Adverse Possession

1
Adverse Possession

• Continued

2
Special Circumstances

• Crown Land The Crown is never barred, and time
  only starts to run in favour of the adverse
  possessor when the land is included in a Crown
  Grant
• Future interests time starts to run when the
  future interest becomes an interest in
  possession. Eg, an interest taking effect after
  a life estate, time starts to run when the life
  tenant dies. This provision has no effect if the
  land is already in adverse possession when the
  future interest is created
• Forfeiture and breach of condition Time runs
  from the time of the forfeiture or breach. But
  the right to recover for forfeiture or breach by
  virtue of the future interest will not be
  affected.

3
Tenancies

• Tenancies Tenancy at will Time will start to run
  when the tenancy is determined, and it will be
  deemed to be determined one year after its
  creation if it is not determined earlier
• Periodic tenancies Time runs from the end of the
  first period of the tenancy, but if rent is
  subsequently received it will run from the date
  of the last receipt
• Leases in writing at a rent above 2 per year
  Possession by a tenant under a lease for a term
  absolute is never adverse to the landlord. But
  time will run against the landlord and in favour
  of another person who claims to be entitled to
  the land subject to the lease if rent is paid to
  that person and not to the landlord

4
Extension of the Limitation Period

• Disability
• Acknowledgement
• Concealed Fraud

5
Disability

• The definition of disability is in s 3(2) and (3)
  of the Limitation of Actions act and includes a
  person
• who is under age, or
• who is subject to a guardianship arrangement for
  intellectual disability
• s 23(1) provides for the case where the owner was
  under a disability when the right of action first
  accrued
• The period may be extended for 6 years from the
  date when the owner ceases to be under a
  disability
• If the owner was a minor when the right to
  commence legal action to recover the land
  accrued, he or she will not cease to be under a
  disability if he or she becomes subject to a
  different disability, such as unsoundness of
  mind, before reaching full age
• In these cases, the 6 years will only begin to
  run from the date when the true owner recovers
  from the disability or dies

6
Disability

• But there is an overall limit of thirty years on
  the period
• So, for example, if the relevant disabilities
  extend for 28 years from the date of first
  adverse possession the section operates to extend
  the right for only 2 years, not for 6 years
• It was Land Titles Office practice for many years
  not to accept an application for registration
  based on adverse possession until 30 years had
  elapsed unless it could be proved positively that
  the true owner had not suffered a disability

7
Acknowledgement

• What if the adverse possessor acknowledges (in
  writing and signed by the adverse possessor or an
  agent) the title of the true owner?
• A new period of limitation commences
• Such an acknowledgment binds everyone in
  possession during the ensuing period

8
Concealed Fraud

• Where a right of action is concealed by the fraud
  of the defendant or an agent, or some person
  through whom the claim is made, time begins to
  run when the plaintiff discovers the fraud or
  when the plaintiff could with reasonable
  diligence have discovered it
• The legislation also protects an honest purchaser
  against fraudulent concealment

9
Stopping Time Running

• Time will cease to run if the owner succeeds in
  ejecting the adverse possessor
• A new period of limitation will start to run from
  the time when the adverse possessor resumes
  possession
• Note that time does not cease to run when the
  owner merely makes a formal entry on the land or
  when he or she merely makes a verbal or written
  claim to ownership
• When a writ to recover the land is issued time
  has ceased to run as at the date of issue of the
  writ

10
Equitable Estates

• No period of limitation applies to an action by a
  beneficiary under a trust to recover from the
  trustee trust property, or the proceeds of trust
  property
• In general, the owner of an equitable estate is
  subject to the same rules as if his or her estate
  were a legal estate

11
Effect of Adverse Possession on Title

• With some exceptions, the rule is that when any
  person's right of action is barred then his or
  her title to the land is extinguished
• When the maximum period applicable has expired
  the Land Titles Office will register the adverse
  possessor as the proprietor of the estate
  acquired
• The important exceptions are
• the estate of a tenant for life, or of statutory
  owner under the Settled Land Act, is preserved so
  long as any person entitled to a beneficial
  interest in the land is not barred
• the estate held by a trustee is preserved until
  every person entitled to a beneficial interest is
  barred

12
Title to Land And Priority Between Conflicting
Interests in Land

• and an argument for law reform in Victoria

13
Recap on General Law Land

• General law land ownership was established by
  production of a chain of documents
• If valid, these established that the person
  claiming ownership had obtained the same right to
  the land as someone in the past
• Assumed to have confirmed the earlier title
  documents back to a good root of title.
• Cumbersome and expensive
• Risk of a defect was placed on the purchaser
• In Victoria, it is necessary to search back
  through the chain of title for only 30 years to
  establish a good root of title s 44 of the
  Property Law Act 1958

14
Recap on General Law Land

• Risk of a defect was placed on the purchaser
• In Victoria, it is necessary to search back
  through the chain of title for only 30 years to
  establish a good root of title s 44 of the
  Property Law Act 1958
• Reforms made in 1998 now require the conversion
  of general law (old law) land to Torrens land
  whenever there is a transaction with the title

15
Land Under the Transfer of Land Act

• The Transfer of Land Act provides a simpler,
  cheaper and more secure system to establish and
  confer ownership
• The Act sets up a system of land title and
  transfer administered by the Land Titles Office.
  The present registration of an estate or interest
  in land is guaranteed by the State in two
  respects
• what is stated on the Certificate of Title is
  upheld as conclusive evidence of the state of the
  legal title (indefeasibility of title)
• loss of a registered estate or interest through
  operation of the indefeasibility doctrine can be
  compensated through Torrens compensation scheme

16
Land Under the Transfer of Land Act

• These structural factors in Transfer of Land Act
  avoid the necessity for searching of a chain of
  title
• There is a consumer protection element what is
  stated on the Certificate of Title is taken to be
  definitive
• This reduces the risk to the purchaser
• We look a little more in detail at registration
  of title

17
Effect of Registration

• Section 40 An instrument takes effect on
  registration (equivalent to under seal) Note
  Courts have maintained the possibility of
  interests being recognised and assigned in Equity
• Section 41 A certificate of title is conclusive
  evidence of the estates and interests in land
  registered on it (typical Torrens)
• Section 42 reinforces the conclusiveness of the
  Certificate of Title, providing that interests
  registered on the certificate of title take
  priority according to the order of their
  registration except in the case of fraud

18
Effect of Registration

• Section 43 modifies the English general law
  Doctrine of Notice by providing that a person not
  involved in a fraud who deals with the registered
  proprietor is not to be concerned to investigate
  the circumstances under which the registered
  proprietor became registered. BUT, if you have
  notice of a fraud when you acquire title,
  registration will not protect you even if you are
  innocent.
• Section 44 This section is subject conflicting
  cases. Until this disagreement is resolved it is
  difficult to explain an undisputed reading of the
  section. Look at the cases in your notes for
  conflicting interpretation
• S44(1) Any folio of the Register or amendment to
  the Register procured or made by fraud shall be
  void as against any person defrauded or sought to
  be defrauded thereby and no party or privy to the
  fraud shall take any benefit therefrom
• S44(2) But nothing in this Act shall be so
  interpreted as to leave subject to an action of
  ejectment or for recovery of damages or for
  deprivation of the estate or interest in respect
  of which he is registered as proprietor any bona
  fide purchaser for valuable consideration of land
  on the ground that the proprietor through or
  under whom he claims was registered as proprietor
  through fraud or error or has derived from or
  through a person registered as proprietor through
  fraud or error and this whether such fraud or
  error consists in wrong description of the
  boundaries or of the parcels of any land or
  otherwise howsoever

19
Deferred Indefeasibility and Immediate
Indefeasibility

• The dispute about the meaning of s44 of the
  Transfer of Land Act concerns whether
  registration of an estate or interest in land,
  innocently obtained, makes that interest
• indefeasible immediately (immediate
  indefeasibility), or whether
• indefeasibility is to be deferred until the time
  when the person who innocently obtains
  registration transfers the title on to another
  innocent party (deferred indefeasibility)
• Consider the example on the next slide

20
Indefeasibility Example

• Evans title is transferred to Felicity through a
  forgery of Evans signature made by George, who
  disappears with the proceeds of sale.
• Under immediate indefeasibility, Felicity obtains
  an indefeasible title as soon as the transfer is
  registered
• Under deferred indefeasibility, the transfer is
  void for forgery (a species of fraud) and Evan
  can bring an action of ejectment against Felicity
  and have the Certificate of Title restored to his
  name

21
Indefeasibility Example

• Now suppose that before the forgery is
  discovered, Felicity sells the land to Harry and
  the transfer to her is registered
• Under immediate indefeasibility, Harry obtains an
  indefeasible title in her own right through
  registration
• Under deferred indefeasibility, Felicitys title
  obtained indefeasibility when she transferred it
  to Harry. So Harry's title cannot be challenged
  by Evan, but it would remain open to challenge by
  Felicity if there had been some fraud in the
  second transaction, regardless of Harry's
  innocence

22
Deferred Indefeasibility - Discussion

• The doctrine of deferred indefeasibility is
  complicated and illogical because title becomes
  indefeasible the moment it is assigned away
• The advantage is that the doctrine appears to get
  just results, especially when the second innocent
  interest (Felicity in our example) is a mortgage,
  the loss of which would be compensated from the
  Torrens compensations scheme, and the defrauded
  party (Evan in this example) has an emotional
  attachment to the land they have lost
• This doctrine prevailed in common law countries
  for some decades

23
Immediate Indefeasibility - Discussion

• The doctrine of immediate indefeasibility is
  simpler and logical
• The problem is that between two innocent parties
  the newcomer prevails and the person likely to
  have the deepest attachment to the land loses
• As far as Victoria is concerned, we seem to
  favour the doctrine of immediate indefeasibility
  (although not settled completely)
• It seems unfair that an innocent purchaser who
  makes all the usual searches should lose because
  of a transaction which it is impossible to
  discover, and which has probably been facilitated
  to some extent by the registered proprietor's own
  carelessness

24
Frazer v Walker

• Immediate indefeasibility
• Mr and Mrs Frazer were joint owners of a farm in
  New Zealand
• Mrs Frazer forged her husband's name on a
  mortgage of the farm to Mr and Mrs Radomski as
  security for a loan of 3000
• No principal or interest was repaid under the
  loan
• Mr and Mrs Radomski exercised their power of sale
  as mortgagees
• Mr Walker bought the property
• Mr Fraser took legal action to recover the land
• The Privy Council decided that Mr and Mrs
  Radomski acquired an indefeasible title to their
  mortgage as soon as it was registere
• Mr Walker also acquired indefeasible title to the
  fee simple estate he purchased from the
  Radomskis when they exercised their mortgagees
  power sale, and the transfer was registered

25
Breskvar v Wall

• Immediate indefeasibility was adopted by the High
  Court of Australia in Breskvar v Wall in 1971
• Mr and Mrs Breskvar left a signed blank transfer
  of land with their solicitor as security for a
  loan
• He inserted the name of his grandson, Wall, and
  had it registered
• Wall then sold the land to Alban Pty Ltd
• After Alban Pty Ltd had paid the purchase price,
  but before it lodged the transaction for
  registration, the Breskvars lodged a Caveat
• The High Court adopted the doctrine of immediate
  indefeasibility, so the solicitors grandson Wall
  could create a valid transaction with Alban Pty
  Ltd
• Between the unregistered interest of the
  Breskvars and the unregistered interest of Alban
  Pty Ltd it decided in favour of Alban
• Although the Breskvars were first in time, they
  had been less than prudent in their transaction
  with their solicitor

26
Deferred Indefeasibility more just?

• The doctrine of deferred indefeasibility seems to
  deliver just results, especially when the
  newcomer is a mortgagee
• Chasfild Pty Ltd v Taranto
• Mr and Mrs Taranto wished to borrow 10,000 at
  low interest from a reliable and conventional
  bank with a view to investing it elsewhere at
  higher rates
• They offered their home as security, but through
  a string of frauds and forgeries by a finance
  broker and a solicitor, and apparently their son,
  it was mortgaged for 100,000 - far more than
  they had approved
• The transaction collapsed and the mortgagee sued
  for possession of the land in order to sell it
  under the mortgagee's power of sale
• Under the doctrine of immediate indefeasibility,
  the bank would clearly prevail
• But under the doctrine of deferred
  indefeasibility the Tarantos were able to keep
  their home and the mortgagee had to apply for
  compensation
• This makes sense because a mortgagee is really
  only interested in the money

27
The Compensation Provisions

• The Transfer of land Act assiste parties who
  suffer loss through amendment of the register
• A person aggrieved may apply to the Registrar of
  Titles to be compensated for a loss
• If compensation is refused, the applicant may
  commence legal action against the Registrar
• Indemnity is not payable where the claimant or an
  agent has substantially contributed to the loss,
  or where valuable consideration was not paid
• Note particularly that claimant/agent are not
  liable for losses occasioned by a breach of trust
• A surveyor would usually be classified as an agent

28
Indefeasibility could be avoided if

• The conflicts at the heart of most
  indefeasibility cases would not have arisen if
  the following were followed (an argument for
  reform)
• caveats should be lodged as a matter of course to
  protect unregistered transactions
• the parties to a transaction should attend in
  person before a solicitor to settle the
  transaction the parties should have to identify
  themselves and show that they understand the
  nature of their transaction in the process
• a doctrine of unjust enrichment should be
  available to obtain compensation for a party
  deprived of an unregistered interest from the
  party who obtained the benefit of it without a
  legal reason
• an efficient cadastre of non-title information
  about land, linked to accurate title plans which
  actually fit with neighbouring parcels,
  providing sound information about different
  interests in land, and where possible the
  paramount interests

29
Question

• Norma worked hard and saved for many years to
  buy a ten pin bowling alley business, in which
  sport she was a well known champion. Norma
  noticed one being sold by Fair Play Bank at a
  mortgagee's sale.
• Norma's solicitor searched the title, planning
  schemes and certificates, rates, land tax and so
  on. Everything pointed to what the Certificate
  of Title stated -the land on which the Bowling
  Alley stood was owned in legal fee simple by
  Pauls Ten Pins Pty Ltd, subject to a registered
  legal mortgage in favour of Fair Play Bank.
  Normas solicitor again checked everything and
  decided to complete the transaction. Norma paid
  over all of her money and the Transfer of Land
  was registered in her name.
• One day a man walked into the Bowling Alley,
  introduced himself as Paul Pins and started
  explaining in a very loud voice how successful
  his world bowling tour had been. It appeared
  that Paul left the Bowling Alley (then not
  subject to a mortgage) in the care of a man who
  happened to be bowling the day when Paul left on
  his tour a year beforehand. For good measure
  Paul left the duplicate Certificate of Title, a
  signed blank mortgage, and other documents with
  the bowler in case he had to raise some money in
  an emergency, and to operate the bank accounts.
  The bowler mortgaged the land to Fair Play Bank
  and disappeared with the money thus raised. Not
  a cent was ever repaid to the Bank.
• Is Normas title secure? What was the position
  of the mortgage in favor of Fair Play Bank? Is
  there somewhere that Paul Pins could at least
  seek compensation?