Introduction to Torrens System:
Indefeasibility
Assoc Prof Cameron Stewart
(c) Cameron Stewart 2009
Registration Systems
• Problems with fraudulent transactions in the
early colony
• 1800 – order of Governor King that all
agreements concerning land be in writing or
entered into books kept at Sydney, Parramatta
and Hawkesbury
• 1802 – Judge Advocate’s office
• 1817- Gov Macquarie – Fraudulent against a
bona fide purchaser for value
• 1825 – Registration Act – substantially amended
over time and then repealed in 1984 and
sections transferred into the Conveyancing Act
(c) Cameron Stewart 2009
Problems with the deed registration
system
• Improved level of knowledge
• Offered greater degree of protection
But
• Did not grant a total security of interest
• Purchasers took subject to unregistered interests which
have not been documented
• Purchasers take subject to unregistered instruments
which they ought to have discovered
• Purchasers title is still dependant on the chain of title
and the risk that a prior interest may be invalidated
breaking the chain of title and destroying the purchaser’s
interest
(c) Cameron Stewart 2009
The introduction of the Torrens system
• 1840 – RR Torrens took up post in SA as
Collector of Customs
• Torrens personality – Hanseatic towns –
merchant shipping system – Ulrich’s
influence
• Rip up the old system and start anew –
destroy the dependent nature of titles – title
needed independence – title should be
“indefeasible”
• One document – CT
(c) Cameron Stewart 2009
The introduction of the Torrens system
• 1858 – SA passed the Real Property Act – Torrens
as R-G
• Legal profession in uproar – one judge (Boothby J)
actually removed from office in relation to his
treatment of the Torrens system (1867)
• Now in NZ, Canada, Malaysia, Singapore, Hong
Kong, Israel – didn’t make it in most of the USA (is
in Iowa)
• First introduced into NSW 1862 – later
amendments consolidated into the Real Property
Act 1900
(c) Cameron Stewart 2009
The introduction of the Torrens system
• In 1993, 3% (between 60K and 80K) held in
old system – conversions occuring at around
4,000 a year – at that rate old system will be
phased out in NSW around 2013
• Torrens system was computerized in 1983 –
in 1993 90% computerized
(c) Cameron Stewart 2009
NECS
• The Council of Australian Governments
• The Council of Australian Governments (COAG) has
confirmed the commitment of the Australian
governments to implementing the National Electronic
Conveyancing System (NECS), a single electronic system
for completing real property transactions and lodging
land title dealings in Australia. The commitment is part
of the National Partnership Agreement to deliver a
Seamless National Economy
• February 2009, the National Partnership (NP)
Agreement to Deliver a Seamless National Economy
• 2011 – new e-conveyancing system
(c) Cameron Stewart 2009
The Register
•
•
•
•
Section 31B(1) – folios dealings, prescribed
instruments and records which the
regulations may require
Manual or computerized folios
Record information – description of land,
estates and interests in land, descriptions of
the proprietors of those interests and any
other particulars which affect the land
Distinct folio reference
(c) Cameron Stewart 2009
(c) Cameron Stewart 2009
(c) Cameron Stewart 2009
The Register
•
Certificate of title – a copy of the folio – you normally
have to produce the CT if you want to register a “dealing”
•
“dealings” – any instrument (other than a Crown grant or
caveat) that is registrable or can be made registrable – s 3
•
Approved forms – see the Conveyancing Law and Practice
Reporter or LPI website
•
Upon registration takes effect as a deed between the
parties - s 36(11)
• “The cardinal principle is that the Register is everything”
Fels v Knowles (1906) 26 NSWLR 604 at 620
(c) Cameron Stewart 2009
Title by registration
•
•
Breskvar v Wall (1971) 126 CLR 376, at 381, Barwick CJ
said that the 'the Torrens system ... is not a system of
registration of title but a system of title by registration'.
This statement confirms that, in the context of Torrens
title land, the question of priorities is properly couched
in the terminology of ‘registered’ and ‘unregistered
interests’.
Priority between competing registered interests
determined by time of registration not by date of
execution (s 36(9)) – priority attaches to the interest
created under the dealing but also the terms and
conditions of the instrument
(c) Cameron Stewart 2009
Title by registration
•
The practical significance of registration is ‘to
provide third parties with the information
necessary to comprehend the extent or state of the
registered title to the land in question’: Westfield
Management Ltd v Perpetual Trustee Co Ltd (2007)
233 CLR 528, at 531; 239 ALR 75, at 77
(c) Cameron Stewart 2009
Section 40
(1) A manual folio shall be received by all Courts or persons having by law or consent of parties
authority to hear, receive and examine evidence as evidence of the particulars therein recorded
and shall be conclusive evidence that any person recorded in the folio as the registered proprietor
of an estate or interest in the land comprised in the folio is the registered proprietor of that estate
or interest and that the land comprised in that folio has been duly brought under the provisions of
this Act.
(1A) Where a computer folio certificate is issued in respect of a folio of the Register:
(a) the certificate is evidence of the particulars recorded in that folio, and (b) it shall be conclusively
presumed that: (i) the certificate contains all the information that was recorded in that folio at the
time specified in the certificate,
(ii) the land to which the certificate relates was, at that time, under the provisions of this
Act, and
(iii) a person recorded in the certificate as the registered proprietor of an estate or interest
in the land to which the certificate relates was, at that time, the registered proprietor of
that estate or interest.
(1B) Where, in a manual folio or computer folio certificate, the estate or interest of a registered
proprietor is expressed to be subject to: (a) an estate or interest evidenced by an instrument, (b) a
provision of an instrument, or (c) an enumerated provision of an Act or of an Act of the Parliament
of the Commonwealth,
the whole of the contents of the instrument, provision or enumerated provision, as the case may
be, shall be deemed to be set forth at length in the folio or certificate
(c) Cameron Stewart 2009
Unregistered interests?
• As we shall see some interests can exists without being registered –
they are equitable
• Halloran v Minister Administering National Parks and Wildlife Act
1974 (2006) 229 CLR 545, at 559-60; 224 ALR 79, at 88, Gleeson CJ,
Gummow, Kirby and Hayne JJ, made the following apt observation:
With respect to the land registered under the provisions of [the
Torrens system], references to vesting at law and vesting in equity
are apt to mislead. The Torrens system is one of title by registration,
not of registered title. The assimilation of the registered title to a
legal title may be convenient so long as it is appreciated what is
involved. It is likewise with respect to the use of the term
‘equitable’ to describe interests recognised in accordance with the
principles of equity but not found on the Register.
(c) Cameron Stewart 2009
Indefeasibility of title
•
•
What is meant by indefeasibility? – once an
interest is registered it cannot be set aside
because of some defect existing in the tile
prior to registration
Not specifically mentioned in the RPA - - s
42 (1) confers free ownership on a registered
owner (with exceptions for fraud etc)
(c) Cameron Stewart 2009
Section 42
• 42 Estate of registered proprietor paramount
• (1)
Notwithstanding the existence in any other
person of any estate or 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: .....
(c) Cameron Stewart 2009
Things to note
• The first thing this section does is establish the
indefeasibility principle, and it is expressed in the
section in the following ways:
• notwithstanding that someone else may have an
estate or interest that would have priority under
the old system
• the registered proprietor of land recorded in a
folio shall
• hold their interest ‘absolutely free from all other
estates and interests that are not recorded’
(c) Cameron Stewart 2009
Things to note
• If someone else has an interest in land that under
general land would take priority, it will not affect
the title of a registered proprietor in Torrens Title
system. That registered proprietor will hold their
interest absolutely free from any such claim. So
you can see how that section operates to
overcome the general law system of chain of
deeds and being held subject to any faults in the
earlier chain of deeds. In Torrens, any faults are
irrelevant. You are registered, your estate and
your interest have priority over previous claims
(c) Cameron Stewart 2009
Things to note
• The second point to make is that the principle
of indefeasibility is subject to fraud. The
person listed as the registered proprietor will
hold that interest free from all other claims
unless it can be shown that the registered
proprietor has committed a fraud. So this
provides some protection for a person against
the fraud of the person registered in the folio.
(c) Cameron Stewart 2009
Things to note
• The third point to make is that the registered
proprietor takes the land holding free from anything
except other interests listed on the register. So
registration on Torrens Title system means that you
take your land free from everything but claims already
listed on the register. So people that want to protect
their interests under Torrens need to register that
interest on the folio. This ensures that people taking or
buying land under Torrens Title will take subject to the
interest. Equally as purchaser of land under Torrens
you have an opportunity to check the register before
you buy and become aware of the interests that you
will be buying that land subject to.
(c) Cameron Stewart 2009
Things to note
• The fourth point to make is that section 42 contains
internal specific exceptions to the principle of indefeasible
title. So this means that the registered proprietor will take
the land free of all of interest except any listed on the
register and any contained within the internal exceptions
within section 42 itself. For example, the particular
exceptions listed in section 42 relate to a persons estate as
listed in the register under a prior folio a portion of the land
that has been wrongly described in the folio, or section
42(a)-(d) which sets out other specific exceptions. This
means that you have indefeasible title unless you
committed fraud and your indefeasible title is subject to
anything that is contained on the register and anything
within those listed exceptions.
(c) Cameron Stewart 2009
Section 43
• 43 Purchaser from 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 imputed as fraud.
(c) Cameron Stewart 2009
Section 45
(2)
Despite any other provision of this Act, proceedings for the
recovery of damages, or for the possession or recovery of land, do
not lie against a purchaser or mortgagee bona fide for valuable
consideration of land under the provisions of this Act merely
because the vendor or mortgagor of the land:
(a) may have been registered as proprietor through fraud or error, or by
means of a void or voidable instrument, or
(b) may have procured the registration of the relevant transfer or
mortgage to the purchaser or mortgagee through fraud or error, or by
means of a void or voidable instrument, or
(c) may have derived his or her right to registration as proprietor from or
through a person who has been registered as proprietor through fraud
or error, or by means of a void or voidable instrument.
(3)
Subsection (2) applies whether the fraud or error consists of a
misdescription of the land or its boundaries or otherwise.
(c) Cameron Stewart 2009
Example of indeafeasibility
• Barb steals Able’s CT and uses it to enter into a
contract for sale with Clarence (who know
nothing of the theft). Barb forges Able’s
signature and Clarence resgiters the
conveyance – once registered Able’s interest
in the property is defeated
• Compare that with the deeds registration
system where the registration would not
perfect a fraud
• A can sue B and might also have a right to
compensation under the RPA’s assurance fund
(see later)
(c) Cameron Stewart 2009
Immediate or deferred?
• The effects of this immediate title by registration
is often called “immediate indefeasibility” –
• In the past some courts stated that the RPA did
not act in this fashion – they subscribed to a
theory of “deferred findefeasibility” – where in
our example could have claimed a better title to
the property up until the point that C sold his
interest onto a fourth party (bona fide for value)
(c) Cameron Stewart 2009
Gibbs v Messer [1891] AC 248
• Mrs Messer went on holidays and left her CT with
her solicitor for safekeeping
• He forged her signature to a transfer to Hugh
Cameron (a fictitious person)
• Creswell acting as Hugh, signed and registered a
mortgage to Gibbs
• Deferred indefeasibility applied – not from the
registered proprietor, BFVWN
• Clements v Ellis [1934] 51 CLR 217, High Court
favoured the doctrine of deferred indefeasibility
(c) Cameron Stewart 2009
Frazer v Walker [1967] 1 AC 569
• Mr and Mrs Frazer registered proprietors of a farm in Auckland.
• Mrs Frazer who purported to be acting for both Mr Frazer and herself,
negotiated a loan from a couple - the Radomski’s of 3000 pounds. In order
to secure the loan Mrs Frazer gave the Radomski’s a mortgage over the
farm, however instead of seeking Mr Frazer’s consent for the mortgage
she forged his signature. She took the form to her solicitors office where
she signed her own signature and the clerk witnessed both Mr Frazer and
Mrs Frazer’s signatures, despite not having seen Mr Frazer sign the
document.
• The mortgage to the Radomski’s was registered with the land title office
such that the mortgage appeared as a registered interest on the relevant
folio.
• Mrs Frazer made no payment of either principle or interest under the
mortgage. Eventually after receiving no payments, the Radomski’s
exercised their power of sale as mortgagees of the property and sold the
property to Mr Walker.
(c) Cameron Stewart 2009
Frazer v Walker [1967] 1 AC 569
• As a consequence of the Radomski’s sale of the property
under their mortgage, Mr Walker was registered as the
proprietor on the folio. It was shown in court that neither the
Radomski’s or Walker had any knowledge of the forgery. Once
Walker was registered as the registered proprietor he brought
action against Mr Frazer for possession of the land.
• Mr Walker claimed that until that time he had not know of
what his wife had been up to. Mr Frazer counter claimed
against Mr Walker seeking a declaration that because his
signature was forged on the mortgage form that the mortgage
was null and void and ordered that he be restored to the folio
as the registered proprietor.
• Nothing in s 42 equivalent to suggest that indefeasibility
deferred
(c) Cameron Stewart 2009
Breskvar v Wall (1971) 126 CLR 376.
Breskvar v Wall (1971) 126 CLR 376 - Mr and Mrs
Breskvar executed a transfer to Petrie as security
for a loan. Petrie fraudulently used the transfer
and sold to his grandson Wall, who became
registered owner. Wall sold to Alban Pty Ltd but
before they could register their interest the
Breskvars lodged a caveat which injuncted the
sale. The conflict was therefore between the
interest of Breskvars and the interests of Alban
Pty Ltd
Barwick : 'title by registration'. What sort of interest
did Wall have? What sort of interest does Alban
have? What interest do the Breskvars have?
(c) Cameron Stewart 2009
The Coverage of Indefeasibility
• Sometimes an instrument will be registered but
the folio may not properly or fully describe all
the interests registered - the interest described
in the folio is said to be subject to the actual
import of the instrument (s 42(1)) – Hence in a
case where the folio had not fully described the
transfer of an interest subsequent interest
holders took their interests subject to the original
import of the document and not the register
• Bursill Enterprises Pty Ltd v Berger Bros Trading
Co Pty Ltd (1971) 124 CLR 73
(c) Cameron Stewart 2009
Provident Capital Ltd v Printy [2008]
NSWCA 131
• Printy bought a property in ‘Canoelands’ Sydney in 1986.
• Afterwards he moved to the US where he lived for many
years.
• A ‘rogue’ managed to fraudulently obtain a duplicate CT
from the Registrar General.
• The rogue then used the CT to enter into two loans,
offering the property as security for the loans. Two loans
were made and two mortgages were filled in and registered
on the folio.
• The mortgages were not paid. The applicant in this case
exercised the right to sell the property due to default on
the mortgage and used the proceeds of sale to pay off the
two mortgages owing on the land.
(c) Cameron Stewart 2009
Provident Capital Ltd v Printy [2008]
NSWCA 131
• Printy tried to get the money that the bank
had taken to pay off the loans back from the
bank but he could not challenge the new
registered ownership.
(c) Cameron Stewart 2009
Provident Capital Ltd v Printy [2008]
NSWCA 131
• Importantly • Mortgage One stated that it secured payment for
everything in a memorandum. The memorandum
stated that the mortgagor must pay the money
secured in any related agreement. Another
forged agreement set out the mortgage liability
• Mortgage two stated that it secured payment for
everything in a memorandum. The memorandum
stated that the mortgagor had received $X
amount of money and was obligated to repay $X
with interest.
(c) Cameron Stewart 2009
Provident Capital Ltd v Printy [2008]
NSWCA 131
• Did indefeasibility cover the personal covenant to
repay?
• Mortgages can only be enforced under ss 57-58
• Under s 57(2) a mortgagee may exercise the power of
sale where a mortgagor has defaulted on a mortgage if:
– default has been made in the observance of any covenant,
agreement or condition expressed or implied in the
mortgage; or
– default has been made in the payment, in accordance with
the terms of the mortgage … of [money] the payment of
which is secured by the mortgage;
(c) Cameron Stewart 2009
Provident Capital Ltd v Printy [2008]
NSWCA 131
• So the right to the charge was indefeasible but was the
right exercised properly?
• Mortgage 2: It stated that it secured everything in the
memorandum. The memorandum said that the
mortgagor had received $X and owed $X. The right of
the mortgagee to exercise the power of sale for this
mortgage was not challenged. If you look at the first
limb of s 57(2), there had been a ‘default in the
observation of a covenant express or implied in the
mortgage’ – the obligation to pay was express in the
covenant which was expressly incorporated into the
mortgage
(c) Cameron Stewart 2009
Provident Capital Ltd v Printy [2008]
NSWCA 131
• BUT Mortgage 1: secured the obligations in a memorandum. That
memorandum referred to another loan document in which the
mortgagor had guaranteed ‘all outstanding sums as and when
borrowed’. Mortgage one obligation to pay was not ‘express or
implied’ into the mortgage doc. The mortgage doc referred to a
memorandum which did not, itself, contain the obligation to repay.
So, the right to sell couldn’t come from the first limb of s 57(2).
What about the second – ‘default has been made in the payment, in
accordance with the terms of the mortgage .. of money the
payment of which is secured by the mortgage’. This says that you
can sell the land if there has been a default under the mortgage
with respect to the payment of moneys secured by the mortgage.
Did this give the bank the power to sell?
(c) Cameron Stewart 2009
Provident Capital Ltd v Printy [2008]
NSWCA 131
• No! - what was secured was the right to demand payment of what
was received by Printy, agreed to in the other document.
• As he hadn’t received anything he didn’t have an obligation to
repay: no obligation, no breach , no right to s 57 power of sale.
(c) Cameron Stewart 2009