Breskvar v Wall
126 CLR 376(1971) 46 ALJR 68
[1972] ALR 205
(Judgment by: Menzies J)
Breskvar
vWall
Judges:
Barwick CJ
McTiernan J
Menzies J
Windeyer J
Owen J
Walsh J
Gibbs J
Subject References:
Real Property (Q.)
Torrens System
Indefeasibility of title
Exceptions
Fraud
Protection of purchasers from registered proprietor
Dealing with registered proprietor
Void instrument of transfer
Equities and unregistered interests
Priorities
Statutory invalidity of instrument executed without insertion of name of purchaser or transferee
The Real Property Act, 1861 to 1963 (Q.), ss. 33, 43, 44
The Real Property Act of 1877 (Q.), s. 48
The Stamp Act of 1894 (Q.), s. 53 (5)
The Real Property Act, 1861 to 1963 (Q.), ss. 33, 43, 44
The Real Property Act of 1877 (Q.), s. 48
The Stamp Act of 1894 (Q.), s. 53 (5).
Equity
Priority and notice
Priority generally
Legislative References:
Section 85 of the Land Transfer Act 1952 (N.Z.) - 44 (2); 183
Transfer of Land Act 1915 (Vict.) - 179
Case References:
Assets Co. Ltd. v. Mere Roihi - [1905] AC 176
Frazer v. Walker - [1967] 1 AC 569
Boyd v. Mayor,
&
c., of Wellington - (1924) NZLR 1174
Clements v. Ellis - [1934] HCA 18; 51 CLR 217
Mayer v. Coe - (1968) 88 WN (Pt 1) (NSW) 549
Ratcliffe v. Watters - (1969) 2 NSWR 146
Barry v. Heider - [1914] HCA 79; 19 CLR 197
Great West Permanent Loan Co. v. Friesen - (1925) AC 208
Rice v. Rice - (1854) 2 Drew 73 (61 ER 646)
Shropshire Union Railways
&
Canal Co. v. The Queen - (1875) LR 7 HL 496
Lapin v. Abigail - [1930] HCA 6; 44 CLR 166
Abigail v. Lapin - [1934] HCA 20; (1934) AC 491; 51 CLR 58
J.
&
H. Just (Holdings) Pty. Ltd. v. Bank of New South Wales - [1971] HCA 57; 125 CLR 546
Barry v. Heider - [1914] HCA 79; 19 CLR 197
Shaw v. Foster per Lord Cairns - (1872) LR 5 HL 321
Latec Investments Ltd. v. Hotel Terrigal Pty. Ltd. - [1965] HCA 17; 113 CLR 265
Caldwell v. Rural Bank of New South Wales - (1951) 53 SR (NSW) 415
Davies v. Ryan - (1951) VLR 283
Gibbs v. Messer - (1891) AC 248
Butler v. Fairclough - [1917] HCA 9; 23 CLR 78
Judgment date: 13 December 1971
Sydney
Judgment by:
Menzies J
The issue between the appellants and the respondent, Alban Pty. Ltd., which is the only issue with which this Court is concerned, is one between two persons, neither of whom is the registered proprietor, as to which of them should become the registered proprietor of the land described in certificate of title vol. 3730 fol. 104. The land is subject to The Real Property Acts, 1861 to 1963 (Q.). (at p394)
2. The claim of the appellants is, firstly, that they were the registered proprietors of the land up to 15th October 1968, and remained thereafter as registered proprietors in law, notwithstanding the registration, on 15th October 1968, of a transfer which they had, on 5th March 1968, signed in blank. This transfer was given, with the duplicate certificate of title, to afford security for a loan from one Petrie. It was, in fraud of them, registered in the name of Wall after his name had, in September 1968, been put into the transfer by Petrie to cheat the appellants out of their land. The learned trial judge found the fraud and found that Wall was a party to it. His Honour said (1972) QdR, at pp 30-31 :
"I find that in transferring the land to Wall and selling it in the way he did Petrie acted fraudulently in that he was attempting to cheat the plaintiffs out of the major part of their interest in the land. He was guilty of moral turpitude. His fraud was of the relevant kind under The Real Property Acts. (See Latec Investments Ltd. v. Hotel Terrigal Pty. Ltd. [1965] HCA 17; (1965) 113 CLR 265 , at pp273, 274 .) But he was an old man born on 24th March 1888 who succumbed to temptation. In the witness box he showed himself to be partially deaf and not very mentally alert. I find that throughout he was acting as the agent of Wall and of his wife and that Wall is affected by his fraud." (at p394)
3. Alternatively to the claim that they have remained as registered proprietors after 15th October 1968, the appellants claim that they are entitled to registration in place of Wall by virtue of their equitable right to become registered proprietors again. (at p394)
4. Before going further it is necessary to refer to an unusual provision, namely s. 53 (5) of The Stamp Acts (Q.) which is, so far as is relevant, in these terms :
"(5) No instrument of conveyance or transfer executed on or after the first day of November, one thousand nine hundred and eighteen, of any estate or interest in any property whatsoever shall be valid, either at law or in equity, unless the name of the purchaser or transferee is written therein in ink at the time of the execution thereof. Any such instrument so made shall be absolutely void and inoperative, and shall in no case be made available by the insertion of a name or any other particulars afterwards. Moreover, for any breach of this subsection a penalty not exceeding twenty pounds shall be incurred by each party executing the instrument." (at p395)
5. It is apparent, therefore, that there are two objections to whatever title Wall has. The first is that it was obtained illegally by the use of an invalid instrument made in breach of s. 53 (5) of The Stamp Acts ; the second is that it was obtained by his own fraud. The appellants can, I have no doubt, displace Wall's title. To succeed, however, at the expense of Alban Pty. Ltd., they must go further than they have to go against Wall. They must show either that Wall had no title at all, or, that their claim is to be preferred to that of Alban Pty. Ltd. (at p395)
6. The claim of Alban Pty. Ltd. is that it holds a transfer from Wall to carry out a purchase of the land, made for valuable consideration by Alban Pty. Ltd. from Wall, and made, so far as Alban Pty. Ltd. was concerned, in good faith, without notice of any rights of the appellants. Their rights came to the notice of Alban Pty. Ltd. only when a caveat to prevent the registration of the transfer to it by Wall had been lodged. The learned trial judge found that Alban Pty. Ltd. was a purchaser in good faith and for valuable consideration without notice of the appellants' rights. (at p395)
7. In support of their claim that Wall is not the registered proprietor, the appellants call in aid certain passages from the judgment of Dixon J. in Clements v. Ellis [1934] HCA 18; (1934) 51 CLR 217 . His Honour cited a passage (1934) 51 CLR, at p258 from the dissenting judgment of Salmond J. in Boyd v. Mayor, & c., of Wellington which concluded as follows (1924) NZLR 1174, at p 1205 :
"The registered title of A cannot pass to B except by the registration against A's title of a valid and operative instrument of transfer. It cannot pass by registration alone without a valid instrument, any more than it can pass by a valid instrument alone without registration." His Honour stated that this appeared to him as an admirable statement of the true position. For himself, his Honour said (1934) 51 CLR, at p 237 : "The principle, in my opinion, is that a prior registered estate or interest, for the removal of which from the register there is no authority but a forged or void instrument, is not destroyed unless afterwards a person, who, according to the existing condition of the register is entitled to do so, gives a registrable instrument which is taken bona fide for value and registered. The justification for destroying an existing legal estate or interest, which has already been duly established upon the register, is, in other words, found only in the necessity of protecting those who subsequently deal in good faith and for value in a manner, which, upon its face, the register appears to authorize, and who then obtains registration." (at p396)
8. Clements v. Ellis [1934] HCA 18; (1934) 51 CLR 217 was a case decided under the Transfer of Land Act (Vict.) but the provisions of The Real Property Act (Q.) are, with one exception to which I will refer later, substantially the same. What Dixon J. said has been followed in New South Wales and in Victoria : Caldwell v. Rural Bank of New South Wales (1951) 53 SR (NSW) 415 and Davies v. Ryan (1951) VLR 283 . (at p396)
9. Since these decisions, however, the Privy Council has decided Frazer v. Walker (1967) 1 AC 569 . In their opinion in this case their Lordships made no reference to Clements v. Ellis [1934] HCA 18; (1934) 51 CLR 217 , although it had been cited, but they did apply the decision of the majority in Boyd's Case (1924) NZLR 1174 , preferring the judgment of the majority to the dissenting judgments of Springer and Salmond JJ. (at p396)
10. Their Lordships said (1967) 1 AC, at p 584 :
"They consider that Boyd's Case (1924) NZLR 1174 was rightly decided and that the ratio of the decision applies as regards titles derived from registration of void instruments generally. As regards all such instruments it established that registration is effective to vest and to divest title and to protect the registered proprietor against adverse claims."
It is important, however, to observe what their Lordships meant by the words "all such instruments" in the passage which I have just cited. They meant void instruments whereby the name of the person had been registered without fraud in respect of an estate or interest. This appears clearly from the reference to Assets Co. Ltd. v. Mere Roihi (1905) AC 176 on the preceding page (1967) 1 AC, at p 583 , and from the statement (1967) 1 AC, at p 584 that the main relevant difference between the majority and the minority in Boyd's Case (1924) NZLR 1174 was whether the Mere Roihi Case (1905) AC 176 established "the indefeasibility of title of a registered proprietor who acquired his interest under a void instrument, or whether it is only a bona fide purchaser from such a proprietor whose title is indefeasible". (at p396)
11. Frazer v. Walker (1967) 1 AC 569 was not a case of conflict between unregistered interests. In that case mortgagees, who had registered a mortgage from registered proprietors to which one signature was a forgery, sold the land under their power of sale to a purchaser who was duly registered as proprietor. The only fraud in the case was that of one of the registered proprietors who forged the name of her husband, a co-proprietor with her. Her fraud afforded no statutory basis for impeaching the title of the mortgagees when they were registered, or, of the registered proprietor from them. Both the mortgagees and the registered proprietor acted in good faith and without knowledge of the forgery. The decision in Frazer v. Walker (1967) 1 AC 569 cannot, therefore, govern this case. Indeed, one may perhaps be excused from wondering how the former registered proprietor, who suffered from his wife's forgery, could ever have hoped to succeed against the newly registered proprietor who took a transfer from registered mortgagees. The problem of competition for registration never arose in that case. Indeed, it is a case which would have fallen fairly and squarely within the statement of Dixon J. in Clements v. Ellis [1934] HCA 18; (1934) 51 CLR 217 , at p 237 cited previously. (at p397)
12. Nevertheless, Frazer v. Walker (1967) 1 AC 569 is important here in establishing that, if and to the extent that earlier decisions were to the effect that an indefeasible title cannot be acquired by the registration of a void instrument, they have lost their authority. It must now be recognized that, in the absence of fraud on the part of a transferee, or some other statutory ground of exception, an indefeasible title can be acquired by virtue of a void transfer. It seems to me to follow that, where there is fraud or one of the other statutory exceptions to indefeasibility, a transferee does, by registration of a void transfer, obtain a defeasible title. (at p397)
13. In this case, as I have already indicated, Wall, although he became registered proprietor, clearly enough did not obtain an indefeasible title. He obtained registration by the fraudulent use of an invalid instrument. It is the significance of his becoming registered in these circumstances that matters here. (at p397)
14. The first critical question which I pose is, therefore, whether, when Wall became registered as proprietor of the land, the appellants ceased to be the registered proprietors. With the guidance of Frazer v. Walker (1967) 1 AC 569 about the effect of the registration of void instruments, I have reached the conclusion that they did, and I think so regardless of whether the transfer was invalid by virtue of s. 53 (5) of The Stamp Acts, or, that, by reason of fraud, the title acquired was defeasible. The registration was of an instrument executed by the appellants as registered proprietors, albeit in breach of law, and, upon its registration, they ceased to be registered proprietors. (at p398)
15. This is not a case where it is possible to apply Gibbs v. Messer (1891) AC 248 where, as the Privy Council has explained, there was no real registered proprietor at all but only a fictitious person. After the registration of Wall as registered proprietor the appellants' rights were no longer those of registered proprietors but were simply to impeach the defeasible title which Wall had obtained by that registration. Furthermore, as I read s. 53 (5) of The Stamp Acts, the breach of law seems to lie in the execution of the instrument and not in its use. I therefore reserve any question arising out of the illegal use of an instrument to obtain registration in the name of the law breaker. Frazer v. Walker (1967) 1 AC 569 was not concerned with illegality on the part of those becoming registered. (at p398)
16. This brings me to what I regard as the second critical question, namely, whether the appellants' claim in equity to registration, which is earlier in time than the claim of Alban Pty. Ltd., should nevertheless be postponed to its claim. (at p398)
17. It is at this point that I think that s. 53 (5) of The Stamp Acts does introduce an element not to be found in earlier cases where earlier claims of an equitable character have been postponed to later claims. Such cases are Butler v. Fairclough [1917] HCA 9; (1917) 23 CLR 78 and Abigail v. Lapin [1934] HCA 20; (1934) AC 491; (1934) 51 CLR 58 . What this section says is that no transfer signed in blank "shall be valid either in law or in equity". If, therefore, Alban Pty. Ltd. has to depend in any way upon that transfer to maintain the rights which it asserts, it must fail. That transfer cannot, in the face of the statute, be regarded as a good source of equitable rights. What Alban Pty. Ltd. holds, however, is a transfer from the registered proprietor, albeit a registered proprietor with a defeasible title, and it is necessary to determine what rights it has solely as such transferee. (at p398)
18. Whatever may be the position in other cases, it seems to me that in this case that question is resolved by a particular enactment which is not to be found generally in state legislation establishing the Torrens system. This enactment is s. 48 of The Real Property Act of 1877. It is as follows:
"48. Unregistered instrument to confer claim to registration. Every instrument signed by a proprietor or by others claiming through or under him purporting to pass an estate or interest in or security upon land for the registration of which provision is made by this Act shall until registered be deemed to confer upon the person intended to take under such instrument or other person claiming through or under him a right or claim to the registration of such estate interest or security . . . "
Wall, as I have already decided, was " a proprietor" and by virtue of the section, therefore, Alban Pty. Ltd. has a right or claim to the registration of the estate which the transfer purports to pass. (at p399)
19. Accordingly, there are conflicting claims to be registered in place of Wall and the final problem is which is to be preferred. The authorities already cited establish that the appellants' right or claim should, in the absence of a good ground for distinguishing them, be postponed and it becomes necessary to determine whether The Stamp Acts, s. 53 (5), affords any such ground for distinction. By reason of the section it is apparent that what the appellants signed was not an effective transfer. It was a document without effect in law or in equity and no registration should have been based upon it. By giving it to Petrie the appellants did not put him in possession of an effective instrument of transfer. The blank transfer, however, with no effect in law or in equity, once it had been wrongly filled in and lodged with the certificate of title, became the means whereby Wall was able to become registered proprietor and to deal with Alban Pty. Ltd. as such. Upon the authorities cited, this, I think, is enough to require the postponement of the appellants' right or claim to that of Alban Pty. Ltd. They did not put Petrie or Wall in a position to have Wall lawfully registered as proprietor. Nevertheless, in executing the transfer in blank they were in breach of The Stamp Acts, s. 53 (5), and it was their breach of the law that enabled Wall, in disregard of the section, to become registered as proprietor. (at p399)
20. The learned trial judge decided that the claim of the appellants must be postponed to that of Alban Pty. Ltd. and I would, for the reasons which I have given, dismiss this appeal from his judgment. (at p399)