The Torrens System
CHAPTER 11 The inherent difficulties associated with conveying old title land, particularly the uncertainties associated with general law priority rules, encouraged law reformers to introduce a new, more efficient and ‘absolute’ conveyancing system. What eventually emerged was the system known today as the ‘Torrens’ system of land registration. The founder of this system was Sir Robert Torrens, and it was first introduced in South Australia in 1858. The statutory system in Victoria was introduced in 1862 and its provisions are now codified in the Transfer of Land Act 1958; equivalent legislation exists in all states.1 Robert Torrens sought to rectify the problem of dependent titles under general law. He noted that the main difficulty with general law title was that the new grantor received a title which was dependent upon the title of a chain of predecessors. Proving the validity of such a chain was often expensive and never certain. Torrens felt that the remedy was to ensure that each grantor received a fresh title akin to an absolute grant from the Crown, so that retrospective investigation was no longer an imperative and bona fide purchasers could deal with the land on the faith of the dealings set out in the register. To effect this purpose, the legislation which was eventually introduced set out that registration conferred a new and independent title upon each grantor who would be subject only to those encumbrances already registered on the title. As Torrens himself noted, ‘indefeasibility of title created by registration follows of necessity as a corollary to the principle of independent title’.2 Nevertheless, a range of exceptions to the notion of an ‘indefeasible title’ were introduced under the terms of the statute and developed by case law because of the injustices that an ‘absolute’ title inevitably caused. Hence, the title could be set aside where some fraud or error could be established unless the new grantor took the title bona fide and for valuable consideration without notice of the fraud or error. Furthermore, registration of the title did not have the effect of destroying existing easements not noted upon the title. Finally, and of increasing relevance today, the registration of title did not destroy preexisting personal obligations owed by the new grantor; the exceptions to indefeasibility are discussed in para 11.4. The fundamental changes introduced by the Torrens system were enacted for the primary purpose of developing a safer and more absolute method of conveying land interests. The most innovative change which the system introduced was the idea that once registered, absolute security of title was guaranteed; there could be no worry of the title being either defective or subject to the existence of a previous interest because the very act of registration conferred a new valid title upon the grantor. In this way, the Torrens system abolished the inherent uncertainties associated with the old common law priority principles. Registration under the Torrens system transcended a mere regulatory or prioritisation objective as existed under the Deeds Registration System; registration under the Torrens system could actually cure a defective title and confer a secure title upon a new proprietor. As the inherent difficulties associated with conveying old title land became increasingly apparent, the desire to develop a new, more effective system gained impetus. The Torrens system has been attributed to the work of Sir Robert Torrens, but gained inspiration from a range of other sources.3 The system did not eradicate all general law land, nor did it alter common law priority principles. The Torrens system was superimposed upon the preexisting general law structure, and it only applies to land grants issued after the enactment of the first legislation and earlier land grants where there has been a successful application transferring the land under the Torrens system. Common law priority principles will still apply to all land grants issued prior to the introduction of the legislation, and therefore outside its ambit, or land interests which remain unregistered. The first Torrens legislation was introduced in South Australia in 1858 and was rapidly followed by all other states and, by 1875, all Australian states had enacted Torrens legislation. The current Torrens system legislation in each state is as follows: Transfer of Land Act 1958 (Vic); Real Property Act 1900 (NSW); Land Title Act 1994 (Qld); Real Property Act 1886 (SA); Real Property Act 1886 (NT); Land Titles Act 1925 (ACT); Land Titles Act 1980 (Tas); and Transfer of Land Act 1893 (WA). Whilst these Acts retain the basic system as first introduced, substantial amendments have been added over the years. The Torrens system is not uniform. Important differences exist in the functioning of the Torrens system within each state. It has been suggested that a uniform Torrens system would provide a more consistent and efficient conveyancing system for Australia and that the only thing standing in the way of uniformity is lethargy and parochialism’.4 The lack of uniformity between the states increases the complexity and costs associated with conveyancing, and this seems to go against the basic aim of the Torrens system of introducing a more efficient and streamlined system. However, we are yet to see any major reform strategies in this area.5 The vulnerability of the common law legal estate to defeat on the basis of the doctrine of notice, or through proof of a lack of bona fides, often resulted in many purchasers acquiring a legal title which, despite detailed and often complex title investigations, could never be absolutely guaranteed. The statutory procedure for registration under the Deeds Registration System did not remove these difficulties, because priority under this system was only conferred where the holder could prove that the title was acquired bona fide and for valuable consideration. By contrast, the Torrens system effectively provided ‘title by registration’. Common law estates which came within the application of the Torrens system would, upon registration, acquire immediate protection and a guarantee of the security of title. Provided the person seeking registration had committed no fraud—mere notice of the existence of another interest does not constitute fraud—and no other statutory exceptions could be raised, the registered title is absolute and is only subject to those encumbrances expressly noted on the title. The primary amendments introduced by the Torrens system can be summarised as follows: (a) old system titles are comprised of what is referred to as a ‘chain of title’, comprising all of the relevant instruments and dealings and evidencing the history of the land. Such chains are often long and complex and require a great deal of effort and time on the part of the purchasers to search and verify. The Torrens system substituted a simple and more efficient methodology. The chain of title deeds was abolished and a central registry was established. Each ‘parcel’ of land coming under the legislation was to be recorded on a separate certificate, called a folio, which was kept at the central registry (known in Victoria as the Land Titles Office) of the capital city of each state. The folio of title would record the boundaries of the land, the name of the registered proprietor, and the nature and extent of all registered interests or encumbrances affecting it. For example, mortgages and easements affecting the land could be registered on the certificate of title rather than forming a chain of title documents. This simplified the ‘investigation of title’ process dramatically: instead of checking the entire chain of title, a purchaser of the land simply had to search the folio at the registry to see what interests were actually registered; (b) the doctrine of notice, a central component of the common law priority principles, was abolished under the Torrens system. Subject to stated exceptions, any encumbrances not noted on the title have no effect upon the newly registered title of a purchaser, even if the purchaser took with notice of them. Furthermore, the legislation expressly states that mere notice does not constitute fraud.6 In this way, the Torrens system provides an effective and secure guarantee to prospective purchasers as to the accuracy of the register; (c) the method of conveying title under the Torrens system differs from that which occurs under general law. Under the Torrens system, the conveyance occurs through the registration of a properly executed transfer form rather than the execution of a deed of conveyance. Upon registration of the transfer, the new owner acquires a copy of the folio—known as the duplicate certificate of title—whilst the original remains with the central registry and forms a part of the register book. The duplicate certificate of title can be used, where needed, to effect further transactions over the land. Where a new interest is created over the land and is registrable, the document creating the interest should be lodged along with the duplicate certificate of title, so that the interest can be properly noted on both the original and duplicate certificates of title. All states are currently in the process of computerising the entire system of land folios so that, eventually, a certificate of title will be available upon computer disc. The first conversions to computer titles were made in 1983, and the conversion rate is moving rapidly along. All of the Torrens statutes entitle the register to be kept in a computerised form and clearly, once this conversion is fully executed, some of the difficulties associated with paper titles—such as loss, damage, theft, etc,—will be eradicated.7 In modern times, virtually all private land interests come within the ambit of the Torrens system. State legislation sets out that the Torrens system will apply to all land which has been alienated or granted by the Crown after the date of commencement of the Act—and the dates of the original legislation vary as noted above. In Victoria, it was 1862. The Torrens legislation also applies to land originally known as ‘old title’ land but subsequently converted to the Torrens system. Consequently, in Victoria, the only land which can be described as ‘old title’ or ‘general law’ land is that land which was issued by the Crown prior to 1862 and which remains unconverted. There is no general law land in the ACT or in the Northern Territory and very little remains in all states apart from Victoria and NSW. Owners of general law land may voluntarily convert to Torrens title, and this is permitted under the legislation.8 In Victoria, land interests which may be converted to Torrens title land include leasehold estates where a term of at least 10 years remains unexpired, life estates and the estate held by a mortgagor provided the mortgagee consents.9 All conversion applications must be made in the appropriate form and must accurately describe the land and include the chain of title documents and a list of all known ‘encumbrances over the land’. Before the title can be converted, the Registrar is required to provide full notification of the process in local newspapers in order to ensure that all persons claiming an interest in the land are aware of the impending conversion and can be properly included on the new folio. Section 10(1) of the Transfer of Land Act 1958 confers a discretion upon the Registrar to determine whether or not the conversion to Torrens title should be accepted. In order to prevent any unfairness in this respect, investigation of an applicant’s title when applying for conversion will be extremely thorough. However, as one of the primary aims of the Torrens system is to extend its application to as many private land interests as possible, undue or excessive criticism of such applications will only occur where clear doubts as to the accuracy of the applicant’s title are apparent. Any person claiming an interest in the land and objecting to the registration of the land under Torrens title may, pursuant to s 12 of the Victorian legislation, lodge a caveat to forbid conversion from going ahead. The caveator then has 30 days from lodgement in which to prove his interest and, during this period, the Registrar must suspend conversion proceedings. The conversion cannot go ahead until the caveat is removed.10 Compulsory conversion of title also exists in some jurisdictions. In all states except Western Australia, the Registrar has the general power to initiate and proceed with the process of conversion. Compulsory conversion also exists over specific land interests: land which is to be subdivided or used pursuant to a strata title scheme must be registered under the Torrens system.11 Once a folio has been created, the person described as the registered proprietor is entitled to deal with the estate or interest. Subsequent transactions over the land may be registered on the title where express provision is set out in the statute. In all jurisdictions, a subsequent transfer, mortgage or lease of the land may be registered and properly noted on the folio. Once registered, the dealings will form a part of the register and the holder of the dealing or encumbrance will acquire the benefit of registration. The Registrar cannot refuse to register an instrument which is capable of being registered and which has been submitted in the proper form.12 It should be stressed that registration is not compulsory; however, it is a usual process with most dealings because of the guarantee of security that registration confers. Unregistered interests will not obtain the guarantee of security associated with registration and, where a dispute arises, will remain subject to the common law priority principles. The Torrens system draws a distinction between the ‘registration’ of an interest and the ‘notification’ of an interest. Registration confers the guarantee of a secure title, whereas notification merely announces to the world that the dealing exists: it does not guarantee its title. Hence, in some states, restrictive covenants—contractual promises which have become annexed to the land but which are not proprietary in nature (see Chapter 12)—may be noted on the title. This notification will ensure that a purchaser of land which is burdened or which acquired the benefit of a restrictive covenant is aware of its existence.13 Once registered, the interest will take effect as if it had been in the form of a deed—even if it had not.14 A registered interest in this sense is similar to a common law legal interest. However, distinctions remain. Under common law, a legal interest is one which is enforceable pursuant to common law doctrines. A registered interest, on the other hand, is simply an interest which has been properly registered under the Torrens system and carries the statutory benefits of that registration. Most unregistered interests will be equitable in nature, because most equitable interests are not capable of being registered on the folio. It is, however, possible that some unregistered interests will be legal in a common law sense whilst not being legal in a statutory sense. The mere fact that an interest is unregistered does not mean that it cannot satisfy the common law formality requirements. The Torrens legislation is only intended to supplement the fundamental common law doctrines, not to destroy them. Nevertheless, for clarity, interests in Torrens title land are generally referred to as either ‘registered’ or ‘unregistered’ in nature, whilst interests in general law land are either ‘legal’ or ‘equitable’ in nature. The Torrens system does not purport to cover all interests existing in the relevant unit of land. Some interests exist outside of the system, because the system is not compulsory and some dealings may simply remain unregistered. Also, some interests are in fact incapable of being registered. The most prominent type of interest which is expressly excluded from registration or notification in all states is, as noted above, the equitable beneficial interest arising under the trust.15 The rationale for this exclusion lies in the desire to prevent the folio from becoming too ‘clogged’ with interests. If all equitable interests were registrable, the folio might be burdened with a huge number of interests, and this is contrary to the basic aim of introducing a simpler and more efficient system. Further, it is assumed that, as the equitable jurisdiction already provides beneficiaries with strong personal and proprietary protection, there is no need to confer additional statutory protections associated with registration. Unregistered interests are not, however, completely ignored under the Torrens system. The statute provides for the protection of unregistered instruments through the lodgement of what are known as ‘caveats’. Where the holder of an unregistered interest lodges a caveat against dealings, it will operate as a kind of statutory injunction, freezing the registration of all future dealings for a 30 day period. This has the effect of giving notification to all future registered interest holders that an interest is claimed in the land and provides the unregistered interest holder with the opportunity of bringing court proceedings to enforce the interest.16 Nevertheless, the caveat system does not override the primacy of the Registrar. If a bona fide purchaser does become registered before the caveat is lodged, then the purchaser will not be bound by the unregistered interest, even if he or she took with notice of it. See, further, para 11.6. Registration under the Torrens system has three basic objectives: (a) to provide a register from which persons who propose to deal with land can discover all the facts relevant to the title; (b) to ensure that a person dealing with land which is registered is not adversely affected by any defects in the vendor’s title which do not appear on the register; and (c) to guarantee the conclusiveness of the register and to provide adequate compensation to any person who suffers loss as a result of this guarantee.17 The Torrens system operates upon the fundamental principle that registration confers an ‘indefeasible title’. Indefeasibility is not a term which is actually used within the legislation. However, it is a term which has become a firm part of the Torrens language. The technical meaning of indefeasibility is indestructibility or an inability to be made invalid. This is true and untrue insofar as it applies to the provisions of the Torrens system. Upon registration under the Torrens system, an interest holder cannot have his or her interest defeated by an unregistered interest, even, as noted above, where the interest holder registers with notice of the existence of the unregistered interest. This does not, however, mean that the registered interest is completely indestructible. In the first place, the security that the Torrens system provides is not absolute: all registered interest holders will take subject to those encumbrances which have already been, or which may in the future be, registered on the title. Hence, the registered holder of the fee simple may be bound by a mortgage or a lease where those interests have also been registered. Secondly, a registered interest holder is fully capable of alienating his or her interest and, once a subsequent transfer of the interest is registered, this subsequent registration will defeat the prior registration. In this sense, the indefeasible status of a registered title is only conferred upon the stated proprietor. Finally, and of increasing significance, the indefeasibility of title conferred upon a registered interest holder is subject to an extensive range of statutory and non-statutory exceptions in all states. Hence, indefeasibility under the Torrens system is a relative concept: it refers to the fact that if a title is examined or attacked at a given point of time, it cannot be defeated or annulled. It does not mean that the title can never be defeated. The idea that indefeasible actually means ‘indestructible’ is not correct in the context of the Torrens system and, to this extent, the term may be criticised as an inappropriate description of the system.18 The statutory provisions which, in combination, have been held to confer the indefeasible status upon a registered interest holder are known as the ‘paramountcy provisions’. The provisions exist in each state. In the Victorian legislation, the relevant provisions are as follows. Section 40 of the Victorian Transfer of Land Act sets out that the benefits of registration shall not be conferred upon an instrument creating, extinguishing or passing an estate or interest in land until that instrument is registered. Similar provisions exist in other states.19 The section reads as follows: Subject to this Act no instrument shall be effectual to create vary extinguish or pass any estate or interest or encumbrance in on or over any land under the operation of this Act, but upon registration the estate or interest or encumbrance shall be created varied extinguished or pass in the manner and subject to the covenants and conditions specified in the instrument or by this Act prescribed or declared to be implied in instruments of a like manner. A strict reading of this section may suggest that no interest at all can exist prior to registration, thereby implying that unregistered interests are not recognised under the system. This interpretation is, however, unlikely, given the other provisions in the legislation which specifically recognise the existence of unregistered interests. The commonly accepted view today is that the section does not preclude the existence of such interests but merely sets out that where capable of being registered, the benefits of registration will not be conferred until the instrument is actually registered.20 Section 41 of the Victorian TLA is an evidentiary provision: it sets out that the certificate of title is to operate as conclusive evidence as to the proprietorship existing in a particular folio of land. This will be the case even where it is alleged that an informality or irregularity in an application, instrument or proceedings existed prior to the creation of the folio. Similar provisions exist in other states.21 The key indefeasibility provision in the Victorian system is s 42. Similar provisions exist in other states.22 Section 42(1) reads as follows: Notwithstanding the existence in any other person of any estate or interest (whether derived by grant from Her Majesty or otherwise) which but for this Act might be held to be paramount or to have priority, the registered proprietor of land shall, except in the case of fraud, hold such land subject to such encumbrances as are recorded on the relevant folio of the Register but absolutely free from all other encumbrances whatsoever, except: (a) the estate or interest of a proprietor claiming the same land under a prior folio of the Register; (b) as regards any portion of the land that by wrong description of parcels of boundaries is included in the folio of the Register or instrument evidencing the title of such proprietor not being a purchaser from or through such a purchaser. The effect of this section may be summarised as follows: (a) that, once registered, the registered proprietor will have priority over the land despite the existence of other interests; (b) that the registered proprietor will only be subject to those encumbrances actually noted on the register and the encumbrances set out in sub-ss (a) and (b); and (c) that fraud will vitiate the priority of the registered proprietor. The exact nature of this fraud is not described or elaborated upon in this provision. Section 42(2) goes on to set out: Notwithstanding anything in the foregoing the land which is included in any folio of the Register or registered instrument shall be subject to: (a) the reservations, exceptions, conditions and powers (if any) contained in the Crown grant of the land; (b) any rights subsisting under any adverse possession of the land; (c) any public rights of way; (d) any easements howsoever acquired and subsisting over or upon or affecting the land; (e) the interest (but excluding any option to purchase) of a tenant in possession of the land; (f) any unpaid land tax, and also any unpaid rates and other charges which can be discovered from a certificate issued under s 387 of the Local Government Act 1958, s 158 of the Water Act 1989 or any other enactment specified for the purposes of this paragraph by proclamation of the Governor in Council published in the Government Gazette— notwithstanding the same respectively are not specially recorded as encumbrances on the relevant folio of the Register. Section 42(2) provides a further exception to the primacy of the registered proprietors title as established in s 42(1). Where an interest is classified under sub-ss (a)–(f), it is described as a ‘paramount interest’ and all registered interests must take subject to paramount interests. Paramount interests operate as an exception to the indefeasibility of registered title and will remain enforceable against all registered interest holders, despite the fact that they have not themselves been registered on the particular land folio. Similar provisions exist in other states.23 The primacy of registration, as set out in s 42(1), is reinforced in its effect by s 43 of the Victorian legislation. The aim of s 43 is to abolish the common law doctrine of notice. Similar provisions exist in other states.24 The section reads as follows: Except in the case of fraud no person contracting or dealing with or taking or proposing to take a transfer from the registered proprietor of any land shall be required or in any manner concerned to inquire or ascertain the circumstances under or the consideration for which such proprietor or any previous proprietor thereof was registered, or to see to the application of any purchase or consideration money, or shall be affected by notice actual or constructive of any trust or unregistered interest, any rule of law or equity to the contrary notwithstanding; and the knowledge that any such trust or unregistered interest is in existence shall not of itself be imputed as fraud. Section 43 operates to prevent a registered interest holder from being held accountable pursuant to the doctrine of notice. Hence, as soon as a purchaser is registered, he or she will take free from any outstanding unregistered interest, even if he or she has notice of its existence prior to registration. Furthermore, whilst the nature of the fraud exception set out in s 42(1) is not positively defined, s 43 makes it clear that mere knowledge that a prior interest existed will be insufficient to constitute such fraud. Section 44(1) and (2) are unique to the Victorian TLA and their exact effect has been the subject of some debate. The purpose of s 44(1) is to set out expressly that any transaction which is procured or made by fraud shall be void as against the person defrauded. Section 44(2) qualifies the effect of s 44(1) by noting that nothing in the Act is to be read so as to deprive a bona fide purchaser for valuable consideration of an estate or interest. On the wording of s 44(2), it seems that, even where the proprietor from whom the bona fide purchaser received the estate is proven to have been registered through fraud, the title of the bona fide purchaser will not be invalidated.25 The combined effect of s 44(1) and (2) can be summarised as follows: (a) any registration of title shall be void as against any person who has been defrauded, and no party who is a subject to the fraud shall receive the benefit of registration; and (b) the court will uphold the registration, even if acquired by fraud, if voiding the registration has the effect of interfering with an interest acquired by a bona fide third party purchaser. An important issue in the construction of these provisions is whether s 44(1) is qualified by s 44(2) so that a bona fide purchaser for value who becomes registered may obtain a good title even where the transaction is affected by fraud. Where such an interpretation is adopted, it is generally referred to as an ‘immediate indefeasibility’ construction, because the immediate rights of the registered proprietor take absolute priority. Alternatively, under a ‘deferred indefeasibility’ construction, a bona fide purchaser who becomes registered under a forged or a void title will not obtain a good title, although protection may be given to a subsequent registered bona fide purchaser. Recent Victorian decisions have favoured the adoption of ‘immediate indefeasibility’ because it accords with the stated aim of the Torrens legislation in providing an absolute guarantee of title upon registration. For example, in Vassos v State Bank of South Australia [1993] 1 VR 318, Hayne J concluded that s 44(1) of the Victorian Torrens legislation referred only to such frauds in which the person seeking registration was actually physically involved. Where the transaction has been tainted by fraud, however, and that fraud has not been committed by the person seeking registration, s 44(1) is inapplicable, and an immediate indefeasible title may be conferred as soon as registration occurs. His Honour interpreted the reference to ‘fraud’ in s 44(1) narrowly because he felt that to do otherwise would significantly interfere with the primary object of the Torrens system in conferring a secure and absolute title upon registration.26 The debate concerning the correct method of interpreting the indefeasibility provisions has resulted in the adoption of two distinctive approaches: that referred to as ‘immediate indefeasibility’, and that referred to as ‘deferred indefeasibility’. As noted above, immediate indefeasibility favours the conferral of absolute title upon registration by a bona fide purchaser, whereas deferred indefeasibility would invalidate such a title where it could be proven that the transaction to which the bona fide purchaser became registered was obtained by fraud or otherwise invalid. Until the 1967 Privy Council decision of Frazer v Walker [1967] AC 569, courts generally favoured the deferred indefeasibility approach (Gibbs v Messer [1891] AC 248). In Frazer v Walker, the Privy Council reversed its previous conclusions in Gibbs v Messer. On the facts of Gibbs v Messer, the registered proprietor of land, Mrs Messer, left the certificate of title with her solicitor for safekeeping, together with a power of attorney in favour of her husband, whilst she went off travelling. The family solicitor, Creswell, forged the signature of the husband (as his attorney) to a transfer of Mrs Messer’s land to a fictitious person. Creswell then managed to secure the registration of this fictitious person. Subsequently, Creswell executed a mortgage, with the fictitious person as mortgagor, and then misappropriated the funds. The mortgagees acted in good faith and subsequently registered the mortgage. When Mrs Messer returned and discovered the fraud, she commenced proceedings, seeking cancellation of the certificate of title in the fictitious person’s name and cancellation of the registered mortgage. The mortgagees claimed that they had an indefeasible title which could not be set aside by the fraud. The Privy Council ultimately held that the protection which the Torrens system gives to persons transacting on the faith of the register is limited to those who actually deal with, and derive a right from, an actual rather than a fictitious proprietor. A person who deals with somebody who is not the registered proprietor, and who turns out to be fictitious, does not transact on the faith of the register. Where the transaction by which such person acquires title is tainted by fraud, that person cannot acquire a valid and indefeasible title, although such a title may be passed on to a bona fide third party purchaser. On the facts, as the mortgagee had dealt with a fictitious person and had not passed on the title, Mrs Messer was successful in having the forged certificate and mortgage cancelled. The decision in Gibbs v Messer is generally cited as authority for the adoption of a deferred indefeasibility construction of the Torrens legislation. It is possible, however, to rationalise the decision as an anomalous exception, restricted to its own peculiar facts.27 On the facts of Frazer v Walker, Frazer and his wife were the registered proprietors of a farm property in Auckland which was subject to a first mortgage. In 1961, Mrs Frazer, without the knowledge or consent of Mr Frazer, arranged to borrow £3,000 pursuant to a further mortgage secured over the property. This mortgage was subsequently registered. After no mortgage payments were made under the second mortgage, the mortgagees exercised their power of sale, and the property was sold to Walker in good faith. Mr Frazer responded by claiming that the second mortgage had been forged and that the sale by the mortgagees had occurred without his knowledge. Relying upon the decision in Gibbs v Messer, Mr Frazer claimed that his interest in the land was not affected by the purported mortgage, or by the sale to Walker, and sought an order that the mortgage be declared a nullity and that the land registrar cancel the entries in the registry and restore him and his wife as joint registered proprietors. The Privy Council reversed its decision in Gibbs v Messer and effectively held that a forged mortgage became immediately indefeasible on registration. The court concluded that indefeasibility of title is central to the whole system of registration. No adverse claim, except as arises under established exceptions to indefeasibility, may be brought against a registered proprietor. The circumstances were held to be outside the ‘fraud’ exception—the mortgagees had passed the title on to a bona fide purchaser and the registration of his interest took priority to any purported unfairness committed against Mr Frazer. Consequently, the appeal was dismissed. No compensation was awarded to the Frazers because the loss did not occur through any fault of the registry or though any reliance upon the registry. Immediate indefeasibility was subsequently endorsed by the Australian High Court in Breskvar v Wall (1971) 126 CLR 376. In that case, a fraudulent transfer was registered and title was passed on to a bona fide third party. Before the third party could register his interest, the Breskvars lodged a caveat to prevent further dealings, and raised the issue of fraud. In considering the effect of the indefeasibility provisions in the Torrens legislation, Barwick CJ concluded that the certificate of title is conclusive evidence of the title of a registered proprietor. Once registered, unless an established exception can be raised, the title of the registered proprietor will be indefeasible. His Honour noted that the Torrens system 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. Hence, it matters not what the cause or reason for the invalidity of the instrument might be. Thus, on the facts, despite the fraud flowing from the void transfer, the Breskvars were unable to have the register amended. In Leros Pty Ltd v Terara Pty Ltd (1991) 106 ALR 595, the Australian High Court confirmed the authority of Breskvar v Wall and noted that the effect of the registration of an interest was to extinguish all prior unregistered estates or interests which, but for that registration would have conflicted with the proprietors estate—unless it fell within one of the recognised statutory exceptions. If an unregistered interest is not protected by caveat, a subsequent inconsistent dealing with land which is registered will extinguish the unregistered interest and it cannot be reasserted. Despite this strong endorsement of immediate indefeasibility, there have been some persuasive arguments in favour of deferred indefeasibility, one of the strongest being the judgment of Gray J in the Victorian Supreme Court in Chasfild Pty Ltd v Taranto [1991] 1 VR 225. The facts of the case concerned the fraudulent registration of a mortgage over the defendants’ land. The defendants claimed that they were unaware of the existence of the mortgage and that they had been tricked into handing over the duplicate certificate of title in the belief that they were making a $10,000 investment. The duplicate certificate of title was then fraudulently used to obtain mortgage moneys from a mortgagee who was unaware of the fraud. Ultimately, the question for the court was simple: with whom should the loss lie—the unsuspecting mortgagees or the duped defendants? In a single judgment of the Supreme Court of Victoria, Gray J concluded that the certificate of title should be amended and the mortgage should be set aside. His Honour felt that the defendants had been unfairly deceived and that it would be both ‘disappointing’ and ‘surprising’ if the Victorian legal system allowed the defendants to be dispossessed of their own home through the enforcement of a forged mortgage.
THE TORRENS SYSTEM
11.1 Introduction
11.2 History of the Torrens system
11.2.1 The difference between the Torrens system and the Deeds Registration System
11.2.2 The application of the Torrens system
11.2.3 Registration
11.3 Indefeasibility of title
11.3.1 Paramountcy provisions
11.3.1.1 Section 40: effect of registration
11.3.1.2 Section 41: certificate of title is conclusive evidence of title
11.3.1.3 Section 42: conferral of indefeasible title upon registration
11.3.1.4 Section 43: abolition of the doctrine of notice
11.3.1.5 Section 44(1): the effect of fraud
11.3.2 Judicial development of immediate and deferred indefeasibility