Topic 3: The Principle Of Indefeasibility

Front 1

'Indefeasibility'

Back 1

is the immunity, security or protection given to registered interests from attack by adverse claims by the holders of other registered interests in the same land

Front 2

s 27 TLA

Back 2

Registrar is the key to the TS as it operates to vest and divest inetest

Front 3

s 41 TLA

Back 3

If you have a CoT, it is conclusive evidence that the person names on the certificate or grant has possession of that interest

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s 42 TLA

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this is the Indefeasibility Provision-

A RP has indefeasible title and their title is paramount, HOWEVER it is subject to exceptions

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Deferred indefeasibility

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The title of a purchaser who registers a forged document is deferred (court can set aside the interest).

However, if the title is then transferred to a bona fide purchaser and registered the title becomes indefeasible.

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Immediate Indefeasibility

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Title of purchaser who registers a forged instrument is immediately indefeasible and cannot be set aside by the court UNLESS fraud is procured by the purchaser themselves.

**Is preferred in Australia

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Gibbs v Messer

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Facts: M gave her lawyer (C) her CoT. C forged the signature and transferred the property to a fictitious person (HC). C then executed a mortgage in favour of (M), a bona fide purchaser. M discovered the fraud.

Held: per deferred indefeasibility, C would win.

per immediate indefeasibility M would win.

Mortgage was removed and did not encumber M.

Front 8

Frazer v Walker

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Facts: Mr and Mrs F were RP of land. Mrs F obtained a further mortgage and forged Mr F's signature. She defaulted on payments and Mortgagee exercised their power of sale. Mortgagee wanted to sell to W. Mr F sought to nullify the mortgage.

Held: W had indefeasible title due to immediate indefeasibility. There was no fraud on the part of the mortgagee or W.

Front 9

Breskvar v Wall

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Facts: B were RP of land who granted a mortgage to P to secure a loan. They gave a blank transfer form to P, who inserted his grandson's name (Wall). W became RP who wanted to sell land to Alban (bona fide purchaser). B attempted to stop the sale.

Held: B lost and had to remove the caveat, where given nominal damages. Once an interest is registered it attracts immediate indefeasibility.

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The Scope of Indefeasibility

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Just because a document is registered, it does not mean that indefeasibility is automatically attached to each covenant it contains.

Indefeasibility is only attached to covenants in the document which are so intimately connected with the property interest.

Front 11

Leases

Back 11

Only covenants which touch and concern the land attract indefeasibility. (Mercantile)

- Does the covenant effect the tenant in his/her normal capacity as tenant or Land Lord?

- Indefeasibility only extends to an option to renew but not to an option to purchase.

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Mortgages

Back 12

A mortgage is a charge over land which secure the performance of a personal obligation

Front 13

Does the protection of indefeasibility extend to the covenants of a 'traditional mortgage'?

Back 13

Registration gives indefeasibility. Even if the document is forged, indefeasibility applies and the Mortgagee's interest is protected provided they were not part of the fraud. (s42)

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Does the protection of indefeasibility extend to the covenants of a 'all monies mortgage'?

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Indefeasibility only extends to covenants contained in the actual mortgage. (Xiao)

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NSW position

Back 15

If the mortgage is found to be fradulent or defeasible it secures noting. Indefeasibility does not cover the covenant to pay. (Perpetual v English)

VIC is moving towards the position held in NSW