Equitable Interests & Deprivation of Land: Fraud, Errors, & Compensation in Property Law, Lecture notes of Property Law

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Torrens/Indefeasibility/Exceptions – Structure of Answer

1. Under the Torrens system, title to land is acquired by registration, and once registered, the registered proprietor generally obtains the benefits of indefeasibility of title under the LTA (s 184(1)). This is subject to some exceptions contained in s 184(3)(b) and in s 185. 1..aEven if an instrument is void or voidable, the indefeasible title under the LTA is immediate (Frazer v Walker). 1..b Except in the case of a fictitious person – in that case immediate indefeasibility is not obtained. (Gibbs v Messer)
2. State the interests of the parties (briefly). 2..aX has a legal interest, Y has an equitable interest, Z has an equitable mortgage etc 2..b An equitable mortgage can be created by depositing the certificate of title with the mortgagee (s 75 LTA)
3. Is there an exception to the indefeasibility? (only shows brief elements, refer to other notes) 3..aFraud (s 184(3)(b)) 3..a..iActual fraud, that is, dishonesty, on the part of the registered proprietor or the RP’s agent in getting registered (Asset’s case) 3..a..ii Includes 3..a..ii..a wilful blindness (Young v Hoger) 3..a..ii..b moral turpitude (Bahr v Nicolay) 3..a..ii..c putting docs on the path to registration that are known to be fraudulent (De Jager) 3..a..iii Must occur prior to registration (Bahr v Nicolay) 3..a..iv Fraud includes where a transferee has notice of an unregistered interest, make representation to uphold it, and they then attempt to plead s 184(2) to defeat that interest (Loke Yew) 3..a..iv..1 Ie where accept that there is unregistered interest and, before registration, say they will respect it, then after registration try to evict the unregistered interest holder 3..a..iv..1..a May also come within in personam exception (below) 3..a..iv..2 Mere notice without more will not suffice (s 184(2)(a)) 3..b In Personam (s 185(1)(a)) 3..b..iNo definition of ‘an equity’ in LTA 3..b..i..1 (^) ‘an equity’ is a equitable or legal cause of action (Grgic v ANZ) 3..b..i..1..a such as: fraudulent misrepresentation, breach of contract, breach of trust, negligence, misleading or deceptive conduct under the TPA and/or FTA (if corp), basically any action (think widely) 3..b..ii Look for acts of unconscionability on the part of the registered proprietor 3..cCareless Mortgagee (s 185(1A)) 3..a..iv..3 Where a mortgagee does not comply with the requirements of 11A (new mortgage) or 11B (transfer of mortgage), that is, they do not take reasonable steps to verify that the mortgagor is identical to the registered proprietor of the lot over which the mortgage is to be executed 3..a..iv..4 (^) Where the mortgagee fails to comply with s 11A or 11B, and the instrument of mortgage was executive by someone other than the current

registered proprietor of the lot, the mortgagee does not obtain indefeasible title (s 185(1A)). 3..d Short Lease (s 185(1)(b)) 3..d..iIf 3..d..i..1 a lease for three years or less; or 3..d..i..2 a lease for a term from year to year, or less 3..d..ii Then 3..d..ii..1 The lease is enforceable against the registered proprietor, even if it is not registered (s 185(1)(b)) 3..d..ii..1..a If unregistered, it is treated as if it was legal (Deventer) 3..d..ii..2 But a right to acquire fee simple is not protected (s 185(2)(a)) 3..d..iii Option to renew the lease is only protected if the total lease and the option comes to three years or less 3..d..iii..1 In this case, the option is also protected under s 185(2) (b) 3..d..iv (^) If lease and options are registered, then everything is protected (Mercantile Credits v Shell Co of Aust / East Doro) 3..eOmitted Easement (s 185(1)(c)) 3..b..i..2 Where an easement is omitted or misdescribed on the register, the RP who apparently got that entitlement does not have the benefit of indefeasibility (s 185(1)(c)) 3..f Adverse Possessor (s 185(1)(d)) 3..f..i Where an adverse possessor who would be entitled to become the RO, upon application by that adverse possessor, the RP who apparently got that entitlement does not have the benefit of indefeasibility (s 185(1) (d)) 3..g Earlier Indefeasible Title (s 185(1)(e)) 3..a..ii..d Where two titles are in existence at the same time, and each titles shows different owners, and the earlier claimant has a valid claim to the land, then the earlier claim prevails (Reg of Titles v Esperance) 3..h Two Indefeasible Titles In Existence (s 185(1)(f)) 3..h..iWhere there are two titles in existence and the error has occurred because someone has forgotten to cancel the earlier title, then the later claim prevails (s 185(1)(f)) 3..i Wrong Inclusion of land (s 185(1)(g)) 3..i..i Where the physical boundary on a title is wrong (ie the person has title to more land than they bought etc) 3..i..ii The registrar has power to correct the register (s 186(1)) 3..i..iii If a person is affected, they have one month in which to make an application to the court to have the change to the register set aside (s 186(2) & (3)) 3..i..iv Extrinsic evidence is admissible to prove the true boundary (Overland v Lenehan)

4. Effect of exception, if any 4..aIf no exception found, RP/RO has indefeasible title (s 184(1)) 4..b If there is an exception, then the RP/RO obtains the benefits of indefeasible title and their title is susceptible to attack 4..c Title is not impeached until some action brought upon the title!
5. Remedies

5..aRecovery of Possession 5..a..i Current RP is liable to a proceeding only if the proceeding is bought by another registered proprietor of that lot (s 184(2)(b)) or by a person defrauded (s 184(3)(b)) 5..a..ii Commonly, these proceedings are brought by: 5..a..ii..1 Mortgagee against a mortgagor in default under a mortgage (s 78(2)(a) – (c)) 5..a..ii..2 Lessor against a lessee in default under a lease (s 68 (1)&(2)) 5..a..ii..3 Person against a fraudulent registered proprietor (s 184(3)(b)) 5..a..ii..3..a So an RP that has acquired the land innocently is free from liability (Frazer v Walker) 5..a..ii..3..b If there is a bona fide purchaser for value without notice, the transaction cannot be reversed (Frazer v Walker) 5..a..iii Other than for the in personam exception and the short lease exception, the court may make an order that it considers “just” (s 187(1)) 5..a..iii..1 In the case of using the in personam exception, or the short lease exception, then the court cannot make any order considers just – the claimant is left to their remedy in equity/ common law. 5..a..iii..2 For all other exceptions, the order can include to cancel or correct the register, execute an instrument, create a new indefeasible title, or “do anything else” (s 187(2)) 5..b Compensation under the LTA 5..b..i A claimant may apply to the court for an order for compensation and/or for the registrar to take any action, on the basis of s 188 and/or 188A (s 188B) 5..b..ii To succeed, the claimant must make out a series of elements: 5..b..ii..1 Deprived of an interest, or have suffered loss or damage 5..b..ii..1..a (^) Deprivation (s 188); or 5..b..ii..1..a..i Circumstances must come within s 188(1) 5..b..ii..1..a..ii Fraud (s 188(1)(a)) 5..b..ii..1..a..ii..a Extends to legal and equitable fraud (Parker), and extends to situation where claimant is induced by fraudulent misrepresentation to transfer the land (RG v Behn) 5..b..ii..1..a..iii Incorrect creation of an indefeasible title in the name of another person (s 188(1)(b)) 5..b..ii..1..a..iii..a Ie some error of the staff in the Registry where someone not entitled to be the RP is named as an RP 5..b..ii..1..a..iv (^) Incorrect registration (including where no new creation of indefeasible title) (s 188(1)(c)) 5..b..ii..1..a..iv..a Same principles as 2 (above) 5..b..ii..1..a..v An error on the register (s 188(1)(d))

5..b..ii..1..a..v..a (^) Open to two views 5..b..ii..1..a..v..a..i “Error” = something more than absence; or 5..b..ii..1..a..v..a..ii “Error” = where there is a factual error and deprivation/loss/damage follows 5..b..ii..1..a..v..b Second view is preferred 5..b..ii..1..a..vi Tampering with the register (s 188(1)(e)) 5..b..ii..1..a..vi..a Where 3 rd^ party tampers directly with the register (ie a hacker etc) 5..b..ii..1..a..vii Loss/destruction/improper use of document at Registry (s 188(1)(f)) 5..b..ii..1..a..vii..a Where a document lodged with the Registry is destroyed in fire etc 5..b..ii..1..a..viii Omission/mistake/breach of duty/negligence/misfeasance of registrar (s 188(1)(g)) 5..b..ii..1..a..v..a..iii Registrar only liable if omitted to do something required to do (Trieste) 5..b..ii..1..a..v..a..iv (^) “Omission” = absence of material entry on register 5..b..ii..1..a..ix Exercise by registrar of power in relation to dealing with person with no connection ((s 188(1)(h)) 5..b..ii..1..a..ix..a Where the registrar accidentally places a mortgage over the claimant’s land 5..b..ii..1..a..x Deprivation occurs if the claimant can no longer recover the land (Cox v Bourne) 5..b..ii..1..a..x..1 Ie where an innocent 3 rd^ party now has indefeasible title 5..b..ii..1..a..xi Partial deprivation is sufficient (Cox v Bourne) 5..b..ii..1..a..xi..1 Ie where an innocent 3 rd^ party mortgagee retains an encumbrance over the land 5..b..ii..1..a..xii Temporary deprivation appears to be sufficient (Parker) 5..b..ii..1..a..xii..1 Ie where the claimant obtains a court order to set aside a registration obtained by fraud, and the land reverts to them, there is a temporary deprivation 5..b..ii..1..a..xii..2 However, old cases seemed to say a temporary deprivation was not sufficient (Cox v Bourne) 5..b..ii..1..a..xiii “interest in land”

5..b..ii..1..a..xiii..1 (^) Extends to equitable interests (Williams v Papworth) 5..b..ii..1..a..xiii..1..a Ie in the case of an equitable mortgagee through deposition of a certificate of title 5..b..ii..1..a..xiii..2 Extends to circumstances where other interests outrank the claimant’s interest in priority (Heid v Connell Investments) 5..b..ii..1..a..xiv The loss of a future interest in land is not sufficient (Finucane) 5..b..ii..1..a..xiv..1 Ie it will only be a deprivation where the future interest actually vests in possession 5..b..ii..1..b Loss or Damage (s 188A) 5..b..ii..1..a..x..2 Where a claimant suffers some loss or damage, but is not necessarily deprived of an interest 5..b..ii..1..a..x..3 Not mutually exclusive with s 188 5..b..ii..1..a..iv..b Ie can claim under both for different things, such as claiming for costs who brought proceedings to rectify the register etc 5..b..ii..1..a..x..4 Circumstances must come within s 188A(1)(?) 5..b..ii..1..a..v..c DOES NOT INCLUDE FRAUD! 5..b..ii..1..a..v..d Incorrect creation of an indefeasible title in the name of another person (s 188A(1)(a)) 5..b..ii..1..a..v..d..a (^) Ie some error of the staff in the Registry where someone not entitled to be the RP is named as an RP 5..b..ii..1..a..v..e Incorrect registration (including where no new creation of indefeasible title) (s 188A(1)(b)) 5..b..ii..1..a..v..e..a Same principles as 2 (above) 5..b..ii..1..a..v..f An error on the register (s 188A(1)(c)) 5..b..ii..1..a..v..f..a Open to two views 5..b..ii..1..a..v..f..b “Error” = something more than absence; or 5..b..ii..1..a..v..f..c “Error” = where there is a factual error and deprivation/loss/ damage follows 5..b..ii..1..a..v..f..d Second view is preferred 5..b..ii..1..a..v..g Reliance on the incorrect state of the freehold land register (s 188A(1) (d)) 5..b..ii..1..a..v..h Loss/destruction/improper use of document at Registry (s 188A(1)(e))

5..b..ii..1..a..v..h..a (^) Where a document lodged with the Registry is destroyed in fire etc 5..b..ii..1..a..v..i Omission/mistake/breach of duty/negligence/misfeasance of registrar (s 188A(1)(f)) 5..b..ii..1..a..v..i..a Registrar only liable if omitted to do something required to do (Trieste) 5..b..ii..1..a..v..i..b “Omission” = absence of material entry on register 5..b..ii..1..a..v..j Exercise by registrar of power in relation to dealing with person with no connection ((s 188A(1)(g)) 5..b..ii..1..a..v..j..a Where the registrar accidentally places a mortgage over the claimant’s land 5..b..ii..2 Causation must be established 5..b..ii..2..a “Claimant must demonstrate that they have been deprived of an interest in land because of being deprived, or because of loss or damage. To determine causation, the commonsense test from March v Stramare is used.” 5..b..ii..2..b Apply 5..b..ii..3 None of the exceptions in s 189 apply 5..b..ii..3..a If the circumstances come under one of these situations, there will be no entitlement to compensation: 5..b..ii..1..a..ii..b Personal injury (s 188AA(1)) 5..b..ii..1..a..ii..b..1 Includes loss of income, psychological or psychiatric injury (s 188AA(2)) 5..b..ii..1..a..ii..c Breach of Trust or Fiduciary Duty (s 189(1)(a)) 5..b..ii..1..a..ii..c..1 Includes express, implied or constructive trusts 5..b..ii..1..a..ii..c..2 Includes a breach of duty arising in the administration of the estate of a deceased person (s 189(1)(a)) 5..b..ii..1..a..ii..d Careless mortgagee (s 189(1)(ab)) 5..b..ii..1..a..ii..d..1 Careless mortgagee cannot have compensation for that failure. 5..b..ii..1..a..ii..e Where own fraud, neglect or wilful default causes deprivation, loss or damage (s 189(1) (b) 5..b..ii..1..a..ii..e..1 Includes acts of another person, acting as agent, or an indemnified solicitor 5..b..ii..1..a..ii..e..2 Must cause or substantially contribute to the loss, so that the fraud/neglect/ default must be the sole or major cause of the loss 5..b..ii..1..a..ii..f Improper Use of its Seal by a Corp (s 189(1)(d))

5..b..ii..1..a..ii..f..1 (^) Where seal of company improperly used 5..b..ii..1..a..ii..g Correction of Register by Registrar where Register Mistakenly Includes Person’s Land (s 189(1)(e)) 5..b..ii..1..a..ii..g..1 Cannot get compo where, if you are incorrectly recorded as RP to land you are not entitled to, then the registrar corrects the register, except if you have previously relied on the state of the register to your detriment 5..b..ii..1..a..ii..h Error in Lot Boundaries (s 189(1)(f)) 5..b..ii..1..a..ii..i Error or shortage in area (s 189(1) (g)) 5..b..ii..1..a..ii..j Matters the Registrar is Excused from Inquiring (s 189(1)(h)) 5..b..ii..1..a..ii..k Caveat Lodged by Registrar (s 189(1)(i)) 5..b..ii..1..a..ii..l Particulars of Easement Omitted (s 189(1)(j)) 5..b..ii..1..a..ii..m Misdescription of Easement in Register (s 189(1)(k)) 5..b..ii..1..a..ii..n (^) Incorrect Information Recorded (s 189(1)(l)) 5..b..ii..1..a..ii..n..1 Information is incorrect; and 5..b..ii..1..a..ii..n..2 That information was given to the Registrar for recording; and 5..b..ii..1..a..ii..n..3 The incorrectness was not because of an error of the registrar in the act of recording the information 5..b..iii Measure of Damages 5..b..iii..1 Claimant is entitled to be put back in the position they would have been in if there wrong had not been committed (Spencer v RoT (WA)) 5..b..iii..1..a Where deprived of whole of the land, compensation will be the value of the land 5..b..ii..1..a..v..k Old cases say value of land at time of deprivation (Spence) 5..b..ii..1..a..v..l Recent cases say date of judgment (Behn) 5..b..iii..1..b Where mortgage involved 5..b..ii..1..a..vi..b Compensation will usually be the amount of the mortgage (Keddell) 5..b..ii..1..a..v..f..e However, if the mortgage amount exceeds the value of the property, the value of the property will be the appropriate mortgage (Keddell) 5..b..ii..1..a..v..f..e..a But, the full amount of the mortgage might be recoverable where it is reasonable between the parties (Keddell)

5..b..iv (^) Claim must be made within the statutory time limit, which is 12 years after the person becomes aware, or ought reasonably to become aware, of the entitlement to compensation (s 188C(a)), or, if the court considers it just, a longer time (s 188C(b)). 5..b..v Upon payment of compensation under the above sections, the State is subrogated to the rights of the claimant, and may consequently sue the person causing the deprivation/loss/damage in its own name (s 190(1)) 5..b..v..1 Any money it recovers from the person who caused the deprivation/loss/damage over and above the compensation amount paid out must be paid to the person who was deprived/lost/ damaged, less an amount for the State’s legal costs (s 190(2)) 5..b..vi If there is existence of a judgment in claimant’s favour at Common Law, this is no bar to proceedings under s 188 or 188A, however, cannot recover twice, so much choose between them (Behn).