Breskvar v Wall

126 CLR 376
(1971) 46 ALJR 68
[1972] ALR 205

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(Judgment by: Barwick CJ)

Breskvar
vWall

Court:

Judges: Barwick CJ
McTiernan J
Menzies J
Windeyer J
Owen J
Walsh J
Gibbs J

Subject References:
Real Property (Q.)
Torrens System
Indefeasibility of title
Exceptions
Fraud
Protection of purchasers from registered proprietor
Dealing with registered proprietor
Void instrument of transfer
Equities and unregistered interests
Priorities
Statutory invalidity of instrument executed without insertion of name of purchaser or transferee
The Real Property Act, 1861 to 1963 (Q.), ss. 33, 43, 44
The Real Property Act of 1877 (Q.), s. 48
The Stamp Act of 1894 (Q.), s. 53 (5)
The Real Property Act, 1861 to 1963 (Q.), ss. 33, 43, 44
The Real Property Act of 1877 (Q.), s. 48
The Stamp Act of 1894 (Q.), s. 53 (5).
Equity
Priority and notice
Priority generally

Legislative References:
Section 85 of the Land Transfer Act 1952 (N.Z.) - 44 (2); 183
Transfer of Land Act 1915 (Vict.) - 179

Case References:
Assets Co. Ltd. v. Mere Roihi - [1905] AC 176
Frazer v. Walker - [1967] 1 AC 569
Boyd v. Mayor, & c., of Wellington - (1924) NZLR 1174
Clements v. Ellis - [1934] HCA 18; 51 CLR 217
Mayer v. Coe - (1968) 88 WN (Pt 1) (NSW) 549
Ratcliffe v. Watters - (1969) 2 NSWR 146
Barry v. Heider - [1914] HCA 79; 19 CLR 197
Great West Permanent Loan Co. v. Friesen - (1925) AC 208
Rice v. Rice - (1854) 2 Drew 73 (61 ER 646)
Shropshire Union Railways & Canal Co. v. The Queen - (1875) LR 7 HL 496
Lapin v. Abigail - [1930] HCA 6; 44 CLR 166
Abigail v. Lapin - [1934] HCA 20; (1934) AC 491; 51 CLR 58
J. & H. Just (Holdings) Pty. Ltd. v. Bank of New South Wales - [1971] HCA 57; 125 CLR 546
Barry v. Heider - [1914] HCA 79; 19 CLR 197
Shaw v. Foster per Lord Cairns - (1872) LR 5 HL 321
Latec Investments Ltd. v. Hotel Terrigal Pty. Ltd. - [1965] HCA 17; 113 CLR 265
Caldwell v. Rural Bank of New South Wales - (1951) 53 SR (NSW) 415
Davies v. Ryan - (1951) VLR 283
Gibbs v. Messer - (1891) AC 248
Butler v. Fairclough - [1917] HCA 9; 23 CLR 78

Hearing date: 7, 8 June 1971
Judgment date: 13 December 1971

Sydney

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Judgment by:
Barwick CJ

This was a suit in the Supreme Court of Queensland in which Walter Wall (the first respondent), George Petrie (the second respondent) and Alban Pty. Ltd. (the third respondent) for declarations of right and orders for the cancellation of a dealing registered under The Real Property Acts, 1861 to 1963 (Q.) (the Act) and for amendment of the endorsements on the relevant certificate of title or in the alternative for an order that the first respondent execute a memorandum of transfer of certain land in favour of the appellant. (at p381)

2. The events which led to the institution of this suit, as found by the learned judge of the Supreme Court who heard it, are that the appellants on 5th March 1968 and until 15th October 1968 were the registered proprietors of an estate in fee simple, free of encumbrances of certain land at Acacia Ridge, a suburb of Brisbane, being the whole of the land comprised in certificate of title registered vol. 3730 fol. 104. As a means of securing a loan of $1200 made to them by the second respondent, they duly signed on 5th March 1968 a memorandum of transfer of the whole of the land comprised in the certificate of title. At the time of its execution which was expressed to be 5th March 1968 the name of a purchaser was not inserted in the memorandum. It was thus in breach of s.53(5) of The Stamp Act of 1894 (Q.) which provides:

"No instrument of conveyance or transfer executed on or after the first day of November, 1918 of any estate or interest in any property whatsoever . . . shall be valid either at law or in equity unless the name of the purchaser or transferee is written therein in ink at the time of the execution thereof. Any such instrument so made shall be absolutely void and inoperative, and shall in no case be made available by the insertion of a name or any other particulars afterwards." (at p381)

3. In fact no name of a purchaser was inserted in the memorandum of transfer before September 1968. In that month the second respondent in fraud of the appellants caused the name of his grandson, the first respondent, to be inserted in the memorandum of transfer. Thereafter on 15th October 1968 the second respondent caused that memorandum to be duly registered by endorsement of the appropriate memorial on the said certificate of title. On 31st October 1968 the first respondent, by contract of sale, agreed to sell the whole of the said land to the third respondent. In pursuance of this contract, the first respondent on 7th November 1968 executed a memorandum of transfer of the said land to the third respondent. Throughout the transaction between the first and third respondents the second respondent acted as the agent of the first respondent, who, by the finding of the trial judge, was affected in relation to his registration as proprietor and that transaction by the fraud of the second respondent. The third respondent was a bona fide purchaser for value of the said land without notice of any of the matters which I have detailed concerning the appellants. (at p382)

4. In December 1968 a land agent who was endeavouring to effect a sale of the land by the appellants searched the real property register. As a result, he informed the appellants of the registration of the memorandum of transfer of 5th March 1968. The appellants thereupon on 13th December 1968 lodged a caveat with the Registrar-General against dealings with the land. On 9th January 1969 the third respondent lodged for registration the memorandum of transfer dated 7th November 1968 but registration thereof could not be effected because of the appellants' caveat. (at p382)

5. The appellants in these circumstances sought a declaration that the memorandum of transfer of 5th March 1968 was executed by way of security only and was not effective to transfer the fee simple in the land to the first respondent : that that memorandum was void by reason of s. 53 (5) of The Stamp Act : that the first respondent was at all material times a trustee of the said land for the appellants : that the appellants are and at all material times have been seised of a legal estate in fee simple in the said land and an order that the memorandum of transfer of 5th March and the entry of it in the register book be cancelled and the relevant certificate of title "altered accordingly", or alternatively, an order that the first respondent do retransfer the said land to the appellants in fee simple free of all encumbrances. Finally and as an alternative to the other relief claimed, the appellants sought damages against the first and second respondents. (at p382)

6. The third respondent by its defence claimed that upon the settlement on 8th November 1968 of its purchase in good faith and for value of the land from the first respondent it acquired an equitable interest in the land and that any interest of the appellants therein should be postponed to its, the third respondent's, interest by reason of the appellants' conduct in signing the memorandum of transfer in blank and in failing to protect their interest by caveat lodged before the third defendant acquired its interest as purchaser of the land. (at p382)

7. The learned trial judge with carefully prepared reasons (1972) Qd R 28 which refer to the principal relevant authorities, ordered the appellants to remove the caveat lodged by them on 13th December 1968 and that judgment be entered against the first and second respondents for the sum of $2,800 being $4,000 damages less $1,200 already received, with in each instance appropriate orders as to costs. His Honour found the appellants from the time of the registration on 15th October 1968 of the memorandum of transfer of 5th March 1968 to have only an equity to have that memorandum set aside and to the retransfer of the land and that, by reason of their conduct, that equity though prior in time was postponed to the equitable interest of the third respondent as a purchaser bona fide and for value and without notice. (at p383)

8. The first respondent is the now registered proprietor of the said land for an estate in fee simple free of encumbrances. The certificate of title which sets out those particulars is conclusive evidence that the said respondent is seised of that estate in that land. Section 33 of the Act is unqualified in its terms and applies to all such certificates and not merely to the certificate initially issued upon the title to the land being brought under the provisions of the Act. (at p383)

9. Section 96 reinforces the conclusiveness of the certificate by providing that in a suit by the registered proprietor against a purchaser for specific performance the certificate of title shall be conclusive evidence that the registered proprietor has a good and valid title to the land and shall entitle such registered proprietor to a decree for the specific performance of the contract of purchase. (at p383)

10. Section 125 of the Act provides that registration as proprietor of the land shall be equivalent to possession of the land by the proprietor for the purpose of bringing an action of ejectment against any person. (at p383)

11. Section 123 precludes any action of ejectment against the registered proprietor, putting aside the cases of mortgagee against mortgagor and encumbrancee against encumbrancer and lessor against lessee, other than

(a)

a person deprived of any land by fraud as against a person registered as proprietor through fraud or a person deriving otherwise than as a purchaser or mortgagee bona fide and for value from or through a person registered as proprietor through fraud;

(b)

a person deprived of any land by reason of a wrong description of any land or of its boundaries ;

(c)

a registered proprietor claiming under a prior certificate of title or under a prior grant registered under the provisions of the Act covering the same land. (at p383)

12. The section goes on to provide that except in those three classes of case the certificate of title shall be an "absolute bar and estoppel to any such action" against the registered proprietor. (at p384)

13. These sections are to my mind central to the Torrens system of title by registration: they make the certificate conclusive evidence of its particulars and protect the registered proprietor against actions to recover the land, except in the specifically described cases. Section 44 complements these provisions by providing that the registered proprietor holds the land absolutely free from all unregistered interests except

(a)

"in the case of fraud" - which means except in the case that the registration as proprietor was obtained by the proprietor's own fraud - see Assets Co. Ltd. v. Mere Roihi (1);

(b)

in the case of a proprietor claiming the same land under a prior certificate of title or under a certificate of title issued under Pt III of the amendment of the Act in 1952, i.e. a certificate based on a possessory title, or under a prior registered grant;

(c)

in the case of right of way or other easement omitted from or misdescribed in the certificate of title; and

(d)

in the case of the wrong description of the land or of its boundaries.

The substantial correspondence of these exceptions to the exceptions to s.123 is readily observed, though the correspondence clearly enough is not complete. (at p384)

14. The opinions held in some places in the past that the conclusive quality of the certificate of title did not enure for the benefit of a registered proprietor, other than the proprietor firstly registered on the land being brought under the provisions of The Real Property Act seem to me to be more than difficult to maintain in the light of the provisions to which I have referred but, in any case, they were shown to be untenable by the decision of the Privy Council in Assets Co. Ltd. v. Mere Roihi (1905) AC 176 where Lord Lindley pointed out that "the sections making registered certificates conclusive evidence of title are too clear to be got over". "In dealing with actions between private individuals, their Lordships are unable to draw any distinction between the first registered owner and any other." (1905) AC, at p 202 This is also made clear by the more recent decision of the Privy Council in Frazer v. Walker (1967) 1 AC 569, at pp 581, 584-585 . Proceedings may of course be brought against the registered proprietor by the persons and for the causes described in the quoted sections of the Act or by persons setting up matters depending upon the acts of the registered proprietor himself. These may have as their terminal point orders binding the registered proprietor to divest himself wholly or partly of the estate or interest vested in him by registration and endorsement of the certificate of title: or in default of his compliance with such an order on his part, perhaps vesting orders may be made to effect the proper interest of the claimants in the land. Also s. 124 gives the Supreme Court power to cancel an entry in the register book and to substitute another entry in the event of the recovery of any land by ejectment from a fraudulent proprietor or from any of the persons against whom an action of ejectment is not expressly barred by the Act. This is the only power of the Supreme Court to amend the register. See Assets Co. Ltd. v. Mere Roihi (1905) AC 176, at p 195 ; Frazer v. Walker (1967) 1 AC 569, at p 581 . Section 85 of the Land Transfer Act 1952 (N.Z.) with which the last-mentioned case was concerned gives the power of amendment upon the recovery of any land estate or interest by any proceeding whereas s.124 of the Act deals only with the recovery of land by action of ejectment. The suit for declarations and orders for amendment of the register brought by the appellant in Frazer v. Walker (1967) 1 AC 569 was held by the Privy Council in that case to be an action for the recovery of land : (1967) 1 AC, at p 586 . The appellants' suit in this case was not an action of ejectment but it was, in my opinion, an action for the recovery of land and, in any case, so far as it concerned the first respondent was within the exceptions contained in s. 123. Such a suit not within those exceptions would be effectively barred by s. 123. Thus, except in and for the purposes of such excepted proceedings, the conclusiveness of the certificate of title is definitive of the title of the registered proprietor. That is to say, in the jargon which has had currency, there is immediate indefeasibility of title by the registration of the proprietor named in the register. The stated exceptions to the prohibition on actions for recovery of land against a registered proprietor do not mean that that "indefeasibility" is not effective. It is really no impairment of the conclusiveness of the register that the proprietor remains liable to one of the excepted actions any more than his liability for "personal equities" derogates from that conclusiveness. So long as the certificate is unamended it is conclusive and of course when amended it is conclusive of the new particulars it contains. (at p385)

15. The Torrens system of registered title of which the Act is a form is not a system of registration of title but a system of title by registration. That which the certificate of title describes is not the title which the registered proprietor formerly had, or which but for registration would have had. The title it certifies is not historical or derivative. It is the title which registration itself has vested in the proprietor. Consequently, a registration which results from a void instrument is effective according to the terms of the registration. It matters not what the cause or reason for which the instrument is void. The affirmation by the Privy Council in Frazer v. Walker (1967) 1 AC 569 of the decision of the Supreme Court of New Zealand in Boyd v. Mayor, & c., of Wellington (1924) NZLR 1174, at p 1223 , now places that conclusion beyond question. Thus the effect of the Stamp Act upon the memorandum of transfer in this case is irrelevant to the question whether the certificate of title is conclusive of its particulars. (at p386)

16. I have thus referred under the description, the Torrens system, to the various Acts of the States of the Commonwealth which provide for comparable systems of title by registration though these Acts are all not in identical terms and some do contain significant variations. It is I think a matter for regret that complete uniformity of this legislation has not been achieved, particularly as Australians now deal with each other in land transactions from State to State. (at p386)

17. It follows, in my opinion, from the provisions of the Victorian Act which are counterpart to those of the Act to which I have referred and from the decisions of the Privy Council in Frazer v. Walker (1967) 1 AC 569 and in Assets Co. Ltd. v. Mere Roihi (1905) AC 176 on comparable sections of the New Zealand Act that the appeal of the registered proprietor in the case of Clements v. Ellis [1934] HCA 18; (1934) 51 CLR 217 ought to have been allowed. The respondent in that case had no claim in personam against the appellant and did not otherwise fall within the category of those who might successfully claim the land from the registered proprietor. As is pointed out in Frazer v. Walker (1967) 1 AC 569, at p 586 a claim such as that made in Clements v. Ellis [1934] HCA 18; (1934) 51 CLR 217 is a claim to the land for the purpose of the Torrens system. A person in the position of that appellant had no need to call in aid s. 179 of the Transfer of Land Act 1915 (Vict.) or its counterpart in the legislation of another "Torrens" Act. He was a registered proprietor: he was not merely in the situation of a person contracting or dealing with or taking or proposing to take a transfer from a registered proprietor nor did he need to rely on having dealt with a registered proprietor. It is unnecessary for the resolution of the present case to discuss the function in a Torrens system of such provisions as s. 179. It follows in my opinion from Frazer v. Walker (1967) 1 AC 569 that Clements v. Ellis [1934] HCA 18; (1934) 51 CLR 217 was not correctly decided. Further in my opinion, Mayer v. Coe (1968) 88 WN (Pt 1) (NSW) 549 and Ratcliffe v. Watters (1969) 2 NSWR 146 correctly applied Frazer v. Walker (1967) 1 AC 569 . (at p387)

18. The situation therefore immediately after the registration of the memorandum of transfer of 5th March 1968 by the endorsement of a memorial on the certificate of title was that the fee simple in the land was vested in the first respondent. It follows that it was not and still is not vested in the appellants. But according to the findings of the trial judge that registration was procured by the first respondent by his own actual fraud. Consequently, although the registered proprietor in whom the fee simple was vested, the first respondent did hold his estate subject to the rights of the appellants. He did not hold it on trust for the appellants but as between themselves and the first respondent they had a right to sue to recover the land and to have the register rectified, their ability to make such a claim being within s. 124 (d). But, as the trial judge correctly points out, such a claim is an equitable claim enforceable by reason of the principles of the Court of Chancery. The appellants require the assistance of a court having equitable jurisdiction. (at p387)

19. If there had been no transaction by the first respondent with the third respondent, the appellants would have been entitled to succeed against the first respondent. Whether or not the Supreme Court could have amended the register need not be decided. Clearly an order for the execution by the first respondent of a memorandum of transfer to the appellants and for delivery to them of the duplicate certificate of title could have been ordered: and that order appropriately enforced. (at p387)

20. But the purchase by the third respondent bona fide for value and without notice intervened before that equitable right of the appellants was fulfilled. The third respondent thus acquired an equitable interest in the land. The ability to create and the validity of an equitable estate in land, the title to which is under the Torrens system were fully established in Barry v. Heider [1914] HCA 79; (1914) 19 CLR 197 . See also Great West Permanent Loan Co. v. Friesen (1925) AC 208 . The interest of the third respondent in the land was competitive with that of the appellants as persons deprived of their land by fraud. Their claim to the assistance of a court of equity whether regarded as a mere equity or an equitable interest in the land was not in its nature paramount or superior to that of the third respondent: nor in my opinion was that of the third respondent over that of the appellants which I think was an equitable interest in the land. As was pointed out by counsel, s. 48 of The Real Property Act of 1877 (Q.) is still operative not having been repealed. That section so far as is presently relevant provides:

"Every instrument signed by a proprietor . . . purporting to pass an estate or interest in land . . . for the registration of which provision is made by this Act shall until registered be deemed to confer upon the person intended to take under such instrument . . . a right or claim to the registration of such estate."

I do not think myself that this provision adds anything significant to the position of the third respondent. Without that section his presentation of the memorandum of transfer with the duplicate certificate of title, which I assume he obtained on settlement of his purchase, would have entitled him to registration, subject of course to the effect of the appellants' caveat. So far as concerns an equitable interest in the land and competition with the interest of the appellants, the third respondent would, in my opinion, be in as strong a position without that section as it is with it. There is thus a competition between the respective interests of the appellants and of the third respondent to be resolved on equitable principles. (at p388)

21. Those principles are well established: see Rice v. Rice (1854) 2 Drew 73 (61 ER 646) ; Shropshire Union Railways & Canal Co. v. The Queen (1875) LR 7 HL 496 ; Lapin v. Abigail [1930] HCA 6; (1930) 44 CLR 166 ; Abigail v. Lapin [1934] HCA 20; (1934) AC 491; (1934) 51 CLR 58 . The creation of the appellants' interest is prior in point of time. It arose at the time the first respondent became the registered proprietor. The circumstance that the memorandum of transfer by virtue of which the registration was obtained was executed in breach of The Stamp Act and void did not, in my opinion, prevent the appellants' right to sue the respondent arising. The priority of the creation of that right will only be lost by some conduct on the part of the appellants which must have contributed to the assumption, false as the event proved, upon which the holder of the competing equity acted when that equity was created. Here the appellants armed the second respondent with the means of placing himself or his nominee on the register. They executed a memorandum of transfer, without inserting therein the name of a purchaser; they handed over the relevant duplicate certificate of title and they authorised the second respondent, if occasion arose for the exercise of his powers as a mortgagee, to complete and register the memorandum of transfer. It seems to me that the actual decision of their Lordships in Abigail v. Lapin [1934] HCA 20; (1934) AC 491; (1934) 51 CLR 58 governs this case. Here, as there, it can properly be said that "the case . . . becomes one of an agent exceeding the limits of his authority but acting within its apparent indicia": see (1934) AC 491, at p 508; [1934] HCA 20; (1934) 51 CLR 58 , at p 72 and the cases there cited. The appellants therefore lose the priority to which the prior creation of their interest in the land would otherwise have entitled them. (at p389)

22. The third respondent also sought to postpone the equity of the appellants by reason of their failure to lodge a caveat to protect their interest in the land as mortgagors. But having regard to what I have already said there is no need for the third respondent to place any reliance on that circumstance. However, I have recently expressed myself in relation to the effect of the failure of a person to lodge a protective caveat and find no need to repeat or amplify what I have written in J. & H. Just (Holdings) Pty. Ltd. v. Bank of New South Wales [1971] HCA 57 ; ( 1971 ) 125 CLR 546 . I agree with the conclusion of the trial judge that the right of the appellants to recover their land from the first respondent should be postponed to the equitable interest therein of the third respondent as a purchaser bona fide for value and without notice. Consequently the order of the Supreme Court was correct. (at p389)

23. In my opinion, the appeal should be dismissed. (at p389)