#7582 - The Torrens System And Indefeasibility - Property and Equity 2

• The textbook deals with the shortcomings of the common law rule of passing title – namely that a chain of title would have to be shown and that even an exhaustive search of a chain of title didn’t give complete security because of the nemo dat rule. Such cases included:

  • Deliberate removal of a document from the chain of title

  • Retention of title deeds and a fraudulent conveyance – in some circumstances this can result in postponing

  • The principle of non est factum

  • Defects on the chain of title – e.g. incorrect words of limitation which fails to pass title

  • Title deeds didn’t reveal acquisition other than by document – e.g. adverse possession

• The common law rule has been changed by statute – in particular in NSW it is changed to 30 years that the vendor has to prove to be consider a ‘good root of title’

• To avoid having purchasers compelled to search assiduously for good title, certain immunities are provided (e.g. no notice unless the purchaser actually makes investigations prior to the statutory period for the commencement of title) – but this doesn't protect against legal interests, since their enforceability, unlike equitable interests, do not depend on notice

• NSW adopted the Irish system – recording or registration of a deed affecting land isn’t essential to its validity but recorded deeds took priority over ones which were not or which were recorded subsequently

• The Torrens system was different – amongst other things it provided that land alienated by the Crown was to be under that system and only that alienated before retains its characteristic as old system land and therefore subject to the deeds registration system

• Registration isn’t compulsory except in special cases (statutory discharge or mortgages where registration is made a condition precedent to their operation

• Under s184G of the NSW Conveyancing Act provides that instruments made an executed BFFV consideration and registered have priority over those which do not

  • But forged conveyances do not confer validity on otherwise invalid documents and it will not have priority over subsequently registered conveyances (Re Cooper)

  • Hence registration gives priority over all instruments that are unregistered or not registered until later – hence someone who does not have good title at common law (e.g. vendor previously runs off with the fee simple) to get it by timely registration

• Stonham suggests that Torrens is distinguishable from deeds registration in that it involves registration of title not of instruments

• The purpose of the Torrens system was to institute a “simple, cheap, speedy and suited [system of registration] to the social needs of the community”

  • Point is made in the textbook as to just how much of the system is attributed to Robert Torrens; the CB writers suggest that his political activities “were substantially, although not entirely, responsible for securing acceptance...in Australian colonies”

• The Real Property Act (1862) (RPA) provides that all land alienated/granted by the Crown after the date of commencement (1 Jun 1863) was automatically to be under the Torrens system

  • Hence only land alienated before this by the Crown retains its status as old system land

  • In NSW only 2.75% of land parcels are yet to be converted (less by area)

  • The process of conversion involves an applicant contributing to an assurance fund to cover the risk of having deprived a subsisting holder of an interest to registration

• Fee simple owners in law/equity, people entitled to appoint/dispose of the fee simple, and trustees (but not the holder of a mortgage and equity of redemption – unless with the mortgagees consent) can convert land pursuant to the Transfer of Land Act s14(2)

  • This must be accompanied by particulars/documents/known encumbrances/the occupant and the nature of the occupation s14(4)

  • The Registrar is given a broad discretion to decide whether to issue a certificate to the applicant and to what standard the title must meet in order to be accepted under the Act (s17(2))

• People can lodge a caveat to prevent registration (s74B) giving the caveator a number of days to launch proceedings to establish an interest; during this time the Registrar may not proceed with registration but upon its lapse the title can be issued

  • This creates an inherent risk for claimants with interests; without lodging caveats their only recourse is the assurance fund

• In NSW a qualified certificate of title can be issued in doubtful cases (s28B) – this doesn't prevail over subsisting interests, which are recorded as a caution on the title to indicate their existence

  • Their issue needn’t be accompanied by an R-G’s extensive search of the title

  • Generally cautions detailing defects in title will lapse in 12 years (s28M(1)); but if a qualified folio is issued they will lapse within six (s28M(2))

    • This lapse frees the Torrens land from all interests other than those recorded on the title or otherwise protected; but while the caution is extant the vendor’s title is qualified and should be investigated as if it were old system land

• The power to issue qualified title gives the RG power to take initiative to bring land into Torrens system

• In NSW there has been some compulsion to converting land to Torrens with respect to subdivisions; the RG can refuse to register a plan of subdivision unless the relevant documentation s provided, allowing them to subdivide the land under Torrens by issuing a qualified/ordinary folio (s28D)

• In Vic/SA the Registrar is directed by legislation to bring land to Torrens system with ‘all convenient speed’ and requires them to proceed as if applications have been made to convert to Torrens

• In QLD conversion is almost complete and Reformists have recommended compelling the registration of any remaining land

• One of the inadequacies of the common law sought to be relieved by the Torrens system was the idea that a break in the chain of title would destroy the last title-holders title unless a sufficient period of adverse possession could be established; this was overcome by the state publishing an authoriatibe register to guarantee the named proprietor his title

• Hence Torrens attempted to make titles to land independent by making the register conclusive and by barring retrospective investigation of title (Harrison) which requires the register to reflect all facts bearing on the title, relieving people from searching title and from needing to go behind the register

  • This conclusiveness of the register is what is called the principle of indefeasibility – a ‘convenient description of the immunity from attack by adverse claim to the land or interest in respect of which he is registered, which a registered proprietor enjoys” (Frazer v Walker)

• The object of the Torrens system has often been equated with its methods (Hinde):

  • To provide a register from which land dealers can discover all the facts relative to the title

  • TO ensure that land dealers aren’t adversely affected by infirmities in the vendor’s title not appearing on the register; saving the need to go behind the register to investigate title

  • To provide a guarantee by the state that the picture presented by the register book is true and complete – and if not compensation is to be paid to persons suffering loss

• The object of systems such as the Torrens system are security, that is security of transaction

  • Demogue describes this as static and dynamic security

• Section 42 of the RPA provides that Crown grants registered under the Act are conclusive evidence that the person named is seised or possessed of that estate – but also provides that this is not a source of indefeasibility but rather is designed to assist in relation to proof of title

• Section 42 provides that:

  • (1) Fraud will vitiate registered title

  • The estate/interest of the registered proprietor (RP) is subject only to encumbrances which are noted on the registered with two exceptions: interests under a prior registered Crown grant/certificate of title (1)(a) and land included in the Crown grant or certificate of title by wrong description (1)(b)

    • The latter was dealt with in Victoria in the case of National Trustees v Hasset

  • Regardless, there are certain unregistered interests which are enforceable against RP which vary from state to state

• Section 43,43A - the notice provision – somewhat narrows the definition of ‘fraud’ (Templeton v Leviathan) and provides that a registered person isn’t affected by notice, actual or constructive of any interest or subsisting trust [unless a specific statutory interest is protected as an exception]

• But s45(2) provides that a bona fide purchaser for valuable consideration is not left to be open to an action for recovery on the ground that the vendor may have been registered through a fraud or error, or that they have derived title through a person registered through fraud or error

Basic scenario under which a conflict arises: A rogue (F – agent/family member of the registered owner (O)) forges O’s signature on a mortgage/transfers and pockets the proceeds and absconds with the money. The purchaser/mortgagee (P1) registers the instrument, ignorant of the forgery – leaving both O and P1 as innocent parties

• Under the...