System of Title By Registration

The principle of indefeasibility of title has been said that is the foundation of the Torrens system of title. It is not a system of registration of title but a system of title by registration; this prevents acts of fraudulence done for both sides of the party which enables a more justified transaction between the two.

As indefeasibility is not an absolute concept, in the case of a volunteer exception where the registering party acquires the interest for no consideration; for example, this means that if a relative leave you a property under a will, you are the owner of the property with or without being informed about the acquisition of the equity. While most cases are resolved with the volunteer regaining the right to their property, in recent times much more controversy has arisen over the years as the New South Wales begin to take on a different perspective to that of the Victorian and South Australian courts. This is demonstrated in the case of Bogdanovic v Koteff (1988- 12 NSWLR 472) where Mrs Bogdanovic looked after Mr Koteff’s son on the bases that she would be given an interest in the house which allowed her to stay in the house for life, but soon after Mr Koteff’s son inherited the house the court held and Mrs Bogdanovic’s claim failed as Mr Koteff’s son had protection according to any register proprietor, therefore he was proven that he was not fraudulent. In contrast, in the Victoria court, the case of Rasmussen v Rasmussen (1995 – 1 VR 613) the property was passed onto one of the grandsons of the owner, but the father stated that the property was held by trust to him and was to avoid taxes and his response was that he was the registered proprietor and that he had indefeasibility. This was held by section 42 and 43 of the Transfer of Lands Act which stated “Estate of registered proprietor paramount & Persons dealing with registered proprietor not affected by notice” as the father was not a bona fide purchase for value he was not granted the ownership of the property and the ownership retained to the grandson who the will was left to. On these bases the Victorian court held the legislation only provides indefeasibility to purchases for value.

The two case examples show the difficulty in terms of judgement for the case, especially when putting into consideration of different rulings in different state governments of both Transfer of Land acts. This is possibly the main reason where cases can be considered misleading in terms of creating the injustice in the court system. In order to provide a more in depth look into the accuracy of the question we must look at other sections of the Transfer of Lands Act and the volunteer exception.

In cases where King v Smail (1958 VR 273) a husband and wife were registered as proprietors of the land and has a joint ownership, then shortly after the husband transferred his interest in the part of the ownership of the land as a way of gift, before the transfer was made the husband executed a deed of bankruptcy and the trustee lodged a caveat claiming equitable interest, which means that they are claiming the ownership of the land as well. In the preceding the case was decided upon wither the wife had priority over the trustee and if the trustee had interest in the property before that of the wife, this decision was held once again under section 42 of the Transfer of Land Act which did not give the wife priority as she was a volunteer and the doctrine of indefeasibility did not protect the transferral of ownership through gifts because the trustee was a bona fide purchaser for value. This means that under the legislation of the Transfer of Land Act when practiced in Victoria would generally decide that case upon the bond fide purchaser when the case of volunteer gifting was subjected to the case. Even though the wife was unaware of the bankruptcy it is still unlikely that she will receive any form of compensation from the court. We can also relate the decision of this case with the section 68 of the Transfer of Lands Act as it states: Foreclosure or surrender of mortgaged lease where lessee is bankrupt. This is the decision maker for the case as it clearly states that in the case of King v Smail, the volunteer ownership indefeasibility can be overruled as the trustee is the previously stated owner of the property due to the bankruptcy of the original title holder. The judge stated that: “Although section 42 of the Transfer of Land Act 1954 in itself affords no ground for distinguishing between the volunteer and the purchaser for value and would appear to give paramount effect to registered title in either case, other sections in the act draw a distinction between the volunteer and the purchaser for value and appear to justify the conclusion that upon the registration of dealings subsequent to initial registration under the act, it is purchasers for value only who were intended to have the benefit of section 42″. The decision also referred to terms such as section 44 (2) section 52 (4) and section 110 (3). In term, this case also sent future standard for similar rulings, this is important also in relation to the Rasmussen v Rasmussen case as it contributed to the judge’s final decision.

An indefeasible title can also be varied where the volunteer was undergo falsified information. This can