Week 6

LAWS216 Week 6

Torrens title:

Essay tips:

1) Look at instructions as to what you're meant to do (i.e. font, size and spacing) - Lawyers need process and consistency, and to follow instructions.

2) Footnoting - follow AGLC3 please!

Torrens title:

• Introduced in SA parliament in 1858.
• Major problems with OST: difficulty and expense with searching and proving title, lack of any purchaser security even after exhaustive searches have been undertaken, possibility of latent defect in title such as void instruments along the chain of title, and impossibility of ascertaining the existence of certain interests such as adverse possession.
• Arose from dependent nature of title - and may be one weak leak in entire chain, and can impact purchaser many years later. Possession and publicity of ownership were hallmarks of title.
• Torrens vision: based on idea of state guaranteed title - where interests were created and transferred by the act of registration itself. Weren't created by executing deeds by parties, any interests in land was ascertainable by search of a single register. Torrens - make title independent of its history, and register itself was conclusive of all title.

Torrens system was based on 3 main principles:

1. Mirror principle: register reflects all facts that are material to an owners title to the land. Nothing that is incapable to register, is deemed to be accurate and complete. Register reflects everything that is relevant.
2. Curtain principle: emphasises that as far a proposing purchaser is concerned, the register is the sole source of information about the legal title - he or she does not have to go back behind the register.
3. Insurance principle: If there's any mistake, the state guarantees that the register is correct - and if there are any mistakes, the state will compensate.

Torrens transition:

- Were problems, but legislation was passed (i.e. Real Property Act 1900).

Torrens principles:

1. System of title through registration.
2. System is dependant on single register.
3. Register contains all dealings and recordings relevant to that lot that is identified by that particular folio number.
4. Interests pass only by registration.
5. State guarantees the correctness of the register, and compensates those who suffer if it is not correct.

Links:
http://www.lpi.nsw.gov.au/land_titles/public_registers/torrens_title_register
and
http://www.lpi.nsw.gov.au/__data/assets/pdf_file/0008/25586/01T.pdf 

Register:

Each jusisdiction in AUS, register of interests of land is administered by the registrar general  - who have responisbility of maintaining the register. Process of registration is in part 6 of the Real Property Act.

Section 31B: Registrar general must maintain a register composed of folios, dealings and records of instruments. And may be maintained in on upon any medium or combination of mediums capable of having information recording in or upon them.

Folio: 321 of RPA 1900 - document that describes the land by recording information of that land, estate or interest in that land (i.e. fee simple, or life estate etc.), proprietor of estate, particulars of all other estates and interest in the land - mortgages, leases, easements (in the second schedule). Each folio has its own distinct folio number or identifier.

Under section 33 of RPA, registrar general can issue a duplicate a paper copy of certificate of title.

s 38 - can refuse any dealings unless there is a significant duplicate of title.

Usually held by registered proprietor - or mortgagee, and will hold it to prevent any unauthorised dealings with the land. Has the effect of a deed dually executed by the parties who signed it.

2 Folios: Computer and paper duplicate certificate of title may not always be exactly the same. Why? Paper may not have updated with dealings added to computer form.

Caveat:  They are means of which a holder of an unregistered interest can attempt to protect their interest in the property - notice that someone may have another interest in the property - i.e. Divorce Proceedings. Notation on the folio, not a registered interest, but that someone is claiming an interest.

Root of execution: May appear on computer folio but not in paper - claim over property with respect to a court order. s 105 of RPA 1900.

Never rely solely on paper certificate of the title. Settlement of any matter shouldn't occur until after a final search.

What can be registered?

Most interests in estates in OS can also appear in Torrens.

Part 7 in RPA is headed Dealings - and 3 types of dealings: Transfers (including easements), Leases and subleases, and mortgages.

Most common estate is an estate in fee simple. Has to be in approved form.

You can no longer register a marriage certificate in Torrens, nor can it be a register of trust over land in a Torrens system. Only dealings in the approved form are able to be registered. Number of these forms that are available - downloadable from above website.

Attested, stamp duty has been paid and can be registered.

Summary:

• Registrar of titles (Registrar General) maintains a register of land holdings.
• Each folio details the people holding the interest in that parcel of land.
• Certificates of title are duplicates of the computerised folio, however may not have all the information on the digital version.
• Registered interests: Mortgages, leases over 3 years, title to the property, transfers, easements.
• Unregisterable interests (incapable of registration under Torrens,but may still have priority in a dispute): Tenant in possession of less than 3 years, adverse possession, equitable titles (normally protected by means of a caveat).
• Registered proprietor is party names as holder of interest in land in the folio. Is able to deal with land as the owner - can lease, sub-lease, mortgage the land etc.
• Registrar general has certain discretionary powers - request documents, request parties to provide evidence in disputes, and the registered interests arise upon registration. In that sense, it is the registration that confers the legal title. 
• Unregistered interests can exists off the register - register cannot be COMPLETE record, because there are other interests that are capable of being acknowledged.

What is the effect of registration?

Ultimate goal to achieve is indefeasible title. That's the foundation of the Torrens system. Not actually defined in RPA, and Sigarfield Barwick - described it as a convenient description as immunity from attack from adverse claims to the land or interest in respect to which he is registered which a registered proprietor enjoys.

Sections that deal with title:

Section 41:

Dealings are not effectual until recorded in Register: (1) No dealing, until registered in the manner provided by this Act, shall be effectual to pass any estate or interest in any land under the provisions of this Act...,

Is the act of transfer that grants or removes title, not the actual act of parties in executing deeds or any other instrument.

Compare to old system:

Forged instrument - OS: void under Nemo-Dat rule, registration would make no difference as there is a reliance on parties' own actions to transfer title. Void instrument doesn't pass any title.

Section 42:
Estate of registered proprietor paramount: (1) Notwithstanding the existence in any other perosn of any estate of interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Register shall, except in case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded except...:

Section 43:
Purchaser form registered proprietor not to be affected by notice: (1) Except in the case of fraud no person contracting or dealing with or taking or proposing to take a transfer from the registered proprietor of any registered estate or interest shall be required or in any manner concerned to inquire or ascertain the circumstances in or the consideration for which such registered owner or any previous registered owner of the estate or interest in question is or was registered, or to see to the application of the purchase money or any part thereof, or 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 imputes as fraud.

- Knowledge of trust is not to be considered fraud.

Interpretation of this was in 2 cases:

Fraser v Walker 1967: (Privy council NZ)
Mr and Mrs Fraser were registered proprietors of a farm property in NZ. Mrs Fraser pretended to act upon herself and her husband, arranged another mortgage over the property in favour of the Radonski's. 3000 pounds. Took mortgage documents to solicitors, and clerk witnessed Mrs Fraser's signature, and forged signature of Mr Fraser. No payments were made on the mortgage. Radonski's sold the property to Walker, and then Walker then commenced proceedings at magistrates court for possession for property - and Mr Fraser found out what Mrs was up to. In this case, Privy Council held up doctrine of immediate feasibility - when Walker obtained title innocently, that was upheld. Went from Frasers --> Radonski's --> Walker. Radonski's took their interest on void instrument which was forgery, which was passed onto Walker who was able to obtain indefeasible title.

Breskvar v Wall (1971) 126 CLR 376:

High Court decision.

B's wanted to borrow money from Petrie. Rather than entering into a mortgage, but instead executed a memorandum of transfer of their ownership in the interest of land - which they gave to P with a duplicate certificate of title. (Dangerous but common) Was an informal mortgage. Transfer was void under QLD legislation, because name of transferee wasn't filled in. Transfer was only to act as security, in case they didn't pay the money - P was to hold that until the mortgage was to be discharge. P then fraudulently entered the name of his grandson (Wall) in the transfer of the land, and W became the registered proprietor. Evidence that W knew of what P was doing. W, then entered into a contract to sell the land to Alban Pty Ltd. Alban now has an equitable interest. A was an innocent purchaser - and W owned the property - and entered into this contract, but before registration B's found out and launched a caveat to prevent A's registration. Fight between two innocent parties (B's and A). Alban is holding valid and specifically enforceable contract - and held up immediate indefeasibility.  

A would only have needed to look at registered title of W - and have that contract specifically enforced.

Where do we end up? Concept that state of registered proprietor is different for bona fide purchase:

• RP won't be affected by mere notice of a prior equitable interest.
• No requirement that purchaser provide value.
• Volunteers are protected by concept of immediate indefeasbility.
• Nemo dat principle doesn't apply in Torrens, where prior dealings are concerned.
• Bona fide has some parallels, as there is an exception to fraud - but not the same. Another group of exceptions to indefeasibly called the in personum exceptions.

Issue: Question of immediate indefeasibility as opposed to deferred indefeasibility.
(Indefeasibility = freedom from attack).

• Immediate indefeasbility falls as soon as when registration takes place.
• Deferred indefeasibility the person who registers a void instrument, can't necessarily resist a challenge to their title from the true owner - even if they have acted without fraud. i.e. if you receive title from a fraud, your title could be attacked. Deferred until the 3rd person registers their claim.

i.e. B v W = Alban hadn't registered their title, so the title that they were receiving from was from W, who had obtained that title fraudulently - had Alban then registered their title, then the next person who be ok - as A is fine.

Which is the better system? Depends on what you want to achieve.

Immediate Indefeasibility: RP's run risk of being defrauded, if signature is forged then the victim of fraud will lose their property in favour of the person who bought from the fraudster.

It isn't something that can't be questioned at this point.

Summary of immediate indefeasibility:

Line of indefeasibility.

• When you become the RP, you take the interest free from all other interests that are not recorded on the register. i.e. Mortgage not on register, RP will not take on that mortgage.
• Registration will cure all defects in the title. RP has title that cannot be set aside for any defect like forgery.
• Notice of another interest does not make a difference if it is not in the register.
• 8.37 of textbook: Further examinations demonstrate for example, that registration also confers indefeasibility on the provisions of the dealings that are intimately connected with, or have direct application to the interest. Not restricted to the interest itself.

Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73: 

The limits of indefeasibility - Indefeasibility given to a transfer of the fee simple in a horizontal stratum where the dealing was described as a 'Right of Way'.

Involved land in George Street, Sydney. 

Issue: If the registrar has interpreted and recorded an interest as one thing (i.e. an Easement), but it in fact is something else, can that additional right be indefeasible?

Dispute was over hatched area over Bursill's land, where there was a building - and built over a right of way (easement). Certificate of title of land that was owned by Bursill, had a notification that the land was encumbered by that right of way. Created by and more fully set out, by the transfer document 7922. R had recorded easement burdening Bursill's land. When that transfer was investigated, contained the transfer of the buildings on top of it (the lane). The further transfer said that there was a further conveyance of the airspace above the right of way, not just the right of way. Rights transferred were much greater than a right of way. 

Transfer of right of way + airspace, but only easement was registered. So what was indefeasible?

Bursill argued that B could only hold such interests that had been recorded on the register. And certificate of title on BU's land didn't record any actual conveyance of the airspace at all. HCA had to decide whether the registered proprietor's title, BU, was only burdened by the rights the R had given and were on the CoT. HCA found that it wasn't just the right of way, but burdened by the airspace as well. Prudent conveyancer would have examined transfer 7922, to see which rights were granted under it, who it was granted to and what the extent of them were. Despite the fact that the R had only registered the right of way, a prudent conveyancer would have examined all those documents, and if they didn't they should have.

Mercantile Credits v Shell Company of Australia (1976)

Not every provision of a R lease necessarily gives the benefit of IN of a title, and court had to decide whether an option to renew was covered by indefeasbility.

Shell had 5 year registered lease, and that lease had 3 options to renew for 5 years each. Between 2nd and 3rd renewal of the lease, the property was mortgaged to Mercantile. RP then defaulted on the mortgage, and issue became priority dispute between mortgagee's power of sale (because they had defaulted), and Shell's option to renew the lease. Notice of intention of renewal had been given, but a new lease hadn't been registered.

Did the option to renew gain indefeasibility? HCA said that it was, because it was an ordinary incident of a lease - Gibbs - right of renewal is so intimately connected with the term granted to the the leasee, which it qualifies and defines, that it should be regarded as part of the estate or interest that the leasee obtains as part of the lease, and on R is entitled to the same priority as the term itself.

So intimately connected with interest of the lease, that the option itself should gain indefeasibility. Rather than being a personal right, it was actually part of the option formed as part of the estate as it touched the land itself.

2 aspects to mortgages under Torrens Title:

1. It gives property as security for the repayment of the loan. It mortgagor defaults, then lender can sell the property if repayment isn't met.
2. Mortgagor has a personal obligation to pay. Enforced if the security property isn't enough to pay off the entire mortgage.

Lendors:

Can file a memorandum of mortgage in the office of the registrar general (pursuant section 81A of the RPA). Provisions of that memorandum constitute part of the register, then the expanded terms of the mortgage are set out.

Chandra v Perpetual Trustees of Victoria:

Concerned a new security, called an all money's mortgage, where the mortgage form itself doesn't indicate the money owing - but said to secure all loans and advances over a period of time (blanket security). C and PToV, rogue (Joey Pan), obtained a new duplicate certificate of title of Mr and Mrs C's house, by lodging a forged stat dec and got new certificate of title to obtain 2 advances from PT of $500,000 in on the 17th of April 2005, and one for $250,000 on the 2nd of May. He was investigated by the police and jailed.

There were 2 important documents:

1. Approved form of mortgage.
2. Collateral loan agreement (T&C of loan and how much it secures).

PT says they have indefeasibility over the whole document, the money was owed to them. It was argued that mortgage was security for any money owing under the collateral loan agreement - there was no actual debt between C and PT - so the mortgage secured no money owing and could be removed. J Bryson - PT could recover from the insurance fund. In that case, plaintiff seeking an order against perpetual, and that no money was secured by the mortgage.

Bryson said that only agreement that could have been secured agreement, was the loan agreement. If it was forgery, then plaintiff's could have had nothing to do with it. Judge was satisfied that there was no agreement entered into PT and C, which could have been characterised as a secure agreement.

Perpetual Trustees v English (2010):

Confirmed line of authority: involved mortgage and collateral loan agreement. Mr and Mrs E had been separated for a number of years, and in 1985 they purchased a property in Castle Hill, and that was their matrimonial home - and joint proprietors of the property. And there was a first registered mortgage on that property. They separated, Mrs E left home but Mr E stayed in the property. In 2003, Mr E made a loan application to an entity that was associated with PT for $536,000 in connection with his earth moving business. Application was made in the name of Mr and Mrs E, and Mr E forged the signature of Mrs E, and stated that she lived at a different address - and was witnessed by a solicitor. This made a collateral loan agreement, and he defaulted on his payment and was declared bankrupt.

Textbook: 8.51 - wording is crucial, loan was expressed as offered to 'you' as meaning both husband and wife. Judgement was delivered by J Sackville, and rest of the court agreed with him that Mrs E was not liable under the mortgage. Because of the construction of the loan documents, and R of mortgage and forgery - she couldn't be liable - and wording was discussed in below case.

Van den Heuval v Perpetual Trustees Victoria Ltd [2010] NSWCA 171:

Hodgson JA:

' The registered mortgage was expressed to be security for payment to Perpetual of 'the secured money' (Blue 49H). 'Secured Money' was defined to mean all monies payable or contigently owing to Perpetual under a 'Secured Agreement' (Blue 48D). 'Secured Agreement' was defined (Blue 47V) to mean: "Any present or future agreement between me or us, or any one of us, and You, or

An agreement which varies such an agreement'".

The expression 'me or us, or any one of us' was apt to refer to the persons named as mortgagors, that is the husband and wife, or either of them (Blue 47F; and 'You' referred to Perpetual.

Young JA: An additional complication is that a so-called 'plan English' document was employed. This endeavoured to deal with the situation of a loan to two persons by defining the word 'I' as embracing 'us' but forgetting to define 'we' and sometimes using 'we' instead of 'I'. If plan English is to be employed in a document, great care must be taken to see that precision is not lost as it was in the case of the present mortgage.

In this case - wife was held liable. Difference between E and this case, is that if the clause is expressed to be joint and several, it will include the whole interest (and the innocent party), where it was expressed as YOU in E where both parties had to agree.

Courts pointed out - matter of construction.

Section 56C1 of the RPA: requiring the mortgagee to take reasonable steps to identify the people executing the mortgage. Reasonable are name, DOB and residential address. Puts onus back on the mortgagee.

Things that don't get I by R:

• Boundaries of property.
• Transactions that do not directly affect the land.

Exceptions to I:

1. Fraud exceptions (what is the meaning of fraud under RPA, who has to be guilty of the fraud, and when does it occur).
2. In personum exceptions.