Registration is Protection

REGISTRATION = PROTECTION
I have written about the Torrens system before. This great Australian invention –Sir Robert Torrens was the first Surveyor General of South Australia- has spread over much of the world.
The concept is simple. The government keeps a register, the register mirrors the title, it shows who owns the land, whether there are leases, if someone has an easement over the land or whether there is an easement in favour of that land and so on.

If an interest isnt on the register in some way then apart from some minor exceptions it doesn’t exist.

One example of this is to see the difference between how the ‘new’ and the ‘old’ form of mortgages work (or don’t work) under the Torrens system. Briefly the old form in which the mortgage sets out all the terms, interest, principal, charges and everything else is fully protected by Torrens title. So that where a fraudster pretends to be the owner and mortgages the land the mortgagee wins against the owner who can make a claim against the "Fidelity Fund,"
But in the new sort of mortgages where the interest and principal and most other things are set out in a side agreement which is not registered the owner wins. And probably the mortgagee doesn’t have a claim against the Fidelity Fund. This is because the side agreement is not registered. The Torrens system is as Sir Garfield Barwick wrote many years ago (and as I like to repeat) ‘not a system of registration of title but a system of title by registration." What is not in the register is not protected in fact it can often be ignored.

Another example of the problems the new sort of mortgages causes has been shown in a recent High Court case.

To simplify the facts a mortgagee lent $410,000 to Queensland Premier Mines and Mr and Mrs Beckinsale and another $560,000 to Queensland Premier Mines alone under two separate agreements. Queensland Premier Mines owned land and gave a mortgage. Mr and Mrs Beckinsale were not involved in the mortgage. The mortgage was registered.

The mortgagee then sold the mortgage to Mr French and –by a separate agreement "assigned" the right to sue under the agreements. The transfer of the mortgage was registered. Later on Mr French again sold the mortgage –to a company associated with Mr and Mrs Breckinsale -and again that transfer was registered. But the right to sue was not assigned.

The High Court (agreeing with the Victorian courts from which the appeal came ) said that the only thing transferred was the rights under the mortgage and not the rights in the agreements. This meant that Mr French could sue to recover the debt and the Beckinsale company -the new owner of the mortgage -could not do so. (not that the company wanted to, it wanted to stop Mr French from doing so)

As Justice Michael Kirby wrote
s 62 (being the relevant section) of the Act reflects the important public policy that lies at the heart of the Torrens system of title by registration. There is to be a register open to the public which will record, with the detail required by such sections as ss 73 and 74 of the Act, the nature of a specified interest which, in this case, is the mortgage. An inspection of the register should reveal all about the title. What parties thought or did "on the side" should not be relevant.

One curious thing about this case is that though the land was in Queensland, the court case started in Victoria.

The basis of this- cutting out the manoeuvring’s by the Beckinsales is that –as we wrote above- the Torrens system protects the registered interests in land and nothing else.

The answer is to make sure you register your interests.