The Torrens System. Indefeasibility and the Fraud Exception

Essay, 2012
19 Pages, Grade: 97% High Distinction

Law - Civil / Private / Law of Obligation / Property Law

Bill Sarwari (Author)

Excerpt

CONTENTS

I INTRODUCTION

II THE TORRENS SYSTEM
A Conditions That Led to the Torrens System
B Torrens Title or Title by Registration

III INDEFEASIBILITY

IV THE FRAUD EXCEPTION
A What is Fraud?
B Fraud Against Whom?

V IMPROVEMENTS

VI CONCLUSION

VII BIBLIOGRAPHY
A Articles/Books/Reports
B Cases
C Legislation
E Other

I INTRODUCTION

Indefeasibility in its pure form is a simple concept. In essence, the name of a registered proprietor on the land register is conclusive proof of legal ownership of land. In practice, however, the concept is far from simple.

This paper critically explores the concept of indefeasibility by comparing the Torrens system of title by registration with that which went before: title by deed. In doing so, this paper clearly sets out the objectives of the Torrens system. The exploration then goes on to an examination of a particular qualification to indefeasibility in the shape of the fraud exception, and finally suggests some improvements that could be made to the doctrine.

II THE TORRENS SYSTEM

A Conditions That Led to the Torrens System

In 1853, the Registrar General of Deeds for South Australia Sir Robert Torrens developed a system that would ensure certainty of title. The idea borrowed from the Hanseatic system in Hamburg and was a significant departure from the common law principles of the time.[1] Prior to this, a deed registration system was used, whereby legal rights to property were derived through the execution of a deed of transfer. The act of ‘noting title’, or investigating if all documents in the chain of title were good, would ensure that the rights holder could point to a grant of land from the Crown as the foundation of that title. Each person interested in acquiring an estate in land would have to use a lawyer to examine the chain of title to ensure that the grant originally came from the Crown.[2] It was also difficult to ensure that all interests in the land had been taken in to account, given the possibility of equitable claims. Misplacing a deed could also mean that some other party would be able to demonstrate a better claim to title.[3]

Croucher suggests that a friend of Sir Robert Torrens was in a situation where he lost land through the deed registration system and could not recover money from the seller.[4] This caused Torrens to instigate the system of title by registration as opposed to registration of title. Torrens also believed there was a great deal of confusion that existed under the title by deed system, and often suspected the privileged and educated were profiting from lay-peoples’ lack of understanding.[5] Overall, Torrens had a ‘strong distaste’ for these complexities and considered the title by deed system to be deficient in four ways.[6]

The first issue was that of certainty. A lack of certainty as to whether or not any title could be absolutely traced to a foundation deed without some other interest being disposed in some other deed, made acquiring land less attractive. Given the concept of nemo dat quod non habet (no one can give what they do not have); the chain of title is only ever as good as the weakest link. This meant that if in possession of a defective title, all that could be passed on to a purchaser was a defective title. Defects in title could result from: a removal of a document from the chain (either deliberately or through loss); a situation where the property was sold twice, as was the case in Pilcher v Rawlins where title deeds were retained by the vendor after the first sale but then passed on to the second purchaser;[7] a prima facie error on the deed, for example disposition to Mr James Smith over 46 Avenue Road as opposed to Mr John Smith over 64 Avenue Road; a situation where the deed was subsequently made void due to some defect in its execution; or where an interest existed that did not require documentation to come in to existence, for example an equitable interest.[8]

The second deficiency in the system of title by deed, in the view of Torrens, was the complexity of the system. The very act of tracing the chain of title was complex in that a number of documents had to be consulted in order to trace any interest in land. This could also cause problems where a deed was misplaced or lost. In such cases, the identity of the landowner would have to be verified by independent witnesses before a replacement copy of the deed could be obtained.

Both of these aforementioned deficiencies resulted in what was seen as the third issue with a system of registration of title deed: delay. Each of the processes relating to noting the chain of title could cause enormous delays in the conveyance of land. As ever, with complex, time-consuming processes the expense was great, this, in turn, limited certain classes of society from accessing the transfer of land. These four perceived deficiencies: a lack of certainty, complexity, delay and cost, encouraged Torrens to implement a new system - the system of title by registration.

B Torrens Title or Title by Registration

Chief Justice Barwick in Breskvar v Wall said that:

[t]he Torrens system of registered title…is not a system of registration of title but a system of title by registration…the title (the register) certifies it is not historical or derivative. It is the title which registration itself has vested in the proprietor.[9]

The basis of the Torrens system meant that it is the act of registration that confers property rights to land, as opposed to deed, which in the previous system transferred the interest in land.

There are three fundamental principles within the Torrens system.[10] Firstly, the principle that everything that can be registered has been registered and thereafter the registered proprietor’s (‘RP’) title is immune from attack from anyone holding an unregistered interest. This has been described as the mirror principle by Theodore BF Ruoff, who stated that:

The register of title is a mirror which reflects accurately and completely and beyond all argument the current facts that are material to a man’s title…the register is not only paramount but also a mirror of all material information about an owner’s estate.[11]

The register contains the name of the RP, the nature and limitations of ownership, and any other interests that may be held by third parties over the land such as easements and equitable interests. While Torrens intended the register to be the paramount record of an estate in land, the title recorded on the register may never truly reflect the complete state of the owner’s rights. This is because equitable interests cannot be registered except through a caveat on the title, which means that the Torrens’ fundamental principle is somewhat flawed. The principle is further compromised when a purchaser makes every attempt to search for all interests relating to the title and fails to find an interest which may very well be in existence and yet, unregistered. In Western Australia and Victoria the recognition of adverse possession means that title without registration may still be recognised under certain conditions.[12]

[...]


[1] Robert Chambers, An Introduction to Property Law in Australia (LBC Information Services, 2001) 445.

[2] R Stein, ‘The “Principles, Aims and Hopes” of Title by Registration’ (1983-1985) 9 Adelaide Law Review 267, 267.

[3] Ibid 273.

[4] R F Croucher, ‘Inspired Law reform or Quick Fix?: Or, “Well Mr Torrens, what do you reckon now?”: A reflection on voluntary transactions and forgeries in the Torrens system’ (2009) 30 Adelaide Law Review 291, 304.

[5] Moerlin Fox, ‘The Story Behind the Torrens System’ (1950) 23 Australian Law Journal 489.

[6] Ibid.

[7] [1872] 7 Ch App 259.

[8] Ronald Sackville and Marcia Ann Neave, Australian Property Law, (LexisNexis, 8th Ed, 2008) 455-456.

[9] Breskvar v Wall [1971] 126 CLR 376, 385.

[10] The original Torrens statute was the Real Property Act 1858 (SA). Transfer of Land Act 1893 (WA) is operative in Western Australia.

[11] Theodore B F Ruoff, An Englishman Looks at the Torrens System (Lawbook, 1957) 20.

[12] Malcolm McKenzie Park and Ian P Williamson, ‘An Englishman Looks at the Torrens System – Another Look 50 Years on’ (2003) 77 Australian Law Journal 117, 4 <http://www.csdila.unimelb.edu.au/publication/journals/Englishman_looks_at_Torrens_System_%28Aust%20Law%20Journal%2002%29.pdf>.

Excerpt out of 19 pages


Details

Title
The Torrens System. Indefeasibility and the Fraud Exception
Course
Master of Business Law
Grade
97% High Distinction
Year
2012
Pages
19
Catalog Number
V232882
ISBN (eBook)
9783656499244
ISBN (Book)
9783656499770
File size
599 KB
Language
English
Tags
torrens, system, indefeasibility, fraud, exception
Quote paper
Bill Sarwari (Author), 2012, The Torrens System. Indefeasibility and the Fraud Exception, Munich, GRIN Verlag, https://www.grin.com/document/232882

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