(c) Cameron Stewart 2009 Old System Priorities: Assoc Prof Cameron Stewart

(c) Cameron Stewart 2009

Old System Priorities:

Assoc Prof Cameron Stewart


Registration Systems• Problems with fraudulent transactions in the

early colony• 1800 – order of Governor King that all

agreements concerning land be in writing or entered into books kept at Sydney, Parramatta and Hawkesbury

• 1802 – Judge Advocate’s office• 1817- Gov Macquarie – Fraudulent against a

bona fide purchaser for value• 1825 – Registration Act – substantially amended

over time and then repealed in 1984 and sections transferred into the Conveyancing Act


Conveyancing Act and the Register of Deeds

• Section 184C – general register of deeds• Open to public inspection – s 199• Deliver original and copy to the Registrar –

registered with a number – copy kept on file• Any instrument affecting land or not can be

registered – not necessarily a “deed” as such


The effect of registration?• Validity of the document – some instruments must

be registered to have legal force eg short form of mortgage discharge, appointment of new trustee, powers of attorney

• Registration for priority – s 184G – instruments affecting land, executed bona fide and for valuable consideration take priority over earlier instruments

• Effect – earlier legal interest will be defeated by later legal interest upon registration of later interest and so on

• However it only affects priority – will not perfect a fraudulent transaction, mistake or forgery


Important factors to consider:

(a) Competing instruments – must have an instrument to register and then it only concerns instruments in writing – if no instrument then the normal priority rules apply eg a short term lease without writing, competing with a legal registered interest eg a sale to a third party – the registration won’t give the later legal interest priority



• (a) Competing instruments – Another eg - equitable mortgage by deposit of title deeds created without writing not defeated by a later registered instrument

• Section 184 confers priority only in cases of “competition” – that is if the interests are compatible no priority is afforded


Scholes v Blunt

• In Scholes v Blunt (1917) 17 SR (NSW) 36, A conferred an easement on B by means of an unregistered instrument. A then sold the land to C ‘subject to all easements, if any, affecting the same’. C registered his instrument first. Because the instruments could stand together, s. 184G did not apply and C took the land subject to B’s easement.


Boyce• Boyce v Beckman, in 1834 the Crown granted a parcel

of land to O’Donnell. In 1841 Sparke acquired the fee simple in the land. In 1845 Sparke conveyed the land to Boyce by deed. The land was described by reference to a number of lots relating to a plan. On 1 January 1852 Sparke executed a second deed of conveyance to Turner in which the land was described as including ‘all and any other lots forming a portion of the said grant to … O’Donnell to which Sparke is entitled’. The conveyance to Turner was registered first. The issue in the case was whether this registration gave the second conveyance priority over the first.


• The Court ruled that it did. The result depended upon finding that the two conveyances were competing. It could have been argued that there was no inconsistency in that the latter general description of the land meant that Sparke was only conveying that land to which he was entitled at the time of the second conveyance, ie. the land he acquired in 1841 less the land he conveyed to Boyce in 1845. On this basis the two conveyances executed by Sparke would not be competing instruments. However, the Court ruled otherwise


• Innes J, at 146, said:• • Such words, then as ‘lands to which I am entitled’, when used by a

vendor, must be held to mean ‘such lands as I possess and am entitled to, whether included in any previous conveyance by me or not, if that conveyance remains unregistered’, and cannot be held to except lands previously conveyed by him, so long as that conveyance remains unregistered. To hold otherwise would, in our opinion, be to defeat the very object of the Act.

• • The significance of this case is that although registration does not confer

title upon the purchaser on an interest in old system title land, in some cases the failure to register results in the loss of title to land. Boyce should have registered his conveyance to preserve and protect his title. The lesson of this case is to register instruments by which interests in old system land are acquired.



• Registration can make effective instruments which may not have had any legal effect under priority rules – eg A sells land to B but then sells land to C

• Under the nemo dat principle C would take no interest – however if C registers before B, C will be given “priority” – eg defeats B’s interest


Important factors to consider:Bona fides – on the part of the person taking the

interest – notice is enough for there to be an absence of bona fides – actual, constructive or implied

• Eg if a purchaser takes interest with notice that someone other than the vendor is in possession of the property and fails to make proper enquiries is said to be notified and will not gain priority in registration


Important factors to consider:• The onus of proving good faith is upon the person

asserting priority based upon registration of his or her instrument: Jones v Collins (1891) 12 LR (NSW) (L) 247 at 250.

• The most significant example of a lack of good faith for the purposes of the legislation is a where a person takes an interest with notice of a prior interest in the land. Notice includes actual, constructive or imputed notice: s.164, Conveyancing Act 1919.


Marsden• In Marsden v Campbell (1897) 18 LR (NSW) Eq 33,

Campbell leased land to Marsden in 1888 for a fifteen year term. The lease was not registered. In 1893 Campbell conveyed the land to Byrnes, with the deed of conveyance being registered. At the time Byrnes took the conveyance he knew that Marsden had been in possession of the land for 5 years and that he was running sheep on the land. Byrnes contended that his registration gave him priority over Marsden’s lease. The Court ruled against Byrnes, stating that he could not rely on s. 184G because of a lack of good faith on his part.


Marsden• Simpson J, at 38, said:• • I must hold that the defendant Byrnes knew that

Marsden had some interest in the land, and that he was content to run the risk of what this interest might be. … [I]n this case Byrnes knew that an interest in the land comprised in his transfer was outstanding [to Marsden], and he made no enquiry. I must, therefore, hold that the lease to [Marsden] takes priority over the transfer to Byrnes.



When does notice have to have occurred? Before execution of the instrument and not the registration

S 164 CA – actual constructive and imputed

Constructive notice if an interest is registered


Important factors to consider:The crucial issue concerning notice relates to the

question of timing. Notice received before the execution of the instrument upon which priority by registration is based precludes priority based upon registration of that instrument: Scholes v Blunt (1917) 17 SR (NSW) 36.

Notice received after execution of the instrument but before its registration does not preclude priority based upon registration of that instrument: Burrows v Crimp (1887) LR (NSW) (L) 198 at 210.


Important factors to consider:(d) Valuable consideration – must not be

nominal but may be inadequate (eg much lower than market value) – S 184G(1) includes marriage

Thus, in Bullen v a'Beckett (1863) 15 ER 684, a conveyance for 10 shillings was held to be for nominal consideration and thus not entitled to the benefits of the legislation.


Important factors to consider:An interest acquired for no or nominal consideration should nevertheless be registered because such registration will preserve the interest holder's priority against interests in the land created after registration. For example, if A acquires an interest in land for nominal consideration and registers it, he or she will not be able to claim priority by registration. However, if after A's registration B, for valuable consideration, acquires an interest in the same land, B will not be able to assert priority over A by registering his or her interest. This is because B's interest will have been acquired with notice of A's interest and thus B will have failed to satisfy the legislative requirement of good faith. Any priority dispute between A and B will therefore be determined by the general law rules relating to priority disputes.


Fraud• Unlike with the Torrens system, registration does not make the

forgery operative: Re Cooper; Cooper v Vesey (1882) 20 Ch D 611.• • In Re Cooper, Thomas Cooper in his will appointed his son of the

same name one of his executors and trustees. The father died. The son had possession of the title deeds to land. The son concealed the fact of his father’s death and without the consent of the other executors and trustees, mortgaged the land, representing the mortgage to be one from his (deceased) father. The mortgagee registered the mortgage. The other executors and trustees, upon discovering the facts, sought recovery of the title deeds and a declaration that the mortgage was of no effect. The Court held in favour of the executors. The mortgage was a forgery and the mortgagee could not rely on forged documents. Registration under s. 184G did not in any way alter this fact


Efficacy

• In Fuller v Goodwin (1865) 4 SCR (NSW) 66, Stephen CJ said:

• • Registration is, at any rate not necessary to give

efficacy to the deed. It appears clearly to us, that, in favour of an innocent taker for value who registers his deed, the statute confers on the conveying party, notwithstanding his previous inconsistent conveyance, a title as against the transferee named therein; and thus enables the person secondly taking, immediately upon registration, to acquire that title.


Problems with the deed registration system

• Improved level of knowledge• Offered greater degree of protectionBut• Did not grant a total security of interest• Purchasers took subject to unregistered interests which

have not been documented• Purchasers take subject to unregistered instruments

which they ought to have discovered• Purchasers title is still dependant on the chain of title

and the risk that a prior interest may be invalidated breaking the chain of title and destroying the purchaser’s interest

Documents

(c) Cameron Stewart 2009 Old System Priorities: Assoc Prof Cameron Stewart