Queensland University of Technology Law and Justice Journal
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Lynden
Griggs[*]
A recent article in the Australian Law Journal raised the
following issue. “[A] final question remains. It is not of principle,
but of policy: Would the allowance of some or all claims
within the law of
unjust enrichment in relation to registered title undermine the objectives of
the Torrens system? This final question
is undoubtedly the most
important.”[1]
This article is an attempt to explore this issue by an examination of a
hypothetical, based loosely on the facts of Garcia v
NAB[2] - and how that case would
have been resolved if the argument had been put that the title of the mortgagee
was indefeasible because
of the operation of the Torrens
system.[3]
This paper thus explores the relationship between the concept of indefeasibility
of title; the very foundation of Torrens, and how
the use of the in personam
exception to indefeasibility (with an extension to claims in unjust enrichment)
may undermine the central
tenets of a land registration system that on the
whole, has been extraordinarily
successful.[4] The importance of this
lies in the fact that if unjust enrichment type claims are not ‘subject
to’ the indefeasibility
provisions, then the in personam exception, which
for so many years had been restricted following the New South Wales Court of
Appeal
decision in Mercantile Mutual v.
Gosper[5] may in fact have a reach
that is undesirable within the context of claims that relate to Torrens land.
Accordingly, Part 1 of this paper will examine the policy goals of the
Torrens system, Part 2, the decision in Garcia v NAB with Part 3 bringing
these disparate threads together.
The starting point for analysis of the Torrens system can be provided by
the man who gave his name[6] to the
reforms that have reshaped land registration in Australia in the last 150 years.
The design of the system was to
give security and simplicity to all
dealings with land by providing that the title shall depend upon registration,
that all interests
shall be capable of appearing or being protected upon the
face of the registry, and that a registered title or interest shall never
be
affected by any claim or charge which is not
registered.[7]
As the
oft-repeated statement of the High Court in Breskvar v
Wall[8] says: “[it is] not a
system of registration of title but a system of title by
registration”.[9] Title is not
historical or derivative, in essence each transfer of land involves surrender
back to the Crown and a fresh grant from
the
State[10] - because of this
surrender and reissue philosophy, there is no necessity to search the
antecedents to the title.[11] The
title of the registered proprietor was to be indefeasible, subject only to such
estates, or interests that are noted on the Register
– in a number of
jurisdictions this very concept of indefeasibility being statutorily
delineated.[12] What the concept of
indefeasibility does is provide for the underlying ideals of the “curtain
and mirror” principle of
land registration. The curtain being represented
by the Register – nothing behind the Register (or the curtain) would
effect
the title of the registered proprietor. Further, the
mirror[13] (again the Register)
would accurately and precisely reflect the estates and interests that were
appurtenant to the title of the land.
Each title is, if you like, independent of
what has gone on previously. To reflect the importance of the register and to
provide
compensation to those who suffer loss, an assurance fund was to be
established to benefit those who have been
deprived.[14] Allied to the
“curtain and mirror” was the express recognition that notice of
prior interests was irrelevant and that
knowledge of prior interests was not to
be imputed as
fraud.[15]
This change was dramatic. Previously, right to pass title to land had
traditionally been subject to proof of
ownership.[16] Further, there would
be interests, which though not evident in the title documentation, would bind
the purchaser, because either
they were enforceable by the court of equity, or
the purchaser was deemed to have notice of them. To further the aims of the
“curtain
and mirror”, Torrens argued that no interest in land should
be created or accepted prior to registration – the title
as represented by
the Register was to be paramount.
Instruments when executed are merely
personal contracts between the parties, upon which action for damages may be
raised, but they
do not bind the land. The entry on the folium of the Register
alone passes the property, creates the charge or lesser estate, discharges,
or
transfers it.[17]
Arguably
this omission to take account of unregistered interests (though conversely, one
suspects that Torrens would not have regarded
it as an omission, given that he
considered that unregistered interests were only to operate between the parties)
has led to the
obscuring of some of the important and critical policy objectives
of the
system.[18]
In a contemporary environment, where the importance and significance of equity
jurisprudence is not to be underestimated, the Torrens
system has had to adapt
to the complexity of interests that attach to modern land holdings and to
provide some form of mechanism
for their recognition and
protection.[19]
Despite these
policy aims of indefeasibility of title, the paramountcy of the register, and
the inconsequential relevance of knowledge
of earlier interests, the courts have
consistently held that this does not permit the registered proprietor to decline
to enforce
contracts that he or she has entered
into.[20] Furthermore, the judiciary
has consistently accepted that they retain the residual discretion to recognise
the personal equity and
give effect to it.
Registration... confers upon
the registered proprietor a title to the interest in respect of which he is
registered which is... immune
from adverse claims, other than those specifically
excepted... this principle in no way denies the right of the plaintiff to bring
against the registered proprietor a claim in personam, founded in law or in
equity, for such relief as court in personam may
grant.[21]
As asked at the
outset, can we now add a further subset of in personam claims, today based on
unjust enrichment – and would
the allowance of these types of claims
undermine the aforesaid objectives of the Torrens legislation – in essence
the concept
of the “curtain and mirror”.
Chambers[22] thinks not. What this
article proposes to examine is whether from a policy perspective, this is
correct. Will the allowance of the
policy motivated
relief[23] that was evident in
Garcia v NAB undermine the Torrens system and its critical imperatives.
Indefeasibility is “designed to protect a transferee from defects
in the title of the transferor, not to free him from interests
which he has
burdened his own title”.[24]
But beyond this, what are the limits or the content of the in personam
exception, can they be stated so that some conclusion can
be drawn as to whether
the type of unjust enrichment claim evident in Garcia should be
admissible against the title of Torrens land. At the outset, there is no doubt
that the limits of the in personam exception
have not been clearly
defined.[25] In determining the high
or low-water mark[26] of the content
of the in personam exception, recourse must be had to the decision of the New
South Wales Court of Appeal in Mercantile Mutual Life Insurance Co Ltd v
Gosper.[27]
Mrs Gosper was the sole registered proprietor of land. At the time of
purchase, it was mortgaged to the extent of $205,000. Subsequently
Mrs
Gosper’s husband varied the mortgage so that the total sum secured rose to
some $550,000. Mrs Gosper’s signature
was forged to the relevant
documentation. Upon the death of Mr Gosper, the fraud was discovered. Mrs Gosper
argued that she was entitled
to have the mortgage discharged upon repayment of
the original sum, whereas Mercantile Mutual argued that as its interest was
registered,
its title was indefeasible and the property secured the larger
amount.
The reasoning of the New South Wales Court of Appeal was that the
forged instrument could be set aside where there was an enforceable
personal
equity against Mercantile Mutual – ie where in personam could apply. In
the case, it was held that the personal equity
arose against the appellants
because of their use of the certificate of title without the consent or
authority of the registered
proprietor.
But the company had no authority
to produce or otherwise use the certificate of title for such a purpose. It had,
of course, no implied
authority as mortgagee under the (valid) existing mortgage
standing in its name. And no authority was in fact given for the purpose
by Mrs
Gosper... Therefore what Mercantile Mutual Life Insurance Co Ltd did in this
regard was done without any authority.
The proper conclusion is, in my
opinion that the company used the certificate of title in breach of its
obligations to Mrs Gosper
and that its use of it in that way was a necessary
step in securing the registration of the forged variation of
mortgage.[28]
Thus it was the
use of the certificate without the authority that gave rise to the personal
equity. There was no requirement or necessity
that the company had used the
documents negligently or without proper
care.[29] Further, Mahoney J
considered that it was possible that the personal equity could arise, not merely
from the acts of the registered
proprietor, but from the acts of some other
person.[30] The following criticism
can be made of this case.
Given that registration confers
indefeasibility, that the mortgagee had no knowledge of the fraud, and that
production of the certificate
of title was an essential – albeit
mechanical – requirement for registration, the personal equities principle
should
not be used in a case like the present to cut back the benefits of
indefeasibility. If [the husband] had stolen the certificate of
title from [his
wife] and given it to the mortgagee for registration of the variation, there
would have been no argument for a personal
equity, even though it had been used
without [the wife’s] authority. The fact that the mortgagee already had
possession of
the certificate of title should not – in the absence of
fraud, or knowledge of fraud, on its part – give rise to a personal
equity. Any other result undermines the confidence in the Torrens
register.[31]
It is this
conundrum that is at the heart of the issue in this paper. Should a personal
equity arise in circumstances of what is ultimately
policy motivated relief -
where to allow the claim cuts back the operation of the Torrens legislation.
That is, if the acts of the
registered interest holder do not involve any
misrepresentation, there is no misuse of power, no improper attempt to rely on
legal
rights and no knowledge of
wrongdoing[32] – should the
goals of the Torrens system override the principles which permit a remedy being
granted to an aggrieved individual.
In 1979, Mrs Garcia and her then husband executed a mortgage over their
home. Ultimately, the National Australia Bank Ltd succeeded
to the rights in
respect of this mortgage. This mortgage, although initially for a loan of $5,000
secured all moneys which the mortgagors
might subsequently owe the mortgagee,
including moneys owing under any guarantee that they might give. Between 1985
and 1987, the
appellant signed a number of guarantees in favour of the National
Australia Bank – the guarantees related to business activities
controlled
by her husband. In September of 1988, Mrs Garcia and her husband separated. She
requested to the respondents that they
keep the bank account within limits.
Subsequently, the parties were divorced and Mrs Garcia sought a declaration that
the guarantees
that she had given were of no force or effect and void. Not
surprisingly, the National Australia Bank Ltd sought to enforce them.
The trial judge[34] held
that no moneys were owing under the mortgage. To this effect, (and despite the
fact that she presented herself as a capable
and presentable professional) he
relied upon the rule in Yerkey v
Jones.[35] Under this
rule, a married woman was entitled to a presumption that the credit provider
knows that she is under the undue influence
of her husband, or is unaware of the
nature and effect of the guarantee. If this presumption is not rebutted –
the guarantee
will be set aside. Furthermore, the trial judge held that Mrs
Garcia was not entitled to relief under the principles of Commercial Bank of
Australia Ltd v Amadio,[36]
since the National Australia Bank Ltd did not have notice of any
unconscionability by the husband.
The appeal by the National Australia
Bank Ltd to the New South Wales Court of Appeal was
successful.[37] The principle in
Yerkey v Jones was no longer to be applied in New South
Wales.[38] Similarly, as relief
under the Amadio principle was unavailable, the plaintiff was
unsuccessful. Special leave to appeal to the High Court was granted, principally
on the
challenge to its previous decision of Yerkey v Jones.
All
judges of the High Court came to the conclusion that the plaintiff, Mrs Garcia,
was entitled to her declaration that the mortgage
was not enforceable. The
majority of the High Court and Callinan J considered that the rule in Yerkey
v Jones was still applicable within Australia today. The fact that a surety
does not understand the nature and effect of a transaction; that
the surety
obtained no gain from the contract; that the lender understands that the wife
may repose trust and confidence in her husband,
and that the lender has not
explained the transaction or to ensure that she received independent advice, led
to a conclusion that
it was unconscionable for the creditor to rely on the
guarantee.[39]
This paper
does not propose to analyse this
judgment.[40] Rather, to put the
hypothetical – assuming that the land was registered under the Torrens
system, would the result have been
different if the National Australia Bank Ltd
had submitted that its mortgage was indefeasible because of the operation of
that system
of land
registration.[41] In this context it
is important to note that the conduct of the National Australia Bank could
hardly have been described as fraudulent
– given that this connotes
something akin to personal dishonesty or moral
turpitude,[42] or actual fraud, not
what could be called constructive or equitable
fraud.[43] As stated by the High
Court in Bank of South Australia v
Ferguson:[44]
Not all
species of fraud which attract equitable remedies will amount to fraud in the
statutory sense. The distinction may be illustrated
as follows. In some
circumstances, equity subjects the interest of a purchaser of unregistered land
to an antecedent interest of
which the purchaser has notice. However, in respect
of land to which the [Torrens legislation] applies, registration of a transfer
is not fraudulent in the statutory sense required to qualify the operation of
the doctrine of indefeasibility, merely because the
transferee knows that
registration will defeat an antecedent unregistered interest of which the
transferee has notice.
This is supported by the notice provisions of the
legislation, which provides that a registered proprietor shall not be affected
by
notice, direct or constructive of any trust or unregistered interest, any
rule of law or equity to the contrary, and that knowledge
that any such trust or
unregistered interest is in existence shall not of itself be imputed as
fraud.[45]
Therefore,
assuming that the National Australia Bank Ltd had notice of a interest held by
Mrs Garcia, was there sufficient to found
a personal equity, such that a claim
in personam could be established. Is the arguable unconscionability of the bank
in Garcia sufficient[46] to
raise the equity. Consider what Moore has to say: “A vague and amorphous
concept such as unconscionability would, if sufficient
on its own to defeat a
registered interest in land, drive a horse and buggy through the Torrens system.
That is precisely the reason
why the courts have insisted that the personal
equity must be founded upon a recognised legal or equitable cause of
action”.[47] In the context of
restitution Birks considers that the multiplication of suits in this area
derives from identifying the precise
basis of the
relief.[48]
The relief in Garcia was granted on the basis that National Australia Bank was
unconscientiousness in retaining the benefit of the
guarantee, rather than
unconscionability in the acquisition of the
interest.[49] “But that kind
of unconscientiousness ex post is itself fictitious... It does not tell us in an
honest and straightforward
way why we are sure that the lending bank ought to
give up its security.”[50]
Nevertheless, the High Court has, on at least three known occasions,
imposed a constructive trust in respect of unconscionable conduct
that occurred
in relation to Torrens land – these three cases being the seminal
authorities of Muschinski v
Dodds,[51] Baumgartner v
Baumgartner[52] and
Bahr v Nicolay (No.
2).[53] But the one
fundamental difference between these cases and the hypothetical under
consideration is that, in those cases, the registered
proprietors themselves
acted unconscionably. Given this it would have been unfair to allow the
registered proprietor to rely on indefeasibility
to defeat the claim of the
plaintiff.[54] However, it is a
significant step from allowing a claim by a plaintiff in circumstances where the
defendant has acted unconscionably,
to a situation where the there is a general
jurisdiction to intervene in circumstances of
unconscionability.[55]
Two
recent cases, Pyramid Building Society (in liq) v Scorpion Hotels Pty
Ltd[56] and Macquarie Bank
Ltd v Sixty-Fourth Throne Pty
Ltd[57] have suggested that
necessary limitations within judicial interpretation must be adopted to ensure
the sanctity of the Torrens system.
The facts of these two cases shared an
underlying similarity. In Pyramid Building Society, five individuals used
their redundancy monies to form a company, Scorpion Hotels, to purchase a
guesthouse. One of the five caused
the guesthouse to be mortgaged to the Pyramid
Building Society. The other members were not aware of the mortgage to Pyramid
–
the document being executed by the individual and his wife, the wife
having no authority to undertake this transaction. The mortgage
was registered
under the Torrens system. Whilst the trial judge found the mortgage
unenforceable,[58] the Victorian
Court of Appeal held that the mortgage was valid and enforceable. The reasoning
of the Court of Appeal was that Pyramid’s
mortgage would have been
indefeasible unless it had been guilty of fraud and that constructive notice of
the fraud of the individual
was not statutory fraud within the meaning of the
Torrens legislation. Further, no personal equity could be raised against
Scorpion.[59]
Chambers[60] considers that to
follow this case would prove a “difficult
road”[61] and that the
exclusion of “rights generated by unjust enrichment would require a highly
artificial and unsatisfactory barrier.
It would also mean uprooting several well
established principles”.[62]
The response to this is that to allow these claims as an in personam exception
involves an uprooting of the foundation principles
of the Torrens system of land
registration, and this, given the success of the Torrens system, must surely be
undesirable.
In the Macquarie Bank case, the factual matrix was
basically indistinguishable – the affixing of the company seal had been
made by people who were
not directors of the company. In this case and in
Pyramid, the solicitors for the mortgagee did not check the signatures of
the purported directors against the company search. The Victorian
Court of
Appeal in Macquarie accepted that even though the bank had the means of
checking the attestation clause on the mortgage documentation with the
information
about the directors – there was no obligation to make this
comparison. As commented by Tadgell
J[63]
If the doctrine of
constructive notice was held to apply generally to the ordering of priorities
under the Torrens system it would,
in effect, introduce into the scheme of title
by registration the notion of priority determinable by reference to the doctrine
of
the bona fide purchaser for value without notice, a doctrine at odds with the
Torrens system.
The significance of these two cases in the context of the
present discussion is the important reaffirmation of the principles and
policies
that underlie the Torrens system. In both cases the mortgagee had registered
their documentation – there was no obligation
to make inquiries which
could easily have established the
fraud.[64] The in personam exception
(and thus the raising of the personal equity) was to be limited by known legal
or equitable causes of action.
In support of this the court cited cases such as
Grgic v Australia and New Zealand Banking Group
Ltd[65] and Garafano v
Reliance Finance Corporation
Ltd.[66]
Accordingly, can
it be said that the policy motivated
relief[67] accorded to Mrs Garcia
– an example of the rising importance of restitution, amounts to a known
cause of action that is sufficient
to raise an equity against the registered
proprietor.[68] In an analogous
context, it has recently been reiterated that indefeasibility of title can be
used to override a right to rectify
a transaction. In Tanzone Pty Ltd v
Westpac Banking Corp[69]
the original agreement between the lessor and lessee contained a rent review
clause – which neither party appreciated would
result in the amount of the
rent escalating greatly over the term of the lease. The agreement did not
reflect the true intent of
the parties and rectification would normally have
been available. However the lessor had sold to a purchaser who had obtained
title
by registration. The purchaser was fully aware that the agreement between
the original lessor and lessee did not reflect the true
intent of the parties.
Despite this, registration granted the purchaser indefeasibility and thus the
equity of rectification was
extinguished.[70] Also consider the
New Zealand decision of Davies v
Laughton.[71] The
Laughtons had provided a second mortgage over their property to assist their son
– who was purchasing the importing business
of the appellants. The
respondents signed the mortgage, prepared by the solicitor of the son. At a
subsequent date, the solicitor
for Laughton’s son altered the mortgage (at
the request of solicitors for Davies) with the result that the mortgage was
collateral
to a first, not a second, debenture. The mortgage was registered. The
appellants sought the discharge of an interim injunction preventing
them from
selling the home. The New Zealand Court of Appeal held that Davies was unable to
rely on indefeasibility of title to defeat
any claim by the Laughtons that the
mortgage had been registered without their consent. “In short,
equity’s protection
over sureties defeated the registered
mortgage.”[72]
The
conscience of a mortgagee who, unbeknown to the mortgagor, alters the terms of
the debtor's obligations which the mortgage is
to secure, must be pricked as
assuredly as if the alteration were made after settlement... A hapless guarantor
who has been exploited
in this way is just as entitled to the protection of a
Court of Equity as one whose liability has been altered following settlement
or
registration.[73]
It seems to their Lordships that the learned judges... have been too much
swayed by the doctrines of English equity, and not paid
sufficient attention to
the fact that they are here dealing with a totally different land law, namely a
system of registration of
title contained in a codifying
enactment.[74]
There
is no doubt that the imposition of equitable doctrines seriously inroads into
the concepts that underlie the Torrens System.
But what balance is to be
achieved? Few of us would argue that indefeasibility of title should not be used
to defeat a claim, where
the registered proprietor has not only notice of an
interest, but has given an express assurance that the interest would be
recognised
and protected. Nevertheless, the balance needs to be made between the
certainty, security, and simplicity of the Torrens system on
one hand and the
fairness and discretionary nature of equitable jurisdiction on the other. Whilst
most would accept the result in
Bahr v Nicolay (No.
2);[75] many more of us
question[76] the reasoning of the
New South Wales Supreme Court in Mercantile Mutual v
Gosper.[77]
Consider now the decision of Garcia v National Australia Bank
Ltd.[78] Had the bank
acted unconscionably? Certainly the High Court considered so. Support for its
conclusion that the conduct of the National
Australia Bank was unconscionable
(even though the trial judge thought otherwise) lay in analogies to the
recognised jurisdiction
of the court to set aside gifts made by a mistaken
donor,[79] the ability to provide
relief to a surety where some particular fact is not made known,
[80] and where the creditor has not
disclosed some material features of the
transaction.[81] Having said this
however, “[d]espite the attempt by the majority in Garcia to
justify the decision in terms of unconscionable conduct on the part of the bank,
the better view is that unconscionability cannot
explain the result in Garcia
itself”.[82] If this is
correct, and I would suggest that it
is,[83] then any restitutionary
claim which policy dictates should be successful will give rise to a personal
equity that can potentially
infringe the operation of the Torrens system. Is
this desirable?[84] Does the
allowance of this type of claim permit the flexibility and discretion that is
needed within a land registration system that
demands certainty and stability?
Are we eating away at the crumbling foundations of Torrens, or providing the
flexibility within
the building itself so that it can meet the changes
resonating through society? Is the “justifiable aim of controlling a
species
of transaction... achieved by damaging and diluting established
doctrines”?[85]
There is no doubt that the Torrens system, as a form of land
registration, has been an unqualified success in
Australia.[86] It has introduced a
conveyancing system which is reliable, simple, cheap, speedy and suited to the
social needs of the community.[87]
Further, and specifically in respect of claims made in personam, it could be
argued that it preserves the concepts of contract and
equity,[88] but as Deane J states:
Long before Lord Seldon’s anachronism identifying the
Chancellor’s foot as the measure of Chancery relief, undefined notions
of
‘justice’ and what was ‘fair’ had given way in the law
of equity to the rule of ordered principle which
is of the essence of any
coherent system of rational law. The mere fact that it would be unjust or unfair
in a situation of discord
for the owner of a legal estate to assert ownership
against another provides, of itself, no mandate for a judicial declaration that
ownership in whole or in part lies, in equity, in that
other.[89]
This ideal must be
met – notions of what is fair or just must give way to the rule of ordered
principle. To this end, the fundamental
tenet of indefeasibility of title
represents this rule. It is only from this genesis that the modifications and
qualifications to
the principle should be articulated and justified. To do
otherwise leaves the imprint of the Chancellor’s foot on recognised
doctrines and fundamental tenets of Property Law. If, contrary to the statements
of the High Court in Garcia, it is accepted that the basis of the result
in that case was not unconscionability but, policy-motivated relief, the end
result for
the Torrens system of land registration is that this policy-motivated
restitutionary relief[90] affords a
recognised cause of action that supports the personal equity necessary for an in
personam claim.
Is this acceptable? Only, I would suggest, if the
circumstances of the case are explained as a modification or qualification to
the
fundamental tenet of indefeasibility. These circumstances must be
articulated and justified as an anomalous exception to the critical
imperatives
of the Torrens system. To do otherwise leaves the law without any broad unifying
principle and with the consequential
practical difficulty of providing adequate
and clear advice to subsequent clients.
A better system of land
registration for Australian conditions than the Torrens system has not been
devised. Its fundamental doctrines
need be reinforced not qualified. Any
analysis of a case involving Torrens land should start from the fundamental
precepts of indefeasibility
of title and the irrelevancy of notice – if
these are to be waived, the justification for this action must be established.
In doing this, the courts need to articulate the reasons for the departure, but
importantly, also indicate that it is an isolated
departure from the
‘house of Torrens’ and its foundations.
[*] Senior Lecturer in Law,
University of Tasmania. Thanks to the comments of anonymous referee. The usual
caveat applies.
[1] J Moore,
‘Equity, restitution and in personam claims under the Torrens system: Part
Two’ (1999) 73 ALJ 712 at 715. This article followed an earlier
piece by the same author, J Moore, ‘Equity, restitution and in personam
claims under
the Torrens system’ (1998) 72 ALJ
258.
[2] [1998] HCA 48; (1998) 72 ALJR 1243.
It is unclear from the case whether the land in question was Torrens
land.
[3] See R Chambers,
‘Indefeasible Title as a Bar to a Claim for Restitution’ [1998]
Restitution Law Review 126 where he examines the technical issues
associated with the relationship between indefeasibility and the concept of
unjust enrichment.
This paper concentrates more on the policy issue as
outlined.
[4] See Whalan,
‘Immediate Success of Registration of Title to Land in Australasia and
Early Failures in England’ (1967) 2 NZULR
416.
[5] (1991) 25 NSWLR
32.
[6] There is considerable
controversy as to whom the authorship of the Torrens system should actually be
attributed. For a discussion
of this see P Moerlin Fox, ‘The Story behind
the Torrens system’ (1950) 23 ALJ 489; Robinson, Transfer of
Land in Victoria, Law Book Co Melbourne 1979 at ch
1.
[7] Opening Statement in the
Report of the Real Property Law Commission in November 1861 (SA): Parl Paper No
192 (1861). Sir Robert
Torrens was one of the Commissioners. For a discussion of
the history behind the legislation, see D Pike, ‘Introduction of
the Real
Property Act in South Australia’ [1961] AdelLawRw 4; (1960) 1 Adel LR
169.
[8] (1971) 46 ALJR
68.
[9] Breskvar v Wall
(1971) 46 ALJR 68 at 70 per Barwick CJ.
[10] R R Torrens, The South
Australian System of Conveyancing by Registration of Title, Adelaide
Register and General Observer Printing Offices 1859 at
9.
[11] In most States the
period of prior searching required for General Law or old system title land is
30 years: Conveyancing Ordinance 1951 (ACT); Conveyancing Act 1919
(NSW) s 53; Property Law Act 1974 (Qld) s 237; Conveyancing and Law of
Property Act 1884 (Tas) s 35 (20 years); Property Law Act 1958 (Vic)
s 44; Property Law Act 1969 (WA) s
22.
[12] Land Title Act
1994 (Qld) ss 38, 169, 170; Real Property Act 1886 (SA) ss 10,
69; Land Titles Act 1980 (Tas) s 40.
[13] See L McCrimmon,
‘Protection of Equitable Interests under the Torrens System: Polishing the
Mirror of Title’ [1994] MonashULawRw 12; (1994) 20 Mon LR 300.
[14] Transfer of Land Act
1958 (Vic) ss 109-111; Real Property Act 1900 (NSW) ss
126-127; Land Title Act (1994) (Qld) s 189; Real Property Act
(1886) (SA) ss 203-211; Transfer of Land Act 1983 (WA)
ss 201, 205; Land Titles Act 1980 (Tas); ss 152-153; Land Titles Act
1925 (ACT) ss 145-6.
[15] See the following
provisions: Transfer of Land Act 1958 (Vic) s 43; Real Property Act
1900 (NSW) s 43; Land Title Act (1994) (Qld) s 184;
Real Property Act (1886) (SA) s 186-7; Transfer of Land Act
1983 (WA) s 134; Land Titles Act 1980 (Tas); s 41; Real
Property Act (NT) s 71A/71B; Land Titles Act 1925 (ACT) s 59.
[16] See the discussion by S
Robinson, ‘Claims in Personam in the Torrens System: Some General
Principles’ (1993) 67 ALJ 355 at 355.
[17] R Torrens, A Handy Book
on the Real Property Act of South Australia, (1862) at 8.
[18] See the comments by M
Hughson, M Neave & P O’Connor, ‘Reflections on the Mirror of
Title: Resolving the Conflict
between Purchasers and Prior Interest
Holders’ [1997] MelbULawRw 16; (1997) 21 MULR 460 at
462.
[19] The High Court in
Barry v Heider [1914] HCA 79; (1914 19 CLR 197; 21 ALR 93 accepting that interests prior
to registration do operate in equity. The caveat system provides for the
necessary protection of unregistered
interests. See the following provisions:
Transfer of Land Act 1958 (Vic) ss 89-91; Real Property Act
1900 (NSW) ss 74F-74R; Land Title Act (1994) (Qld) s
121-131; Real Property Act (1886) (SA) s 191; Transfer of Land
Act 1983 (WA) ss 136K-142; Land Titles Act 1980 (Tas); ss
133-138; Land Titles Act 1925 (ACT) ss
104-108.
[20] See for example
Maddison v McCarthy (1865) 2 WW and aB(Eq) 151; Robinson v Keith
(1870) 1 VR(Eq) 11; and recently Mercantile Mutual Life Insurance Co Ltd
v Gosper (1991) 25 NSWLR 32 – though of course, strictly speaking,
“Implementation of this goal [the idea that transactions giving rise to
equitable
interests only resulted in a contractual interests, rather than
proprietory interests] would have required abandonment of the principle
that a
specifically enforceable contract passes an equitable interest in land” M
Hughson, supra n 18 at
461.
[21] Frazer v Walker
[1967] NZLR 1069 (PC) at 1078. This principle can be seen as early as 1927
in Tataurangi Tairuakena v Mua Carr [1927] NZLR 688.
[22] Chambers, supra n
3 at 134 considers not: “A primary
objective of the Torrens system is the avoidance of the expense, difficulty, and
delay of
investigating and proving the validity of a vendor’s title. The
inclusion of claims for restitution of unjust enrichment in
the category of
‘in personam exceptions’ does not conflict with this
objective.”
[23] As
described by J Moore (1999) supra n 1
at 714.
[24] Bahr v Nicolay
(No. 2) [1988] HCA 16; (1988) 164 CLR 604 at 653.
[25] C McDonald, L McCrimmon, A
Wallace & M Stephenson, Real Property Law in Queensland, LBC
Information Services Sydney 1998 at 335: “In 1969 one commentator noted
that, ‘it is evident that the limits of the
registered proprietor from
adverse claims in personam have not been clearly defined.’ This
observation applies with equal force today.”
[26] As described by D
Skapinker, ‘Equitable interests, mere equities, ‘personal’
equities and ‘personal equities’
– distinctions with a
difference’ (1994) 68 ALJ 593 at
596.
[27] (1991) 25 NSWLR
32.
[28] Mercantile Mutual
Life Insurance Co Ltd v Gosper (1991) 25 NSWLR 32 at 48.
[29] Ibid.
[30] Ibid at
46.
[31] P Butt,
‘Indefeasibility and Sleights of Hand’ (1992) 66 ALJ 596 at
597.
[32] To borrow the wording
of Hayne J of the Supreme Court of Victoria in Vassos v State Bank of South
Australia [1993] VicRp 74; (1992) V ConvR 54-443 at
65,180-65,181.
[33] [1998] HCA 48; (1998) 72
ALJR 1243.
[34] Garcia v
National Australia Bank Ltd (1993) 5 BPR
11,996.
[35] [1939] HCA 3; (1939) 63 CLR 649.
[36] [1983] HCA 14; (1983) 151 CLR
447.
[37] (1996) 39 NSWLR
577.
[38] Ibid at
598.
[39] [1998] HCA 48; (1998) 72 ALJR 1243 at
para 33.
[40] See T Cockburn,
‘Yerkey v. Jones: The Phoenix’s New Clothes’ (1998) 9
Journal of Banking and Finance Law and Practice 308; A Hanak, ‘The
wife’s special equity survives the High Court’ (1998) 6
Insolvency Law Journal 202; S Hii, ‘From Yerkey to Garcia: 60 years
on and Still as Confused as Ever!’ (1999) APLJ Lexis 3.
[41] Interestingly the majority
of the High Court in Garcia refused to follow the English House of Lords
decision in Barclays Bank v O’Brien (a decision which was accepted
and modified by Kirby J in Garcia). As raised by P Milne, ‘Lenders,
co-owners and solicitors’ (1999) 149 New Law Journal 168 at 168,
“It is not apparent from the reports whether O’Brien involved
registered or unregistered land. In any event,
the approach set out in the case
was clearly intended for general application. But the doctrine of notice does
not operate in the
context of registered
land.”
[42] Wicks v
Bennett [1921] HCA 57; (1921) 30 CLR 80 at
91.
[43] Assets Co v Mere
Roihi [1905] AC 176 at
210.
[44] [1998] HCA 12; (1998) 151 ALR 729 at
732.
[45] Land Titles Act
1925 (ACT) s 59; Real Property Act (NT) ss 72, 186, 187;
Land Title Act 1994 (Qld) s 184; Real Property Act 1886
(SA) ss 72, 186, 187; Land Titles Act 1980 (Tas) s 41; Transfer of
Land Act 1958 (Vic) s 43; Transfer of Land Act 1893 (WA) s 134;
Real Property Act 1900 (NSW) ss 43,
43A.
[46] Remembering of course
that the trial judge had decided that there was no unconscionability: Garcia
v National Australia Bank Ltd (1993) 5 BPR
11,996.
[47] Moore (1998),
supra n 1 at 260: though of course
that it should be noted that he reconsidered some aspects of his view in a later
piece: Moore (1999), supra n
1.
[48]
P Birks, ‘The Law of Restitution at the End of an Epoch’ (1999) 28
UWA Law Review 13 at
27.
[49] Ibid at
28.
[50] Ibid at
29.
[51] [1985] HCA 78; (1985) 160 CLR
583.
[52] [1987] HCA 59; (1987) 164 CLR
137.
[53] [1988] HCA 16; (1988) 164 CLR
604.
[54] See the comments by
Moore (1998), supra n 1 at
265.
[55]
Ibid.
[56] [1998] 1 VR
188.
[57] [1998] 3 VR
133.
[58] (1996) 136 ALR 166
(TJ); [1998] 1 VR 188 (CA).
[59]
[1998] 1 VR 188 at 196.
[60]
Supra n
3.
[61]
Ibid at 132.
[62]
Ibid.
[63] [1998] 3 VR
133 at 152.
[64] As to whether
wilful blindness would constitute a finding of fraud, Tadgell J didn’t
decide. At [1998] 1 VR 133 at 146 his
Honour had this to say: “I
understand the expression to connote more than a failure to see or look: the
adjective is to be
given its due value. The compound expression connotes a
concealment deliberately and by pretence, from oneself – a dissembling
or
dissimulation. In other words wilful blindness connotes a form of designed or
calculated ignorance, of which none on the part
of the appellant or its agents
is proved.”
[65] (1994) 33
NSWLR 202.
[66] (1992) NSW ConvR
55-640.
[67] As described by
Moore (1999) supra n 1 at
714.
[68] Birks, supra n
48 at 29 recognises that in many cases, the
resolution of a dispute between a domestic borrower and a business lender
involves a case
of policy-motivated
restitution.
[69] [1999] NSWSC 478; (1999) NSW
ConvR 55-908.
[70] See the
brief note on this case: P Butt, ‘Rectification thwarted by
indefeasibility’ (2000) 74 ALJ 280 where he notes that the
different wording of the Victorian legislation may have led to a different
result: Section 42 of the Transfer of Land Act 1958 excluding from the
doctrine of indefeasibility, the “interest of a tenant in possession of
the land.”
[71] [1997] 3
NZLR 705 (CA).
[72] E Toomey,
‘Certainty of title in the Torrens System – Shifting Sands as the
Millennium Approaches’ Paper delivered
to 1999 Real Property Law Teachers
Conference – The Flinders University Law School, 30 September 1999 –
2 October 1999.
[73] [1997] 3
NZLR 705 at 714-715 per Thomas J.
[74] Haji Abdul Rahman v.
Mahomed Hassan [1917] AC 209 at 216 per Lord Dunedin (Privy Council). S
Hepburn, ‘Concepts of Equity and Indefeasibility in the Torrens System of
Land Registration’
(1995) APLJ Lexis 8 at 1 also states: “The
ambiguous and pejorative nature of equity does not fit easily into a statutory
structure centred around
the guarantee of land title upon registration.
Indefeasibility of title upon registration necessitates a level of certainty and
determination
which is, in many ways, directly oppositional to the approach
taken by equitable principles of
fairness.”
[75] [1988] HCA 16; (1988) 164
CLR 604.
[76] See for example P
Butt, ‘Indefeasibility and Sleights of Hand’ (1992) 66 ALJ
596.
[77] (1991) 25 NSWLR
32.
[78] [1998] HCA 48; (1998) 72 ALJR
1243.
[79] Ibid at
para 35.
[80] Ibid
at para 37.
[81] Ibid
at para 36.
[82] Moore
(1999), supra n 1 at 714 quoting from
Gardner, ‘Wives Guarantees of their Husbands’ Debts’ (1999)
115 LQR 1 at 3-4.
[83]
See R Baxendale [1999] SydLawRw 13; [1999] 21 Sydney Law Review 313 at 319-320.
[84] See S Hepburn, supra
n 74 at
8.
[85] [1997] All ER Rev 385 at
394.
[86] Whalan, supra n
4.
[87] M A Neave, C J Rossiter
& M A Stone, Sackville and Neave Property Law Cases and Materials,
6th edn Butterworths 1999 at
418.
[88] As noted by J G
Tooher, ‘Muddying the Torrens Waters with the Chancellor’s Foot?
Bahr v Nicolay’ (1993) 1 APLJ at 1.
[89] Muschinkski v Dodds
[1985] HCA 78; (1985) 160 CLR 583 at
616.
[90] Birks supra n
48 at 30 describes the problems encountered
in Garcia as “incredibly difficult” and there is a need to
avoid “pseudo-solutions and, in particular, not to go in for distorting
or
denaturing particular unjust factors.”
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