TORRENS SYSTEM (IMMUNITY FROM ATTACK)
→ The TT system is The Torrens system is the freehold land registration system – a statutory system of registration of
land – Real Property Act 1886 (SA).
→ Title “by” registration, not “of” title.
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Peldan v Anderson: “In establishing a system based on indefeasibility of title, the Torrens system has 3 main objectives:
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1. To provide a register from which persons who propose to deal with land can discover all the facts relative to the title.
2. To ensure that a person dealing with land which is registered is not adversely affected by any defects in the vendor’s
title which do not appear on the register; and
3. To guarantee the conclusiveness of the register and provide adequate compensation to any person who suffers loss
as a result of this guarantee.
MORTGAOR AND MORTGAGEE (IN REAL PROPERTY CONTEXT)
→ When it comes to mortgages, the titles are reversed: the lender (who lends the $) receives the mortgage (mortgagee).
→ The person who has to pay the mortgage is the mortgagor.
INDEFEASABILITY CONCEPTUALLY
→ Where an interest or encumbrance in land is registered under TT, it automatically acquires full statutory protection.
→ “Indefeasible” status.
→ In South Australia, if a person is a ‘bona fide’ purchaser for value’ (s 69); Frazer v Walker; Breskvar v Wall and they
have registered their interests in land (s 67) then the interests of that person are ‘indefeasible’ which means their title
enjoys ‘immunity from attack by adverse claims (s 69) Frazer v Walker; Breskvar v Wall.
→ IND has the effect of creating a title ‘anew’, and in doing so, ‘curing’ that title of any defect and is immediate at the
time of registration Frazer.
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INTERESTS THAT MAY BE REGISTERED
Interests that can be registered include:
→ Fee simple (RPA s 69)
→ Easements (RPA s 81)
→ Mortgages (RPA s 128)
→ Leases (RPA s 116)
→ Restrictive Covenants (RPA s 3)
→ Rentcharges (RPA ss 128, 137)
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EXCEPTIONS TO INDEFEASIBILITY
69—Title of registered proprietor indefeasible, except in cases of—
The title of every registered proprietor of land shall, subject to such encumbrances, liens, estates, or interests as may be
notified on the original certificate of such land, be absolute and indefeasible, subject only to the following qualifications:
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(a)
Fraud
in the case of fraud, in which case any person defrauded shall have all rights and remedies that he would have had if the
land were not under the provisions of this Act: Provided that nothing included in this subsection shall affect the title of a
registered proprietor who has taken bona fide for valuable consideration, or any person bona fide claiming through or
under him;
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(b)
Forgery or disability
in the case of a certificate or other instrument of title obtained by forgery or by means of an insufficient power of attorney
or from a person under some legal disability, in which case the certificate or other instrument of title shall be void:
Provided that the title a registered proprietor who has taken bona fide for valuable consideration shall not be affected by
reason that a certificate other instrument of title was obtained by any person through whom he claims title from a person
under disability, or by any of the means aforesaid;
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(c)
Erroneous inclusion of land
where any portion of land has been erroneously included, by wrong description of parcels or boundaries, in the certificate
or other instrument evidencing the title of the registered proprietor: In which case the rights of the person who but for such
error would be entitled to such land shall prevail, except as against a registered proprietor taking such land bona fide for
valuable consideration, or any person bona fide claiming through or under him;
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(d)
Omission of easement
where a right-of-way or other easement not barred or avoided by the provisions of the Rights-of-Way Act 1881, or of this
Act, has been omitted or mis-described in any certificate, or other instrument of title: In which case such right-of-way or
other easement shall prevail, but subject to the provisions of the said Rights-of-Way Act 1881 and of this Act;
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(h)
A lease or letting for not more than a year
where at the time when the proprietor becomes registered a tenant shall be in actual possession of the land under an
unregistered lease or an agreement for a lease or for letting for a term not exceeding one year: In which case the title of
the tenant under such lease or agreement shall prevail;
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SCOPE OF THE PROTECTION OF INDEFEASIBILITY
Terms are called ‘covenants’.
Not all these ‘covenant’ in a registered document attract the protection of indefeasibility.
A covenant might be ‘no pets’ or ‘water the pot plants’.
“Only hose covenants which are effectively part of the estate or interest in land, or are intimately connected with that
interest, affect the quality of indefeasibility” (Mercantile Credits)
→ The right to renew is covered.
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→ “The right of renewal is so intimately connection with the term granted to the lessee, which it qualifies and defines,
that is should be regarded as part of the estate or interest which the lessee obtains under the lease and on
registration is entitled to the same priority as the term itself”. (Mercantile Credits Ltd v Shell Co of Australia)
→ (s 117 RPA) → “Every such lease shall, for description of the land intended to be dealt with, refer to the certificate of
the land, or shall give such other description as may be necessary to identify the land, and a right for or covenant by
the lessee to purchase the land therein described may be stipulated in such lease, and shall be binding”.
→ The obligation to water the plants or any other personal rights is not covered
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FRAUD AS AN EXCEPTION TO INDEFEASIBLITY
Fraud is listed under statute law as an exception to indefeasibility (RPA s 69(a)).
Under case law, the fraud exception involves an element of ‘actual fraud…that is dishonest and moral turpitude…that
must be brought home to the person whose registered title is impeached or to their agents’ (Assets Co Ltd v Mere
Roihil).
“Moral turpitude is conduct that is considered contrary to community standards of justice, honesty or good
morals” (Wicks).
Notice of another interest is irrelevant (RPA 186 + 187).
(Waimiha Sawmilling) a person went and registered land and hurried up the registration process and knew about
the other interest (NOT FRAUD): the system is all about registration.
FRAUD MUST OCCUR IN THE LEAD UP TO REGISTRATION NOT AFTER (Bahr v Nicolay).
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GENERAL PRINCIPLES OF FRAUD (DISHONESTY)
Mere notice of the existence of prior interests does not itself constitute fraud (RPA s 72, 186, 187; Assets Co Ltd v Mere
Roihil; Bahr v Nicolay No 2).
However, fraud will be established where the current RP induces the seller into a contract, intending to defraud them of
their interest – additional promise is more than mere notice (Loke Yew v Port Swettenham).
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1. Knowledge of a fraud committed by someone else can constitute fraud (Russo v Bendigo Bank; AGC v De Jager).
A wilful and conscious disregard and violation of the rights of another person’s interest amounts to personal dishonest
and thus fraud (Russo). A wilful and conscious disregard and violation of the rights of another is the test and this is
hard to satisfy (Russo). Someone needs to know that somebody would have been deprived of an interest or
that the Registrar General would have been misled.
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2. Mere negligence on the part of the RP (or their agent) will not of itself constitute fraud (Grgic v Australia & N
Banking Group).
‘A less than meticulous, slack or even negligent act on behalf of the RP does not amount to fraud’ (Grgic).
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3. If a RP lodges a document of which they are aware has not complied with required formalities or has been forged,
they will be guilty of fraud (Russo v Bendigo Bank; AGC v De Jager).
4. Wilful blindness or recklessness as to someone else’s fraud can constitute fraud.
(Pyramid Building Society v Scorpion Hotels).
5. Failure to make further enquiries will not be fraud (Pyramid v Scorpion).
If the person abstained from enquiries for fear of learning the truth then fraud is likely to be attributed (Bahr v Nicolay
No 2).
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6. Where a person takes part in a transaction as an agent, that person’s knowledge of fraud will not affect the
indefeasibility of the RP unless the knowledge is to be imputed to the RP (Schultz v Corwill Properties).
To succeed, the agent must be acting within the scope of their actual or apparent authority.
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IN PERSONAM EXCEPTION TO INDEFEASIBILITY
71—Saving of certain rights and powers viz
Nothing in the two preceding sections contained shall be construed so as to affect any of the following rights or powers,
that is to say—
(d)
Contracts
the rights of a person with whom the registered proprietor shall have made a contract for the sale of land or for any other
dealing therewith;
(e)
Trusts
the rights of a cestui que trust where the registered proprietor is a trustee, whether the trust shall be express, implied, or
constructive;
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THE CONCEPT OF IN PERSONAM
The rights of a person with whom the RP shall have made a contract for the sale of the land or any other dealing are
not affected by the doctrine of indefeasibility given to the RP (RPA s 71(d), 71(e); Bahr v Nicolay; Frazer v Walker).
Refers to personal obligations, similar to contractual and equitable obligations.
In personam rights (‘personal equities’) can survive against a registered proprietor.
The in personam exception ensures the concept of indefeasibility does not affect the personal obligations of the
registered proprietor.
(RPA s 71) is a general exception to (RPA s 69).
GENERAL PRINCIPLES
Personal obligations of the RP may arise from the RP’s conduct before or after registration of their interest (Bahr v
Nicolay; Barry v Heider).
Occur in two broad categories:
a. Cases where the RP enters into a transaction which gives rise to the obligation, either on its terms or by
operation of law.
b. Cases where the RP has created the obligation by their words or conduct (promissory estoppel).
Situations that have given rise to a claim in personam against the RP include the following:
a. The execution of a transfer acknowledging receipt of the purchase price that had not been paid yet (Barry v
Heider).
The production of a certificate of title to enable registration of a variation to a mortgage without the consent
of the RP (Mercantile v Gosper).
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The acknowledgement by a purchaser of the right of a tenant to purchase the land at the expiration of the
lease with the implied undertaking to be bound by that right (Bahr v Nicolay No 2).
ESTABLISHING IN PERSONAM
To succeed in an in personam claim, a party must show that their claim:
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b.
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Is against the current registered proprietor, their agent or employee; and
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Rests on a legal or equitable cause of action; and (Vassos v State Bank of SA; Grgic v ANZ Banking Group;
Mercantile Mutual Life v Gosper).
Does in fact include an element of unconscionability (Mercantile Mutual Insurance v Gosper).
→ ASK:
→ Did a RP at some time create a promise? Did the new RP act unconscionably? Vassos (found it didn’t).
→ Denying a promise would be unconscionable (Gosper).
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→ VOLUNTEERS – a gift, no consideration given.
→ Equity will not assist a volunteer – (Peck v Peck).
→ Consideration must be given – RPA s 69.
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REGISTERED VOLUNTEERS
There is an issue whether or not volunteers take subject to unregistered interests of which they had notice when they
acquired their interest.
A volunteer is somebody who is a RP but has not provided valuable consideration.
Obtains title via a gift or as a beneficiary under a will.
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GENERAL PRINCIPLES
In South Australia, a volunteer who becomes a registered proprietor does not obtain indefeasibility (Peck v Peck).
WHY? If a volunteer doesn’t get indefeasibility it means that the courts are providing some form of protection to
ensure that the TT of indefeasibility can’t be abused simply by the transfer for free of land from one person to
another.
The view in NSW is that a volunteer who becomes a registered proprietor does in fact obtain indefeasible title
(Bogdanovic v Koteff; King v Esmaeil).
In a recent High Court of Australia case it was also held that a volunteer does obtain indefeasibility (Farah
Constructions).
OVERRIDING STATUTES
It is a general principle that a later and inconsistent statute will repeal the earlier at last to the extent of the
inconsistency.
The RPA has attempted to limit the exception by providing that later legislation will only prevail over the Torrens
legislation where the Act expressly states that it is to apply despite the provisions of the Torrens legislation (RPA s 6).
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GENERAL PRINCIPLES
The High Court has held that the principle that a parliament cannot bind its successor may result in implied repeal by
a later statute even in the absence of the statutory formula if the interpretation of the later statute indicates such an
intention (South Eastern Drainage v Savings Bank of SA)
Thus, rights created by later legislation may prevail over the interest of the registered proprietor even though the later
interests created under statute cannot be discovered by search of the Torrens register (Horvath v Commonwealth
Bank of SA; Pratten v Waringah Shire Council; Hillpalm v Heaven’s Door).
UNREGISTERED LEASES
SA provides some protection for unregistered leases in relation to unregistered tenancies for terms not exceeding
one year (RPA s 69(h); 117; 119).
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GENERAL PRINCIPLES
The protection for unregistered leases only extends to tenants in possession (RPA s 69(h))
The option to renew a lease is a proprietary interest and can be registered (RPA s 119) which makes it legal and
indefeasible (Mercantile v Shell).
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The option to purchase a house is also a proprietary interest and can be registered (RPA s 119) which also makes it legal
and indefeasible (Mercantile v Shell).
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PRIORITIES UNDER THE TORRENS SYSTEM
When inconsistent claims by two or more persons are made over the same land, the issue of priorities arises.
Types of Interests:
→ Legal interest:
Registered interest (RPA s 67)
→ Equitable interest:
Unregistered interest (Barry v Heider)
→ Proprietary Interest:
In relation to personal property and
is stronger than mere equity.
→ Mere Equity:
Ancillary to equitable interest – you have to
take action in court to enforce something against a person (e.g. to put a
sale aside but not obtain the house).
Equitable interests do survive: the principle of indefeasibility foes not deny legal and equitable interests
against a registered proprietor (Frazer).
Complete inconsistency is when two people claim they both own the land.
Partial inconsistency is when one person claims they own the land and another claims they have either a lease or a
mortgage.
Essentially “how do you resolve competing interests in the same piece of land”?
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THE CAVEAT
→ (RPA s 191).
→ Any settlor of land or beneficiary claiming under will or settlement, or any person claiming to be interested at law or in
equity, whether under an agreement, or under an unregistered instrument, or otherwise whatsoever in any land, may
lodge a caveat with the Registrar General forbidding the registration of any dealing with such land, either
absolutely or unless such dealing shall be expressed to be subject to the claim of the caveator, or to any
conditions conformable to law expressed therein:
→ It affords protection to later inconsistent dealings.
→ It acts as an injunction from the Registrar.
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SOME EXAMPLES OF LEGAL AND EQUITABLE INTERESTS
LEGAL: (THINK “REGISTERED”)
→ Fee simple.
→ Life estate.
→ Mortgage.
→ Easement.
→ Lease.
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EQUITABLE:
→ Interests of a beneficiary or trust.
→ Equitable lease.
→ Equitable mortgage.
→ Equitable easement.
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GENERAL PRINCIPLES
PRIORITIES UNDER GENERAL LAW (OLD SYSTEM)
Relevant when there are unregistered interests involved.
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First in time rule or nemo dat.
If you don’t have title you cannot pass it on.
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LEGAL V LEGAL
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EQUITABLE V EQUITABLE
If both interests are equal in every aspect then the first in time rule applies (Rice v Rice.)
The holder of the second interest takes with notice then their interest is subject to the first (Moffett v Dillon).
If both interests are unequal then determine who has the better equity – did someone put meat before the cat?
(Latec Investments; Heid v Reliance).
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PRIORITIES UNDER TORRENS SYSTEM (INDEFEASIBILITY)
The principle of indefeasibility does not deny legal and equitable interests against a registered proprietor (Frazer v
Walker).
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REGISTERED V UNREGISTERED
Registered interests will prevail unless there is an exception to indefeasibility (RPA s 69; 70).