Tenure and the Torrens System (1) Study Notes

Doctrine of Tenure

• Tenure = to hold, possess or occupy land.
• Formed the basis of land ownership in England and rooted in the feudal system of Norman England.
  • Crown owned all the land; land was granted to subjects in return for performance of services.
  • Created a hierarchical pyramid structure known as sub-infeudation (subletting of grants).
• Legal evolution away from feudalism:
  • Statute of Quia Emptores (1290) – abolished the process of subinfeudation.
  • Tenures Abolition Act 1660 – abolished most remaining features of feudalism.
• With Captain Cook and British colonisation, Australia inherited the English land law system:
  • Doctrine of tenure received into Australia.
  • All land vested in the Crown; creation of sovereign or ‘radical’ title.

Preliminary Mindsets

• Ownership = ultimate title to land.
• Possession = an incident of ownership (physical occupation plus intention to possess).
  • Example: Ben buys an investment property and leases it to Max. Who has ownership vs possession?

Co-ownership: Defined

• Co-ownership arises where two or more people are entitled to simultaneous enjoyment of the land.
• The focus is on mutual ownership and overlapping rights to the same land.

Types of Co-ownership

• Tenancy in common
• Joint tenancy

Joint Tenancy

• Each tenant owns the whole of the land (not a separate, proportionate share).
• Distinguished from tenancy in common by four unities and right of survivorship.

The ‘Four Unities’ (Joint Tenancy)

• Possession: each joint tenant is entitled to possession of any part of the land.
• Interest: the interest for each joint tenant must be the same.
• Title: each joint tenant must claim title to the land under the same act or document (e.g., conveyance, will, or adverse possession).
• Time: the interest of each tenant must vest at the same time.

Joint Tenancy: Features

• Right of survivorship: when one joint tenant dies, their interest is extinguished and passes to the surviving joint tenants; this supersedes any disposition by will.
• If joint tenants die simultaneously, the land is treated as if they died as tenants in common in equal shares.

Severance of Joint Tenancies

• Occurs when one or more joint tenants no longer retain one or more of the four unities.
• Methods of severance:
  • Alienation: one tenant unilaterally disposes of their share to a third party.
  • Mutual agreement: all parties agree to sever.
  • Severance by partition: court-ordered partition.
  • Statutory severance: by virtue of legislation.
  • Reversion to tenancy in common – ‘fall back’ position.

Tenants in Common

• Each co-owner has a distinct but undivided share; ownership is proportional and can be unequal.
• When one tenant dies, their share passes to their estate.
• All tenants in common have the right to possession.

Creation of Co-Ownerships

• Joint tenancy or tenancy in common may be created by express words.
• Common law preference: joint tenancy presumed when land is conveyed to two or more people unless:
  • One unity is absent, or
  • Words of severance are used.

Statutory Presumption (Western Australia)

• Section 60 of the Transfer of Land Act (WA) provides a statutory presumption regarding joint tenancy.
• Drafting is critical to avoid unintended severance.

Rights of Co-owners

• Occupation: each co-owner has an undivided share and the right to use and occupy the whole land.
  • If one co-owner occupies and others do not, the occupying co-owner is not obliged to pay rent to non-occupying co-owners.
  • Non-occupying co-owners may sue the occupying co-owner on appropriate grounds (e.g., Rees v Rees [1931], Beresford v Booth [1999], Brickwood v Young (1905)).
• Income and Profit: historically, common law did not require sharing income with other co-owners; equity may allow adjustments.
  • If third-party rents are received by a co-owner in exclusive occupation, other co-owners may claim a just proportion under an action of account.
• Repairs and Improvements: no common-law obligation to contribute to expenses in absence of an agreement; equity may adjust when improvements/lasting repairs are paid by a co-owner.
• Partition or Sale: co-owners may end their arrangement by selling to another co-owner or a stranger; judicial remedies available.

Judicial Remedies: Court’s Options (WA)

• WA: sections 126–129 of the Property Law Act (PLA):
  • If a co-owner has one-half or more, the court is required to order a sale unless there is good reason to the contrary (s126(1)).
  • If a co-owner has less than a half-share, sale is ordered only if it is more beneficial to the co-owners than partition (s126(2)).
  • If a co-owner has less than a half-share and other co-owners purchase the share, the court may order a valuation and a sale (s126(3)).

How Should the Land Be Held? (Scenarios Revisited)

• Scenario 1: Three business partners contribute equally to buy an old house for their partnership; upon a partner’s death, who inherits the partnership interest—the partner’s family or the business partners?
• Scenario 2: Jean (with two university children from a previous marriage) and Adrian purchase a house; Jean dies; who inherits Jean’s interest—the surviving partner or Jean’s children?

Operation of the Torrens System (1)

• The Torrens System distinguishes between:
  • General law land: legal title established by a ‘good root title’.
  • Torrens title land: title created and governed by the Torrens system.
• Robert Torrens introduced title by registration in South Australia in 1858.
• In Western Australia, provisions are codified in the Transfer of Land Act 1893 (WA).

Problem Example

• Mr and Mrs Jones own a house; Mrs Jones forges Mr Jones’s signature to obtain a mortgage; bank exercises power of sale; house sold to Mr Green; Mr Green registers transfer; Mr Jones alleges fraud. Key questions:
  • Who has the best title?
  • Identify old vs new registered proprietor; mortgagor vs mortgagee; when can the mortgagee exercise sale power; was transfer valid?;
  • What are the relevant sources of law?

Framework of the Torrens System

• The register – section $s48$ TLA.
• Certificate of Title – sections $s48A$; $s48B$; registration – $s52$.
• Effect of registration – section $s68$.

The Register

• Administered by a Registrar who maintains a complete record of all land under the Torrens system and all interests in the land: $s48$ TLA 1893 (WA).
• Each parcel identified by a folio number (Volume/Folio System).

The Certificate of Title (CT)

• A CT is the record of the interests in the property.
• A CT is issued once an estate or interest is registered.
• A duplicate CT was previously issued to a registered proprietor (now largely obsolete) – $s48B$.
• The CT is conclusive evidence of title: $s63$.

Electronic Conveyancing and Online CTs

• In 2023, WA moved to online conveyancing.
• There are no longer Duplicate CTs for transactions.
• Identity forms required for verification; fraud considerations apply to identity forms.
• More information: WA changes to the Transfer of Land Act and Landgate resources.

Features of Certificate of Title

• Volume and folio number appear on CT.
• Description of land (e.g., Lot 39 on Plan 7992; entire land in Certificate of Title Volume 1224 Folio 415).
• Name of registered proprietor (First Schedule).
• Interests and encumbrances (Second Schedule): mortgage, lease, easement, covenant, etc.

Registration

• The act of registration creates the title: $s58$ TLA.
• Registration is effected by noting a ‘memorial’ of an instrument on the register – the actual entry: $s52$ TLA.
• Instruments are registered in the order in which they are lodged: $s53$ TLA.
• The time of execution is not relevant for registration.
• “Instrument” is defined in $s4$ TLA and includes conveyances, transfers and leases.

Effect of Registration

• As soon as an instrument is registered, it acquires statutory protection: $s58$ TLA.
• It gives rise to indefeasibility of title: $s68$.
• Registration provides security of title, but note exceptions to indefeasibility.
• A registered interest is a legal interest; an unregistered interest is an equitable interest.

Indefeasibility of Title

• A foundational concept: registration protects title from most adverse claims.
• Section $s68$ TLA is the paramount provision.
• A registered title has priority over all other interests.
• A registered proprietor is not affected by actual or constructive notice of any unregistered interests: $s134$ TLA.

Indefeasibility: Definition

• Indefeasibility of title = immunity from attack by adverse claim to the land or interest of which one is registered, while remaining registered.
• It does not guarantee protection against every possible claim; there are specific exceptions that may cancel or correct entries.
• Quotation from Frazer v Walker: "no adverse claim (except as specifically permitted) may be brought against him" while registered, but exceptions exist.

Exceptions to Indefeasibility

• The protection from registration is subject to statutory and common-law exceptions.
• The indefeasibility of a registered proprietor may be set aside in certain circumstances.
• Common examples include: fraud, wrong description of boundaries, existence of earlier valid title, short leases, adverse possession; in personam exception (not examinable).

Fraud: The core exception

• Fraud: a registered estate acquired by fraud is paramount only to the extent allowed by law; if acquired by fraud, title may be defeated under $s68$ TLA.
• Examples of conduct include forgery, involvement in fraudulent schemes, breach of fiduciary duty.
• A registered proprietor is protected unless fraud is established against them (or their agents).

Actual Fraud

• If a party acquires a registered interest through their actual fraud, title may be set aside or defeasible: Gibbs v Messer and $s68$ TLA.
• It is rare for the fraudster to keep the property in their own name; typically the property is transferred to a third party to avoid detection.

Deferred vs Immediate Indefeasibility

• Courts have treated fraud under two models: deferred indefeasibility (fraud recognized first before indefeasibility applies) and immediate indefeasibility (indefeasibility applies upon registration even if fraught by fraud, provided the claimant is not involved in the fraud).
• Gibbs v Messer (deferred indefeasibility): not immediate.
• Frazer v Walker (immediate indefeasibility): established the modern Australian approach; Breskvar v Wall also adopted immediate indefeasibility.

Gibbs v Messer (1891) – illustration of deferred indefeasibility

• Diagrammatic scenario: A fraudster manipulates registration; the court decides on whether the fraud taints the title or if indefeasibility applies only after fraud is proven.
• Used to illustrate the older approach where indefeasibility could be deferred pending fraud proof.

Frazer v Walker (1967) and Breskvar v Wall (1971)

• Immediate indefeasibility: a bona fide purchaser obtains indefeasible title even if fraud occurred, so long as the purchaser was not involved in the fraud.
• Australian adoption of immediate indefeasibility: Breskvar v Wall (1971 CLR 376) applied Frazer v Walker to Australian context.
• Implication: a genuine purchaser without fraud involvement can obtain indefeasible title even where a prior fraud exists.

Fraud: Key Cases and Themes

• Frazer v Walker: immediate indefeasibility principle; fraud exception hinges on lack of involvement by purchaser.
• Gibbs v Messer: example of deferred indefeasibility; illustrates the pre-Frazer approach.
• Assets Co Ltd v Mere Roihi (1905): fraud requires personal dishonesty; unusual to rely solely on an isolated act without showing awareness or involvement by the registered proprietor’s agent.
• Wilful blindness and lack of vigilance: concepts in fraud assessment.

Fraud by Agents

• If fraud is brought home to the agent of the registered proprietor, the agent’s knowledge is imputed to the proprietor.
• Notable cases:
  • Loke Yew v Port Melbourne Rubber (1913)
  • Khan v Hadid (No 2) [2008] NSWSC 119
• The agent’s fraudulent acts may contaminate the title if within the scope of agency or for the benefit of the principal.

Other Agent-Related Fraud Cases

• Schultz v Corwill Properties (1969): forged documents were connected to a secretary/solicitor; the agent acted beyond authority for the agent’s own benefit; held that fraud could not be brought home to Schultz because the agent acted beyond their authority.
• Dollars & Sense Finance v Nathan (NZ): the borrower’s forged signature; the mortgagee’s documents; mortgagee’s actions linked to the fraud; the borrower acted as the mortgagee’s agent; fraud occurred, affecting the title.

Other Exceptions to Indefeasibility (continued)

• Erroneous description of land.
• Earlier existing title: where there are two subsisting titles for the same lot, the earlier title prevails (policy rationale).
  • Section $s68$ TLA.
• Some unregistered easements can be exceptions to indefeasibility (e.g., certain encumbrances that exist outside the CT).
• A registered proprietor does not have protection against a successful claimant to an adverse title; adverse possession may seek registration under Torrens statutes.
• Overriding statutes: a general later statute overrides an earlier general statute.
• See pages 93–95 in the textbook for further detail.

Review and Synthesis

• The Torrens system is a system of registration of title where the act of registration creates the title.
• Registrations confer indefeasibility of title on the registered proprietor; indefeasibility provides protection against subsequent claims to the title.
• Indefeasible title is subject to a range of exceptions (statutory and common-law). The principal exception is fraud, but other exceptions include erroneous descriptions, earlier title, adverse possession, and overriding statutes.
• The framework includes: the register (s48 TLA), certificate of title (s48A, s48B), registration (s52), effect of registration (s68) and the general principle of indefeasibility (s134 in relation to notice, and s58 for registration effect).

Key Sources and References (Selected)

• Transfer of Land Act 1893 (WA): core statute underpinning the WA Torrens system.
  • s4: definition of instruments.
  • s48: register; s48A, s48B: CT and duplicates.
  • s52: registration process.
  • s53: lodgment order for instruments.
  • s58: registration creates title; s68: indefeasibility and its exceptions.
  • s134: notice-related provisions regarding indefeasibility.
  • s60: WA statutory presumption for joint tenancy (creation of co-ownership).
• PLA WA (sections 126–129): judicial remedies for partition or sale of co-owned land.
• Selected cases:
  • Gibbs v Messer (1891) AC 248 (deferred indefeasibility).
  • Frazer v Walker [1967] 1 AC 569 (immediate indefeasibility).
  • Breskvar v Wall (1971) 126 CLR 376 (Australian adoption of immediate indefeasibility).
  • Assets Co Ltd v Mere Roihi [1905] (fraud definition et al).
  • Loke Yew v Port Sri (1913) (agent’s knowledge imputed).
  • Khan as Trustee for the Khan Family Trust v Hadid (No 2) [2008] NSWSC 119.
  • Schultz v Corwill Properties (1969).
  • Dollars & Sense Finance v Nathan (NZ).

Quick Reference: Formulas and Notation

• Indefeasibility:
  • The core concept is encapsulated in the idea that a registered title enjoys immunity from attack, subject to specified exceptions, most notably $ext{s68 TLA}$ (indefeasibility) and $ext{s134 TLA}$ (notice-related limitations).
• Four Unities (Joint Tenancy):
  • $ext{Possession}, ext{Interest}, ext{Title}, ext{Time}$
• Key statutory references (WA):
  • $s48, s48A, s48B, s52, s58, s60, s68, s126, s129, s134, s4$.
• Land description and registration indicators:
  • Volume/Folio format: e.g., "Volume 1224 Folio 415".

Practice Prompts (to test understanding)

• If two co-owners hold land as joint tenants and one dies, what happens to their share? How would severance by sale or partition affect the title?
• A purchaser buys land registered in the CT from a fraudster who forged a signature elsewhere in the chain. Under immediate indefeasibility, what factors determine whether the purchaser's title remains indefeasible?
• How does WA’s Transfer of Land Act interact with common-law principles in determining the effect of registration on title and indefeasibility?

Recap of Core Concepts

• Torrens system creates title by registration and provides indefeasibility of title, subject to exceptions (primarily fraud).
• Priorities are governed by the order of registration; indefeasibility protects the registered proprietor from most later claims.
• Fraud and related agent-based fraud can defeat indefeasibility under certain conditions, with immediate indefeasibility favoring bona fide purchasers.
• Co-ownership concepts (joint tenancy vs tenancy in common) determine how land is held, transferred, and what happens on death or severance.
• WA-specific rules (Particularly s60, s126–129 PLA) govern how co-owned land can be partitioned or sold in disputes.