LAND TRANSFER AND INDEFEASIBILITY

(1) New Zealands land transfer system

(a) Deeds system - title transferred on delivery of relevant deed
-under deeds system however purchaser of property was handed conveyancing documents
-deed was signed w/ witnesses, sealed with wax, then physically delivered to purchaser
-no record of who owned property - had to go back through chain of transfers
-uncertain whether new purchaser would get good title because of nemo dat
-if person selling land didnt have good title, they couldnt give good title to new buyer
-therefore, innocent buyer didnt take good title from a fraudster

(b) Deeds registration system - title still passed under deed

-after 1841 in NZ it became possible to register instruments affecting rights in land
-Deeds Registration Act 1908 - when Crown granted land, deed recording grant was recorded in
register of instruments relating to land
-title didnt pass on registration either; title still passed on delivery of deed

(c) Land Transfer System - the Torrens system

-features a central register which is state managed, interests accurately recorded here
-not always possible because some interests dont get registered or cant be registered
-thereby register becomes definitive record of all rights/interests in a piece of land
-after LTA 1870 all land alienated by Crown in NZ was subject to LTS
-Compulsory Registration of Title Act 1924 put most land onto LTS

(2) Indefeasibility of title

(i) Who is protected by IND and who is trying to assail that?
(i) Can a registered interest holders title be defeated?
-P is another person was once registered on title or is currently registered on title
-person deprived of rights cannot assail RP under IND
-eg former RP trying to get land back or RP wants to get rid of a registered mortgage
(ii) Can an unregistered interest holder assail IND?
-unregistered interest holder wants to claim against RP
-RP will claim they are not bound by unregistered interests under s 182
-IND means RP doesnt have to give effect to interests

(ii) Has the interest to be assailed been registered on the title?

-Yes - the interest is protected by IND
-No - the interest is not protected by IND

(iii) Act of registration conveys an interest in land - s 41 LTA

-the act of registering, rather than executing documents, is when interest transferred
-therefore interest passes at the minute the name of the new owner is entered on Register

(iv) Indefeasibility gives RP good title upon registration - Kerr

-IND was created to get rid of nemo dat in relation to land
-nemo dat meant defect way back could affect title to land now
-IND under Torrens designed so bona fide purchaser or interest holder registered on title is secured
regardless of flaws/defects w/ person granting them the interest

(v) Title good against and notice to world with being on Register - s 62
-only need to show you are on title to have good rights to property
-Register also incorporates anything else listed on title and gives it IND protection
-registered title is paramount subject to a number of exceptions - s 62 - paramountcy
1

-no need to look behind person you are dealing with as long as not obviously fraudulent
-anyone dealing w/ land assumed to have notice of everything on the title
No obligation to look further than cert of title - s 182
-thus, prima facie, a new RP doesnt have to abide by unregistered interests
-only if they had notice of them will they have to abide by them
-evidence of title can be provided by duplicate cert of title - s 75
-but nearly all land is ET land, so s 75 effectively defunct
-but w/ ET land, certified print out of title is evidence in court
Placement of interests on title makes them IND, and also makes content of instruments
referred to IND as well - Harvey v Hurley
-necessary to request copy of document referred to on title - eg mortgage
-person taken to have CN of what is in agreements as well
-looking at title you are taken to have seen interest and interest agreement
-eg clauses in mortgage agreement become IND too
>> Harvey v Hurley
-easement granted for ROW on property, dispute arose as to its scope
-two different plans existed - one attached to registered easement and other not
-CA - plan attached to memo of transfer was conclusive
-plan itself took IND because it was part of instrument noted on title
-thus world taken to know how far ROW extended because of plan

(vi) Indefeasibility provides different kinds of protections to RP

(1) Section 62, s 63 and s 183 provide protection to person registered on title
(a) Against claim of competing owner/registered interest holder - ss 62-63
-generally, person who is RP cannot have their rights as RP assailed
-even in the case of a person wrongly deprived of their rights
(b) Protection against unregistered interests - ss 62 and 182
-RP not required to give effect to things not listed on title
-eg a lease is not registered and new RP takes title w/o fraud

(2) Section 62 affirms registered titleholders prominence

(3) Section 63 is defence to actions seeking ejectment of RP
-RP protected against proceedings for recovery of land unless exception applies
-thus prima facie, if interest is on title, it is protected, unless there is exception to IND

(vii) Even if previous RP didnt have good title, or agreement concerning interest
is defective, new interest holder protected by IND - s 183
(1) Need consideration given by transferee if previous RP was fraudulent
-otherwise s 63(1)(c) applies because transferee is a volunteer
-in which case IND doesnt apply
-hence why s 183 is described as flipside to s 63

(2) Nemo dat principle doesnt apply to transactions of interests in land - s 183
-bona fide purchasers for value shielded against various proceedings
-even if previous RP was registered through fraud or accident then new RP protected
-two different ways title could be flawed at CL:
(a) Defect in vendors title
(b) Flaw in the agreement (agreement void or voidable)
-signature was forgery, K void due to duress, formalities were defective, etc
(a) Defect in vendors title does not affect title being IND
2

-good title comes from registration

-wasnt clear until Frazer v Walker that IND applied to void(able) agreements too
(b) Void/voidable instruments confer immediate benefits of IND, not deferred IND
(i) Deferred IND
-A sells land to B under void(able) instrument
-B doesnt get IND title, only when B validly transfers to C will C receive IND title
>> Gibbs v Messer (Vic)
-solicitor transferred property of client to fictitious person who granted mortgage
-question whether RP should be reinstated or whether title subject to mortgage
-court applied deferred IND and reinstated original RP
>> Frazer v Walker
-Mrs F forged Mr Fs signature on mortgage document
-mortgagees were Rs; Rs not aware of fraud and registered mortgage
-mortgage defaulted on and Rs sold property to Ws
-court DID NOT apply DEF IND, but even if they had F still would have lost
-Ws interest would be IND because transaction to W wasnt fraudulent
-W took protection of ss 63 and 183 whether DEF IND or IM IND
(ii) Immediate IND
-A sells land to B under void(able) instrument
-B gets IND title IMMEDIATELY under this model
-this is regardless of fact that agreement was of no legal effect
>> Frazer v Walker
-PC didnt have to address position of Rs and whether mortgage was IND
-PC applied IM IND and thus concluded Rs mortgage was IND
-Rs not party to fraud, thus fell under s 63 and mortgage protected in any event
>> Morrison v BNZ
-document for mortgage was forged
-mortgage was protected by IM IND
-BNZ was not a party to fraud and thus protected
(iii) Question whether IM IND coupled w/ state compensation is fair
-under s 172 those who lose out can claim compensation from the state, take other action
-is it fair that former RP should lose out to new RP where both parties innocent?
-new RP is probably only a recent purchaser whereas former RP has attachment to land
-following NZLC suggestion government is going to amend LTA to allow court to set aside new RP in
favour of original RP where it would be manifest injustice not to do so
-the newcomer would have to seek compensation in that case
-but that creates uncertainty Torrens is meant to avoid
-eg Frazer v Walker; Sutton v OKane; Bunt v Hallinan

(viii) If interest not registered, RP should seek injunction or caveat

(a) Injunction will protect RP from unregistered interest holder getting on title
(b) Caveat could do the same, but s 137 possibly means RP cant caveat their title

(ix) Does an exception to IND under s 62 or s 63 apply?

(1) Is the person who has been transferred an interest/title a volunteer?
(a) Is the volunteer seeking protection from ejectment?
-s 63 normally provides protection from ejectment
(b) Is IND denied to volunteers generally though?
3

-NZSC and NSW agree volunteers not getting IND is exception

-Vic thinks volunteers dont take IND generally
-no clear HCA decision, weight appears to be volunteers take IND, subject to exceptions
(i) Volunteers have protection of IND (except for statutory exceptions)
-volunteers protected in same way as those who give value
-no distinction between PFV and volunteer, except for exceptions in ss 63(1)(c) and 63(1)(d)
-one shouldnt find exceptions to IND unless they are express, IND must be respected
-Registration and IND at heart of Torrens system - Regal Castings
>> Regal Castings v Lightbody
-trustees were volunteers because gave no consideration for transfer
-ss 62 and 182 dont refer to volunteers but ss 63 and 183 do
-exception in s 63 says nothing of position of volunteers generally
-Tipping J - cant extrapolate from this that volunteers denied IND generally
-volunteer takes IND if previous owner didnt gain title by fraud
-SC apparently agreed - Ls took IND as trustees; otherwise no need to consider IP
>> Bogdanovich v Koteff (NSW)
-beneficiary under will, K, became RP of property
-K didnt know will granted equitable interest in property to B
-interest was B could stay in house for rest of her life
-didnt matter that K was a volunteer, K was protected by IND - NSWCA
-therefore, w/o fraud, K could take property clear of interest
>> Conlan v Registrar of Titles (WA)
-s 199 (same as s 163) dealt w/ ejectment; express reference made to volunteers
-if volunteers are a general exception to IND, why include discussion of volunteers in
some sections but not in others?
(ii) Volunteers arent protected by IND at all
-LTA should be interpreted as whole, only giving protection of IND to purchasers for value
-volunteers take title subject to equitable interests that would have bound transferor
>> Rasmussen v Rasmussen (Vic)
-one child became RP as beneficiary under fathers will
-another child claimed interest arguing land held on CT
-apparently father made promise that the disputing child would become RP of land
-because new RP was volunteer, allegedly they were bound by promise of father
-court thought distinction between purchaser for value and volunteer rational
-equity would be hindered if volunteers took IND outside of specified exceptions
(c) Section 63(1)(c) doesnt protect volunteers where transferor committed fraud
-if person who transfers interest to volunteer derived title through fraud, IND doesnt apply to the new
interest holder - s 63(1)(c)
-prevents fraudster from simply transferring gratuitously to a friend

(2) Has the new person registered committed fraud? Section 63(1)(c)/s 62
(a) Who is the plaintiff?
(i) Can a registered interest holder be defeated through fraud?
-P is another person was once registered on title or is currently registered on title
-eg former RP trying to get land back or RP wants to get rid of a registered mortgage
(ii) Can an unregistered interest holder assail IND?
-unregistered interest holder wants to claim against RP
-RP will claim they are not bound by unregistered interests under s 182
(b) Who is the alleged fraudster? Agent or fraudster themselves?
4

-person whose title being challenged or agent (implicating RP) must have committed fraud
-fraud must be within scope of tasks agent was meant to perform - Assets Co v Mere Roihi
>> Nathan v Dollars & Sense
-N was agent of D&S in getting mortgage from Ns parents
-N was asked to obtain signature of his parents after solicitor prepared papers
-N got fathers signature but forged mothers signature
-forgery was within scope of Ns task as agent, although not authorised
-thus N, as agent, committed fraud, which translated to D&S
-effectively D&S had committed a fraud in getting mortgage granted
-because of fraud, mortgage not protected by IND - s 63(1)(c)
(c) If new interest holder is not a party to fraud then they take good title, and are protected by IND
against being assailed by former RP or unregistered interests
-but if a party to fraud, new interest holder cant take IND title
(d) What is the nature of fraud when unclear whether a person is a party to fraud or not?
Each case must be determined on its facts - knowledge and conduct of RP is focussed on
Essential element of fraud is dishonesty - Assets Co v Mere Roihi; Nathan v Dollars & Sense
-for there to be dishonesty there needs to be knowledge or wilful blindness as to truth
-person who take s title must have known of or be wilfully blind to the truth
-wilful blindness - individual abstained from making inquiries for fear of learning truth
-but just knowing of prior interests isnt immediately dishonest - s 182
-direct/constructive knowledge of trusts/unregistered instruments isnt fraud - s 182
If transfer was designed to defeat interests of another registered interest holder then that can amount to
fraud - Waimiha Sawmilling v Waione (PC)
-problem is whether object has to be sole, dominant, or just part of reason
-Glantschnig - transaction was designed to defeat interest of beneficiary under a trust
If dealing with unregistered equitable interest, knowledge of interest itself not fraud - s 182
-at equity, taking conveyance with actual/constructive notice of interest was fraud
-but under LTA, s 182, knowing of unregistered interest/trust is not enough for fraud
-instead dishonesty, actual knowledge, or wilful blindness is needed - Assets Co
>> Efstratiou v Glantschnig
-Gs were married; Mr G was RP, Mrs G not
-Mrs G provided half deposit at start for property
-Mr G went to Austria, then came back and found Mrs G was an adulterer
-unregistered interest was fact Mrs G owned half of property beneficially
-Mr G thus held half of property on trust for Mrs G
-Mr G sold property to E - E was held to have committed fraud
-sold grossly under value, E didnt inspect property, payment made in 3 days of offer
-court found E either knew of Mrs Gs interest or purposely avoided the fact
-transaction also intended to defeat Mrs Gs interest
>> Bunt v Hallinan
-Bs used to own land, but then sold it and agreed on lease over it
-thus unregistered lease was equitable interest Mrs B had
-H purchased property and denied having to give effect to lease
-H was at auction where conditions of sale read out, including lease
-H asked Mr B about shed - Mr B said he told H there was a lease in place
-B went to solicitors office and asked for title search
-solicitor found no lease registered and said s 182 meant notice wasnt enough
>> Bunt v Hallinan: majority concluded no fraud
-H didnt acquire title with a view to depriving Mrs B of her rights
-H had been advised Mrs B had no rights to be deprived of

-H not wilfully blind; he sought legal advice that Mrs B had no rights deprive
>> Bunt v Hallinan: Eichelbaum J concluded H was fraudulent
-Eichelbaum J relied on statements of Salmond J in Waimiha (CA)
-fact H didnt ask for copy of lease agreement was wilful blindness and dishonest
-Hs inquiries were perfunctory and H was taking a gamble
(e) If dealing w/ unregistered interest has there been supervening fraud?
-RP intends to honour unreg interest, after reg dishonestly refuses to recognise interest
-thus fraud is committed after registration of new RP on title
-not clear if SF exists under LTA; but PLA grants relief for land-locked properties
-moreover, an in personam claim could be used to skirt around IND
>> Sutton v OKane
-two lots subdivided w/ easement ROW to get to rear property
-easement shown on plan but nor registered - thus unregistered interest
-no mention of easement in S&P agreement when property sold to Ss
-Ss let Os use ROW, but parties fell out and Ss tried to stop Os from using ROW
-Wild CJ didnt state whether SF is possible under LTA
-Wild CJ found there was no fraud in standing on ones rights in any event
-Richmond J said no possibility of SF in NZ under LTA
-Richmond J - fraud must be committed at time of registration of new RP
-Turner P applied Webb v Hooper
-Turner P - SF is possible under LTA
-Turner P - Ss had more than mere knowledge, knew Os reliant on easement
>> Bahr v Nicolay (HCA)
-two judges said conduct after registration (SF) may be fraud
-two judges said fraud must occur before registration (ie no SF)
-Brennan J didnt rule on whether SF exists
(f) Is the fraudster still registered on the title?
-defrauded person can apply to court, court then instructs Registrar to correct title
>> Heron v Broadbent
-Herons were RPs; B, fraudster, executed mortgage in favour of Hussey
-Hussey not implicated in fraud - bona fide mortgagee for value
-B then transferred property to himself, Hussey registered mortgage
-Bs title was impeachable for fraud - B got title through fraud
(g) Has fraudster passed interest on to another or interacted w/ innocent mortgagee?
-has this new person been a party to fraud?
-if new person is not party to fraud and has purchased/entered agreement for value they are protected
by IND despite purchasing from/entering K with a fraudster - ss 62, 63, 183
-Heron v Broadbent - Husseys mortgage protected by IND because not party to fraud

(3) Crown authorised dispossession of persons land/interest through statute?

(a) Not necessary that direct provision exists overriding LTA
-sufficient if overriding IND is proper implication from terms of relevant statute
-but courts slow to override IND especially where there are multiple overriding statutes
-Miller v Minister of Mines (PC); Regal Castings v Lightbody
(b) Does a provision exist for an interest that can exist without registration of notification?
-some interests can exist without notification or registration and override IND
-controversial because certainty of Torrens system is eroded by this
-various provisions of PLA, Public Works Act, Relationship Property Act can override IND
-eg PLA allows court to impose easements for people whose land is landlocked

(4) Other registered interests? RP takes title subject to other registered interests
6

(5) Has a prior cert of title already been issued? Section 62(a)/s 63(1)(e)
(6) Omission/misdescription of an easement? Section 62(b)/s 63(1)(d)
-courts interpret this as applying only to legal easements
-if a legal easement left off title, it can be compelled to be put on
>> Millns v Borck
-legal easement of ROW included on title
-admin error meant when new cert issued registered easement was omitted
-this fell within s 62(b) and thus new RP had to comply with easement
-RP could get compensation for easement they didnt expect though

(7) Erroneous inclusion/description of boundaries? Section 62(c) ONLY

(8) Mortgagee against mortgagor in default - s 63(1)(a) ONLY
-mortgagee not prevented from taking land by IND
(9) Lessor against lessee in default - s 63(1)(b) ONLY
-s 63 doesnt protect lessee if lessee is in default
(10) Can the Register be corrected for wrongful issue of cert of title? Sections 80-81
-s 81 particularly seems to give Registrar significant powers, beyond just the exceptions listed in ss, 61,
62 and 63 (eg wrongful issue) - Housing Corp v Maori Trustee
-powers not affected by IND - Frazer v Walker; Housing Corp v Maori Trustee
-one can apply to Registrar against exercise of adding interest to Register
-can also appeal from decision of Registrar to HC
(a) Correction of Register can occur when there is fraud under ss 62 and 63 - s 81
-s 81 is problematic because it refers to exceptions to IND in LTA
-it refers to CT that has been fraudulently obtained
-fraudulently probably means LTS fraud under ss 62 and 63
(b) Correction of Register can occur when CT is wrongfully obtained - s 81
-this is a power seldom ever used, but could create problems
-powers of cancellation and correction not coincident with ss 62 and 63 - Housing Corp
-s 81 doesnt map onto ss 61, 62, 63 because wrongful means something other than fraud
-s 81 applies where person obtaining registration does so in manner which is wrongful in sense that it
infringes legal rights of another - Housing Corp v Maori Trustee
-wrongful registration involves something more than that the instrument to which it was procured was
void or that the cert of title was erroneous for that reason - Housing Corp
-but it need not be close to fraud either - Housing Corp per McGechan J
-wrongful may involve breaching a statutory power - McGechan J
-Hinde thinks it may involve negligence
>> Housing Corp v Maori Trustee
-mortgage of Maori land registered on title to land
-statutory requirement mortgage be endorsed by Registrar of Maori land not
complied
with - potentially registering the mortgage was wrongful in this case
-but power for Registrar only so McGechan J didnt say whether wrongful or not

(x) In personam claims preserved by LTA 1952 - Frazer v Walker

(1) In personam claims are equitable/CL claims against RP for personal obligations
-crux of IP claim is that it is against an individual where IR claim is against a thing
-can pursue both equitable and CL claims (eg estoppel and breach of K) outside IND
-IND doesnt exclude personal claims against RP arising out of their acts or acts of agent
(2) Criteria necessary to set up an in personam claim

(a) Recognised legal or equitable cause of action

-must be something more than just unfairness
-relief always equitable regardless of cause of action
(i) Contractual relationship
-RP signs S&P agreement cannot use title to deny S&P agreement
-purchaser has claim in K and equitable remedy of SP can be granted
(ii) Fiduciary relationship breached by RP
-eg RP is trustee holding title for beneficiaries
-trustee cant use IND to claim they have no obligation - court enforces trust
>> Smith v Hugh Watt Society
-Labour Party fundraised and purchased hall to be held on trust for LP members
-1985 - title to property transferred to HW Society w/o consent - breach of trust
-HWS received trust property w/ actual or constructive knowledge it trust property
-action by beneficiaries in unjust enrichment or knowing receipt of trust property
(iii) Cause of action in statute?
>> Regal Castings v Lightbody
-1998 - Ls transferred home to family trust of which they were trustees w/ solicitor
-consideration to transfer was debt of $250k forgiven by gifts from Ls to trust
-Ls were jewellers w/ major creditor being RC - RC didnt know of house transfer
-RC continued to supply Ls despite Ls business being in difficulty
-Ls business went in liq w/ debt of $165k, thus RC brought s 60 PLA claim
-RC claimed transfer intended to defraud; thus transfer should be set aside, and Mr
personally liable for debt should transfer half of house to OA for creditors
-court held s 60 met because L put creditors at greater risk by transferring house

L,

(b) Remedy must not be inconsistent with objective of Torrens system

>> Smith v Hugh Watt Society
-claim arose not from any defect in title; as such IND provisions not challenged
-action arose directly from acts and knowledge of RP and thus no conflict with IND
>> Regal Castings v Lightbody
-s 60 not an exception to IND, but IND didnt preclude IP claim against trustees
-because claim arose from unconscionable behaviour, nothing inconsistent with IND
upholding the IP claim

in

(c) Conscience of person protected by IND must be engaged

-if person protected failed to uphold obligation they would be acting unconscionably
-question of fact and degree whether behaviour would be unconscionable
-doesnt have to be dishonest, but must be more than knowledge of unreg interest
-Lightbody - unconscionable to transfer house w/ intent of keeping beyond reach of RC
(d) Claim arises from acts of RP or agent whether acts done before or after registration
-hence why SF isnt really relevant anymore - Bahr v Nicolay
-Bahr - RP took with notice another party had option to purchase property - RP said they wouldnt
recognise option - RP had assumed obligation thus was liable in personam

(xi) PLA 2007 ss 321-338 provide remedies that skirt around IND
(xii) If an innocent party loses out the state pays them compensation
Newly registered person gets to keep their name on the Register despite being faulty
-person who loses their interest or has to take an encumbered title gets compensation
-new registered person gets to keep name on title and other party gets compensation

Has the limitation period for claiming compensation expired? Section 180
-limitation period lasts six years - starts running when person aware of deprivation or should
reasonably have been aware of it
(1) Loss through omission, mistake, misfeasance of govt officials - s 172(a)
-covers errors made by LRO
-compensation assessed on normal CL principles
-compensation puts you in position as if wrong had not been done - McNicholl v AG
(2) Deprivation of estate/interest through effect of IND
-new RP/person w/ interest registered on title gets to remain in this case
-and the person encumbered or who has lost property gets compensation
-could be total deprivation of land - former RP no longer on title
-or partial deprivation - mortgage registered by fraudster, easement on title removed
-loss assessed at time of transfer of property to new RP or when interest added/removed
-value of property at the time property was transferred to new RP - s 179

(xiii) Different types of title under LTA

(1) Ordinary
-most common - fully backed by compensation and subject to IND
(2) Limited as to title
-defect or uncertainty as to who is titleholder
-could be because uncertainty whether adverse possessor has a claim
-the limitation ceases 12 years after issue of cert of title
(3) Limited as to parcels
-Registrar hasnt fully guaranteed position or boundaries of land
-doesnt automatically cease - some land still has it - eg Sinton Damerell Ltd
-only replaced by ordinary title when boundaries certified - eg Boskett
(4) Limited as to both title and parcels

(xiv) Competition between registered interests?

-priority determined by time of registration - s 37
-when were the documents registered?
-the first registered interest has priority over others, the second over the third, etc

(xv) Automation of Register

There is lack of oversight with processing transactions now, but some additional security
-previous system paper based - forms lodged, checked then registered
-papers checked by someone at LRO - now no oversight of documents
-registration now occurs immediately on entering transfer and legal title gained
-every individual using Landonline has separate digital cert w/ username/password
-other conveyancing professionals can sign and certify docs and have additional passphrase
-Grinlinton and Thomas suggest double key system like SX
Register is now a computer register and most transactions are done online
-transactions take place through electronic instrument created and lodged online
-only a few exceptions are allowed
(1) E-searching - online title searching
(2) E-dealing - lodging of instruments for registration in e-dealing workspace
-conveyancer electronically signs instruments on behalf of party to K, certifies
Duplicate certs of title replaced with search copy, making it easier to commit fraud
-RP was issued w/ duplicate cert of title under old system - s 65 LTA
-this was evidence they were RP of land - prima facie you could deal w/ land
-search copy only states ownership when copy was retrieved - not evidence of title now
-getting rid of cert meant no need to show cert when dealing w/ the land
-previously had to show cert of title in order for transaction to be processed
-also easier to do a lot of damage very quickly
9

Benefits to computer register do exist however

-no longer a vulnerable window where money paid over but title not yet registered
-someone could come along and register an interest
-difficult to break into system and alter physical documents because there are none
-potentially could register everything on computer Register if LIM was integrated
-costs reduced by not having to go to LRO in each of 12 districts and look up documents
-having no duplicate cert saves problem of people losing the cert

(3) Adverse possession

(a) AP/title by prescription is an exception to IND of title under s 62 LTA
-s 62 and s 64 subject to LTAA 1963
-s 62 and s 64 also subject to rights of AP
-s 62 also subject to s 79 and s 199 (prescriptive title)
(b) Adverse possession is based on relativity of title as at CL
-we are referring to who has the best right to possession at CL and under LTS
-if someone has better title than another they can eject the other person
-out of the parties before a court one of them had to win - hence title relative
However, under LTS, the register is almost always conclusive as to who has title
-person on register has better title than any other competitor
-therefore relativity of title is not really relevant under LTS
Nevertheless, adverse possession is a manifestation of relativity of title
-when adverse possessor sets up on land, their title is inferior to actual owner
-but over time true owner may lose right to eject adverse possessor
(c) What is adverse possession?
Adverse possession is when squatter occupies piece of land owned by another
-if true owner allows someone else to be in possession of property for certain period of time, true
owner relinquishes rights to eject adverse possessor from property
-AP is occupying of land against rights of another person - JA Pye v Graham
-no need for adverse possessor to be aggressive or hostile
Does person in question have permission to be there? They are not adverse possessor
-the adverse possessor needs to cut across rights of the true owner
-a lessee thus cant claim to be an adverse possessor
>> Boskett v Drummond: not in AP at time because of permission to be there
-neighbouring pieces of land separate by drainage ditch
-ditch followed boundary of land mostly, but deviated at a point
-thus half acre of Bs land on Ds side of ditch and one and half acres of Ds land was
Bs side of the ditch
-D had survey of land in 1998 done and placed fence on legal boundary
-B removed fence and dispute arose between parties
-there was a relationship between two families on each piece of land
-in light of relationship it was unlikely there was occupation adverse at all

on

If titleholder doesnt take claim before end of period, adverse possessor gains rights
-from when they occupy the clock starts ticking to when they acquire rights to land
During period of adverse possession, adverse possessor risks being ejected
-they dont acquire rights until point at which they acquire rights
-therefore, until that point they can be ejected by true owner at any time
But adverse possessor has better rights than other attempted adverse possessors
-this is despite fact that first adverse possessor doesnt yet have title
10

(d) Nature and quality of possession required for AP is same for LA/LTA/LTAA
Occupation needs to be actual, open and manifest, exclusive and continuous - McDonell
(i) Occupation needs to be open and manifest - McDonnell v Giblin
-must be sufficiently obvious to give owner means of knowing someone challenging title
-person reasonably careful of their interests living in locality should be able to reasonably discover
someone has taken possession of their land
-if concerned to look, would owner visibly be able to see someone attempting to set up exclusive
possession of the land
-must enable true owner to be able to consciously realise they can eject adverse possessor
(ii) Possession must be exclusive - McDonnell v Giblin
-possession must be such as would be sufficient to maintain possession against anyone but the rightful
owner - must be a degree of exclusivity
-must be such that if T tried to assert possession, adverse possessor could sue for trespass
>> Boskett v Drummond
-having fence in wrong place didnt mean AP
-it was a give and take fence because impractical to have it on legal boundary
-thus couldnt be deemed immediately to be exclusive possession
(e) Deeds system land?
(i) Limitation Act 2010 adverse possession only applies in relation to deeds system land
-hardly any of this land exists - most of it is under Torrens system
(ii) Adverse possession survives under s 21 Limitation Act 2010
-after expiry of period, the adverse possessor has a defence as an adverse possessor
-if claim not put in for ejectment w/in period, original owners title is extinguished
(iii) Period of time required differs depending on who is owner of land
-Crown - 60 years must expire
-private landowner - 12 years must expire
(f) Land Transfer Act land?
(i) Starting point is such land cannot be lost through adverse possession - s 64
-CLs encapsulation in LA 2010 doesnt apply to LTS land
-save for provisions in LTAA 1963 title to LTS land cannot be lost through AP
(ii) Exception 1: when land brought under LTA, AP had a matured AP claim - s 79
-even if title is ordinary, title may be void because of AP
-covers situations where when land brought under LTA, someone else already has AP claim
(1) Did the adverse possessor meet the requirements of s 21 and s 27 LA?
-must have been in adverse possession for either 12 or 60 years
-and must have been in adverse possession at time land brought under LTA
(2) When was land brought under LTA?
(3) Had the adverse possessors claim matured at the point land brought under LTA?
(iii) Exception two: cert limited as to title or parcels is issued while putative adverse possessor is partly
way through period required for AP claim - s 199(1)(d), s 199(3) and s 200
-deals w/ situation where no matured AP claim, but person is in adverse possession
(1) What was the date at which the land was brought under the LTA?
-does this come after adverse possession has already begun?

11

(2) Was the cert of title limited as to title or parcels when it was issued?
-ss 199 and 200 only apply when cert of title was issued limited as to title/parcels
-it need not be limited now, but must have been limited then
(3) Has the alleged adverse possessor been in AP for a period of time?
-they must also be in adverse possession at time cert of title is issued
(4) Issue of cert of title limited as to title doesnt stop time running on AP claim
-therefore, time keeps running towards the 12 year or 60 years required
-adverse possessor may have been for 3 years when cert issued, and thus have to
remain for 9 years for claim to mature
>> Boskett v Drummond: the claim succeeded temporally, but no actual AP
-cert of title was limited as to title and parcels here
-relevant date was when land was brought under LTA
-once this was discovered you can decide whether AP claim had matured
-land was brought under LTA in 1929
-thus if Bs predecessors had matured claim at that point, they could claim AP
(iv) Exception three: title by prescription
(1) Guarantee under s 64 LTA is subject to LTAA 1963
-this applies today when a person tries to claim AP of ordinary title
(2) Has the alleged adverse possessor been in AP for 20 years?
-must have been in adverse possession right throughout
-and must continue to be in adverse possession
(3) Title does not automatically vest in adverse possessor after 20 years though
-at CL title to land was extinguished on application of AP for title - s 3(1)(a)-(b)
-but adverse possessor can still apply for title under s 3 LTAA 1963
(4) Has there been any objection to the application?
-Registrar has to give notice of application and look for interested parties
-if interested party registers caveat Registrar must reject adverse possessors claim
-only if no one objects will title to land pass to adverse possessor
-shows LTAA was designed to deal w/ abandoned land - Boskett v Drummond
>> Boskett v Drummond
-claim under s 3 was spurious
-if you claim under s Registrar must advertise and seek objections from RP
-Ds thus could lodge a caveat which they obviously would

(4) Priority between unregistered interests

As with other forms of law, equitable interests only recognised in equity
-the law does not recognise an equitable estate or interest in land, but equity does
-most forms of estates or interests in land may have both legal and equitable equivalents
-because legal title granted by registration (s 41) interest cant be legal otherwise
Incompletely constituted dispositions of land (gifts) w/ no consideration given
-Milroy v Lord applies - equity will assist if donor done everything necessary for donor to effect legal
transfer of title - equity treats donee as equitable owner of property in that case
-under paper system this was when donor handed over the duplicate cert of title and signed the transfer
instrument - Scoones v Gavin - probably similar under electronic system
-probably signing authority and instruction form at a solicitors office is sufficient
(a) Can the equitable interest be enforced through SP of a K?
-under original LTA courts held there were no unregistered interests in land, only Ks
12

-however, courts now agrees 41 allows for unregistered interests

-equity can look at underlying agreement and use this to establish interest
-if you meet the criteria in (c) below then an equitable interest in land arises
(b) What kind of equitable interest is this?
(i) An estate or interest which could be legal but doesnt meet formalities?
-you cant get legal title to any estate or interest if it isnt registered
-in these circs the interest has not yet been registered - thus interest is an equitable one
>> Example of enforcement of K for S&P of real property
-S&P agreement doesnt grant legal title to property
-registration on LTS is legal title - so title remains w/ vendor until then
-in law there is nothing to prevent vendor acting as they wish
-but equity recognises purchasers interest and acts on vendors consicence
-usually equitable interest added to title by lodging a caveat
(ii) An interest in land that is not capable of registration and thus never legal?
-in which case, the interest can only ever be equitable
(c) Does the alleged equitable owner meet the requirements for an equitable interest?
-there needs to be a K capable of being specifically performed
-this is because under constructive trust model the K must be specifically performed
-interest in land arises if these criteria are met - Re Universal Management; Abigail v Lapin
(1) The K must be one for value (given valuable consideration) or equity wont assist
(2) The K must be in writing (s 24 PLA 2007)
(3) Or, if no writing, the purchaser has partly performed the K (s 26 PLA 2006)
>> Example of equitable easement through an enforceable K
-say X has a signed, written agreement for easement, and paid consideration
-there is no legal easement because it has to be registered to be legal interest
-equity will enforce the K for the easement however if a caveat is lodged
(d) Which interest has priority?
(i) Equity uses caveats to determine priorities in relation to land
-caveat is a notice that no action can be taken until a party has been heard
-effectively freezes title and stops dealings with it - caveat against dealings most common
-anyone who claims to be interested in land can lodge a caveat
-but it doesnt create new rights or improve existing rights
(ii) What are the competing equities?
>> Honeybone v National Bank of NZ
-H borrowed money from K as a private mortgage
-H thus signed absolute transfer of property to K, gave K instrument and cert
-after promising not to register transfer K went ahead anyway
-K thus went and got a mortgage over property
-bank didnt register mortgage and then H lodged a caveat
-K was bankrupt so bank went after H
-competing interests - Hs equity of redemption and banks unreg mortgage
>> AGC v CFC Commercial Finance
-two unregistered mortgages over property
>> OLeary v Sentiero
-F leased property from O - lease contained option allowing F to purchase land
-but ignoring this O entered S&P agreement with S
-F became aware of option in lease K after S&P between O and S signed

13

-competition interests - Fs option and Ss unregistered S&P agreement

(iii) First equity in time prevails as long as the equities are equal
-starting point is first equitable interest in time is the best in law
(iv) Earlier right prevails against later right if the latter knows of the earlier right (actual notice) or
would have discovered it had they taken proper steps (constructive notice)
-if knowledge of earlier interest, later interest can never prevail; equities are unequal
-by prevail it is meant that the equitable interest will be specifically performed
>> OLeary v Sentiero
-S had knowledge of the competing equities
-S either actually knew or had constructive knowledge of Fs interest
-S provided with copy of lease which stated option to purchase
-thus no possibility of S reversing the priorities
-thus S left to damages for breach of S&P agreement but not SP of K
(v) Which equity is the first in time?
>> Honeybone v National Bank of NZ
-Hs equity of redemption was first in time
-Hs dealings with K predated Ks dealings with the bank
>> AGC v CFC
-first in time was mortgage agreement with AGC - 14 September 1987
-AGC didnt take duplicate cert and belatedly lodged caveat 23 September 1987
-second in time was mortgage with CFC - 18 September 1987
-CFC searched title on 16 Sep, found it unencumbered, took duplicate cert of title
-parties became aware of each others mortgage 24 November 1987
-stock market crashed and co defaulted on mortgages
-value of land not sufficient to cover both mortgages by 1991
(v) Subject to proviso that merits of the equities must be equal
-displacement of temporal priority can occur when equity looks at merits of respective claims and
decides latter is the better of the two interests
-onus is on second equitable interest holder to reverse priorities - AGC v CFC
-preference should be given to what is better equity in examination of circs - AGC v CFC
-court looks at all circs, not just conduct of first equitable interest holder
-actions subsequent to creation of equitable interests can be examined - AGC v CFC
>> AGC v CFC
-AGC argued CFCs conduct was also relevant
-AGC argued CFC should have challenged priority and land could have been sold
-at time parties were aware of mortgages land was worth enough to cover both
-delay in challenging AGCs priority created false sense of security
-didnt maintain AGCs priority, but allowance made by CFC and paid money to AGC
(1) Priority can be reversed where one equitable interest holder has given a person
seeking a mortgage, etc the means of holding themselves out as being unencumbered,
or
being the RP - false colours doctrine - AGC v CFC
-prior equitable interest may be postponed if person entitled to it has armed
another with
power of going into world under false colours
(2) Failure by 1st interest holder to lodge caveat can result in reversal of priorities
-extension of false colours doctrine
-failure to lodge caveat by prior interest holder can affect priorities
-note 2nd interest holder cant get priority by lodging caveat
(3) Failing to take duplicate cert of title would have affected priorities at one stage
-obviously not possible today with electronic system - extension of false colours

14

(4) Delay in registering can affect priorities

(5) Failure to search title for caveats means priority generally not reversed
-failure of 2nd party to search title generally means priority not reversed
>> Honeybone v National Bank of NZ
-H had given K means of registering the property transfer
-K had means of going out and representing himself as RP of property
-H was effectively author of his own misfortune in this way
>> AGC v CFC
-AGC could have lodged caveat on 15 September 1987
-CFC then would have had notice when they performed search
-AGC failed to take duplicate cert of title, thus allowing CFC to believe it was the first
mortgagee of the property - CFC would have known there was a charge otherwise
-this was enough to reverse temporal priority in favour of CFC
(6) A lender can rely on person claiming to be RP if they hold title and are on the
as RP - Honeybone

title

15