Real Property 4 Assoc Prof Cameron Stewart. Registration Systems Problems with fraudulent transactions in the early colony Problems with fraudulent transactions.

Real Property 4Real Property 4

Assoc Prof Cameron StewartAssoc Prof Cameron Stewart

Registration SystemsRegistration Systems

Problems with fraudulent transactions in the Problems with fraudulent transactions in the early colonyearly colony

1800 – order of Governor King that all 1800 – order of Governor King that all agreements concerning land be in writing or agreements concerning land be in writing or entered into books kept at Sydney, Parramatta entered into books kept at Sydney, Parramatta and Hawkesburyand Hawkesbury

1802 – Judge Advocate’s office1802 – Judge Advocate’s office 1817- Gov Macquarie – Fraudulent against a 1817- Gov Macquarie – Fraudulent against a

bona fide purchaser for valuebona fide purchaser for value 1825 – Registration Act – substantially amended 1825 – Registration Act – substantially amended

over time and then repealed in 1984 and over time and then repealed in 1984 and sections transferred into the Conveyancing Act sections transferred into the Conveyancing Act

Conveyancing Act and the Conveyancing Act and the Register of DeedsRegister of Deeds

Section 184C – general register of Section 184C – general register of deedsdeeds

Open to public inspection – s 199Open to public inspection – s 199 Deliver original and copy to the Deliver original and copy to the

Registrar – registered with a number Registrar – registered with a number – copy kept on file– copy kept on file

Any instrument affecting land or not Any instrument affecting land or not can be registered – not necessarily a can be registered – not necessarily a “deed” as such “deed” as such

The effect of registration?The effect of registration? Validity of the document – some Validity of the document – some

instruments must be registered to have instruments must be registered to have legal force eg short form of mortgage legal force eg short form of mortgage discharge, appointment of new trustee, discharge, appointment of new trustee, powers of attorneypowers of attorney

Registration for priority – s 184G – Registration for priority – s 184G – instruments affecting land, executed bona instruments affecting land, executed bona fide and for valuable consideration take fide and for valuable consideration take priority over earlier instruments priority over earlier instruments

Effect – earlier legal interest will be Effect – earlier legal interest will be defeated by later legal interest upon defeated by later legal interest upon registration of later interest and so on registration of later interest and so on

However it only affects priority – will not However it only affects priority – will not perfect a fraudulent transaction, mistake perfect a fraudulent transaction, mistake or forgeryor forgery

Important factors to consider:Important factors to consider:

(a)(a) Competing instruments Competing instruments – must – must have an instrument to register and have an instrument to register and then it only concerns instruments in then it only concerns instruments in writing – if no instrument then the writing – if no instrument then the normal priority rules apply eg a normal priority rules apply eg a short term lease without writing, short term lease without writing, competing with a legal registered competing with a legal registered interest eg a sale to a third party – interest eg a sale to a third party – the registration won’t give the later the registration won’t give the later legal interest prioritylegal interest priority

Important factors to consider:Important factors to consider:

(a)(a) Competing instruments Competing instruments – – Another eg - equitable mortgage by Another eg - equitable mortgage by deposit of title deeds created without deposit of title deeds created without writing not defeated by a later writing not defeated by a later registered instrumentregistered instrument

Section 184 confers priority only in Section 184 confers priority only in cases of “competition” – that is if the cases of “competition” – that is if the interests are compatible no priority is interests are compatible no priority is affordedafforded

Important factors to consider:Important factors to consider:

Registration can make effective Registration can make effective instruments which may not have had instruments which may not have had any legal effect under priority rules – any legal effect under priority rules – eg A sells land to B but then sells eg A sells land to B but then sells land to Cland to C

Under the nemo dat principle C Under the nemo dat principle C would take no interest – however if C would take no interest – however if C registers before B, C will be given registers before B, C will be given “priority” – eg defeats B’s interest“priority” – eg defeats B’s interest

Important factors to consider:Important factors to consider:

Bona fidesBona fides – on the part of the person – on the part of the person taking the interest – notice is enough taking the interest – notice is enough for there to be an absence of bona for there to be an absence of bona fides – actual, constructive or impliedfides – actual, constructive or implied

Eg if a purchaser takes interest with Eg if a purchaser takes interest with notice that someone other than the notice that someone other than the vendor is in possession of the property vendor is in possession of the property and fails to make proper enquiries is and fails to make proper enquiries is said to be notified and will not gain said to be notified and will not gain priority in registrationpriority in registration

Important factors to consider:Important factors to consider:

When does notice have to have When does notice have to have occurred? Before execution of the occurred? Before execution of the instrument and not the registrationinstrument and not the registration

S 164 CA – actual constructive and S 164 CA – actual constructive and imputedimputed

Constructive notice if an interest is Constructive notice if an interest is registeredregistered

Important factors to consider:Important factors to consider:

(d) (d) Valuable considerationValuable consideration – must not – must not be nominal but may be inadequate be nominal but may be inadequate (eg much lower than market value) (eg much lower than market value) – S 184G(1) includes marriage– S 184G(1) includes marriage

Problems with the deed Problems with the deed registration systemregistration system

Improved level of knowledgeImproved level of knowledge Offered greater degree of protectionOffered greater degree of protectionButBut Did not grant a total security of interestDid not grant a total security of interest Purchasers took subject to unregistered Purchasers took subject to unregistered

interests which have not been documentedinterests which have not been documented Purchasers take subject to unregistered Purchasers take subject to unregistered

instruments which they ought to have instruments which they ought to have discovereddiscovered

Purchasers title is still dependant on the chain Purchasers title is still dependant on the chain of title and the risk that a prior interest may of title and the risk that a prior interest may be invalidated breaking the chain of title and be invalidated breaking the chain of title and destroying the purchaser’s interestdestroying the purchaser’s interest

The introduction of the Torrens The introduction of the Torrens systemsystem

1840 – RR Torrens took up post 1840 – RR Torrens took up post in SA as Collector of Customsin SA as Collector of Customs

Torrens personality – Hanseatic Torrens personality – Hanseatic towns – merchant shipping towns – merchant shipping system – Ulrich’s influencesystem – Ulrich’s influence

Rip up the old system and start Rip up the old system and start anew – destroy the dependent anew – destroy the dependent nature of titles – title needed nature of titles – title needed independence – title should be independence – title should be “indefeasible”“indefeasible”

One document – CTOne document – CT

The introduction of the Torrens The introduction of the Torrens systemsystem

1858 – SA passed the Real Property 1858 – SA passed the Real Property Act – Torrens as R-GAct – Torrens as R-G

Legal profession in uproar – one Legal profession in uproar – one judge actually removed from office in judge actually removed from office in relation to his treatment of the relation to his treatment of the Torrens system (1867)Torrens system (1867)

Now in NZ, Canada, Malaysia, Now in NZ, Canada, Malaysia, Singapore, Hong Kong, Israel – didn’t Singapore, Hong Kong, Israel – didn’t make it in the USAmake it in the USA

First introduced into NSW 1862 – First introduced into NSW 1862 – later amendments consolidated into later amendments consolidated into the Real Property Act 1900the Real Property Act 1900

The introduction of the Torrens The introduction of the Torrens systemsystem

In 1993, 3% (between 60K and In 1993, 3% (between 60K and 80K) held in old system – 80K) held in old system – conversions occuring at around conversions occuring at around 4,000 a year – at that rate old 4,000 a year – at that rate old system will be phased out in system will be phased out in NSW around 2013NSW around 2013

Torrens system was Torrens system was computerized in 1983 – in 1993 computerized in 1983 – in 1993 90% computerized90% computerized

The RegisterThe Register

Section 31B(1) – folios dealings, Section 31B(1) – folios dealings, prescribed instruments and records prescribed instruments and records which the regulations may requirewhich the regulations may require

Manual or computerized foliosManual or computerized folios Record information – description of Record information – description of

land, estates and interests in land, land, estates and interests in land, descriptions of the proprietors of descriptions of the proprietors of those interests and any other those interests and any other particulars which affect the landparticulars which affect the land

Distinct folio referenceDistinct folio reference

The RegisterThe Register Certificate of title – a copy of the folio – you Certificate of title – a copy of the folio – you

normally have to produce the CT if you want to normally have to produce the CT if you want to register a “dealing”register a “dealing”

““dealings” – any instrument (other than a dealings” – any instrument (other than a Crown grant or caveat) that is registrable or Crown grant or caveat) that is registrable or can be made registrable – s 3can be made registrable – s 3

Approved forms – see the Conveyancing Law Approved forms – see the Conveyancing Law and Practice Reporter or LPI websiteand Practice Reporter or LPI website

Upon registration takes effect as a deed Upon registration takes effect as a deed between the parties - s 36(11)between the parties - s 36(11)

Title by registrationTitle by registration

Cardinal principle – register is the source Cardinal principle – register is the source of title as opposed to a system where of title as opposed to a system where title can be registered – it is a system title can be registered – it is a system where title is granted by registrationwhere title is granted by registration

Priority between competing registered Priority between competing registered interests determined by time of interests determined by time of registration not by date of execution (s registration not by date of execution (s 36(9)) – priority attaches to the interest 36(9)) – priority attaches to the interest created under the dealing but also the created under the dealing but also the terms and conditions of the instrument terms and conditions of the instrument

Indefeasibility of titleIndefeasibility of title

What is meant by indefeasibility? – What is meant by indefeasibility? – once an interest is registered it once an interest is registered it cannot be set aside because of cannot be set aside because of some defect existing in the tile prior some defect existing in the tile prior to registrationto registration

Not specifically mentioned in the Not specifically mentioned in the RPA - - s 42 (1) confers free RPA - - s 42 (1) confers free ownership on a registered owner ownership on a registered owner (with exceptions for fraud etc)(with exceptions for fraud etc)

ExampleExample Barb steals Able’s CT and uses it to enter Barb steals Able’s CT and uses it to enter

into a contract for sale with Clarence (who into a contract for sale with Clarence (who know nothing of the theft). Barb forges know nothing of the theft). Barb forges Able’s signature and Clarence resgiters Able’s signature and Clarence resgiters the conveyance – once registered Able’s the conveyance – once registered Able’s interest in the property is defeatedinterest in the property is defeated

Compare that with the deeds registration Compare that with the deeds registration system where the registration would not system where the registration would not perfect a fraudperfect a fraud

A can sue B and might also have a right A can sue B and might also have a right to compensation under the RPA’s to compensation under the RPA’s assurance fund (see later)assurance fund (see later)

Immediate or deferred?Immediate or deferred?

The effects of this immediate title by The effects of this immediate title by registration is often called “immediate registration is often called “immediate indefeasibility” – indefeasibility” –

In the past some courts stated that the In the past some courts stated that the RPA did not act in this fashion – they RPA did not act in this fashion – they subscribed to a theory of “:deferred subscribed to a theory of “:deferred findefeasibility” – where in our example findefeasibility” – where in our example could have claimed a better title to the could have claimed a better title to the property up until the point that C sold his property up until the point that C sold his interest onto a fourth party (bona fide for interest onto a fourth party (bona fide for value) - value) - Gibbs v Messer Gibbs v Messer [1891] AC 248 [1891] AC 248

Immediate or deferred?Immediate or deferred?

Never strictly overruledNever strictly overruled

Frazer v WalkerFrazer v Walker Immediate indefeasibility allows title Immediate indefeasibility allows title

in cases of fraud, forgery, breach of in cases of fraud, forgery, breach of statutory prohibition and many more statutory prohibition and many more examples!!examples!!

Unregistered interests in the Unregistered interests in the Torrens systemTorrens system

Section 41(1) – unregistered instruments not Section 41(1) – unregistered instruments not effective to pass any estate or interest in land effective to pass any estate or interest in land until registereduntil registered

RPA does recognize unregistered interests but RPA does recognize unregistered interests but not the instruments: not the instruments: Barry v HeiderBarry v Heider(1914) 19 (1914) 19 CLR 197 – the instrument does not create an CLR 197 – the instrument does not create an interest in land but the agreement between the interest in land but the agreement between the parties brings into being an equitable interest parties brings into being an equitable interest which is then enforceablewhich is then enforceable

Hence unregistered interests are said to be in Hence unregistered interests are said to be in the nature of equitable interests in the Torrens the nature of equitable interests in the Torrens system, even if they are in writing (remember system, even if they are in writing (remember the Statute of Frauds!!)the Statute of Frauds!!)

Priorities between registered and Priorities between registered and unregistered interestsunregistered interests

Unregistered interests are Unregistered interests are extinguished by registered interests extinguished by registered interests (unless caveats or exceptions to (unless caveats or exceptions to indefeasibility: see below)indefeasibility: see below)

Priorities between unregistered Priorities between unregistered interestsinterests

Priority is determined by general Priority is determined by general common law principles: however common law principles: however some unregistered interests never some unregistered interests never have to be registered and hence have to be registered and hence are “legal” eg short term leases and are “legal” eg short term leases and adverse possession, mortgage by adverse possession, mortgage by deposit of title deedsdeposit of title deeds

Priorities between unregistered Priorities between unregistered interestsinterests

So generally we got back to the So generally we got back to the principles – where the broad idea is principles – where the broad idea is “First in time has the better equity” “First in time has the better equity” but the main principle is “Who has but the main principle is “Who has the better equity?”the better equity?”

Look to conduct: inaction or Look to conduct: inaction or postponing conduct, failure to lodge postponing conduct, failure to lodge a caveat to protect the interesta caveat to protect the interest

Exceptions to indefeasibilityExceptions to indefeasibility- Fraud- Fraud

A person who acquires a registered A person who acquires a registered interest through fraud has a interest through fraud has a defeasible interest: RPA ss 42, 43, 124defeasible interest: RPA ss 42, 43, 124

Eg their interest can be set aside.Eg their interest can be set aside. The requirements for setting aside The requirements for setting aside

such an interest are:such an interest are: the registered proprietor’s interest the registered proprietor’s interest

must have been acquired through must have been acquired through implication in the fraud; andimplication in the fraud; and

the implication may be personal or the implication may be personal or through the acts of an agent.through the acts of an agent.

Exceptions to indefeasibilityExceptions to indefeasibility- Fraud- Fraud

General principle: unless the fraud General principle: unless the fraud can be brought home to the can be brought home to the registered proprietor, registration registered proprietor, registration will confer indefeasibility.will confer indefeasibility.

Definition of fraud: actual Definition of fraud: actual dishonesty, which can be attached dishonesty, which can be attached to the registered proprietor’s title to the registered proprietor’s title ((Assets Co Ltd v Mere RoihiAssets Co Ltd v Mere Roihi [1905] [1905] AC 176)AC 176)

Sometimes said to be “moral Sometimes said to be “moral turpitude”turpitude”

Exceptions to indefeasibilityExceptions to indefeasibility- Fraud- Fraud

Hence includes actual fraud and Hence includes actual fraud and some forms of constructive or some forms of constructive or equitable fraud (but not all)equitable fraud (but not all)

The fraud may not necessarily have The fraud may not necessarily have been practiced against another been practiced against another interest holder but may have been interest holder but may have been practiced against the RG 9 see Butt practiced against the RG 9 see Butt [2058][2058]

Exceptions to indefeasibilityExceptions to indefeasibility- Fraud- Fraud

What about notice of an earlier What about notice of an earlier interest? Under old system that interest? Under old system that would be enough for actual or would be enough for actual or constructive fraud if you then constructive fraud if you then attempted to register and interest.attempted to register and interest.

Under RPA s 43(1) – notice does not Under RPA s 43(1) – notice does not have this effect and is taken to be have this effect and is taken to be outside the definition of “fraud” for outside the definition of “fraud” for the RPA – section takes effect on the RPA – section takes effect on registration, not beforeregistration, not before

Exceptions to indefeasibilityExceptions to indefeasibility- Fraud- Fraud

What then is the dividing line What then is the dividing line between cases of mere notice of between cases of mere notice of earlier interest (which will not give earlier interest (which will not give rise to fraud on registration) and rise to fraud on registration) and cases where notice is coupled with cases where notice is coupled with other factors (which do give rise to other factors (which do give rise to a finding of fraud)?a finding of fraud)?

See Butt [2060]See Butt [2060]

Exceptions to indefeasibilityExceptions to indefeasibility- Fraud- Fraud

Fraud where:Fraud where: Registered proprietor has been given Registered proprietor has been given

notice of unregistered interest and notice of unregistered interest and then assures that the interest will be then assures that the interest will be protected and then registers seeking protected and then registers seeking indefeasibility;indefeasibility;

Registered proprietor receives notice Registered proprietor receives notice and lulls unregistered interest holder and lulls unregistered interest holder into not registered, then seeks to into not registered, then seeks to claim indefeasibility;claim indefeasibility;

Exceptions to indefeasibilityExceptions to indefeasibility- Fraud- Fraud

Fraud where:Fraud where: Notice and deliberate frustration of Notice and deliberate frustration of

prior interest holder’s registration;prior interest holder’s registration; Any attempt to deprive a Any attempt to deprive a

beneficiary of interest in trust beneficiary of interest in trust property via indefeasibility property via indefeasibility provisions;provisions;

Actual knowledge of a fraud and Actual knowledge of a fraud and then an attempt to register to then an attempt to register to defeat the defrauded party (NOT defeat the defrauded party (NOT Constructive knowledge).Constructive knowledge).

Exceptions to indefeasibilityExceptions to indefeasibility- Fraud- Fraud

Not fraud where:Not fraud where: You have been given express notice You have been given express notice

of unregistered interest and then of unregistered interest and then register to defeat that interest;register to defeat that interest;

You have been given notice and You have been given notice and believe that unregistered interest is believe that unregistered interest is enforceable and discover on enforceable and discover on registration that it is not;registration that it is not;

You register with the express aim of You register with the express aim of defeating a possible interest, which defeating a possible interest, which may arise from pending litigation.may arise from pending litigation.

Exceptions to indefeasibilityExceptions to indefeasibility- Fraud- Fraud

What about agency? Agent’s activity What about agency? Agent’s activity is normally brought home to the is normally brought home to the principal so if actual fraud then principal so if actual fraud then defeasible title.defeasible title.

What about knowledge of fraud? What about knowledge of fraud? Knowledge of agent is imputed to Knowledge of agent is imputed to principal – so generally the principal principal – so generally the principal will acquire defeasible title – H/W!! will acquire defeasible title – H/W!! principal can rebut the presumption principal can rebut the presumption of communication and hence claim of communication and hence claim ignorance of the fraud to get ignorance of the fraud to get indefeasible title.indefeasible title.

Exceptions to indefeasibilityExceptions to indefeasibility- Prior folio- Prior folio

If the RG makes a mistake and If the RG makes a mistake and issues two folios for the one piece issues two folios for the one piece of land the earlier folio is said to of land the earlier folio is said to take priority – s 42(1)(a)take priority – s 42(1)(a)

Exceptions to indefeasibilityExceptions to indefeasibility- Prior interests entered into the - Prior interests entered into the

foliofolioSometimes an instrument will be registered Sometimes an instrument will be registered

but the folio may not properly or fully but the folio may not properly or fully describe all the interests registered - the describe all the interests registered - the interest described in the folio is said to interest described in the folio is said to be subject to the actual import of the be subject to the actual import of the instrument (s 42(1)) – Hence in a case instrument (s 42(1)) – Hence in a case where the folio had not fully described where the folio had not fully described the transfer of an interest subsequent the transfer of an interest subsequent interest holders took their interests interest holders took their interests subject to the original import of the subject to the original import of the document and document and notnot the register.[ the register.[Bursill Bursill Enterprises Pty Ltd v Berger Bros Trading Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd Co Pty Ltd (1971) 124 CLR 73](1971) 124 CLR 73]

Exceptions to indefeasibilityExceptions to indefeasibility- Omitted or misdescribed - Omitted or misdescribed

easementseasements An easement is right attached to land which An easement is right attached to land which

is held by someone other than the owner of is held by someone other than the owner of the land to use the land in a particular way the land to use the land in a particular way eg right of wayeg right of way

Section 42(1)(a1) – registered proprietors Section 42(1)(a1) – registered proprietors take subject to omitted easementstake subject to omitted easements

““Omitted” when simply not there on the Omitted” when simply not there on the registerregister

Works either when old system land brought Works either when old system land brought under Torrens and easement left out OR under Torrens and easement left out OR when a registered easement has been left when a registered easement has been left off a reprint of a new foliooff a reprint of a new folio

Exceptions to indefeasibilityExceptions to indefeasibility- Omitted or misdescribed profits - Omitted or misdescribed profits

a prendrea prendre

A profit is a right attached to land which is A profit is a right attached to land which is held by someone other than the owner of the held by someone other than the owner of the land to enjoy part of the sold or the nature land to enjoy part of the sold or the nature produce of the soil eg timber, wild animalsproduce of the soil eg timber, wild animals

Section 42(1)(b) - “Omitted” if the Section 42(1)(b) - “Omitted” if the transferred from old system and left offtransferred from old system and left off

OROR If always Torrens system then if all that had If always Torrens system then if all that had

to be done for registration had been done to be done for registration had been done but the RG failed to put it on the registerbut the RG failed to put it on the register

Exceptions to indefeasibilityExceptions to indefeasibility- Misdescription of a portion of - Misdescription of a portion of

landland

Section 42(1)(c) – not indefeasible if Section 42(1)(c) – not indefeasible if misdescribed boundaries unless where misdescribed boundaries unless where the proprietor is a purchaser or the proprietor is a purchaser or mortgagee for valuemortgagee for value

Exceptions to indefeasibilityExceptions to indefeasibility- Short term tenancies- Short term tenancies

By s. 42(1)(d) of the By s. 42(1)(d) of the Real Property ActReal Property Act, a , a registered interest is subject to a short-registered interest is subject to a short-term lease if:term lease if:

(i)(i) the lease plus any option does not the lease plus any option does not exceed 3 years; andexceed 3 years; and

(ii)(ii) the tenant is in possession of the the tenant is in possession of the property or entitled to its immediate property or entitled to its immediate possession; andpossession; and

(iii)(iii) the holder of the registered interest the holder of the registered interest had notice of the tenancy before he had notice of the tenancy before he became registered.became registered.

Exceptions to indefeasibilityExceptions to indefeasibility- Short term tenancies- Short term tenancies

Tenancy for less than three years do not Tenancy for less than three years do not have to be registered – hence under s have to be registered – hence under s 42(1)(d) a registered proprietor who 42(1)(d) a registered proprietor who takes with notice will take subject to a takes with notice will take subject to a leaselease

Notice in this section includes Notice in this section includes constructive noticeconstructive notice

Under Torrens system requires the Under Torrens system requires the registration of the correct instrument. registration of the correct instrument. Must be registered if term exceeds three Must be registered if term exceeds three years: s 53 RPAyears: s 53 RPA

Exceptions to indefeasibilityExceptions to indefeasibility- Short term tenancies- Short term tenancies

If the lease is less than three years and If the lease is less than three years and not registered what sort of interest does not registered what sort of interest does the lessee hold? Legal but subject to the the lessee hold? Legal but subject to the registered interests. If there is registered interests. If there is competition between the unregistered competition between the unregistered but legal lease and an unregistered but legal lease and an unregistered equitable interest eg an equitable equitable interest eg an equitable mortgage the normal priority rules applymortgage the normal priority rules apply

Exceptions to indefeasibilityExceptions to indefeasibility- Short term tenancies- Short term tenancies

Snowlong Pty Ltd v Choe Snowlong Pty Ltd v Choe (1991) 23 (1991) 23 NSWLR 198NSWLR 198

A contract for the sale of Torrens Title A contract for the sale of Torrens Title land disclosed the existence of, and land disclosed the existence of, and annexed a copy of, an unregistered annexed a copy of, an unregistered lease agreement for part of the land for lease agreement for part of the land for a term of five years with options for a term of five years with options for renewal in favour of the lessee. Under renewal in favour of the lessee. Under the contract the purchaser agreed to the contract the purchaser agreed to abide by the terms and conditions of the abide by the terms and conditions of the annexed lease.annexed lease.

Exceptions to indefeasibilityExceptions to indefeasibility- Short term tenancies- Short term tenancies

Snowlong Pty Ltd v Choe Snowlong Pty Ltd v Choe (1991) 23 NSWLR (1991) 23 NSWLR 198198

The lease which had remained unregistered The lease which had remained unregistered while six subsequently executed dealings while six subsequently executed dealings were registered remained unregistered. The were registered remained unregistered. The purchaser, on registration of its transfer, purchaser, on registration of its transfer, sought to evict the lessee as a tenant at sought to evict the lessee as a tenant at will. will.

Held: Construing the contract in the light Held: Construing the contract in the light of its express terms and in the light of of its express terms and in the light of the fact that prior to its execution the the fact that prior to its execution the lessee's interest was, because of lack of lessee's interest was, because of lack of registration, one at will only: registration, one at will only:

Exceptions to indefeasibilityExceptions to indefeasibility- Short term tenancies- Short term tenancies

(a) the purchaser, having acknowledged (a) the purchaser, having acknowledged or agreed to recognise that the lessee or agreed to recognise that the lessee had a lease for five years with two options had a lease for five years with two options for renewal, took title subject to an for renewal, took title subject to an express trust on those terms; express trust on those terms;

(b) alternatively, repudiation of the (b) alternatively, repudiation of the agreement to abide by the terms and agreement to abide by the terms and conditions of the annexed lease conditions of the annexed lease constituted fraud within the exception to constituted fraud within the exception to indefeasibility in s 42 and s 43 of the Real indefeasibility in s 42 and s 43 of the Real Property Act 1900, so that registration of Property Act 1900, so that registration of the transfer free of any reference to the the transfer free of any reference to the lease did not destroy the lessee's rightslease did not destroy the lessee's rights

Exceptions to indefeasibilityExceptions to indefeasibility- Rights in personam- Rights in personam

While registration of an interest may While registration of an interest may extinguish other unregistered interests extinguish other unregistered interests personal rights of action can still survive – personal rights of action can still survive – sometimes called “personal equities”sometimes called “personal equities”

Examples:Examples: Right of specific performance in a sale of Right of specific performance in a sale of

land contract;land contract; Right of beneficiary to call on performance Right of beneficiary to call on performance

of trust;of trust; Right to rectify a mistake in a contract Right to rectify a mistake in a contract

which has bestowed title on the wrong which has bestowed title on the wrong party.party.

The personal equity must rest on a legal The personal equity must rest on a legal or equitable cause of actionor equitable cause of action

Exceptions to indefeasibilityExceptions to indefeasibility- Rights in personam- Rights in personam

Bahr v Nicolay (No 2)Bahr v Nicolay (No 2) 1988) 62 ALJR 1988) 62 ALJR 268.268.

The registered proprietor (R) was The registered proprietor (R) was bound by a personal equity where R bound by a personal equity where R knew of an unregistered interest knew of an unregistered interest and had purchased the property on and had purchased the property on the basis that R would recognise the basis that R would recognise and be bound by that unregistered and be bound by that unregistered interest.interest.