Real Property: Exceptions to
indefeasibility
Assoc Prof Cameron Stewart
(c) Cameron Stewart 2009
Last week
• Introd to Torrens
• Indefeasibility
• Fraud
• against an interest holder;
• against the Registrar General – Australian Guarantee
Corp v De Jager [1984] VR 483 – needs dishonesty
(c) Cameron Stewart 2009
Bill introduced on motion by Mr Barry
Collier
I will now move on to the most significant amendment that this bill proposes to make to the Real Property Act,
and that is the section that deals with mortgages. As members of the House may be aware, identity fraud is
one of the fastest-growing crimes in Australia and costs the Australian community billions of dollars every year.
Protecting the community from identity fraud is an important task that we take seriously. The department has
Been involved in an increasing number of claims for compensation relating to mortgage fraud involving what
appears to be a lack of due diligence by some lenders in verifying the identity of borrowers. While the Torrens
Assurance Fund may be available to compensate innocent landowners who are the victims of a fraudulent
mortgage, it is preferable if the fraudulent mortgage can be avoided in the first place. The mortgagee, who is
dealing directly with the fraudster, has the best opportunity to prevent a fraud. The amendments this bill
proposes are intended to encourage due diligence in mortgagees' loan approval practices.
The majority of cases of fraudulent mortgages in which the Registrar-General has been involved are with those
mortgages that are commonly known as low-doc loans. These loans are usually offered by lenders of last resort
who lend at excessively high interest rates. Usually these types of loans are not covered by the consumer credit
code and in many cases the lender has not performed due diligence. Disturbingly, it appears that the value of
The property to be used as security for the loan is usually the only qualifying requirement for a low-doc loan to
be granted. The nature of these loans I have described presents a perfect opportunity for fraudsters to
perpetrate their crime; the department has many examples of claims of compensation based on these types of
loans.
(c) Cameron Stewart 2009
Bill introduced on motion by Mr Barry
Collier
For example, a few years ago the department was involved in a claim for compensation made by elderly
Property owners whose title was encumbered by registration of a mortgage they did not sign and knew
nothing about. The son of the property owners, together with an accomplice, obtained a loan of $750,000 at
upwards of 12.5 per cent interest per month, pretended to be the owners of the property and purported to
give a mortgage over it as security for this loan. The lender appears to have done little or nothing to confirm
that the borrowers were the persons recorded in the freehold land register as the owners of the then
unencumbered property and to verify that the borrowers were able to service the loan. It appeared that the
value of the property alone—more than $1 million—was enough to satisfy the grant of the loan.
Soon the borrowers defaulted on the loan and it was only when the mortgagee came to exercise its power of
sale that the true owners found out that a mortgage was registered on their title. The fraudsters were
apprehended and sent to jail, but in the end the Torrens Assurance Fund had to compensate not only the
owners but also other parties that were affected by the fraud. This included paying the lender's legal costs. This
claim resulted in payment of in excess $2 million from the Torrens Assurance Fund. As this example indicates,
there is clearly potential for our State to be liable for payment of large amounts of compensation for fraud.
Questionable lending practices or wilful disregard of matters that might raise doubts in a prudent person's
Mind unfortunately do not currently disentitle a lender from recovering its loss under the Real Property Act
1900.
(c) Cameron Stewart 2009
Bill introduced on motion by Mr Barry
Collier
This bill proposes to amend the Real Property Act 1900 to require mortgagees, that is the lenders, to take
reasonable steps to confirm the identity of the mortgagor, that is the borrowers, before presenting a mortgage
For lodgement and registration. If the mortgagee fails to comply with the requirement to confirm the identity
of the mortgagor and the execution of the mortgage involved fraud against the registered proprietor of the
Mortgaged land, the Registrar-General may cancel any recording in the register with respect to the mortgage.
The reasonable standard required to be taken by mortgagees for identification under the proposed
amendments will be established by the guideline to be known as the Registrar-General's Directions. In most
cases the reasonable standard will, at minimum, be the equivalent to the 100-point check that is common to
financial institutions. The Registrar-General's Directions is intended to be available on the department's
website. It will also be necessary for the mortgagee to keep a written record of the steps taken to comply with
this requirement and a copy of any associated documents. The Registrar-General may require the mortgagee to
answer questions and produce documents in determining whether the mortgagee has complied with their
obligation to verify the identity of the borrower. If a mortgagee refuses to comply with a request of this nature
the Registrar-General will have the power to either put a notation on the title to alert anyone dealing with the
property that the mortgagee has not complied with the requirement to verify the identity of the borrower or, if
the mortgage has not yet been registered, refuse to accept the mortgage for lodgement.
(c) Cameron Stewart 2009
Real Property and Conveyancing
Legislation Amendment Act 2009
NB Not yet in the legislation!!
56C Confirmation of identity of mortgagor
(1) Mortgagee must confirm identity of mortgagor
Before presenting a mortgage for lodgment under this Act, the
mortgagee must take reasonable steps to ensure that the person
who executed the mortgage, or on whose behalf the mortgage
was executed, as mortgagor is the same person who is, or is to
become, the registered proprietor of the land that is security for
the payment of the debt to which the mortgage relates.
(2) Without limiting the generality of subsection (1), the mortgagee
is to be considered as having taken reasonable steps to ensure the
identity of the mortgagor under subsection (1) if the mortgagee
has taken the steps prescribed by the regulations.
(c) Cameron Stewart 2009
Real Property and Conveyancing
Legislation Amendment Act 2009
(3) Record-keeping requirements
A mortgagee must keep the following for a period
of 7 years from the date of registration of the
mortgage under this Act (or for such other period
as may be prescribed by the regulations):
(a) a written record of the steps taken by the
mortgagee to comply with subsection (1),
(b) a copy of any document obtained by the
mortgagee to comply with subsection (1).
(c) Cameron Stewart 2009
Real Property and Conveyancing
Legislation Amendment Act 2009
(4) Mortgagee to answer questions and produce documents
The Registrar-General, in determining whether or not this section has been
complied with, may at any time require the mortgagee:
(a) to answer questions in relation to the steps taken by the mortgagee to
comply with subsection (1) and
(b) to produce for inspection any records kept under subsection (3).
(5) If a person fails to comply with a requirement made under subsection (4),
the Registrar-General may:
(a) in relation to a registered mortgage—make a recording in the Register,
with respect to the relevant land, to that effect, and
(b) in relation to a mortgage that has not been registered— refuse to register,
or reject, the mortgage in accordance with section 39 (1A) or refuse to
make any recording or entry in the Register or take any other action in
respect of the mortgage.
(c) Cameron Stewart 2009
Real Property and Conveyancing
Legislation Amendment Act 2009
(6) Cancellation of recordings in the Register
The Registrar-General may cancel, in such manner as the Registrar
General considers appropriate, any recording in the Register with
respect to a mortgage if the Registrar-General is of the opinion:
(a) that the execution of the mortgage involved fraud against the
registered proprietor of the mortgaged land, and
(b) that the mortgagee:
(i) has failed to comply with subsection (1), or
(ii) had actual or constructive notice that the mortgagor was not the
same person as the person who was, or was about to become, the
registered proprietor of the land that is security for the payment of
the debt to which the mortgage relates.
(c) Cameron Stewart 2009
Real Property and Conveyancing
Legislation Amendment Act 2009
(7) Before cancelling a recording of a mortgage in the
Register under subsection (6), the Registrar-General must
give notice of the proposed cancellation to the
mortgagee and may also give notice to any other person
that the Registrar-General considers should
be notified of the cancellation. Section 12A (2) and (3)
apply to and with respect to a notice given under this
section.
(c) Cameron Stewart 2009
Real Property and Conveyancing
Legislation Amendment Act 2009
(8) Application to transferee of a mortgage
This section applies to the transferee of a mortgage in the same
way that it applies to a mortgagee (that is, requiring the transferee
of a mortgage to take reasonable steps to ensure that the person
who executed the mortgage as mortgagor is the same person who
is, or is about to become, the registered proprietor of the land that
is security for the payment of the debt to which the mortgage
relates). Accordingly, a reference in this section to:
(a) the presentation of a mortgage includes a reference to the
presentation of a transfer of mortgage, and
(b) the mortgagee includes a reference to the transferee of the
mortgage, and
(c) the date of the registration of the mortgage includes a
reference to the date of registration of the transfer of
mortgage.
(c) Cameron Stewart 2009
Real Property and Conveyancing
Legislation Amendment Act 2009
NB not yet in force - Sec 117 – certification of correctness by witnesses
(4) In this section, eligible witness, in relation to the execution of an
application, dealing or caveat, means a person who:
(a) is at least 18 years of age, and
(b) is not a party to the application, dealing or caveat, and
(c) has known the person to whose execution of the
application, dealing or caveat the witness is attesting for
more than 12 months or has taken reasonable steps to
ensure the identity of that person.
(5) Without limiting the generality of subsection (4) (c), a witness is
to be considered as having taken reasonable steps to ensure the
identity of the person to whose execution of the application,
dealing or caveat the witness is attesting if the person has taken
the steps prescribed by the regulations.
(c) Cameron Stewart 2009
Real Property and Conveyancing
Legislation Amendment Act 2009
138A Registrar-General may take steps to rectify Register in case of fraud
(1) The Registrar-General may, in relation to the settlement of a claim in accordance with section
135, take any of the steps set out in subsection (2) that are required to rectify the Register
(including by registering a person as proprietor of land) if the Registrar-General is satisfied that:
(a) the person has been deprived of land, or an estate or interest in land, as a result of fraud,
and
(b) the current registered proprietor acquired the estate or interest in land through fraud.
(2) The Registrar-General may do one or more of the following:
(a) cancel or amend a folio of the Register,
(b) cancel, amend or make a recording in a folio of the Register,
(c) create a new folio of the Register,
(d) create a new edition of a computer folio,
(e) issue a new certificate of title.
(3) The Registrar-General may, if he or she considers it appropriate to do so, require the current
registered proprietor to deliver up the certificate of title for the purpose of it being cancelled, by
notice in writing to the current registered proprietor.
(4) If the current registered proprietor fails to respond to such a notice within a reasonable time or
cannot be found for the giving of such a notice, the Registrar-General may, if the RegistrarGeneral considers it appropriate, dispense with the production of the certificate of title or take
(c)upon
Cameron
2009
action under the authority conferred
theStewart
Registrar-General
by section 111 (3).
Exceptions to indefeasibility
- Prior folio
•
•
•
If the RG makes a mistake and issues two
folios for the one piece of land the earlier
folio is said to take priority – s 42(1)(a); or
If two folios are issued one for a larger
block, the other for a block within the larger,
the earliest one issued has priority; or
Two blocks which have an overlapping strip
probably better dealt with under s 42(1)(c)
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Prior interests entered into the folio
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
Exceptions to indefeasibility
- Prior interests entered into the folio
Mercantile Credits Ltd v Shell Co of Australia [1976] 136 CLR 326. In this
case a folio contained reference to a lease. The lease itself turned out
to be a lease for five years with two options to renew, making it apply
for a possible total of 15 years. The holder of the title defaulted on a
mortgage and the mortgagee sought to exercise their power of sale.
They went to court arguing that while they were subject to the lease as
noted on the folio, they were not subject to the options to renew.
The lease document contained in the register contained the options,
so the question was: did the option to renew in that registered lease
bind subsequent interest holders even though the folio made no
reference to that option? The case went to the High Court which said
yes. The option to renew is enforceable against successors and so in
this case is enforceable against the mortgagee. What we learn from
this is that a purchaser needs to look at the documents in the register
to see exactly what it is that they are being bound by.
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Omitted or misdescribed easements
•
•
•
•
An easement is right attached to land which is held
by someone other than the owner of the land to
use the land in a particular way eg right of way
Section 42(1)(a1) – registered proprietors take
subject to omitted easements
“Omitted” when simply not there on the register
not fault on part of RG
Works either when old system land brought under
Torrens and easement left out OR when a
registered easement has been left off a reprint of a
new folio
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Omitted or misdescribed easements
•
•
•
Easements ‘validly created’ – probably excludes
what of easements where parties have complied
with creation formalities but been frustrated by
lack of registration
Implied easements? If an implied easements
existed under the old system and was left off the
register on conversion then it will be ‘validly
created’
What if land was always Torrens? Implied
easements should work against the RP as an in
personam exception but will fail when a new RP
registers
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Omitted or misdescribed easements
Australian Hi Fi Publications Pty Ltd v Gehl [1979] 2 NSWLR 618. In this case land was owned by the
Savage family. During their ownership a block of shops was erected and subsequently an office block.
At that time there were two buildings on the land. The land was subdivided such that lot 1 comprised
the shops and some of the land and lot 2 comprised the office block and the land adjoining it.
The Savage family sold lot 1 to Gehl and several years later sold lot 2 to Australian Hi-Fi Publications Pty.
Ltd. There was no reference in any of the contracts or transfers or the certificates of title to any
easements providing for rights of way.
Evidence was adduced that prior to the first sale the tenants of the shops constructed on what became
lot 1 used part of the land that became lot 2 to access a public road. The Court considered that if the
land had been under old system title then the rule in Wheeldon v Burrows would have allowed the
subsequent owners of lot 1 to claim a right of way over those parts of lot 2 used as the right of way. In
his judgment in the Court of Appeal, Mahoney J.A. considered the application of the rule in Wheeldon v
Burrows to land held under the Real Property Act and said:
The argument that such an exception should be created has been put, in substance, upon the
following basis: that interests such as Wheeldon v. Burrows easements are interests well recognized
by the law; that, as they are incapable of being registered or noted on the register, they will, unless
protected by s. 42 (b), be incapable of existing; and that it could not have been the intention of the
Act to destroy such interest. But, in my opinion, such an argument involves at least two difficulties.
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Omitted or misdescribed easements
Rights, such as those which arose upon the sale of the land by the Savage
family to the defendant and his wife, would normally be within the class of
rights existing personally against the Savage family as proprietors and so
enforceable against them notwithstanding s. 42. Those rights would not
be enforceable against a subsequent registered proprietor taking without
fraud; the existence of such rights is proscribed by s. 42 to that extent.
There is, in my opinion, nothing special in this, such as would warrant the
creation of an exception to the ordinary effect of s 42 or the extension of
the term “omission” to make such rights enforceable against the
subsequent registered proprietor. I see no reason why, for example, a
Wheeldon v. Burrows interest should be in a better position than he
interest which would have arisen had the Savage family, by deed,
purported to grant to the defendant exactly a right in similar terms. The
right created by that deed would not be enforceable against a subsequent
registered proprietor.
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Omitted or misdescribed easements
McGrath & v Campbell [2006] NSWCA 180 – (from the headnote) Two adjoining lots were
owned by a single registered proprietor. The northern lot (Lot 6) faced a main road, while the
southern lot (Lot 12) was bounded by a street known as Brighton Avenue. A registered
easement had been created over both lots in favour of a third adjoining property, which
permitted access to the third lot from Brighton Avenue. The easement had also been used for
some years as an access point for Lot 12, although this use had never been noted on the
register.
In 1980, Lot 6 was sold to the respondents and Lot 12 was sold to the appellants and the
transfers of title were recorded in the register as having occurred on the same day. The
respondents continued to use the easement over Lot 12 to access Lot 6 until a dispute arose
in 1995.
The respondents argued that the circumstances of the sale gave rise to an implied easement
over Lot 12 for the benefit of Lot 6, and that the simultaneous transfers of the two lots gave
rise to an equity or right in personam enforceable against the appellants. The appellants
argued that the indefeasibility provisions of the Real Property Act 1900, and the
circumstances of the transfers in this case, prevent the recognition of any such equity.
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Omitted or misdescribed easements
Aldridge v Wright [1929] 2 KB 117
4. Where an owner executes contemporaneous conveyances of adjoining plots with the houses
erected on them, and there exists a made road across the land of one plot to an entrance to the
house on the other plot, and it is proved that the road was constructed for the use of both houses,
there will be implied a grant in the one conveyance of a right to use the road and a corresponding
reservation in the other conveyance.
Implied easements can arise but they are equitable :
79 One might accept, for present purposes, that had Lots 6 and 12 been under old system title, the
authority of Aldridge v Wright may have carried the day in favour of the Campbells. According to
Professor Butt in Land Law (2006, 5th ed) at 446, such an easement would be a legal and not
merely an equitable interest. Professor Butt refers to the statement of Priestley JA in Dobbie v
Davidson (1991) 23 NSWLR 625 at 646 to the effect that easements such as those arising under the
doctrine of Wheeldon v Burrows are equitable, and suggests that this approach may be explained
upon the basis that the easement in that case arose over Torrens title land and was, at the time of
the litigation, unregistered. As an unregistered interest it could only be an “equitable” and not a
“legal” interest. The finding by the primary judge in [71] that the Wheeldon v Burrows implied
easement in the present case brought about “in equity, the result that lot 6 had the benefit of, and
lot 12 was burdened by” may be explained in a similar way.
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Omitted or misdescribed easements
While the original title holders may be bound
in equity, the personal equity will not be
created in the case of simultaneous transfers
of title in circumstances where the new
owners of the putative servient tenement
have not in any way contributed to the
creation of the implied easement or
conducted themselves in any way which could
be regarded as unconscionable
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Omitted or misdescribed easements
Easements by prescription (long use) – 20 yrs - doctrine
of the lost modern grant - Dobbie v Davidson (1991)
23 NSWLR 625, The Court was asked to consider
whether a track used for access to a property across
another property for a period of 60 years prior to
the land being brought under the Real Property Act
constituted a right of way and further considered
whether the “omission” from the certificate of title
after the land was brought under the Real Property
Act constituted an exception to indefeasibility within
what was then s 42(b).
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Omitted or misdescribed easements
In his judgment in the Court of Appeal Kirby P made the following observations:The purpose of the rule by which a prescriptive right is upheld by the law is ultimately to guard the
peaceful enjoyment of the use of land where that use has endured for more than twenty years, as
of right.” The evidence showed that the use of the road constituting the right of way to “Ellerslie”
was extensive. In connection with access to that property it had been used by bullock drays and
bullock wagons; horse drawn vehicles carrying products; carts, trucks, cars and tractors; visitors,
tradespeople, shearing teams, droving stock, electricity and bush fire brigade vehicles; shooters; for
carting and bailing hay and by children. None of the aforementioned people using the road over
this time ever sought permission from the owners of “Lumley Park”. They just used it without
dispute until the present litigation began.
Relevant to assigning conduct to one category rather than the other will be: (i) the time during
which the conduct has been peacefully followed; (ii) the persistence of the conduct, despite
supervening sale and the acquisition of new owners by the dominant and servient tenements; (iii)
the unlimited variety of the persons who have utilised the alleged right-of-way; (vi) the absence of
physical impediments or obstructions to that use; and (v) the knowledge of the use by the owners
of the servient tenement yet their failure to attempt to forbid, limit or control the use of the rightof-way by the owners of the dominant tenement and those having dealings with them.
Both Kirby P and Priestly JA found that the missing easement had been omitted in the conversion
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Omitted or misdescribed easements
Williams v State Transit Authority of NSW [2004] NSWCA 179 the Court of Appeal considered an
appeal from a judgement of Young CJ in Eq. In the case before Young J, the court was asked to
consider whether the doctrine of lost modern grant applied to claim for rights of way over
land under the provisions of the Real Property Act.
In his judgment Mason P deals with the doctrine commencing at paragraph 78. He says:
At common law an easement may be created by twenty years uninterrupted enjoyment of
the right claimed. This doctrine of “lost modern grant” requires the court to presume, even if
contrary to the truth, the existence of an express grant which has been lost. The presumed
grantor must have the legal capacity to have executed the grant.”
In particular, s46 of the Real Property Act relevantly provides that “where any
easement…..affecting land under the Act is intended to be created, the proprietor shall
execute a transfer in the approved form”.
Until the present case, there was an unbroken stream of authority in New South Wales to the
effect that easements by prescription could not arise over land subject to the Real Property
Act where the acts of user occurred during the time the land was under the Act.
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Omitted or misdescribed easements
Mason P:
In my opinion, it is to pile fiction upon fiction to extend the doctrine of lost
modern grant into the Torrens system, because (assuming no relevant
exception to s42 or its equivalents) that system contemplates title at law as
arising only upon registration. To transpose the fiction of lost modern grant
into a Torrens context one has to presume considerably more that the loss of
an executed (and delivered) deed. At the very least, one would have to
presume the execution and delivery of a registrable instrument. But the logic
suggests that one has to go further and presume delivery accompanied by
certificate of title, since that is the normal way in which the person entitled to
have an interest registered goes about perfecting such title so far as lies in the
grantor’s power. Indeed, title is only perfected through the act of a third party
(the Registrar General), and there is no basis for inferring that officer’s
acquiescence in the user giving rise to the common law doctrine.
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Omitted or misdescribed easements
Dabbs v Seaman (1935) 36 CLR 538 – where conveyance
describes land as adjoining a road there is an implied grant of an
easement to the road, even in Torrens title without an express
easement
Limited to where the road is also Torrens land: Cowlisaw v
Ponsford (1928) SR(NSW) 331 at 336
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Omitted or misdescribed profits a
prendre
•
•
•
•
•
A profit is a right attached to land which is held by
someone other than the owner of the land to
enjoy part of the sold or the nature produce of the
soil eg timber, wild animals
Section 42(1)(b) - “Omitted” if the transferred from
old system and left off
OR
If always Torrens system then if all that had to be
done for registration had been done but the RG
failed to put it on the register
Prescription? Williams
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Misdescription of a portion of land
•
•
Section 42(1)(c) – not indefeasible if misdescribed
boundaries unless where the proprietor is a
purchaser or mortgagee for value
Register is not conclusive as to its boundaries:
Michael v Onisforoui (1977) 1 BPR 9356
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Short term tenancies
•
By s. 42(1)(d) of the Real Property Act, a registered
interest is subject to a short-term lease if:
(i)
(ii)
the lease plus any option does not exceed 3 years; and
the tenant is in possession of the property or entitled to
its immediate possession; and
(iii) the holder of the registered interest had notice of the
tenancy before he became registered.
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Short term tenancies
•
•
•
•
•
•
Tenancy for less than three years do not have to be
registered – hence under s 42(1)(d) a registered
proprietor who takes with notice will take subject to a
lease
Term probably includes the option
Periodic tenancy for less than 3 years do not have to
be registered (but can be)
Notice in this section includes constructive notice
under Hunt v Luck
Notice is timed at the date of the settlement (dealing
registrable under s 43A)
Under Torrens system requires the registration of the
correct instrument. Must be registered if term exceeds
three years: s 53 RPA
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Short term tenancies
•
If the lease is less than three years and not
registered what sort of interest does the lessee
hold? Legal but subject to the registered interests.
If there is competition between the unregistered
but legal lease and an unregistered equitable
interest eg an equitable mortgage the normal
priority rules apply
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Short term tenancies
•
•
Snowlong Pty Ltd v Choe (1991) 23 NSWLR 198
A contract for the sale of Torrens Title land
disclosed the existence of, and annexed a copy of,
an unregistered lease agreement for part of the
land for a term of five years with options for
renewal in favour of the lessee. Under the contract
the purchaser agreed to abide by the terms and
conditions of the annexed lease.
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Short term tenancies
•
•
Snowlong Pty Ltd v Choe (1991) 23 NSWLR 198
The lease which had remained unregistered while
six subsequently executed dealings were registered
remained unregistered. The purchaser, on
registration of its transfer, sought to evict the
lessee as a tenant at will.
•
Held: Construing the contract in the light of its
express terms and in the light of the fact that
prior to its execution the lessee's interest was,
because of lack of registration, one at will only:
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Short term tenancies
•
•
(a) the purchaser, having acknowledged or
agreed to recognise that the lessee had a lease
for five years with two options for renewal, took
title subject to an express trust on those terms;
(b) alternatively, repudiation of the agreement to
abide by the terms and conditions of the
annexed lease constituted fraud within the
exception to indefeasibility in s 42 and s 43 of the
Real Property Act 1900, so that registration of
the transfer free of any reference to the lease did
not destroy the lessee's rights
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Short term tenancies
Alcova Holdings Pty Ltd v Pandarlo Pty Ltd
(1988) 15 NSWLR 53 a tenant was in
occupation of a property under a two year
unregistered lease which contained an
option to renew for a further two years. At
the end of the first two years the tenant
exercised the option and started the second
two year term. After this, the RP sold to a
new RP and the new RP tried to evict the
tenants.
(c) Cameron Stewart 2009
Exceptions to indefeasibility
- Short term tenancies
The court found that the tenant was in
occupation of the property under a two year
lease – the first lease was finished and a
new 2 year lease had come into occupation
and so they could not be evicted as their
lease was an exception to the indefeasible
title of the new RP. Ironically, had the
property sold six months earlier while the
first lease was on foot then the lease would
not have been an exception to
indefeasibility because it added up to 4
years!
(c) Cameron Stewart 2009