Reverberations in the Torrens system: a new Land Transfer Act in New Zealand

Elizabeth Toomey (Faculty of Law, University of Canterbury, Christchurch, New Zealand)

Journal of Property, Planning and Environmental Law

ISSN: 2514-9407

Article publication date: 14 May 2019

Issue publication date: 17 July 2019

Abstract

Purpose

On 12 November 2018, New Zealand's Land Transfer Act 2017 came into force. The purpose of this paper is to pinpoint some of the significant changes in the Act that challenge the fundamental concepts of the Torrens system of registration.

Design/methodology/approach

The paper addresses three significant reforms: a definition of land transfer fraud; the concept of immediate indefeasibility with limited judicial discretion and its impact on volunteers and the Gibbs v. Messer anomaly; and the compensation regime. Case studies illustrate the effect of these changes.

Findings

The limited legislative definition of fraud reflects the common law and allows for any necessary flexibility. The new Act reiterates the principle of immediate indefeasibility but qualifies it with the introduction of some judicial discretion. This is a novel concept for the courts and will undoubtedly be dealt with cautiously. The author voices some disquiet with regard to some of the guidelines set out in s 55(4) of the Act. The compensation provisions introduce an element of an owner's culpability. An owner now runs the risk of reduced compensation if there has been a lack of proper care.

Research limitations/implications

The implications of this research are fundamental for New Zealand's land transfer system.

Practical implications

The limited judicial discretion will challenge the courts of New Zealand. The new compensation provisions will ensure that an owner's carelessness will be accountable.

Originality/value

This study is one of the first to analyse the Land Transfer Act 2017 (New Zealand). Its value extends beyond New Zealand shores as it has implications for global land transfer systems.

Keywords

Citation

Toomey, E. (2019), "Reverberations in the Torrens system: a new Land Transfer Act in New Zealand", Journal of Property, Planning and Environmental Law, Vol. 11 No. 2, pp. 87-107. https://doi.org/10.1108/JPPEL-12-2018-0035

Publisher

:

Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited


1. Introduction

New Zealand has a world-leading land title registration system, but the legislation that governed the Land Transfer Act 1952 (LTA 1952) was outdated in terms of technology and other changes. Reform was well overdue.

In 2007, the Law Commission, in conjunction with Land Information New Zealand (LINZ), undertook a review of the 1952 Act, and in 2008, the Law Commission released a detailed Issues Paper and invited submissions on a range of matters[1]. The review resulted in the Law Commission’s 2010 Report[2]. This set out a series of recommendations for reform and included a draft Land Transfer Bill. The recommendations were aimed at modernising, simplifying and consolidating the land transfer legislation for enhanced clarity and accessibility. Various versions of this initial draft Bill underwent intense scrutiny for seven years, and culminated in the passing of the Land Transfer Act 2017 (LTA 2017) on 10 July 2017. It came into force on 12 November 2018.

While the new Act retains the core principles of the Torrens system, it includes some significant reforms[3].

This paper addresses three significant changes:

  • definition of land transfer fraud;

  • immediate indefeasibility with limited judicial discretion; volunteers; the Gibbs v. Messer anomaly; and

  • the compensation regime.

Throughout this paper, case studies are used to illustrate the effect of these changes.

2. A definition of land transfer fraud

There was no definition of “fraud” in the LTA 1952, although s 182 stated that notice of an unregistered interest “shall not of itself be imputed as fraud”. Insofar as it refers to fraud, s 182 has been replaced by s 6 of the LTA 2017.

The Law Commission recommended that such a definition be included in a new Act. It considered it unwise to define fraud in an exclusive way as that could create inflexibility. It noted that most submitters commenting on its Issues Paper preferred a limited legislative definition confirming the leading cases, such as Assets Co Ltd v. Roihi (Assets Co) and Waimaha Sawmilling Co Ltd v. Waione Timber Co Ltd (Waimaha)[4]. Assets Co defines land transfer fraud to the extent that it is dishonesty (not constructive fraud) by or brought home to a registered owner whose title is challenged, or by their agent. Waimaha holds that it is fraud if the designed object of a transfer is to cheat a person of a known existing right.

Thus, the aim of the definition is to “improve certainty and reduce litigation while at the same time allowing scope for judicial development of the concept of fraud when necessary[5]”.

The definition in the LTA 2017 comprises:

6 Meaning of fraud

  1. For the purposes of this Act, other than subpart 3 of Part 2, fraud means forgery or other dishonest conduct by the registered owner or the registered owner’s agent in acquiring a registered estate or interest in land.

  2. For the purposes of subsection (1), the fraud must be against:

    • the registered owner of an estate or interest in land; or

    • the owner of an unregistered interest if the registered owner or registered owner’s agent:

      • in acquiring the estate or interest had actual knowledge of, or was wilfully blind to, the existence of the unregistered interest; and

      • intended at the time of registration of the estate or interest that the registration would defeat the unregistered interest.

  3. For the purposes of subpart 3 of Part 2, fraud means forgery or other dishonest conduct by any person.

  4. The equitable doctrine of constructive notice does not apply for the purposes of deciding whether conduct is fraudulent.

Analysis of s 6 of the LTA 2017

A number of points with regard to this definition require comment.

  • The exception in s 6(1) relates to compensation. The legislative intention is that fraud for the purposes of compensation should not be limited to dishonest conduct by the registered owner or his or her agent in acquiring the registered estate or interest but also cover fraud by a third party more generally[6].

  • Minus the exception, s 6(1) defines fraud to the extent of stating the fraud is dishonest conduct by a registered owner or an agent of the registered owner in acquiring a registered estate or interest (the Assets definition).

  • Section 6(2) covers both fraud against a previous registered owner and against the holder of an unregistered interest. With respect to the latter, fraud is further defined: the acquiring registered owner or registered owner’s agent must have had actual knowledge of, or was wilfully blind to, the existence of the unregistered interest, and intended at the time of registration of the estate or interest that the registration would defeat the unregistered interest.

The Law Commission considered that this expanded definition allowed clearer fact-finding for the court than was available under the 1952 Act.

It is clear that the equitable doctrine of constructive notice does not apply when deciding whether conduct is fraudulent: s 6(4).

  • Supervening fraud is abolished in so far as it does still seem to exist. Under s 6(1) fraud is confined to conduct in acquiring a registered estate or interest in land. This precludes any argument based on supervening fraud – that is fraud in relation to an unregistered interest taking place entirely after registration. As the Law Commission noted, such fraud will no longer be land transfer fraud and any such conduct can be dealt with by an in personam claim against the registered owner if appropriate.

3. Case studies

As is made clear above, the definition in LTA 2017 derives from leading cases that have been cited many times by the courts when investigating land transfer fraud. The following case studies demonstrate that, with the exception of the tricky area of constructive notice, little change will occur as a result of the new definition.

3.1 Nathan v. Dollars and Sense Finance ltd – fraud by an agent

The Assets Co Ltd principle was endorsed by the New Zealand Supreme Court in Nathan v. Dollars and Sense Finance Ltd[7]. This must now be considered the leading case in this jurisdiction with respect to land transfer fraud by an agent.

Mr and Mrs Nathan (senior) were the registered proprietors of a property. Their son, Rodney, became involved in a business proposition that required him to borrow $250,000. The lender, Dollars and Sense Finance Ltd (D and S), required several securities. It was agreed between the lender and Rodney to target the property owned by Rodney’s parents.

Mr Thomas (a solicitor instructed by the lender) prepared the loan and mortgage documentation. Subsequently, Mr Harris (a director of both the vendor company of the business being sold and another company endeavouring to arrange the purchaser’s loan) delivered the documentation to Rodney. When the latter returned the documents, Mr Thomas was concerned that none of the signatures on the documents had been witnessed, and neither the title nor details of insurance had been provided as requested. Mr Thomas did not communicate with the lender, but informed Mr Harris. Mr Thomas sent the documents back to Rodney requesting the necessary completions. (At trial, Rodney gave evidence that while his father had signed the documents, he had forged his mother’s signature on them). When the documents were returned to him, he had a friend complete the witnessing sections of all documents.

Subsequently, Rodney’s company was placed in liquidation. Mrs Nathan only became aware of the mortgage’s existence when she was advised that recovery proceedings under the mortgage were to begin. She brought proceedings alleging fraud on the part of D and S in its procurement of the mortgage and sought an order that the mortgage be removed from the title. By this time, Mr Nathan had died.

The Supreme Court held that:

  • (a)Rodney was the agent of the mortgagee for the purpose of obtaining his mother’s signature as mortgagor; and

  • (b)Rodney’s forgery was committed within the scope of the agency.

With respect to (b) above, the Court considered that although the mortgagee (obviously) did not authorise the forgery, it did not follow that the forgery was outside the scope of the agency. The Supreme Court applied the test of whether the act, in this case the act of forgery, was sufficiently connected with an authorised act and therefore done within the scope of the agency. It held[8] that the liability of the principal is not dependent on imputation of the knowledge of the agent to the principal but arises because the agent has done an act, namely the fraud, for which the principal is vicariously responsible. It qualified this by noting that a close connection with what was authorised must be shown. Thus the forgery was committed in the course of Rodney’s agency for D and S. It followed that Rodney’s fraud rendered D and S’s registration as mortgagee vulnerable. It did not have an indefeasible title to the mortgage.

Were this case to be heard under the new s 6 definition of fraud, there is no doubt that the courts would return the same result.

3.2 Cook v. Abdallah – on-line scam

Cook v. Abdallah is an interesting example of land transfer fraud[9]. The respondent, who was perpetrating an online scam, persuaded the applicant[10] to transfer her property to him, as a prerequisite for him to obtain a visa to enter New Zealand. As the High Court noted, it was clear the respondent had no intention of coming to New Zealand. The request was a ruse to either ensure that the respondent acquired the property without paying for it, or to put him in a position where he had power over the applicant and could exploit that power to extract further payments from her. The Court was satisfied that the applicant believed the respondent was coming to New Zealand because of the dishonest representations he had made to her. The Court was satisfied that the respondent was registered as proprietor of the applicant’s land through depriving her of that land by fraud. It held that the applicant was entitled to be reinstated on the register as sole proprietor of the property. The Court’s discussion of land transfer fraud was brief. Again, there would be no different outcome under the LTA 2017.

3.3 Mortgage decisions – supervening fraud

Instant Funding Ltd v. Greenwich Property Holdings Ltd.

As noted above, s 6(1) of the LTA 2017 precludes any argument based on supervening fraud.

Several cases have raised the issue as to whether a mortgagee can be guilty of fraud when exercising its power of sale upon default by the mortgagor. If indeed it is possible for a mortgagee to commit fraud when exercising this right, this must amount to supervening fraud, as the mortgagee cannot exercise the right unless its interest is already registered on the title.

For instance, in Instant Funding Ltd v. Greenwich Property Holdings Ltd[11] Greenwich had contracted to purchase land over which Instant Funding (IF) held a first registered mortgage. Subsequently the mortgagor defaulted and was placed in receivership. IF contemplated assigning its mortgage to Vector Finance, a company linked to Greenwich. However, at the request of the receivers controlling the mortgagor, IF exercised its power of sale and sold to an unrelated party. In its refusal to remove a caveat, the Court reasoned that because of IF’s knowledge about Greenwich’s equitable interest in the land, its transfer to another party could be regarded as part of a design to cheat Greenwich of that interest. If so, that action would be fraudulent.

The same debate has arisen when considering the concept of fraud alongside s 105 of the LTA 1952 (see s 103 of the LTA 2017: “Transfer of mortgaged land by mortgagee sale”)[12].

Nonetheless, as the Law Commission notes, these cases could (and now will) be determined on the basis of the in personam claim.

3.4 Constructive notice

JEB Management Ltd v. Grubz United Whanau

Trust Westpac New Zealand Ltd v. MAP and Associates Ltd

Section 6(4) of the LTA 2017 states that the equitable doctrine of constructive notice does not apply when deciding whether conduct is fraudulent: s 6(4).

In terms of recipient liability, the High Court’s comments in JEB Management Ltd v. Grubz United Whanau Trust support this stance[13]:

Allowing applicants to attack the indefeasible titles of registered proprietors on the grounds that they had constructive knowledge that the received property was impressed by a trust would undermine the concept of indefeasibility. It would permit a registered interest in land to be set aside on the basis of a lesser extent of knowledge than is required to establish [L]and [T]ransfer [A]ct fraud. Accepting such a position would threaten to create a two-track land transfer system in which land that is held in trust is treated differently to other land.

There is less clarity in terms of accessory liability which requires a finding of dishonesty. In Westpac New Zealand Ltd v. MAP and Associates Ltd[14], the Supreme Court referred to Barlow Clowes International Ltd (in liq) v. Eurotrust International Ltd[15], where the Privy Council recognised that although a dishonest state of mind is a subjective mental state, the standard by which the law determines whether it is dishonest is objective[16]. Tipping J repeated his adopted approach in US International Marketing Ltd v. National Bank of New Zealand Ltd[17] (an appeal that was concerned with the duty of a banker faced with a customer’s demand for payment of an account in credit when the bank becomes aware that payment might constitute or facilitate a breach of trust in relation to a third party) that such a dishonest state of mind may comprise a sufficiently strong suspicion of a breach of trust, coupled with a deliberate decision not to make inquiry lest the inquiry result in actual knowledge[18].

In US International Marketing Ltd v. National Bank of New Zealand Ltd Tipping J considered what should happen in the rare event in which a reasonable banker would know it was dishonest to meet its customer’s demand without making further inquiry[19]:

If the bank appreciates that to be so, it should make appropriate and timely further inquiry and then assess the position in the light of what that inquiry elicits. Liability will not arise on this basis if the failure to make further inquiry is only negligent; to give rise to liability the failure must be dishonest. Essentially what is required to make a person liable on the basis of failing to make further inquiry is what is often called willful blindness or, as Lord Nicholls put it in Royal Brunei Airlines[20] at 389F, deliberately closing one’s eyes or deliberately not asking questions lest one learn something unwelcome.

The reference to “wilful blindness” brings this inside the s 6 definition of “fraud”.

Moreover, it is recognised that such dishonesty will in most, but possibly not all, cases be fraud for the purposes of the indefeasibility provisions in any Torrens statute: LHK Nominees Pty Ltd v. Kenworthy[21]; Burmeister v. O’Brien[22]. It remains to be seen how the courts will define the parameters of constructive notice[23].

4. Immediate indefeasibility with judicial discretion – the concept of manifest injustice

The Law Commission investigated a number of options for title by registration. These comprised[24]:

  • (a)adhere to the immediate indefeasibility principle, subject to clarifying Gibbs v.Messer[25];

  • (b)provide for limited discretionary indefeasibility, with the presumption of immediate indefeasibility;

  • (c)adhere to the deferred indefeasibility principle (but the Law Commission notes this would involve a movement away from transactional certainty in favour of individual justice); and

  • (d)adhere to the immediate indefeasibility principle, but provide specific statutory exceptions.

Despite its provisional view to adopt immediate indefeasibility (option (a) above), the Law Commission subsequently recommended that the new Act should confirm the current system of indefeasibility of title, but modify it by introducing judicial discretion as a means of avoiding manifest injustice in certain cases (option (b) above). The Law Commission considered that this would reduce lengthy and expensive litigation in fraud cases, and avoid pushing the boundaries of the in personam jurisdiction in Torrens title cases.

This reform attracted significant comment from submitters and some changes were made to accommodate their concerns.

4.1Immediate indefeasibility

The pivotal ss 51 (“Title by registration”) and 52 (“Exceptions and limitations”) confirm the immediate indefeasibility principle and its exceptions and limitations. These two provisions subsume ss 62, 63 and 64 of the LTA 1952. Section 183 of the 1952 Act has not specifically been carried forward partly because of problems with its interpretation. As noted by the Law Commission[26], Tipping J in Regal Castings Ltd v. Lightbody[27] stated that the purpose of s 183 was to make it clear that good faith purchasers were not affected by any “vice in a predecessor’s title”. This is essentially captured in s 51(1).

Section 51 states:

Title by registration

  1. On registration under this Act of a person as an owner of an estate or interest in land, the person obtains a title to the estate or interest that cannot be set aside.

  2. The title of the registered owner is free from estates and interests in the land that:

    • (a)are not registered or noted on the register; or

    • (b)are not capable of being registered or noted on the register.

  3. Despite subsections (1) and (2), the title of the person registered as owner of the estate or interest is subject to:

    • (a)the exceptions and limitations in s 52 to 56, subparts 1 and 3 of Part 4 and s 204[28]; and

    • (b)any enactment other than this Act that overrides or limits the title.

  4. Subsections (1) and (2) apply whether or not the registered owner acquired the estate or interest–

    • (a)for valuable consideration; or

    • (b)from a fictitious person.

  5. Nothing in this section affects the in personam jurisdiction of the court.

Analysis of s 51 of the LTA 2017

Again, a number of points with regard to this fundamental provision require comment.

4.1.1 Manifest injustice exception.

Sections 51(3)(a) and 52(2) make it clear that the immediate indefeasibility principle is subject to the court’s ability to alter the register in cases of manifest injustice (see below).

4.1.2 Interests incapable of registration.

Section 51(2) [subject to the exceptions and limitations in s 51(3)] provides that a registered interest will defeat any estates or interests that are not registered or noted on the register or are not capable of being registered or noted on the register.

As the Law Commission noted, there is a line of authority that interests incapable of registration may override a LTA title[29]. However, the strong obiter dictum statement of Tipping J in the Supreme Court decision Regal Castings Ltd v. Lightbody[30] (see below) was persuasive high authority in New Zealand that no unregistered interest (whether registrable or not) should override the register (with the exception of those which override by virtue of a statutory provision). Section 51(2) confirms this position and thus settles the matter.

4.1.3 Volunteers.

Section 51(4)(a) states that s 51(1) and (2) apply whether the registered owner acquired the estate or interest for valuable consideration. This settles the debate as to whether a volunteer (he or she who acquires land for no consideration) gains immediate indefeasibility. A volunteer’s position was never entirely clear under the 1952 Act and case law has been diverse[31].

Section 51(4)(a) clarifies the position: a volunteer acquires an indefeasible title just as a purchaser for value does. This is consistent with the principle that registration confers title.

The Law Commission noted that the main concern of submitters was that giving volunteers indefeasible title may encourage transfers to defeat an unregistered interest. As the Law Commission noted, if such “a volunteer transferee was aware of an unregistered interest and the transaction was intended to defeat that interest, this could well be fraud and thus defeasible[32]”.

4.1.4 Gibbs v. Messer anomaly.

Section 51(4)(b) states that s 51(1) and (2) apply whether or not the registered owner acquired the estate or interest from a fictitious person.

This resolves the narrowest interpretation of Gibbs v. Messer4.

The Privy Council in Frazer v. Walker laid down the immediate indefeasibility principle: a purchaser gains title immediately upon registration whether or not the transfer instrument is void or voidable[33]. Nonetheless it distinguished, but did not overrule, Gibbs v. Messer on the ground that[34]:

The board was then concerned with the position of a bona fide “purchaser” for value from a fictitious person and the decision is founded on a distinction drawn between such a case and that of a bona fide purchaser from a real registered proprietor.

Gibbs v. Messer was thus reduced to its narrowest interpretation and continued to stand as authority for the proposition that registration of a forged instrument in favour of a fictitious or non-existent person does not confer an indefeasible title[35]. This anomaly (which kept alive the concept of deferred indefeasibility) has now been settled by s 51(4)(b). A purchaser from an apparently fictitious person will obtain good title.

4.1.5 Overriding statutes.

Section 51(3)(b) alerts registered owners to the possibility of statutes that override the Act.

4.1.6 In personam claim.

The Law Commission considered it was desirable that the new LTA at least recognise in personam claims in relation to registered land if only as clarification that it is not affected by indefeasibility of title. This is satisfied by s 51(5).

5. Case study

5.1 Regal Castings v. Lightbody

The decision of the Supreme Court in Regal Castings Ltd v. Lightbody[36] pre-empts two provisions in s 51.

Mr Lightbody and his wife transferred their home (their only substantial asset) into the ownership of a family trust of which they, and their solicitor, were the registered trustees. The consideration for the transfer was a debt of $230,000 to be repaid in one sum in 2005. Contemporaneously with the transfer, $54,000 of the debt was forgiven. Mr and Mrs Lightbody then progressively gifted sums to the trust, eventually extinguishing the debt by 2002. At the time of the transfer, Mr Lightbody was a guarantor of the indebtedness of his jewellery business to its major supplier, which remained unaware of the transfer. The business was placed in liquidation in 2003, owing substantial money to the supplier. The general question on the appeal was whether the transfer of the house to the trustees could be set aside on an application by the supplier under (the now repealed) s 60 of the Property Law Act 1952 (see now s 344–350 of the PLA 2007).

5.1.1 The unregistered interest.

Tipping J made it very clear in an obiter statement that he disagreed with the body of authority that suggests that interests incapable of registration may override an LTA title[37]. His Honour stated[38]:

[Section 62 of the LTA 1952] is simply expressed and deliberately so. Except in the case of fraud, the registered proprietor takes free of all interests that are not notified. The certainty and simplicity of that proposition should not be watered down by reference to whether the interest qualifies for registration. It is the fact of non-notification which is crucial. […] If you have an interest, whether registrable or not, of which you wish to give notice, you should, if possible, protect it by caveat. I can find nothing in either the text of the Act or in its underlying purpose to support the view that the paramountcy afforded by s 62 does not apply against unregistrable interests.

Section 51(2) settles the matter.

5.1.2 Volunteers.

In Regal Castings, one of the fundamental issues was whether the trustees were volunteers.

Four judges[39] agreed that the alienation had been voluntary, because either the transfer was “for no effective consideration under the scheme of gifting which was integral to the arrangement[40]”, or, alternatively expressed, Mr Lightbody’s “action in exchanging that interest for an unsecured debt not repayable for seven years and simultaneously gifting away $27,000 of the debt constituted […] a disposition at an under-value[41]”. Therefore the trustees were volunteers[42].

Tipping J was then the only judge who specifically addressed the issue of whether the trustee volunteers attracted indefeasibility of title. After providing an insightful analysis of the interlinking of the main indefeasibility provisions in the LTA 1952 and the varying judicial views, his Honour could not see “how the Land Transfer Act can properly be interpreted so as to deny an indefeasible title to someone who is registered without fraud simply on account of their having been a volunteer[43]”.

Section 51(4)(a) settles the matter.

5.2 Judicial discretion

Sections 54 and 55 give the courts the ability to override the concept of immediate indefeasibility on the ground of manifest injustice.

In response to submitters’ concerns about importing judicial discretion on grounds of lack of certainty, the Law Commission made the following comment[44]:

We consider that the interests of justice substantially outweigh transactional certainty in the few cases where discretion would need to be exercised. It is likely that those few cases would be litigated in any event, with uncertain outcome. We also recommend limiting the discretion with specific guidelines, rather than giving the court a broad discretion as in Queensland, which should help to allay any concerns about this proposal.

In its amendments to the original Bill, the Government Administration Committee emphasised “that the threshold for manifest injustice is very high” and that the amendments “more effectively set out the interplay between ‘manifest injustice’ and ‘fraud’[45]”.

Sections 54 and s 55-57 apply to a person (Person A) who:

  • has been deprived of an estate or interest in land by the registration under a void or voidable instrument of another person (Person B) as the owner of the estate or interest in the land; or

  • being the owner of an estate or interest in land, suffers loss or damage by the registration under a void or voidable instrument of another person (Person B) as the owner of an estate or interest in the land.

Person A may apply to the court for an order under s 55 [s 54(2)].

Any such application for an order must be made not later than six months after Person A becomes aware, or ought reasonably to have become aware, of the acquisition of the estate or interest by Person B [s 54(3)].

Section 55(1) enables the court to make an order cancelling the registration of Person B only if it is satisfied that it would be manifestly unjust for person B to remain the registered owner of the estate or interest.

5.3 Example

A is the registered owner of land. A loses his or her land through fraud by X. X then either sells the land to a bona fide purchaser B (new owner) or raises a mortgage from a bona fide mortgagee B (new mortgagee). Under the immediate indefeasibility principle, in either case B is protected. However, under ss 54 and 55, A can apply for an order cancelling the registration of B on the ground of manifest injustice.

5.4 Section 55(2), (3), (4) and (5)

Section 55(2), (3), (4), and (5) define the parameters of s 55(1):

The existence of forgery or other dishonest conduct does not, of itself, constitute manifest injustice [s 55(2)].

The court may only make such an order if it “is satisfied that in the circumstances the injustice could not properly be addressed by compensation or damages, whether under subpart 3” (“Compensation”) “or otherwise” [s 55(3)].

A set of matters the court may take into account [s 55(4)]:

  • the circumstances of the acquisition by person B of the estate or interest;

  • failure by person B to comply with any statutory power or authority in acquiring the estate or interest;

  • if the estate or interest is in Māori freehold land, failure by a person to comply with Te Ture Whenua Maori Act 1993;

  • the identity of the person in actual occupation of the land;

  • the nature of the estate or interest, for example, whether it is an estate in fee simple or a mortgage;

  • the length of time person A and person B have owned or occupied the land;

  • the nature of any improvements made to the land by either person A or person B;

  • the use to which the land has been put by either person A or person B;

  • any special characteristics of the land and their significance for either person A or person B;

  • the conduct of person A and person B in relation to the acquisition of the estate or interest; and

  • any other circumstances that the court thinks relevant.

The court can make such an order subject to any conditions that it thinks fit (for example, an order relating to the possession of the land) (s 55(5)).

6. Some curious observations

The author assumes that the courts will take a very conservative approach to this new provision and will, indeed, set a very high threshold for a “manifest injustice” claim. Nonetheless, the court is given appropriate guidelines to consider.

This paper, using past case law, makes some curious observations as to four of these parameters.

6.1 Failure to comply with a statutory power: Boyd v. Mayor of Wellington

As noted above, the Privy Council in Frazer v. Walker laid down the immediate indefeasibility principle: a purchaser gains title immediately upon registration whether or not the transfer instrument is void or voidable34.

This confirmed the majority view in Boyd v. Mayor etc of Wellington[46] in which the Wellington City Council had failed to comply with a statutory power.

Boyd was the registered proprietor of land needed for a tramway. A proclamation was issued by the Governor-General taking the land and vesting it in the City of Wellington. The proclamation was registered. Boyd then argued that the registration was void because necessary consents had not been obtained. The majority of the Court of Appeal[47] held that, even if the proclamation was void, its registration under the then Land Transfer Acts Compilation Act 1915 had, in the absence of fraud, conferred an indefeasible title on the city council. The three judges were clearly of the opinion that the Privy Council in Assets Co Ltd[48] had pronounced in favour of immediate indefeasibility[49].

If a court were to consider overturning a scenario similar to Boyd, this would be a serious threat to the immediate indefeasibility principle.

6.2 Failure to comply with Te Ture Whenua Maori Act 1993: Housing Corporation of New Zealand v. Maori Trustee

In Housing Corporation of New Zealand v. Maori Trustee, a dispute arose over a second mortgage of freehold land. Due to an oversight, the mortgage was not produced to the Registrar of the Māori Land Court for endorsement under (then) s 233 of the Maori Affairs Act 1953[50]. According to the terms of s 233, the instrument therefore had no force or effect. The District Land Registrar then inadvertently registered the mortgage, despite the lack of endorsement.

The decision focussed on the Registrar’s powers of correction under the former s 81 of the LTA 1952, whereby the Registrar could cancel registration of an instrument that had been, inter alia, wrongfully obtained or retained. McGechan J noted the “significant and extensive” reach of such a power[51] and with reference to the comments in Frazer v. Walker, his Honour noted[52]:

I see no escape from the conclusion that s 81 is alive and well, however unwelcome, and applies where the person obtaining registration does so in a manner which is “wrongful” in the sense that it infringes the legal rights of another. While immediate indefeasibility may bar the citizen, and indeed even this Court, it will not in such situations bar the Registrar.

To everyone’s relief, s 81 of the LTA 1952 (an “anachronistic” power)[53] disappeared on the repeal of the LTA 1952. Section 21 of the LTA 2017 limits the Registrar-General’s powers to being solely administrative.

The curious question is whether a power as extensive as this, albeit with a “manifest injustice” threshold, has been transferred to the court wherever the Te Ture Whenua Maori Act 1993 is involved.

Decisions such as McCann – Waipuka 3B1B1 and 3B1B2B1C2A[54], Edwards v. Maori Land Court[55] and Jensen v. Registrar-General of Land[56] deserve mention in this regard.

6.3 Nature of estate: fee simple or mortgage – Frazer v. Walker

The Privy Council in Frazer v. Walker[57] made it clear that immediate indefeasibility applies to a bona fide mortgagee and a bona fide purchaser. This was emphasised by the Court of Appeal in Nathan v. Dollars and Sense Finance Ltd, where it observed that to declare the interest of a registered mortgagee defeasible merely because the mortgage documents were void, through no fault of the mortgagee, would “destroy the benefit of immediate indefeasibility and would be inconsistent with the Torrens system[58]”.

Whenever the judiciary is exercising this discretionary power, it is paramount that there is no inconsistency or ranking between a mortgagee and an owner.

6.4 Conduct of the parties in relation to the acquisition of the estate or interest – is there a shade of grey between a bona fide purchaser and an unconscionable purchaser (in personam)

As noted above, in its amendments to the original Bill, the Government Administration Committee emphasised “that the threshold for manifest injustice is very high” and that the amendments “more effectively set out the interplay between ‘manifest injustice’ and ‘fraud’[46]. It is interesting to note that in that comment, no mention is made of the in personam claim which one might assume is part of that interplay.

It is difficult to imagine why this guideline would stand apart from an in personam claim where the conduct of the parties is paramount. One of the three principles of the in personam claim, as set out in Regal Castings v. Lightbody[59] involves the unconscionable behaviour of the current registered proprietor (“owner” in the LTA 2017 idiom).

If the conduct does not reach that threshold, it may be difficult to establish the occurrence of manifest injustice.

An Australian case is illustrative. In Vassos v. State Bank of South Australia, Hayne JA failed to find that the mortgagee bank in the case of a forged mortgage had acted unconscionably[60]. In doing so his Honour noted that[61]:

[…] the very language used to describe the right and the reference to the remedies being “in personam remedies” is a clear reference to the remedies being available in circumstances where equity would act, i.e. in cases which equity would classify as unconscionable and unconscientious.

In Vassos, there had been no misrepresentation by the bank, no misuse of power, no improper attempt by the bank to rely on its legal right, and no knowledge of wrongdoing by any other party. Hayne JA held that neglect itself does not amount to unconscionable conduct. Thus, even if by making enquiries the bank could have discovered the forgery, this fact alone did not render its conduct unconscionable. It was clear that more than the bare fact of forgery must be shown to found any in personam claim[62].

Section 55(2) deserves repetition: “the existence of forgery or other dishonest conduct does not, of itself, constitute manifest injustice”.

Thus Vassos would not meet the “manifest injustice” threshold. One wonders what might.

6.5 Section 56

Section 56 states that the court “must not make an order under s 55 if person B has transferred the estate or interest to a third person, that third person acting in good faith”.

The “Registrar of the court must serve a copy of the order on the Registrar” (s 57(1)) who must then make the necessary alterations to the register [s 57(2)].

7. The compensation regime

State compensation is an essential feature of any Torrens system of registration. The LTA 2017 not only modernises the statutory provisions but introduces new provisions, the most important of which is accountability for the deprived owner’s lack of proper care.

The expanded regime and comparative comment are detailed below.

7.1 Loss or damage resulting from registrar’s error or from system failure

Section 58 of the LTA 2017 allows compensation to be recovered where there is any loss due to the mistake of the Registrar. It re-enacts s 172(a) of the 1952 Act[63] but extends its application to include system failure.

7.2 Loss of estate or interest in land

Section 59 specifies the grounds on which a person who is deprived of an estate or interest in land, may claim compensation from the Crown. It expands (and, in one instance, lessens) s 172(b) of the 1952 Act. Under s 59(1)(b), the person must be barred by the Act from bringing an action for possession or other action for the recovery of the estate or interest other than an application for an order under the new provision s 55 (which relates to the power of the court to make an order to alter the register in cases of manifest injustice).

The grounds comprise:

  • registration of another person as the owner of the estate or interest or of a different estate or interest under a void instrument or through fraud [s 59(2)(a)].

This is designed to cover largely what is provided for in s 172(b) of the LTA 1952 but it must be noted that fraud in s 59 is fraud as defined in s 6(3) (the exception). The 2017 Act makes it clear that compensation for fraud can be obtained in a broader range of circumstances than those that would defeat an indefeasible title. Fraud for the purposes of compensation is not limited to dishonest conduct by the registered owner or his or her agent in acquiring the registered estate or interest: it is defined in s 6(3) as “forgery or other dishonest conduct by any person”.

  • the bringing of the land under the Act otherwise than in accordance with the procedure prescribed by this Act or any other Act [s 59(2)(b)].

This replaces s 181 of the 1952 Act (“Plaintiffs to be nonsuited if laches proved”). As the Law Commission noted, under the High Court Rules, it is “no longer possible to obtain a non-suit[64]”. Section 59(2)(b) provides that compensation is only available where the proper processes have not been followed.

  • an order under s 55 [s 59(2)(c)].

This is a new ground and relates to the court’s judicial discretion in cases of manifest injustice. A person who has lost an estate or interest in land due to the application of s 55 (“Court may make order only in cases of manifest injustice”) may make an application for compensation. Under s 54, that would be person B.

  • “unlawful alterations to, or entries on, the register” [s 59(2)(d)].

This is also a new ground. It covers unlawful interference with the register and is designed to protect against loss that might result from possible increased access to the electronic land register.

Section 59 does not re-enact the provision in s 172(b) of the 1952 Act for compensation for loss of an estate or interest in cases of error, omission or misdescription. The Law Commission noted[65]:

The implication is that these grounds are designed to cover situations where someone other than the Registrar has made an error. These grounds for compensation have not been re-enacted in the Bill as it is hard to think of circumstances where compensation is appropriate for mistakes that are not caused by the Registrar.

Section 59(3) makes it clear that compensation is recoverable by a volunteer.

7.3 Loss or damage occurring after search and before registration

Section 60 re-enacts s 172A of the 1952 Act but reduces the guaranteed search time periods.

The Law Commission, having considered in its earlier Issues Paper whether a guaranteed search was still necessary in the light of electronic conveyancing and the reduced time between settlement and registration1, favoured its retention but with shorter time periods to reflect the changed conveyancing environment[66].

  • (c)The 14-day period between the obtaining of a search copy of the record of title and settlement has been reduced to a five working day period.

  • (d)The two month period from settlement to registration has been reduced to 20 working days.

Section 60(4) provides that the purchaser is entitled compensation if the search copy does not disclose the registration or lodgement of the instrument or document and the document or instrument was registered or lodged before the earlier of:

  • the expiry of the 20 working day period; or

  • the registration of the instruments and documents required to give effect to the transaction.

The court may extend the 20-working-day period if it is satisfied that the failure to register the documents and instruments within that period was not the fault of the purchaser or their practitioner or agent [s 60(5)]. The definition of “transaction” in s 60(1) makes it clear that this provision applies whether or not valuable consideration has been given and therefore includes volunteers.

7.4 Exceptions to compensation

Section 61 lists exceptions to the right to claim compensation. It substantially re-enacts s 178 of the 1952 Act and also incorporates other provisions that exclude the right to claim compensation. The Law Commission noted that the exceptions to compensation were scattered throughout the 1952 Act and the Land Transfer Amendment Act 1963[67]. The 2017 Act incorporates the necessary exceptions together in one place.

The exceptions comprise:

  • loss or damage resulting from breach of trust by the claimant [s 61(1)(a)];

The justification commonly advanced for the exception is that it is consistent with the fact that trusts cannot appear on the register[68].

  • loss or damage resulting from the improper exercise of a power of sale under a mortgage or re-entry under a lease;

This mirrors s 178(e) of the 1952 Act. Any such loss does not relate to public faith in the land transfer system and there is a remedy available against the mortgagee or lessor69.

  • loss or damage resulting from the operation of an enactment other than this Act that overrides or limits the title to an estate or interest in land.

This exception is a new provision and reflects that the Torrens-based systems allow for compensation where the loss is the result of the operation of the Torrens legislation itself. The Law Commission saw no good reason to extend this to loss resulting from the operation of another statute[69]. Where appropriate, the other statute can provide for its own compensation regime (for example, s 330 Property Law Act 2007 – compensation in landlocked land proceedings). Some statutes specifically provide that the compensation provisions do not apply.

Other exceptions to compensation provided for in s 178 of the 1952 Act[69], in other parts of the 1952 Act[70], and in the Land Transfer Amendment Act 1963[71], have been excluded because they are unnecessary[72]. Section 61(2) carries forward s 60 of the 1952 Act in a modified form. It provides that:

The Crown is not liable to pay compensation […] for loss of an estate or interest in land as a result of bringing the land under this Act if the estate or interest in the land could have been, but was not, registered under the Deeds Registration Act 1908 or any comparable earlier legislation unless, before the land was brought under this Act, – (a) notice of a claim to [the land] was given to the Registrar; or (b) the Registrar had actual knowledge of the claim but failed to recognise it.

It was considered more appropriate to include this exception in s 61 along with the other exceptions.

7.5 Notice and consideration of claim

Section 62 replaces s 173 of the 1952 Act. It provides that before commencing a proceeding to recover compensation a claimant must give not less than 20 working days’ notice of the claim to the Registrar if the amount of the claim does not exceed the prescribed amount; or if the amount of the claim does exceed the prescribed amount, the claimant, within that time frame, must also give notice to the Attorney-General.

Section 63(1) provides that if the claim does not exceed the prescribed amount the Registrar may accept Crown liability for payment of the whole or part of the claim without the need for the claimant to commence a proceeding.

Section 63(2) provides that if the claim exceeds the prescribed amount, the Attorney-General and the Registrar may accept Crown liability for the payment of the whole or part of the claim without the need for the claimant to commence a proceeding.

7.6 Calculation of compensation for deprivation of estate or interest in land

Section 64, which replaces s 179 of the 1952 Act, sets out the basis for determining the amount of compensation payable to a claimant.

Where the claimant has been deprived of an estate or interest in land, the maximum amount is the value of that lost estate or interest [s 64(1)].

Where the claimant is a mortgagee, no compensation is payable for any amount owing on the mortgage that exceeds the value of the estate or interest in land that the mortgagee has been deprived of [s 64(2)]. Section 64 is subject to s 65, 66 and 67.

7.7 The value of the estate or interest

Section 65 states that the value of the estate or interest in land is its market value at the date on which the claimant gained (or ought reasonably to have gained) knowledge that the loss has occurred [s 65(1)]. The Crown has the onus of proof if it alleges that a reasonable person would have gained that knowledge at an earlier date than the claimant [s 65(2)].

Section 65 changes the date at which the amount of compensation is to be assessed. Section 179 of the 1952 Act provided that that amount was limited to the value of the land at the time of deprivation[73].

The Law Commission considered that this date can be unfair as deprivation can often take time to be discovered and the plaintiff will not receive compensation that covers any increase in property value or improvements subsequently added to the property[74].

The 2017 Act sets the date at the date of reasonable discovery with the onus of proving knowledge at an earlier date on the Crown.

7.8 Value of improvements

Section 66 states that the value of any improvements made to the land after the claimant gained (or ought reasonably to have gained) knowledge about the loss are not to be taken into account when determining compensation (unless those improvements were required to be carried out by statute or by order of a court [s 66(1)]. The claimant has the onus of proof if he or she alleges that those improvements were made before the claimant gained (or ought reasonably to have gained) knowledge of the loss [s 66(2)].

Section 179 of the 1952 Act provided for the amount of compensation to include value of improvements made prior to the time of deprivation.

Section 66 assesses that date as the date of reasonable discovery. It is expressed in different language – no compensation is available for value of improvements beyond that date. The onus of proof is on the claimant to show that any supposed later improvements were made before or at the date of discovery.

7.9 What benefit has the claimant obtained?

Section 67 is a new provision. It allows the court, when determining the amount of compensation, to take into account the value of any benefit obtained by the claimant if it considers it just in all the circumstances to do so.

This clearly gives the court power to reduce the amount payable and is designed to avoid the kind of situation that arose in McNicholl v. Attorney-General[75] where the claimant received compensation even though the loss had been rectified by the time of bringing the claim[76].

7.10 Court’s discretion to adjust amount

Section 68 is also a new provision. It gives the court discretion to adjust the amount of compensation as determined in s 64–67 above, if it thinks that amount would be inadequate or excessive. In this instance the court may use the market value as at a different date to that set out in s 65(1) including, if the court thinks fit, as at the date of the judgment of the court in the proceeding. In making such a decision, the court must take into account:

  • whether the time taken by the claimant between the date on which [he or she] gained (or ought reasonably to have gained) knowledge of the loss and the date on which [he or she] gave notice [of the claim] was excessive in the circumstances; and

  • any increase in market values between the date set in s 65(1) and the date of the judgment of the court in the proceeding.

Section 68(3) states that the court must not adjust compensation on any basis other than provided for in ss 68(1) or 69 (see below).

7.11 When compensation not payable or able to be reduced

Section 69 of the 2017 Act deals directly with the matter of contributory negligence. It provides that no compensation is payable for any loss or damage suffered by a claimant either wholly or part as a result of the claimant’s own fraud; or wholly as a result of the claimant’s own lack of proper care.

If any such loss or damage is partly as a result of the claimant’s own lack of proper care, any compensation payable is reduced to the extent that is fair having regard to the claimant’s share in the responsibility for the loss or damage [s 69(2)].

A lack of proper care may include, without limitation, signing an instrument or authorising the registration of an instrument without seeking independent legal advice or failure to take other reasonable and prudent steps to ascertain the effect of the instrument: [s 69(4)].

Any contribution by a claimant’s practitioner to the loss or damage is not to be considered as a contribution by the claimant (s 69(3)).

Section 69(3) is in line with the principle that the compensation regime should operate as a system of first resort with a right of subrogation in favour of the Crown against the wrongdoer. Section 175(1A) of the 1952 Act partly recognised this in providing a right of subrogation for the Crown against a negligent practitioner where a claim is made under the guaranteed search provisions in s 172A of the 1952 Act.

Section 69(5) makes it clear that the Contributory Negligence Act 1947 does not apply to a claim for compensation under the 2017 Act. Once the Law Commission had determined that compensation should be reduced in cases of contributory fault, it considered how best to effect this. It noted problems with the Contributory Negligence Act 1947 which does not apply to intentional torts and it is therefore in many cases unrealistic to equate the operation of the compensation regime with claims in tort-based litigation. It therefore did not support applying the Contributory Negligence Act 1947 to compensation claims under a new LTA but rather to deal directly with the matter by a specific statutory provision[77].

7.12 Interest

Section 70 provides that the amount of compensation ordered may include interest at the prescribed rate from the date of the claim to the date of judgment or acceptance. This provision therefore allows for the rate to be adjusted.

Section 179 of the 1952 Act provided that no claimant was entitled to recover any greater amount for compensation in respect of loss or deprivation of any land than the value at the time of deprivation, together with value of improvements made prior to the time of deprivation (see above) with interest at the rate of 5 per cent per annum to the date of judgment recovered[78].

7.13 Subrogation; compensation recoverable by crown as debt

Section 71 provides that the Crown is subrogated to the rights and remedies of a successful claimant.

Section 72 details compensation recoverable by the Crown as debt.

The Crown can recover from a practitioner for compensation paid as a result of loss or damage caused wholly or in part by the practitioner’s negligence [s 72(3) and (4)].

7.14 No limitation provision

The 2017 Act has no equivalent to s 180 of the 1952 Act (limitation period for compensation claims).

In the Limitation Act 2010, while s 11(1) provides that it is a defence to a money claim if a claim is filed after six years, s 11(2) provides for a late knowledge date in certain specified circumstances. In these circumstances, s 11(3) provides that it is a defence to a claim if the claim is filed at least three years after that late knowledge date.

These provisions in the Limitation Act 2010 are adequate to address time limits to claims for compensation.

8. Conclusion

This paper addresses some of the significant reforms in the LTA 2017 and uses a number of case studies to highlight how court decisions might be different under the new regime.

The new definition of fraud in s 6 of the LTA 2017 is based on the classic cases Assets Co Ltd v. Roihi and Waimaha Sawmilling Co Ltd v. Waione Timber Co Ltd5. These decisions have always underpinned extensive judicial reasoning in cases on land transfer fraud. The resultant limited legislative definition should allow any necessary flexibility. The new Act reiterates the principle of immediate indefeasibility but qualifies it with the introduction of some judicial discretion. This is a novel concept for the courts and will undoubtedly be dealt with cautiously. The author voices some disquiet with regard to some of the guidelines set out in s 55(4) of the LTA 2017.

The compensation provisions introduce an element of an owner’s culpability. Under the repealed LTA 1952, the courts had no ability to take into account an owner’s carelessness when assessing the award of compensation. This is no longer the case, and an owner now runs the risk of reduced compensation if there has been lack of proper care. Section 69(4) of the LTA 2017 specifies explicitly that this might comprise signing an instrument or authorising the registration if an instrument without seeking independent legal advice or the failure to take other prudent steps to ascertain the effect of the instrument. Decisions in this area of the Torrens system will differ considerably under the new LTA 2017. Owner beware!.

Notes

1.

Law Commission Review of the Land Transfer Act 1952 (NZLC IP10, 2008)

2.

Law Commission A New Land Transfer Act (NZLC R116, 2010).

3.

For a detailed discussion of these reforms, see E Toomey, “Introduction: The Significant Features of the New Land Transfer Act” in Brookers Land Transfer Act Handbook 2017 ( ThomsonReuters, 2017).

4.

Assets Co Ltd v. Roihi [1905] AC 176 (PC); Waimiha Sawmilling Co Ltd v. Waione Timber Co Ltd [1923] NZLR 1137 (CA).

5.

Law Commission A New Land Transfer Act (NZLC R116, 2010) at [2.38].

6.

See “The Compensation Regime” below at 4.

7.

Nathan v. Dollars & Sense Finance Ltd [2008] NZSC 20, [2008] 2 NZLR 557.

8.

Nathan v. Dollars & Sense Finance Ltd [2008] NZSC 20, [2008] 2 NZLR 557 at [44].

9.

Cook v. Abdallah [2016] NZHC 2445, (2016) 18 NZCPR 133.

10.

The applicant sought an order under s 85 of the LTA 1952 directing the Registrar-General to cancel and correct the respondent’s registration as registered proprietor.

11.

Instant Funding Ltd v. Greenwich Property Holdings Ltd HC Auckland CIV-2007-404-6806, 20 December 2007. See also Centillion Investments Ltd v. Hillpine Investments Ltd HC Auckland CIV-2006-404-6965, 6 December 2006.

12.

See, for instance, Vegar-Fitzgerald v. Aorangi Forests Ltd [2014] NZCA 200; Cashmere Capital Ltd v. Carroll [2009] NZSC 123, [2010] 1 NZLR 577; Gold Band Finance Ltd v. Philpott [2015] NZHC 2383, (2015) 16 NZCPR 749.

13.

JEB Management Ltd v. Grubz United Whanau Trust [2015] NZHC 157, (2015) 15 NZCPR 705 at [44].

14.

Westpac New Zealand Ltd v. MAP & Associates Ltd [2011] NZSC 89, [2011] 3 NZLR 751.

15.

Barlow Clowes International Ltd (in liq) v. Eurotrust International Ltd [2005] UKPC 37, [2006] 1 WLR 1476.

16.

Westpac New Zealand Ltd v. MAP & Associates Ltd [2011] NZSC 89, [2011] 3 NZLR 751 at [26].

17.

US International Marketing Ltd v. National Bank of New Zealand Ltd [2004] 1 NZLR 589 (CA)

18.

Westpac New Zealand Ltd v. MAP & Associates Ltd [2011] NZSC 89, [2011] 3 NZLR 751 at [27].

19.

US International Marketing Ltd v. National Bank of New Zealand Ltd [2004] 1 NZLR 589 (CA) at [10].

20.

Royal Brunei Airlines Sdn Bhd v. Tan [1995] 2 AC 378(PC).

21.

LHK Nominees Pty Ltd v. Kenworthy [2002] WASCA 291, (2002) 26 WAR 517 at [214]. See also Conlan v. Registrar of Titles [2001] WASC 201, (2001) 24 WAR 299 at [174]–[175]

22.

Burmeister v. O’Brien [2010] 2 NZLR 395 (HC) at [133].

23.

See discussion in New Zealand Land Law (3 ed, Toomey gen ed) at 2.5.06 where Blanchard J (writing extra judicially: P Blanchard,“Indefeasibility under the Torrens system in New Zealand” in David Grinlinton (ed) Torrens in the Twenty-first Century (LexisNexis, Wellington, 2003) 29 at 42) when discussing s 182 of the Land Transfer Act 1952 (the “notice” section) drew a contrast between notice “directive and constructive” and “knowledge”.

24.

Law Commission A New Land Transfer Act (NZLC R116, 2010) at [2.4].

25.

Gibbs v. Messer (1891) AC 248.

26.

Law Commission A New Land Transfer Act (NZLC R116, 2010) at 78–79.

27.

Regal Castings Ltd v. Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 at [132].

28.

The exceptions and limitations comprise:

Sections 52 to 56

s 52 “Exceptions and limitations” (see below)

s 53: “No title to public road or reserve unless authorised” (compare s 77 of the 1952 Act)

s 54–56 comprise the provisions relating to the ability of the court to alter the register in cases of manifest injustice – see commentary below.

(Note: cls 54 and 55 of earlier versions of the Land Transfer Bill (“Verification of identity of mortgagor by mortgagee” and “Title of transferee of mortgage”) were deleted during the passage of the Bill.

Subparts 1 (“Application for record of title based on adverse possession”) and 3 (“Title to access strips”) of pt 4 (“Miscellaneous applications and other matters”).

Section 204 (“Applications by persons claiming title to land for which there is limited record of title”).

Section 52 covers the five exceptions and limitations that were stated in ss 62 and 63 of the 1952 Act: (fraud; estate or interest registered or noted on the record of title at the time of registration; prior record of title; incorrect description of area or boundaries; omission of easement).

Nothing in s 52 limits s 54 (“Application to court for order for alteration of register”): s 52(2).

29.

Law Commission A New Land Transfer Act (NZLC R116, 2010) at [3.4].

30.

Regal Castings Ltd v. Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 at [150] per Tipping J (Blanchard and Wilson JJ in agreement).

31.

See for instance New Zealand decisions such as Re Mangatainoka 1BC (No 2) (1913) 33 NZLR 23 (SC); dicta in Boyd v. Mayor of Wellington [1924] NZLR 1174 (CA); and leading Australian decisions such as Bogdanovich v. Koteff (1988) 12 NSWLR 472 (CA) and Conlan v. Registrar of Titles [2001] WASC 201, (2001) 24 WAR 299 (cited in Regal Castings Ltd v. Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 at [130] per Tipping J). Tipping J, considering s 62 as the key indefeasibility section in the LTA 1952, noted that the provision made no reference to a need for consideration, thus providing a good indication that protection should apply equally to purchasers for value and volunteers.

32.

Law Commission A New Land Transfer Act (NZLC R116, 2010) at [2.18].

33.

Frazer v. Walker [1967] NZLR 1069 (PC).

34.

Frazer v. Walker [1967] NZLR 1069 (PC) at 1078.

35.

See comments of Anthony Mason in “Indefeasibility: Logic or legend?”, in D Grinlinton (ed) Torrens in the Twenty-first Century (LexisNexis, Wellington, 2003) 3 at 6.

36.

Regal Castings Ltd v. Lightbody [2008] NZSC 87, [2009] 2 NZLR 433.

37.

Regal Castings Ltd v. Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 at [149]–[153]. See, for example, Carpet Import Co Ltd v. Beath & Co Ltd [1927] NZLR 37 (SC) and Webb v. Hooper [1953] NZLR 111 (SC).

38.

Regal Castings Ltd v. Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 at [150].

39.

Elias CJ and Blanchard, Tipping and Wilson JJ; McGrath J was silent on this point.

40.

Regal Castings Ltd v. Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 at [14] per Elias CJ. Tipping J agreed that there had been “no substantive consideration” (at [111]) and was satisfied that the alienation was voluntary (at [113]).

41.

Regal Castings Ltd v. Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 at [60] per Blanchard and Wilson JJ (Blanchard J delivering the judgment).

42.

This was not the view of the majority in the Court of Appeal, where it was held (William Young P dissenting) that the alienation was not voluntary at the time it was made, as the respondents were free to modify or abandon the gifting programme in the future: Regal Castings Ltd v. Lightbody [2007] NZCA 396, [2008] 2 NZLR 153 at [69]. The length of time between the alienation and liquidation was a relevant factor.

43.

Regal Castings Ltd v. Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 at [135].

44.

Law Commission A New Land Transfer Act (NZLC R116, 2010) at [2.16].

45.

Land Transfer Bill 2016 (118-2) (commentary) at 4.

46.

Boyd v. Mayor etc of Wellington [1924] NZLR 1174 (CA).

47.

Stout CJ, Sim and Adams JJ

48.

Assets Co Ltd v. Roihi [1905] AC 176 (PC);

49.

The dissenting judges (Stringer and Salmond JJ), dismissing the relevance of the decision in Assets Co Ltd, considered that the principle of Gibbs v. Messer [1891] AC 248 applied to all void instruments

50.

See now ss 126 and 160 of Te Ture Whenua Maori Act 1993.

51.

Housing Corporation of New Zealand v. Maori Trustee [1988] 2 NZLR 662 (HC), citing Frazer v. Walker [1967] NZLR 1069 (PC) at 1079.

52.

Housing Corporation of New Zealand v. Maori Trustee [1988] 2 NZLR 662 (HC) at 699.

53.

Housing Corporation of New Zealand v. Maori Trustee [1988] 2 NZLR 662 (HC) at 700.

54.

McCann – Waipuka 3B1B1 and 3B1B2B1C2A (1993) 135 Napier MB 165 (135 NA 165).

55.

Edwards v. Maori Land Court HC Wellington CP78/01, 11 December 2001 (appealed on a different ground: Bruce v. Edwards [2003] 1 NZLR 515 (CA).

56.

Jensen v. Registrar-General of Land [2013] 15 NZCPR 44.

57.

Frazer v. Walker [1967] NZLR (PC).

58.

Nathan v. Dollars & Sense Finance Ltd [2007] NZCA 177, [2007] 2 NZLR 747 at [138].

59.

Regal Castings v. Lightbody [2008] NZSC 87, [2009] 2 NZLR 433.

60.

Vassos v. State Bank of South Australia [1993] 2 VR 316 (SC).

61.

Vassos v. State Bank of South Australia [1993] 2 VR 316 (SC) at 333.

62.

Hayne J’s conclusion was referred to with approval by Gleeson CJ (with whom Cripps JA agreed) in Story v. Advance Bank Australia Ltd (1993) 31 NSWLR 722 (CA); and by Campbell J in Brueckner v. The Satellite Group (Ultimo) Pty Ltd [2002] NSWSC 378, (2002) 15 BPR 28,885.

63.

Extensive judicial comment on s 172(a) of the LTA 1952 can be found in Registrar-General of Land v. Marshall [1995] 2 NZLR 189 and Marriott v. Attorney-General [2011] 1 NZLR 354.

64.

Law Commission A New Land Transfer Act (NZLC R116, 2010) at 85.

65.

Law Commission A New Land Transfer Act (NZLC R116, 2010) at 86.

66.

Law Commission A New Land Transfer Act (NZLC R116, 2010) at [4.8].

67.

Law Commission Review of the Land Transfer Act 1952 (NZLC IP10, 2008) at [11.3].

68.

Law Commission A New Land Transfer Act (NZLC R116, 2010) at 87.

69.

See ss 178(b), 178(c) and 178(d).

70.

See ss 89E, 201, 204 and 209.

71.

Section 19.

72.

See commentary in Law Commission A New Land Transfer Act (NZLC R116,2010) at 87–88.

73.

See Burmeister v. Registrar-General of Land[ 2014] NZHC 2033, (2014) 15 NZCPR 871.

74.

Law Commission A New Land Transfer Act (NZLC R116, 2010) at [4.13], commenting on findings in Law Commission, Review of the Land Transfer Act 1952 (NZLC IP10, 2008) at [11.44]–[11.51]. The 2010 Report and draft Bill set the date at the date on which the claim is made. This is not reflected in the 2017 Act – rather it is the date of reasonable discovery.

75.

McNicholl v. Attorney-General (1996) 3 NZ ConvC 192,451 (HC).

76.

Law Commission A New Land Transfer Act (NZLC R116, 2010) at [4.17].

77.

Law Commission A New Land Transfer Act (NZLC R116, 2010) at [4.28].

78.

See Burmeister v. Registrar-General of Land [2014] NZHC 631, (2014) 15 NZCPR 91.

Corresponding author

Elizabeth Toomey can be contacted at: elizabeth.toomey@canterbury.ac.nz