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The Australian Torrens System Principle of Immediate Indefeasibility: Is It 'Fit for Purpose' for the 21St Century?

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The Australian Torrens System Principle of Immediate Indefeasibility: Is It 'Fit for Purpose' for the 21St Century? The Australian Torrens system principle of immediate indefeasibility: Is it ‘fit for purpose’ for the 21st century? Penelope Jane Carruthers BJuris, LLB (Hons), BA, LLM (Dist) This thesis is presented for the degree of Doctor of Philosophy of The University of Western Australia Law School 2018 ABSTRACT All Australian jurisdictions have a system of land title registration known as the Torrens system. The principal aims of the Torrens system are to ensure that a person’s registered title to land is secure (‘security of title’) and that purchasers seeking to acquire an interest in land need only search the Register to discover all facts relevant to title (‘security of transaction’). In consensual land transactions, these two aims are achieved. However, in other situations, these aims are mutually incompatible. A person may become the registered proprietor of land unaware that the registration was pursuant to a non-consensual transaction based on a forgery or other defective instrument. As between the former and latter registered proprietor, who is to be entitled to the land? Security of title favours the former, but security of transaction favours the latter. This conundrum is resolved in land title registration systems by the application of rules, referred to in this thesis as ‘bijuralism rules’. The bijuralism rule adopted in the Torrens system is the principle of ‘immediate indefeasibility’: the non-fraudulent registered proprietor obtains an immediately indefeasible title regardless of the fact registration was pursuant to a void instrument. The application of immediate indefeasibility produces unfair outcomes for the prior registered proprietor who is deprived of his or her land by a non-consensual transaction. The injustice of this outcome inevitably leads one to question the continuing acceptability of immediate indefeasibility as the Torrens system bijuralism rule. This prompts the overarching research question in this thesis: Is the Australian Torrens system principle of immediate indefeasibility ‘fit for purpose’ for the 21st century? This question is both topical and timely. A number of comparable jurisdictions are currently engaged in comprehensive reviews of their bijuralism rules. In addition, Australia has recently introduced the Electronic Conveyancing National Law (‘ECNL’). Consequently, there is heightened awareness of property law reform, particularly with regards uniform land laws. A comprehensive evaluation of immediate indefeasibility, encompassing both doctrinal and comparative law methodologies, is therefore warranted. Accordingly, this thesis explores the overarching question by seeking answers to three subsidiary questions: How well does the principle of immediate indefeasibility compare with the bijuralism rules of England and Wales? Is immediate indefeasibility always applied consistently and coherently in the case ii law? Will the introduction of e-conveyancing affect the ongoing fitness for purpose of the Torrens principle of immediate indefeasibility? These questions are explored in this thesis through a series of 5 published articles. In light of the comparative and doctrinal analysis and the anticipated benefits of the ECNL, this thesis concludes that yes, the Torrens system principle of immediate indefeasibility is indeed ‘fit for purpose’ for the 21st century. iii TABLE OF CONTENTS Thesis Declaration ..................................................................................................................................i Abstract ..................................................................................................................................................ii Table of Contents .................................................................................................................................iv Acknowledgements ..............................................................................................................................ix Authorship Declaration ........................................................................................................................x Chapter One: Introduction...................................................................................................................1 1.1 Introduction .......................................................................................................................................2 1.2 Research questions ............................................................................................................................6 1.3 Research methodologies ...................................................................................................................7 1.3.1 Doctrinal research .............................................................................................................7 1.3.2 Comparative research ......................................................................................................10 1.3.3 Summary of doctrinal and comparative research process in this thesis ..........................10 1.4 Significance and originality of thesis ..............................................................................................11 1.5 Thesis outline ..................................................................................................................................13 Chapter Two: The Torrens System and Indefeasibility ..................................................................18 2.1 Introduction .....................................................................................................................................19 2.2 The purposes of the Torrens system ...............................................................................................19 2.2.1 The mirror principle and the exceptions to indefeasibility .............................................20 2.2.2 The curtain principle and the ‘notice’ provision .............................................................21 2.2.3 The insurance principle and its fundamental limitation ..................................................22 2.2.4 Ruoff’s mirror, curtain and insurance principles – conclusion .......................................23 2.3 Immediate and deferred indefeasibility ...........................................................................................24 2.3.1 Objects of the Torrens legislation – register errors and transactional errors ..................26 2.3.2 Economic efficiency arguments ......................................................................................29 2.3.3 Immediate and deferred indefeasibility – conclusion .....................................................37 2.4 The New Zealand bijuralism rule ...................................................................................................39 2.5 Conclusion ......................................................................................................................................43 Chapter Three: A Tangled Web Indeed: the English Land Registration Act and Comparisons with the Australian Torrens System ..........................................................................46 I Introduction .........................................................................................................................................47 II The Torrens system in outline ...........................................................................................................50 A Indefeasible title ...................................................................................................................50 iv B Exceptions to indefeasibility ................................................................................................51 C Compensation .......................................................................................................................53 D A ‘Torrens methodology’ .....................................................................................................55 III Land title registration in England: The legislation ...........................................................................55 A Background to title registration in England .........................................................................55 B LRA 2002: Registered title, rectification and indemnity ......................................................57 C A suggested ‘LRA 2002 methodology’ ...............................................................................63 IV The narrow and wide approaches: The case law .............................................................................64 A The narrow approach ...........................................................................................................65 B The wide approach ...............................................................................................................72 V The enigmatic section 58: Is beneficial title conferred? ...................................................................79 A Malory ..................................................................................................................................80 B Fitzwilliam ............................................................................................................................84 C Swift 1st Limited v Chief Land Registrar (Swift) ..................................................................88 D The Torrens approach to Fitzwilliam and Swift ...................................................................92 VI Conclusion
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