Indefeasibility of Title

Immediate indefeasibility

Frazer v Walker

Recognized in s 135 of the Conveyancing Act

Which view is to be preferred

Registration is conclusive to confer unimpeachable title; - this is so whether or not the RP acquires registration pursuant to a void instrument
- This is in line with the general 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
A registered mortgagee is a registered proprietor for the purpose of the paramountcy sections

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

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

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

Other void instruments come within the rule:

Unauthorized alteration by mortgagor’s solicitor (Morton v Black)
Registration purporting to be created by POA created after execution of the document (Broadlands v Sly)
Mortgage given by minor that was void by force of statute (Horvath v CBA)
Registration of invalidly executed mortgage (Co-op Property Dev v Cth Bank)

Breskvar v Wall

‘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

Clements v Ellis was not correctly decided – Frazer v Walker implies this
Here there is a competition between equitable interests to be resolved according to settled principles of equity as per Rice v Rice
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 holder acted upon

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
The appellants armed the second respondents with the means of placing himself on the register:
- They executed a memo of transfer without inserting the name of the purchaser
- They handed over the duplicate COT and thus authorized the second defendant to act as a mortgagee

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’

Indefeasibility for what and for whom?

Concept	Key Cases	Issue	Principle		Ratio	Comments
Indefeasibility of terms	Mercantile Credits 5+5+S defaults + not touching	Is a right to renew indefeasible	Gibbs J – It must be “rightly said to be a part of the estate or interest” 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” Barwick CJ – it depends on whether or not the right is specifically performable (no other adequate remedies, court capable, no inequitable conduct etc.)		“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” A right to purchase on the other hand would not be – it is collateral and does not affect the estate or interest in land	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. 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 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 not be indefeasible 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
	Yazgi v PC Housing loan contract	The extent of indefeasibility of a facility mortgage	The question is ‘indefeasibility for what’ and the answer depends on the wording of the covenants in the particular mortgage In the case of a traditional mortgage the statement of the sum lent was prima facie evidence of the existence of a debt Where there is no statement as to the amount lent, the indebtedness secured must be established in some other way		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 Since Sabah’s signature was forged, there was no loan agreement to which the schedule referred (‘non est factum’)
	Perpetual Trustees Victoria v English	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 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. But what happens to Mr English? An equitable mortgage is enforceable against him by way of an estoppel or an implied contract
		Personal covenants		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)		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)

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

The Fraud Exception

Loke Yew

Selangor

Fraud is an exception to indefeasibility and is a complete answer to a valid certificate of title

The formal transfer was obtained by deliberate fraud, the object of which was to defraud Loke Yew of his interest

Lyria identifies two steps when it comes to establishing fraud:

Is what was done ‘fradulent’ in the sense used in the case law
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)

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

Fraud and Agency

**Schultz v Corwill Properties**

There are broadly two classes of case

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...

#7195 - The Torrens System - Property and Equity 2

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