Old System Priorities:

1
Old System Priorities

• Assoc Prof Cameron Stewart

2
Registration Systems

• Problems with fraudulent transactions in the
  early colony
• 1800 order of Governor King that all agreements
  concerning land be in writing or entered into
  books kept at Sydney, Parramatta and Hawkesbury
• 1802 Judge Advocates office
• 1817- Gov Macquarie Fraudulent against a bona
  fide purchaser for value
• 1825 Registration Act substantially amended
  over time and then repealed in 1984 and sections
  transferred into the Conveyancing Act

3
Conveyancing Act and the Register of Deeds

• Section 184C general register of deeds
• Open to public inspection s 199
• Deliver original and copy to the Registrar
  registered with a number copy kept on file
• Any instrument affecting land or not can be
  registered not necessarily a deed as such

4
The effect of registration?

• Validity of the document some instruments must
  be registered to have legal force eg short form
  of mortgage discharge, appointment of new
  trustee, powers of attorney
• Registration for priority s 184G instruments
  affecting land, executed bona fide and for
  valuable consideration take priority over earlier
  instruments
• Effect earlier legal interest will be defeated
  by later legal interest upon registration of
  later interest and so on
• However it only affects priority will not
  perfect a fraudulent transaction, mistake or
  forgery

5
Important factors to consider

• (a) Competing instruments must have an
  instrument to register and then it only concerns
  instruments in writing if no instrument then
  the normal priority rules apply eg a short term
  lease without writing, competing with a legal
  registered interest eg a sale to a third party
  the registration wont give the later legal
  interest priority

6
Important factors to consider

• (a) Competing instruments Another eg -
  equitable mortgage by deposit of title deeds
  created without writing not defeated by a later
  registered instrument
• Section 184 confers priority only in cases of
  competition that is if the interests are
  compatible no priority is afforded

7
Scholes v Blunt

• In Scholes v Blunt (1917) 17 SR (NSW) 36, A
  conferred an easement on B by means of an
  unregistered instrument. A then sold the land to
  C subject to all easements, if any, affecting
  the same. C registered his instrument first.
  Because the instruments could stand together, s.
  184G did not apply and C took the land subject to
  Bs easement.

8
Boyce

• Boyce v Beckman, in 1834 the Crown granted a
  parcel of land to ODonnell. In 1841 Sparke
  acquired the fee simple in the land. In 1845
  Sparke conveyed the land to Boyce by deed. The
  land was described by reference to a number of
  lots relating to a plan. On 1 January 1852 Sparke
  executed a second deed of conveyance to Turner in
  which the land was described as including all
  and any other lots forming a portion of the said
  grant to ODonnell to which Sparke is
  entitled. The conveyance to Turner was
  registered first. The issue in the case was
  whether this registration gave the second
  conveyance priority over the first.

9

• The Court ruled that it did. The result depended
  upon finding that the two conveyances were
  competing. It could have been argued that there
  was no inconsistency in that the latter general
  description of the land meant that Sparke was
  only conveying that land to which he was entitled
  at the time of the second conveyance, ie. the
  land he acquired in 1841 less the land he
  conveyed to Boyce in 1845. On this basis the two
  conveyances executed by Sparke would not be
  competing instruments. However, the Court ruled
  otherwise

10

• Innes J, at 146, said
•  
• Such words, then as lands to which I am
  entitled, when used by a vendor, must be held to
  mean such lands as I possess and am entitled to,
  whether included in any previous conveyance by me
  or not, if that conveyance remains unregistered,
  and cannot be held to except lands previously
  conveyed by him, so long as that conveyance
  remains unregistered. To hold otherwise would, in
  our opinion, be to defeat the very object of the
  Act.
•  
• The significance of this case is that although
  registration does not confer title upon the
  purchaser on an interest in old system title
  land, in some cases the failure to register
  results in the loss of title to land. Boyce
  should have registered his conveyance to preserve
  and protect his title. The lesson of this case is
  to register instruments by which interests in old
  system land are acquired.

11
Important factors to consider

• Registration can make effective instruments
  which may not have had any legal effect under
  priority rules eg A sells land to B but then
  sells land to C
• Under the nemo dat principle C would take no
  interest however if C registers before B, C
  will be given priority eg defeats Bs
  interest

12
Important factors to consider

• Bona fides on the part of the person taking the
  interest notice is enough for there to be an
  absence of bona fides actual, constructive or
  implied
• Eg if a purchaser takes interest with notice
  that someone other than the vendor is in
  possession of the property and fails to make
  proper enquiries is said to be notified and will
  not gain priority in registration

13
Important factors to consider

• The onus of proving good faith is upon the person
  asserting priority based upon registration of his
  or her instrument Jones v Collins (1891) 12 LR
  (NSW) (L) 247 at 250.
• The most significant example of a lack of good
  faith for the purposes of the legislation is a
  where a person takes an interest with notice of a
  prior interest in the land. Notice includes
  actual, constructive or imputed notice s.164,
  Conveyancing Act 1919.

14
Marsden

• In Marsden v Campbell (1897) 18 LR (NSW) Eq 33,
  Campbell leased land to Marsden in 1888 for a
  fifteen year term. The lease was not registered.
  In 1893 Campbell conveyed the land to Byrnes,
  with the deed of conveyance being registered. At
  the time Byrnes took the conveyance he knew that
  Marsden had been in possession of the land for 5
  years and that he was running sheep on the land.
  Byrnes contended that his registration gave him
  priority over Marsdens lease. The Court ruled
  against Byrnes, stating that he could not rely on
  s. 184G because of a lack of good faith on his
  part.

15
Marsden

• Simpson J, at 38, said
•  
• I must hold that the defendant Byrnes knew that
  Marsden had some interest in the land, and that
  he was content to run the risk of what this
  interest might be. In this case Byrnes knew
  that an interest in the land comprised in his
  transfer was outstanding to Marsden, and he
  made no enquiry. I must, therefore, hold that the
  lease to Marsden takes priority over the
  transfer to Byrnes.

16
Important factors to consider

• When does notice have to have occurred? Before
  execution of the instrument and not the
  registration
• S 164 CA actual constructive and imputed
• Constructive notice if an interest is registered

17
Important factors to consider

• The crucial issue concerning notice relates to
  the question of timing. Notice received before
  the execution of the instrument upon which
  priority by registration is based precludes
  priority based upon registration of that
  instrument Scholes v Blunt (1917) 17 SR (NSW)
  36.
• Notice received after execution of the instrument
  but before its registration does not preclude
  priority based upon registration of that
  instrument Burrows v Crimp (1887) LR (NSW) (L)
  198 at 210.

18
Important factors to consider

• (d) Valuable consideration must not be nominal
  but may be inadequate (eg much lower than market
  value) S 184G(1) includes marriage
• Thus, in Bullen v a'Beckett (1863) 15 ER 684, a
  conveyance for 10 shillings was held to be for
  nominal consideration and thus not entitled to
  the benefits of the legislation.

19
Important factors to consider

• An interest acquired for no or nominal
  consideration should nevertheless be registered
  because such registration will preserve the
  interest holder's priority against interests in
  the land created after registration. For example,
  if A acquires an interest in land for nominal
  consideration and registers it, he or she will
  not be able to claim priority by registration.
  However, if after A's registration B, for
  valuable consideration, acquires an interest in
  the same land, B will not be able to assert
  priority over A by registering his or her
  interest. This is because B's interest will have
  been acquired with notice of A's interest and
  thus B will have failed to satisfy the
  legislative requirement of good faith. Any
  priority dispute between A and B will therefore
  be determined by the general law rules relating
  to priority disputes.

20
Fraud

• Unlike with the Torrens system, registration does
  not make the forgery operative Re Cooper Cooper
  v Vesey (1882) 20 Ch D 611.
•  
• In Re Cooper, Thomas Cooper in his will appointed
  his son of the same name one of his executors and
  trustees. The father died. The son had possession
  of the title deeds to land. The son concealed the
  fact of his fathers death and without the
  consent of the other executors and trustees,
  mortgaged the land, representing the mortgage to
  be one from his (deceased) father. The mortgagee
  registered the mortgage. The other executors and
  trustees, upon discovering the facts, sought
  recovery of the title deeds and a declaration
  that the mortgage was of no effect. The Court
  held in favour of the executors. The mortgage was
  a forgery and the mortgagee could not rely on
  forged documents. Registration under s. 184G did
  not in any way alter this fact

21
Efficacy

• In Fuller v Goodwin (1865) 4 SCR (NSW) 66,
  Stephen CJ said
•  
• Registration is, at any rate not necessary to
  give efficacy to the deed. It appears clearly to
  us, that, in favour of an innocent taker for
  value who registers his deed, the statute confers
  on the conveying party, notwithstanding his
  previous inconsistent conveyance, a title as
  against the transferee named therein and thus
  enables the person secondly taking, immediately
  upon registration, to acquire that title.

22
Problems with the deed registration system

• Improved level of knowledge
• Offered greater degree of protection
• But
• Did not grant a total security of interest
• Purchasers took subject to unregistered interests
  which have not been documented
• Purchasers take subject to unregistered
  instruments which they ought to have discovered
• Purchasers title is still dependant on the chain
  of title and the risk that a prior interest may
  be invalidated breaking the chain of title and
  destroying the purchasers interest