Indefeasibility Flashcards
protection for RP/BFP on registration, against adverse claims from competing owners/other interests
Faulkner v Tauranga [English poet]
On proclaiming sovereignty, Crown became the ‘original proprieter’ of Land in NZ
• Therefore all land in NZ is granted by Crown as estate in fee simple is held in freehold tenure – i.e if no subject can show title – crown is proprietor
HELD
1) Where law is held as estate in fee simple, (especially where registered title under LTA) title must be recognized as one derived from the Crown
2) Indefeasibility does not extinguish Maori possession/occupation– Crown may only extinguish/grant title to subject other than customary owner where they have legislative authority to do so
Indefeasibility
Def.
Adv.
Dis.
Def = in Torrens system NZ this means, protection for RP/BFP on registration, against adverse claims from competing owners/other interests
Adv? Purchaser can rely on register - no further investigations required
Dis? Title is even held under void / illegal circumstances
Franz v Walker
[Sky walker - BFPV is one]
FACTS + Husbands Case
Facts
o Husband and wife (Franz) jointly owned farm property
o Wife forged husbands signature to secure mortgage over property
o Mortgagee [lender] exercise power of sale, and the buyer (Walker) brought an action of possession over husband and wife
Husband argued -
i. his interest in property had not been affected by mortgage for sale
ii. he was still beneficial owner of one-half the interest in the property
iii. to restore property to their names
Franz v Walker
HELD
Held – HC
o applied s 183, held Walker was a BFP
o CoA found
1. Husband’s claim did not fit under any of the 5 exceptions in s63 - claim against mortagee failed
2. Claim against buyer failed as he was a BFP
This case settled two points:
1) Immediate Indefeasibility is favored in NZ – registration of an instrument that is forged or void is effective to vest and divest title and to protect the RP against adverse claims
2) A BFP of an estate in fee simple who buys from a mortgagee exercising its power of sale under a mortgage, is entitled to the same protection of s183 to the same extent as if the BFP had taken title directly from the RP
Relevant Provisions for indefeasibility - LTA
s62 - paramount
s62 [Bunt v Hallinan] - Paramount Section in which quality of indefeasibility stems in NZ
An RP’s registered estate is above all interests EXCEPT those
i. already notified in register
ii. in the absence of fraud
iii. not subject to 3 exceptions
o yet courts have made numerous departures from this
Relevant Provisions for indefeasibility - LTA
s63(1) - exceptions
s63(1) -
• Where a person is wrongfully dispossessed of land, the remedy is a proceeding for possession against the dispossessor , subject to 5 exceptions..
FOPROEA
Relevant Provisions for indefeasibility - LTA
EXCEPTIONS to 63(1)
FOPROEA
- Fraud (s62)
- Other registered/notified interests (s62)
- Prior CT (s62a)
- Omission/Misdescription) (s62b)
- Erroneous inclusion/wrong description of boundaries) (s62c)
- Adverse possesson (S79/199)
If no exceptions apply - a copy of the register that proves RP’s title will be an absolute bar to any action against title
THIS SECTION DOES NOT APPLY TO CLAIMS:
in personam/where liability has been discharged/where claim is under authority of seperate statute
Relevant Provisions for indefeasibility - LTA
s64 - adverse
s64 - Protects RP’s Title against:
a) extinction by adverse possession; through provisions in Limitations Act 1950
b) the acquisition of prescriptive rights, privileges or easements in derogation of that title
EXCEPTIONS -
Part 1 LT Am Act 1963 - where subject in continuous possession for 20+ yrs
Relevant Provisions for indefeasibility - LTA
s182 - notice
s182 -
A purchaser innocent of fraud is not affected by the doctrine of notice (not affected by other unregistered interests)
o A person purchasing land (or taking a mortgage over land) should not go behind the registered proprietor’s (R/P) title
o Knowledge of a trust or unregistered instrument in existence is not enough to be imputed for fraud;
o knowledge of improper deprivation is fraud
Relevant Provisions for indefeasibility - LTA
s182 - protection of purchasers (DPD)
s182
A BFP or mortgagee for valuable consideration is protected against:
• Damages
• Proceedings for possession
• Deprivation of registered estate or interest
Even where the vendor or mortgagor was registered through fraud/error/void instrument, or deprived title through fraud/error/void intrument
[section is subject to FOPrOEA exceptions]
THE LIMITS OF INDEFEASIBILITY
1) Fraud
Nathan v Dollars & Sense Ltd
Kind of fraud that renders title voidable [Efrstiou v Glantschnig] must involved dishonesty agaisnt RP/RP’s agent
Nathan v Dollars & Sense Ltd
Facts
• son forged his mothers signature on memorandum of mortgage so he could get a loan secured by his parent’s house.
Held
o under the fraud exception to indefeasibility the title became defeasible and mortgage was removed from register
Situations of Fraud that render title defeasible
3 SITUATIONS
1
1) Forgery
- where signature is forged title is defeasible unless purchaser is a BFPV
(Nathan v Dollars & Sense)
Situations of Fraud that render title defeasible
3 SITUATIONS
(2) and remedies
2) Knowledge
- mere notice of an unregistered right shall have no effect (s182)
o whilst knowledge of imputed unregistered instrument is not fraud, knowledge to other factors may be (i.e wilful blindness, voluntary ignorance) [Efstration and Bunt]
o Fraud is actual dishonesty, and if the object of transfer is designed to cheat another of exiting right, this is fraudulent [Efstration]
REMEDY - Fraudlent RP must do whatever is necessary to give effect to rights of unregistered holder of interest
• In Efstration – court set aside offending transfer]
• Can sometimes turn unregistered -> registered
• Or get an injunction against fraudulent RP from interefering with rights of unregistered owner
Situations of Fraud that render title defeasible
3 SITUATIONS
(3)
3 CASES
2 STATUTORY REMEDIES
3) Supervening Fraud
Fraud in relation to an unregistered interest taking place entirely after registration
Sutton v O’Kane
Facts
• Easement was never registered to benefitting land; therefore was an equitable interest only
• Servient land wished to know if benefit stood
CoA Held
• No fraud – equitable right of way did not effect Sutton’s title; was not fraudulent to disavow obligations that do not exist
• S62(b) has no application to equitable easements created after servient land has been brought under LTA
Regal Castings v Lightbody
Held
o Under s61 PLA – if a subsequent purchaser insists to alienate land, this alienation is voidable if made with the intent to defraud the purchaser
Requires evidence of intention to defraud (full case p 13)
Burmeister v Registrar General
FACTS
o Burmeisters fraudulently cheated out of the ownership of their house,House sold on
o Considered s63 LTA and s183(1)
Held
o Plaintiffs were entitled to compensation under s172 LTA – which provides compensation to a former RP who has been deprived of an estate or interest by fraud
REMEDIES
Statutory Powers to Correct the Register
S80/81 – gives power to registrars to correct errors / omissions in CT (unless BFP or mortgagee for value)
S85 – gives power to court to direct registrar to correct title
Claims in Personam that render title defeasible
Claims in Personam
A remedy in personam [against a person] will not undermine indedeasibility of title [Davies v Laughton] unless:
o RP is trying to rely on register to escape their actions that have created legal/equitable rights
o i.e an RP who has entered into contract for sale of land cannot set up indefeasibility of title as a defence to proceeding for
Per Frazer & Congregational Church – in personam remedies may be granted
A) where there is privity of contract between parties
B) Where the RP has undertaken a trust or has entered into a fiduciary relationship
Wider principle
Personam claim must
a) be consistent with Torrens system
b) involve unconscionable behaviour on part of current RP
As per Davies – key element is involvement/knowledge of RP of illegal or unconscionable act/omission in issue
c) must be a recognized course of action – RP must be guilty of unconscionable conduct
