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23 Cards in this Set
- Front
- Back
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Meaning of Fraud |
Fraud is not expressly defined in the act but rather interpreted through case law. |
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Types of fraud |
1. fraud against the registrar 2. wilful blindness to fraud. |
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Is notice of a prior interest fraud? |
(s 43 TLA): mere notice of an unregistered interest is not fraud. It is not fraudulent to register with notice of a prior unregistered interest, thereby destroying it. |
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1. Actual fraud |
dishonesty of some sort, moral turpitude, seeking to defeat another's right. (Lord Linley Assets) |
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Assets v Mere Roihi
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- A person who fails to discover the fraud of another because he didn't make inquiries is not guilty of fraud. The fraud must be 'brought home' to the party - ie, the party must be a part of the fraud in a way to come within the exception.
- However, if the person had suspicions that there might be fraud, and then didn't make inquiries so as to not find out and thus tied down by law (this is called willful blindness - shutting one's eyes to avoid implications), then they are guilty of fraud. |
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Loke Yew v Port Swettenham Rubber
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- Where a party promises that an unregistered interest will be preserved and then goes back on that promise, they will be guilty of fraud. - A registered proprietor who has acted fradulently will not enjoy the protection given by indefeasibility |
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2. Fraud must operate on the mind of the person defrauded |
and caused them to act detrimentally (Bank of SA v Ferguson)
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Bank of SA v Ferguson
Facts: Bank officer forged Ferguson's signature to speed up internal process |
- Fraud was not operative because it did not induce Ferguson to act to his detriment.
- The forged documents did not have the effect of harming Ferguson. In theory it helped him get the money faster from the bank. |
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3. Wilful blindness |
- negligence is not fraud - but wilful blindness is fraud. wilful blindness is abstaining from making inquiries in fear of learning the truth |
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Pyramid Building Society v Scorpion Hotels |
Facts: Mortgage was improperly executed because one of the attesting witnesses was not a director of the company as required by the company's article of association Held: Pyramid's actions were not dishonest. At most it shows their solicitors failed to take due care. |
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Fraud must occur ... |
before or at the time of registration and may also occur after registration (Obiter in Bahr v Nicolay) |
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Bahr v Nicolay Facts: The Appellants [Bahr] wanted to develop their land but couldn't afford it. They sold it to the First Respondent [Nicolay], and had an agreement which allowed them the option of buying it back for a specified price in a couple of years. Thompson sold the land to the Second Respondent [Thompson], who acknowledged and agreed to the option of the Appellants to purchase. When the Appellants tried to exercise their option, the Second Respondent refused. |
Held: Bahr won - Indefeasibility is there to protect a purchaser from defects in his predecessor's title, not to protect him from his own contractual promises. - Contractual rights would already not be effected by indefeasibility provisions, but in this case they don't suit the situation (because the contract was between the First and Second Respondents, making the Appellants not privy to the contract). Therefore, a trust relationship arose. - This meant the Second Respondent held the land subject to the equitable right of the Appellants to exercise their option. |
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4. Fraud by Agents and Employees |
Fraudulent acts or knowledge of an agent may affect a registered proprietor, but it must be brought home through agency principles in Dollars & Sense |
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Are they an agent? |
1. Expressed agency: agent is a direct employee of registered proprietor 2. Implied agency: look at the responsibilities of agent to principal |
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2 limb test |
1. Fraudulent act: P is liable for A's fraud if it is within the scope of their actual or apparent authority (Dollars & Sense) 2. Knowledge of Fraud: for fraud to be brought back home to P, A must have a duty to communicate any matter to P (Pyramid) |
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Knowledge of fraud |
1. when A has knowledge of fraud there is a rebuttable presumption A communicated it to P 2. where A has knowledge of his own actual fraud, there is a rebuttable presumption that P knew of the fraud. Corwill Exception: where A is operating purely for their own benefit and not for P (on frolic of his own) |
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5. Does false attestation amount to Fraud? |
Attestation is not a mere formality, but a fundamental part of conveyance process (De Jager) - false attestation may give rise to fraud (Jager) - However, if a party acts less than meticulously in formality, it does not necessarily give rise to fraud. (Grgic) |
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Elements A. Knowledge of the false attestation |
1. knowledge of the fraudulent act is sufficient to constitute fraud (De Jager) 2. attestation must be accompanied by a wilful and conscious disregard and violation of the rights of other persons' (Russo) 3. false attestation has to be distinguished from acts that are done to speed up the process |
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B. Understanding of the consequences of their actions (Russo) |
1. Attester must know they were putting document forward on path to registration 2. Look at attester's age, experience, education to determine if they understood the consequences |
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Aggregation of Fraud |
1. acts of two employees may be aggregated if a more senior employee is determined to have appreciated the consequences of the act 2. where multiple agents are involved and there is no direct person to attribute the blame to, courts are reluctant to create conduct amounting to fraud. (Russo) |
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AGC v De Jager Facts: Husband forged his wife's signature on mortgage documents which were witnessed by a person who knew the signature was forged. AGC knew the documents were improperly witnessed but registered the mortgage anyway |
Held: AGC was dishonest in not finding out the true position which they could have easily done. Their conduct was fraudulent within the meaning of the TLA and their mortgage was defeasible. |
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Russo v Bendigo Bank Facts: Halaseh forged Russo's (mother in law) signature on mortgage documents securing a loan to his company. The signature was not witnessed and the documents returned to the bank. However, an inexperienced clerk employed by the bank’s solicitor proceeded to witness the signature believing it to be a formality despite being advised not to witness signatures without actually seeing them being signed. Neither the bank not solicitor knew the signature was false. Russo sought to have the mortgage removed. |
Held: - held that the bank’s conduct was not fraudulent. Even though the clerk’s actions were wrongful they fell short of the degree of impropriety necessary to amount to fraud. - The clerk’s conduct did not evidence moral turpitude or wickedness. |
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Grgic v ANZ Banking group Facts: Son took the title documents from father and got an impersonator to act as him and forge his signature. He defaulted on the loan at which point the father was informed of the fraud. Father imputed that the property was defeasible on the basis of fraud, on grounds that he was personally known to the bank manager |
Held: there was no evidence that the bank or the law clerk wanted to take advantage or had malicious intentions hence the fraud was not bought home. |
