security are conceptually distinct PBS v Scorpion Hotels - indefeasibility extends to the personal covenant to pay (obiter) BETTER VIEW: Vassos v State Bank of SA - forged all accounts mortgage - guarantee and indemnity contained in it could not be enforced, the mortgage's effect is limited to rights of recourse against the land Supported in Chandra v PT - One is not liable to mortgagee for personal covenants contained in a forged mortgage But an covenant given by an RP becomes operative in order to make out the mortgagee's charge on the land (Duncan v McDonald NZCA)

Volunteers - Bogdanovic (NSWCA), Conlan v Registrar of Titles (WASC), Farah Constructions (HCA) say they get indefeasibility; King v Smail, Rasmussen v Rasmussen (both VSC) say they do not. Many policy arguments for and against The Fraud Exception Concept

Key Cases

The Fraud Exception

Loke Yew Selangor

Issue

Principle

Ratio

*

*

Fraud is an exception to indefeasibility and is a complete answer to a valid

Comments The formal transfer was obtained by deliberate fraud, the object of which was

Lyria identifies two steps when it comes to establishing fraud:

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Is what was done 'fradulent' in the sense used in the case law

Property & Equity 2 - Super Summaries (Torrens System) certificate of title Fraud as against carelessness

*

PBS v Scorpion Hotels

*

indifference and willful blindness do delineate some types of fraud but they do not extend to negligence and want of due care in making inquiries

Affixation of the company saeal

Attestation of a fraudulent signature

Terms like reckless

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Russo v Bendigo Bank

Fraud means "dishonesty -

Bank of SA v Ferguson - document forged for a different purpose (not to cheat/harm etc.) does not bring the mortgage into the exception

*

She was not aware of the significance of attesting to the mortgage, there was nothing to say she didn't believe it wasn't signed by the person whose signature was fraud, her lack of training accounts for her failure to recognize the legal significance

*

There was no basis for aggregating

Fraud and Agency

**Schultz v Corwill Properties**
There are broadly two classes of case

*

Gerada and the solicitor's knowledge to construct fraud since no combination of acts could together be considered as actual fraud Davis v Williams JT TIC - stamp duty

Attestation done to avoid stamp duty

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The lack of an intention to harm does not justify treating something as a white lie - if one makes a representation knowing it to be false in a material respect and induces someone to act in a way materially different this is sufficient moral turpitude/dishonesty

If so, is it brought home to the RP (Assets Co v Mere Roihi - also says can be based on willful blindness (deliberately abstaining from making inquiries for fear of learning the truth)

In this case the mortgagee (RP) wasn't bound to check that the person who affixed the company seal on it was not a director

a willful and conscious disregard and violation of the rights of other persons" it requires evidence of "dishonesty or moral turpitude"

Stupid secretary

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to defraud Loke Yew of his interest

*

(Hodgson JA): The clerk knew that the R-G would be misled but didn't understand the representation to be material as opposed to a mere formality

Fraud actually committed by the agent of the person whose title is being impeached - it doesn't matter that the agent is acting in his own interests but the agent must be acting within the scope of his actual or apparent authority for the principal to be responsible

*

Where the agent has knowledge of a fraud being committed which will deprive the previous RP of their interest - in this case both a relationship of principal and agent AND a duty to communicate any matter to the principal must be established - this gives rise to an irrebuttable presumption that the agent did communicate it UNLESS the agent was himself involved; in which case the principal can rebut the presumption by providing evidence

On the point of sheeting it to the RP Hodgson JA: It is not, the benefit was trivial and the RP had no choice but to accept the benefit Young J: If there was fraud it was brought home Gazelle J: It was brought home since it was within the registration clerk's authority

J Wright v Ballidu - Attorney enters into a loan agreement with mortgage without authority but affixes to it that it was done under the power of attorney - he was acting beyond his authority. This was not fraud because at the time the new RP thought it was done pursuant to the power of attorney False attestation Grgic v ANZ Banking Group - Bank officer attested on the basis that he thought the impersonator was the RP, hence no fraud - didn't act with

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