The unattachable title under the Torrens system is the guaranteed title of a registered owner. The law states that the Torrens system is not a historical title or derivative title but, in fact, re-registers the title as new each time the title is registered. According to Barwick CJ, who succinctly said in Breskvar v Wall:
“The Torrens system…is not a title registration system, but a title-by-registration system.”
Once an interest in the Torrens title has been registered, that registered title cannot be revoked for reasons related to Torrens’ prior title, thereby transferring to the registered owner an unattachable title. The term “invalidity of title”, although not expressly mentioned in the Torrens legislation, is granted by supremacy provisions defined by s42 of the Real Estate (NSW) Act. This section gives the registered owner of a title a legal guarantee of ownership against almost all others not registered in the folio and most others registered in the folio with some legal exceptions;
1. Fraud; giving rise to deferred infeasibility;
2. Another owner claims the same land from a previous folio;
3. An omission or misdescription of the land (easements);
4. The right of people to share the land; profit to take;
5. The incorrect description of parcels or boundaries included in the folio;
6. The lessee, in possession, with a contract that does not exceed three years; Y
7. Non-statutory exceptions such as personal duties and personal assets.
Until the advent of the Torrens system, the main problem with the old English system was the complexities and subsequent costs associated with it. One of those complex issues was the doctrine of notice and the obligation for the buyer to investigate proof of title.
Essentially, what the Torrens system did was, on each registration, return the land to the Crown, and from there, the Crown would grant the land to the registered holder, thus eliminating the need for notification. This created what is known as unattachable title; any breaks in the chain of documents and claims on them became irrelevant as each record created a new chain.
The terms “unattachable” or “unattachable” are not mentioned in the Real Estate Act, but originated with Robert Torrens himself and later in case law. The Privy Council made mention of “indefectible” in Gibbs v Messer in 1891. Gibbs v Messer also set a precedent regarding the first of the legal exceptions; that of fraud.
The fraud exception stems from Gibbs v Messer in which the concept of deferred unattachment was expounded. It was held that because the fraudulent document of title was in the name of a fictitious person; that in effect the good title did not go to the third. However, if the nonfictitious third had passed title to a fourth, then that would in fact constitute good title, deferring unattachability. This idea was further elaborated in Frazer v Walker, which differentiated the idea of deferred ineffectiveness from the idea of immediate ineffectiveness. The holder forged the signature of a non-fictitious person and therefore passed a good title, despite the fact that there was a fraud. It was held that as long as the third party was an innocent bona fide buyer and was in no way part of the fraud, this would allow the title to be immediately unseizable. In Australia, this was authorized by the High Court case of Breskvar v Walln, which remains the authority on the unattachability of title. The decision was upheld in later and more recent cases such as Westfield Management Limited v Perpetual Trustee Company Limited, Halloran v Minister Administering National Parks and Wildlife Act 1974, Farah Constructions Pty Ltd v Say-Dee Pty Ltd, and Black v Garnock.
For a legal fraud exception, there must be actual fraud as opposed to equitable fraud, and actual personal dishonesty or moral turpitude on the part of the registered owner, sometimes coupled with willful blindness or willful ignorance. There must also be the mens rea or knowledge of deceptive conduct and actual loss or damage to a registered owner.
The property title of a whole or partial parcel of land that has been registered in a previous page may prevail over a partial or total parcel registered in a subsequent page. This is described in s42(1)(a). The persuasive, non-binding case law for this is National Trustees Co v Hassett, in which a fence was built five inches south of the northern boundary and existed there for some years. Cousins J says at 414;
… [t]these factual findings are immaterial, because the land is included in the claimant’s certificate of title, which, like his Crown grant, predates the defendant’s.
Hassett is also persuasive case law regarding the statutory exception of misdescription of land in the folio. Section 42(1)(c) sets out the legal provision for this exception. The omission or misdescription of parcels of land, partial parcels of land, or boundaries may render a registered owner a voidable interest under this section. However, section 45 and section 118 provide some protection to a bona fide purchaser of land.
Article 42(a1) expressly refers to easements and their misdescription or omission of the folio. Essentially, the right that exists within the easement is transferred from the servient estate to the dominant estate. Therefore, as Kirby P says in Dobbie v Davidson;
The general purpose of section 42(b) [repealed now 42(a1)] is to protect the rights of people in relation to unregistered easements from the loss of those rights due to the operation of a general principal.
This means that section 42(a1) operates to protect the rights of the servient tenement holder who has, for example, access to his land on the general principle of non-seizure of title.
Supplies and Bona Fide Buyer Volunteers
As mentioned above, sections 42(1)(c), 45 and 118 of the Real Estate Act (NSW) provide legal exceptions to a “Bona fide Buyer” of land. However, unattachable title protection is not only available to a “buyer” of land, but also to a volunteer who did not pay any consideration for a donation. It was held in Bogdanovic v Koteff that the same standard exists for volunteers as for bona fide full value purchasers, as long as they meet certain criteria as to what constitutes a gift and registration of their title.
1. The donor must do everything necessary to transfer the title and do everything necessary to put that transfer outside of its revocation.
2. The donee must become a registered owner.
It should be noted that Bogdanovic v Koteff is a NSW Court of Appeal decision and the investigation has been unable to find a High Court decision on voluntary and finality. However, in the absence of a final judgment from a higher court, it must be argued that the rules of equity would apply to the general principal of a voluntary unattachable title.
Public Rights and Charges – The right of a Minister to create roads, easements and public right-of-way on land.
Government eminent domain rights: the rights of the government to take land for the public interest, for example, to build transport infrastructure, etc.
Utility Easements – The right of a prescribed authority to create an easement on land to provide utility services such as gas, water, drainage, sewer, etc.
Planning Restrictions – In Hillpalm v Heavens Door, Meagher JA held that the Environmental Assessment and Planning Act should take precedence over the Real Property Act, which confers non-attachability.
Construction Compliance Laws: Includes issues such as illegal or unapproved construction work; invasions; and non-compliance with zoning.
Mining or Exploration Subsidies: Mining companies can apply to the government to obtain a mining lease or exploration license on a person’s land. This problem is very important today with the extraction of coal seam gas in Queensland.
Non-statutory duties ‘in personam’ and personal equity
The obligations of the buyer and registered owner of the land, in law or in equity, may in some circumstances render the title voidable. Lord Wilberforce in Frazer v Walker said;
[t]hat the beginning [of indefeasibility of title] in no way negates the right of a plaintiff to bring a personal claim, based on law or in equity, against a registered owner for relief that a court acting personally may award.
Types of personal exceptions
1. Previous contractual obligations of the registered holder;
2. Equitable resources (such as trust property).
Contractual Obligations: Bahr v Nicolay is the authoritative case with respect to personal claims and the unattachability of title. A sold his land to B under a contract in which B leased it back to A for three years. One option within this contract was that after the three-year lease, B would give A the option to buy back the land. C then bought the land from B expressly accepting the terms of the existing contract. Upon registration, C refused to resell the land to A citing the unattachability of his title.
It was held in this case that the registered owners were bound by the contract under which the land was transferred to them and therefore C had to offer A the option to buy back the parcel of land. This has been confirmed in contemporary cases such as Farah Constructions Pty Ltd v Say-Dee Pty Ltd, TEC Desert Pty Ltd v State Revenue Commissioner and Bank of South Australia Limited v Ferguson.
Equitable Remedies: Farah Constructions Pty Ltd v Say-Dee Pty Ltd is the authoritative case in respect of the personal equity personal objection to the unattachability of title. This exception exists in circumstances where it would be inconceivable for the legal owner of the property to assert beneficial ownership. There are a number of previous cases that give us a set of principles from which to work. These are;
1. When a person becomes the legal owner of the land by knowingly breaching his trustee duty. In Chan v Zacharia, Dr. Chan and Dr. Zacharia dissolved their business partnership; however, Dr. Chan knowingly renewed the lease on the property for his own benefit.
2. Know the receipt of the trust assets as a consequence of the breach of the trust or the duties of the trustee or know the assistance in the breach. In National Commercial Banking Corporation of Australia Ltd v Batty, the defendant deposited a check into his company’s trust account knowing that the check was made out to another company.
3. Seal the leases. For example, joint ventures in the business or a break in a relationship where the husband and wife were co-owners.
Guidelines for personal exceptions to the unseizability of the title.
According to The Australian Property Law Journal, Australian courts have established certain guidelines when considering personal exceptions:
In-person claims cover only known legal or equitable causes of action
The remedy cannot be used to undermine the fundamental concepts of the Torrens system
The conduct giving rise to a personal claim may arise before or after registration; Y
Must involve unreasonable conduct on the part of the current registered owner.
The mere lack of liability will not be enough to enforce a personal claim. It is ‘a necessary but not sufficient criterion’, and
The expressions ‘personal equity’ and ‘right in personam’ do not provide a blank canvas on which a plaintiff can paint any picture.
