Breskvar v Wall

was decided on the basis that Breskvar, the holder of the earlier equitable interest, had armed Petrie, the fraudulent solicitor, with the capacity to create the subsequent interest and was therefore postponed. The right to set aside for fraud was construed on its fullest basis (equitable interest) but the issue of whether it was a mere equity or an equitable interest was not directly decided. (1971) HCA: Facts The Breskvars are registered proprietors of Torrens land in Queensland In March 1968, they execute a memorandum of transfer for $1200, but leave the name of the transferee blank A blank transfer is absolutely void and inoperative according to s 53(5) of the Stamp Act 1894 (Qld) In September 1968, Petrie took possession of the transfer and inserted the name of his grandson, Wall, into the blank space Breskvar registered the transfer In October 1968, Wall contracted to sell the land to Alban Pty Ltd In November 1968, this transfer occurred; Alban was a bona fide purchaser for value without notice of the Breskvars interest or the fraud that had taken place In December 1968, the Breskvars discover Walls registration and lodge a caveat preventing further dealings In January 1969, Alban lodges its transfer for registration but registration cannot proceed because of the caveat The Breskvars seek a declaration that the memorandum of transfer of march 1968 was void and ineffective to transfer title to Wall The trial judge finds that Wall and Petris conduct is fraudulent - The Breskvars therefore had a mere equity (Kitto and Menzies JJ in Latec) to set aside the sale to Wall for fraud - Meanwhile, Alban has an equitable interest in completion of the sale and registration of the transfer Issue Which should take priority out of a prior mere equity and a later equitable interest? Reasoning Note: - The conduct of the Breskvars (first in time holders) was conceived of as postponing conduct in terms of reasonable foreseeability - The Breskvars did caveat upon their discovery that Wall had become registered proprietor but after Wall had contracted to sell to Alban: this gave rise to the subsequent equitable interest

Barwick CJ: - There is thus a competition between the respective interests of the [Breskvars] and of [Alban] to be resolved on equitable principles - Applies Abigail v Lapin test to conclude that the Breskvars armed Petri, the solicitor, and therefore lose priority: o The creation of the [Breskvars] interest is prior in point of time. It arose at the time [Wall] became the registered proprietor. o The priority of the creation of that right will only be lost by some conduct on the part of the [Breskvars] which must have contributed to the assumption, false as the event proved, upon which the holder of the competing equity acted when that equity was created. here the [Breskvars] armed [Petri] with the means of placing himself or his nominee on the register. They executed a memorandum of transfer, without inserting therein the name of a purchaser; they handed over the relevant duplicate certificate of title and they authorised [Petri], if occasion arose for the exercise of his powers as a mortgagee, to complete and register the memorandum of transfer. o The [Breskvars] therefore lose the priority to which the prior creation of their interest in the land would otherwise have entitled them. o the right of the appellants to recover their land from the first respondent should be postponed to the equitable interest therein of the third respondent as a purchaser bona fide for value and without notice. - The case becomes one of an agent exceeding the limits of his authority but acting within its apparent indicia. - The effect of a caveat o Not considered important or relevant, since priority is decided on other grounds o Barwick CJ repeats the views his Honour expressed in Just : a failure to caveat is not to be regarded as of itself a reason for loss of priority In some circumstances failure to caveat in association with other conduct may lead to loss of priority - A majority of Justices did not definitively decide whether the Breskvars right to have the transaction set aside for fraud was a mere equity or an equitable interest o Barwick CJ gave the right its fullest possible interpretation (equitable interest); since even this was insufficient, their claim was bound to fail regardless of the classification adopted Walsh J: - It is not necessary to enter into the question whether [the] appellants should be regarded as having an equitable estate or interest in land or as having a mere equity as distinguished from an equitable estate. I am of the opinion that if it is assumed that [the] appellants had [an] equitable estate after [the] transfer [was] registered, that interest is not entitled to priority over the interest Alban acquired in the land.

- Thus, the prior interest of the defrauded mortgagor lost priority because the Breskvars armed Petrie (this was postponing conduct), not because the interest was treated as a mere equity Menzies J: - Wall did not obtain an indefeasible title because the registration was procured by fraud - However, Wall was still registered as proprietor by means of the registration of the transfer instrument - 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] 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]. 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 [Act], and it was their breach of the law that enabled Wall to become registered proprietor

Cases referred to Breskvar v Wall

Perpetual Trustees Victoria Ltd v Van den Heuvel [2009] NSWSC 57 [89] The plaintiff submitted that although there are occasional references in the authorities to the proposition that registration of the mortgage validates some parts of the mortgage (see for example PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 at 679B per Giles J) strictly there is no validation as such, but rather there is a statutory scheme provided by the Real Property Act which scheme has the effect of conferring an estate or interest in land on the mortgagee. The plaintiff cited what was said by Barwick CJ in Breskvar v Wall at 385.9 that: The Torrens system of registered title of which the Act is a form is not a system of registration of title but a system of title by registration. Mr Leopold contended that while the plaintiff has an enforceable estate or interest in the property deriving from the registration of the mortgage, the mortgage which is at common law null and void for all purposes did not become a contract upon registration. [90] In my opinion, this submission should be accepted. As was said by Barwick CJ in Breskvar v Wall at 386: It is the title which registration itself has vested in the proprietor. Consequently, a registration which results from a void instrument is effective according to the terms of the registration. It matters not what the cause or reason for which the instrument is void.

Khan as Trustee for Khan Family Trust v Hadid (No 2) [2008] NSWSC 119 [109] In Breskvar v Wall [1971] HCA 70 ; (1971) 126 CLR 376 at 384385, Barwick CJ said: These sections are to my mind central to the Torrens system of title by registration: they make the certificate conclusive evidence of its particulars and protect the registered proprietor against actions to recover the land, except in the specifically described cases. Section 44 complements these provisions by providing that the registered proprietor holds the land absolutely free from all unregistered interests except (a) in the case of fraud which means except in the case that the registration as proprietor was obtained by the proprietors own fraud see Assets Co Ltd v Mere Roihi; Thus, except in and for the purposes of such excepted proceedings, the conclusiveness of the certificate of title is definitive of the title of the registered proprietor. That is to say, in the jargon which has had currency, there is immediate indefeasibility of title by the registration of the proprietor named in the register. The stated exceptions to the prohibition on actions for recovery of land against a registered proprietor do not mean that that indefeasibility is not effective. It is really no impairment of the conclusiveness of the register that the proprietor remains liable to one of the excepted actions any more than his liability for personal equities derogates from that conclusiveness. So long as the certificate is unamended it is conclusive and of course when amended it is conclusive of the new particulars it contains. [110] Thus, with fraud being the only possible relevant exception, it is clearly established that immediately upon registration of an interest, the registered interest holder obtains good title. Hillpalm Pty Ltd v Heaven's Door Pty Ltd [2004] HCA 59 [52] As Barwick CJ said in Breskvar v Wall20.: The Torrens system of registered title is not a system of registration of title but a system of title by registration. That which the certificate of title describes is not the title which the registered proprietor formerly had, or which but for registration would have had. The title it certifies is not historical or derivative. It is the title which registration itself has vested in the proprietor. (emphasis added) It follows that, when the appellant became registered as proprietor of an estate in fee simple in the appellant's land, it obtained the title described in the certificate of title. That title was free from any encumbrance or interest of the kind which the respondent contends it is now entitled to have created.

Cases applied in the case

Frazer v Walker [1967] 1 All ER 649; Mayer v Coe [1968] 2 NSWR 747 Abigail v Lapin (1934) 51 CLR 58 The respondent in that case had no claim in personam against the appellant and did not otherwise fall within the category of those who might successfully claim the land from the registered proprietor. As is pointed out in Frazer v Walker (1967) 1 AC 569, at p 586 a claim such as that made in Clements v Ellis (1934) 51 CLR 217 is a claim to the land for the purpose of the Torrens system. A person in the position of that appellant had no need to call in aid s 179 of the Transfer of Land Act 1915 (Vic) or its counterpart in the legislation of another "Torrens" Act. He was a registered proprietor: he was not merely in the situation of a person contracting or dealing with or taking or proposing to take a transfer from a registered proprietor nor did he need to rely on having dealt with a registered proprietor. It is unnecessary for the resolution of the present case to discuss the function in a Torrens system of such provisions as s 179. It follows in my opinion from Frazer v Walker (1967) 1 AC 569 that Clements v Ellis (1934) 51 CLR 217 was not correctly decided. Further in my opinion, Mayer v Coe (1968) 88 WN (Pt 1) (NSW) 549 and Ratcliffe v Watters (1969) 2 NSWR 146 correctly applied Frazer v Walker (1967) 1 AC 569. It seems to me that the actual decision of their Lordships in Abigail v Lapin (1934) AC 491; (1934) 51 CLR 58 governs this case. Here, as there, it can properly be said that "the case. . . becomes one of an agent exceeding the limitohs of his authority but acting within its apparent indicia": see (1934) AC 491, at p 508; (1934) 51 CLR 58, at p 72 and the cases there cited. The appellants therefore lose the priority to which the prior creation of their interest in the land would otherwise have entitled them.

Legislation considered by this case

Real Property Act 1861 (Qld) s 33, s 43, s 109, s 123, s 124, s 125, s 126, s 44, s 96 Real Property Act 1877 (Qld) s 48 Stamp Act 1894 (Qld) s 53, s 53(5)