University ofQueensland Law Joumal Vol. 10, No.1

State Indemnified Title in QlJeensland-Success orFailure?

W.D. DUNCAN.*

15

(1) Nature and Object of Fund

As the Real Property Acts abolished the principle of nemo dat quod nonhabet in relation to registered dealings; a statutory fund was established asa concomitant to allow persons deprived of an interest in land through othersbeing registered with unassailable title to be compensated for any loss sufferedby that deprivation. As one learned commentator upon the Act observed,

"The indemnity machinery set up by ... the statutes, for the purpose ofcompensating persons who suffer loss through others being registered with warrantedtitle is complementary to the provisions by which the warranted title is conferred.The right to indemnity and the right to land under warranted title are ofteninterchangeable rights as where a right to indemnity arises by reason of the lossof a registered interest".2

The "Assurance Fund", as it was called, was set up initially by s.41 of theReal Property Act of 1861 which gave the Registrar of Titles the authorityto collect specified sums levied upon the value of the land being dealt withunder the Acts. Provision was made in s.42 for the investment of the Fund,as it then was, in government securities. However, in 1931, the amount inthe Assurance Fund was transferred to the Treasury to become part ofConsolidated Revenue out of which all future claims were to be satisfied.3 Theonly limitation upon the satisfaction of claims is for loss occasioned by anybreach of trust or default committed by any trustee, guardian or committeeof a lunatic or person of unsound mind, executor, administrator or any otherperson standing in relation of trustee to any other person.4 This only appliesto express trusts so that it is possible to recover for loss caused by a mereconstructive trustee.5 The trustees intended by the section (s.42) are personsin whom land is vested upon trust by virtue of an order of a competent court,or by virtue of a conveyance made by some person competent to convey theland upon trust and that term does not include persons who are merelyconstructive trustees, or against whom the trust can only be established bythe aid of the Court.6

As in New South Wales, when the Assurance Fund was transferred toConsolidated Revenue the relevant Act did not make any consequential

* LL.B.(Qld), LL.M.(Lond.), Solicitor, Lecturer in Law, University of Queensland.I. Boyd v. Mayor of Wellington [1924] N.Z.L.R. 1174, 1202.2. Hogg, Registration of Land Throughout the Empire, 1920, p. 384.3. The State Advances Reserve Fund, The Real Property Acts Assurance Fund etc. Act of

1931, ss. 6-12. As at the 30th June 1931 the Assurance Fund was in credit to the extentof £221,610, of which £45,000 was invested in government securities: s.140 of 1861 Act.Qld.Parl. Debates, 14 Nov. 1952, 1272, "The history of the operations of the AssuranceFund encourages us to feel that contributions to it are more than ample for its purposes.A study of its operations discloses that contributions have been mounting while no drawingshave been made".

4. S.42, Real Property Acts 1861-1976 (Qld.)5. Hogg, op.cit, pp. 392-393; Finucane v. Registrar of Titles [1902] St.R.Qd. 75.6. Id., at 92 per Griffith C.J.

16 W.D.DUNCAN

amendments to the Real Property Act. Technically since 1931 the AssuranceFund has not had separate existence but the Real Property Acts still referto it as the Fund into which payments from levies upon transactions shouldbe made and the Fund out of which claims should be satisfied.7

What therefore is the nature of this Fund? The Fund has been describedas one "specifically provided by a system of insurance in order to compensatepersons, who without any fault of their own may have been deprived of theirproperty".8 In other places, the Fund has been described as a system ofinsurance. For example, Real J. in Queensland Trustees Ltd. v. Registrar ofTitles9 said that "the Assurance Fund is an indemnity and the Governmentare in the position of insurers who undertake in consideration of certainpayments, to make good any loss. It has been raised from contributions fromproperty holders who find it more convenient to contribute than to havedoubtful title". to So the Fund is therefore in the position of a quasi-surety,as Griffith C.J. opined, guaranteeing against losses, but which for the Act wouldnot have occurred. II

Thus in circumstances where the title cannot be recovered by ejectmentaction 12 there lies a statutory remedy against the wrongdoer and, failingrecovery against him, the Registrar of Titles as nominal defendant. A bonafide purchaser for value is immune for such claims. 13 Before considering theextent of the claims which may be made against the Fund under the Acts,the action for ejectment should be first considered.

(2) Ejectment Action under the Real Property Acts.

By making the title of bona fide purchasers for value "indefeasible" andmaking such persons immune from adverse claims by others through theirantecedents in title, the Acts heavily circumscribed the common law right ofaction of ejectment or recovery of possession of land. At law, any person inpossession of land in the assumed character of owner and exercising peaceablythe ordinary rights of ownership (and not guilty of fraud) had a perfectlygood title against all the world but the rightful owner. If the rightful ownerdid not come forward and assert his title by process of law within the periodprescribed by the Statute of Limitations that title of the owner wasextinguished and the possessory owner acquired good title. 14 That generalposition was affected by the Real Property Acts especially in relation to actionsagainst bona fide purchasers for value and mortgagees15 and this immunityis afforded registered proprietors whether or not they are in possession.

7. SSe 41,42; S.128 of the 1861 Act provides, however, that any judgment against the Registrarmay be presented to the Treasurer for payment uupon the receipt of a warrant under thehand of the Governor". For comment upon the similar anomaly in New South Wales seeBaalman, The Torrens System in N.S.W., 2nd Ed., 1974, pp. 390-391.

8. Williams V. Papworth [1900] A.C. 563, 568 (J.C.).9. (1893) 5 Q.L.J. 46.

10. Id., at 51. The use of the word uconvenient" by Real J. makes contributions to the fundappear optional, like other forms of insurance; this is not the case.

II. Finucane V. Registrar of Titles [1902] St.R.Qd., at 94.12. S.123 (ejectment, see below).13. S.126 Real Property Act of 1861; Clements V. Ellis (1934) 51 C.L.R. 217,271 per Evatt

J.14. Perry V. Clissold [1907] A.C. 73 (J.C.) (speaking of adverse possession); Oxford Meat Co.

Pty. Ltd. V. McDonald (1963) S.R. (N.S.W.) 423,427 per Brereton J; Cf. the positionof trespassers; McPhail V. Persons Unknown [1973] 2 All E.R. 393.

15. S.126, Real Property Act of 1861.

State Indemnified Title in Queensland 17

S.123 of the 1861 Act states that no action of ejectment shall lie or besustained against a registered proprietor for the recovery of land under theprovisions of the Act and the grant of the certificate of title in the name ofthat person shall be an "absolute bar or estoppel" to any such action. Thesection is framed negatively and contains several exceptions.

(a) Mortgagor v. Mortgagee ("The right ofa mortgagee or encumbranceeto bring an action for ejectment against his mortgagor or encumbrancer".)

S.60 of the Real Property Act of 1861 permits any registered mortgageeor encumbrancee to bring an action to recover possession of the land. S.60itself does not preclude the registered mortgagee from bringing an action forejectment against any person in possession provided the principal and interestis in arrears and seems to be in conflict with s.123 of the 1861 Act. 16 LutwycheJ. considered that the words of reference contained in the opening line of s.123,"except in the case hereinbefore provided of a mortgagee or encumbranceeagainst a mortgagor or encumbrancer" crept into the section by mistakebecause the words "hereinbefore provided" could only refer to s.60. To makethe clauses of the statute consistent, he said those words should be struck outof the 123rd section. 17 Thus, the mortgagee's right to ejectment under s.60should be read subject to s.123.

(b) Lessor v. Lessee

A lessor may bring an action for ejectment against a lessee in default underthe lease. The lessor originally had the power to re-enter and take possessionof the demised premises where the rent was in arrears for a period of sixcalendar months or there was default in the fulfilment of any express or impliedcovenants by virtue of s.71(2) of the 1861 Act. This section has now beenrepealed and the lessor's rights to re-enter are governed by s.107(d) of theProperty Law Act 1974-1975. This section gives the lessor the same powerto re-enter and take possession where the rent has been in arrears for onemonth or where there is default in the performance of a covenant for a periodof two months. The following section, s.108 of the Property Law Act1974-1975, gives a lessor with no power to re-enter for non-payment of rentthe right to do so by proceedings for recovery where the rent is in arrearsby one half year.

(c) A person deprived ofaflJJ land by fraud.

As against (1) a person registered as a proprietor through fraud or as against(2) a person deriving otherwise than as purchaser or mortgagee for valuefrom or through a person registered as proprietor through fraud (quaere avolunteer):-

The derivation of title through fraud is always open to attack and fraudremains the major exception to the paramountcy of all titles. This is recognisedin ss. 44 and 109 of the 1861 Act, while the words "bona fide" are used ins.126 of that Act to create an immunity in favour of bona fide purchasersand mortgagees. "Fraud" under the Act is actual fraud, not merely constructive

16. Oelkers v. Merry (1872) 2 S.C.R. 193, 199 per Lutwyche J.17. Jd., at p. 200. Mortgagees are affected by notice as a mortgage operates as a charge not

a transfer, s.60; Conroy v. Knox (1901) 11 Q.L.J. 112, 120-121.

18 W.D.DUNCAN

or equitable fraud. 18 While the Act seems to concede that a person takes bonafide and for value from a proprietor registered through fraud and this is nowrecognised as the doctrine of immediate indefeasibility,19 it does not appearto protect persons who take in another status, particularly volunteers, againstthe person deprived of his interest in the land.20

(d) A person deprived ofany land by reason ofwrong description ofany landor boundaries

This is an exception to s.44 but is difficult to apply in practice especiallyin relation to the immunity afforded a bona fide purchaser under s.126. Ithas been held that s.44 does not limit the operation of s.126 of the 1861 Actand vice versa, that the two sections run side by side with independent coursesas s.126 does not create or limit any estate or interest in the land.21 One mighthave thought that s.126 would have been read subject to s.44 which doesexpressly limit estates or interests. By s.44 of the 1861 Act the estate of aregistered proprietor is declared to be paramount except in the case of a"wrong description of the land or its boundaries". Griffith C.l. in Overlandv. Lenehan22 commented upon the sections thus;

"If it is made out that the description of land or of the boundaries is erroneousin the certificate of title, the erroneous description is not conclusive. This propositionassumes that the identity of the land in question is not necessarily to be determinedby a mere literal application of the description contained in the certificate of thelocus in dispute. It assumes further, that if the identity of the land is clea~ly

ascertained an error in the description of the land or its boundaries may bedisregarded. S.123 of the Act (of 1861) provides in effect that a man deprived ofland by a wrong description of the land or its boundaries is not precluded fromasserting title by action for ejectment. S.124 provides that the Court may directthe instrument of title to be rectified".

Then Griffith C.l. concludes,

"It follows therefore, that an error in the description of boundaries cannot be reliedupon to displace the title otherwise good, of a person in possession of land,erroneously included in the title. "23

It seems, though, that if a bona fide purchaser for value acquires a certificateof title with erroneous descriptions as to the boundaries of the land, he mustdeliver up the title for rectification. Therefore he can be ejected from thatpiece of land, in excess of that which he properly purchased which has beenerroneously included in his certificate.24 This appears to be the most logicalapproach.25

18. Conroy v. Knox (1901) II Q.L.J. 112,122; Assets Co. v. Mere Roihi [1905] A.C. 210-211(J .C.). Notice is not fraud; Friedman v. Barrett [1962] Qd.R. 498, 510-511.

19. See e.g. Fraser v. Walker [1967] I A.C. 560; Breskvar v. Wall (1972) 46 A.L.J.R. 68,69-71.

20. For position of volunteers generally, see, 3 Qld. Lawyer, p. 83.21. Finucane v. Registrar of Titles (No.2) [1947] St.R.Qd. 26 at 33 per Stanley A.J.22. (1901) II Q.L.J. 59.23. Id., at 60. (With respect, this seems to be a difficult conclusion to understand in the light

of His Honour's earlier remarks with which I agree).24. Registrar of Titles and Esperance Land Co. (1899) I W.A.R. 118, 120-121 per the Chief

Justice.25. The person deprived of land in these circumstances may be entitled to compensation; See,

ide at 123 per Hensman J. and s.126 of 1861 Act (Qld.).

State Indemnified Title in Queensland 19

(e) Except in the case ofa registered proprietor claiming under a priorcertificate of title or under a prior grant registered under the provisions ofthis Act in which two grants or two certificates or a grant and a certificatemay be registered in respect of the same land.

This is indeed a rare exception. It is noted that the estate of a registeredproprietor claiming under a prior certificate of title is an exception to s.44of the 1861 Act. 26 It would almost appear technically inconceivable that twocertificates of title could issue for the same piece of land today because ofthe improvement in surveying and registration techniques. The last reportedcase upon the subject appears to be Oelkers v. Merry,27 decided ten years afterthe Act came into force when, no doubt, applications to bring land under theprovisions of the Act were far more common than at present.28

S.44 positively gave paramountcy to the title of a registered proprietor whilsts.123 attempted to restate this in a negative way. The effect of the cognatesection in the New South Wales has been spoken of thus by Taylor J. in GalaxyMotors Pty. Ltd. v. Carroll and Weekes29 in the following terms;

"The purpose of the section is to provide that where the proprietor of the interestof a freehold or other estate or interest in the land has had the instrument whichgives him title registered under the Real Property Act, that registration determinesthis title to the interest or estate therein set out and he is not to be subjected toan action, the purpose of which is to dispute his title. Registration of the instrumentwhich sets out his title is paramount and is not to be questioned in any action forejectment ... where a person has an estate or interest in land of which he is theregistered proprietor, an action cannot be brought in ejectment to deprive him ofthat interest. "30

In Fraser v. Walker31 the Privy Council considered the effect of theQueensland equivalent of ss.44 and 123. Their Lordships intimated that thesections read together conferred upon the registered proprietor immunity fromattack by adverse claim to the land and the interest in respect of which heis registered but that registration did not protect him against claims inpersonam.32

Does the Limitation oj' Actions Act of 1974 apply to actions for ejectmentunder s.123? Under s.13 of the Act no person may bring an action to recoverland after twelve years from the date upon which the right of action accruedto him or to some person through whom he claims. After the time for recoveryof possession has expired the title of the claimant to the land is extinguished.33

Hogg declared that the Limitation Statutes have been held not to apply inQueensland34 and further declared that in Queensland where the Real Property

26. Similarly a prior grant registered under the provisions of the Act.27. (1872) 2 Q.S.C.R. 193.28. Note that Division 4 of Part XVIII of the Property Law Act 1974-1975, (ss. 250-254),

provides for the compulsory registration of Qld. Old System Titles.29. (1964) 82 W.N. (Pt.I) (N.S.W.) 40.30. Id., at 43. A registered interest is not some special kind of statutory interest-it is a legal

interest, acquired by a statutory conveyancing procedure and protected from competitionto the extent provided for by the Act but having, subject to the Act, the nature and incidentsprovided by the general law: I.A.C. (Finance) Pty. Ltd. v. Courtenay (1963) II C.L.R. 550at 572 per Kitto J.

31. [1967] 1 A.C. 569 (J .C.).32. Id., at 580.33. S.24 of Limitation of Actions Act 1974.34. Citing Maltby v. Pang [1911] St.R.Qd. 12, 16 per Chubb J. (which could hardly be said

to contain an authoritative pronouncement on the subject).

20 W.D.DUNCAN

Acts are silent on the subject the Limitation Statutes should apply to registeredland.35 The Privy Council in Belsize Estates and Produce Company v.Quilter,36 a case on adverse possession, held that the Limitation Statutes didapply to Torrens System land where the Real Property Acts did not expresslyexempt their operation or were silent on the matter.37 Belsize Estates andProduce Company v. Quilter38 was distinguished by the Full Court inMiscamble v. Phillips39 mainly upon the basis that the Honduran Statute uponwhich the Privy Council were adjudicating contained no similar provision toour s.33 of the 1861 Act.40 E.A. Douglas J. on the other hand, (dissenting),considered that the principle laid down in Belsize Estate and Produce Companyv. Quilter41 did apply to the construction of the Queensland Real PropertyAct.42 However, in that case, the Court was considering the positive assertionof the existence of the right of the registered proprietor as against an adversepossessor through the "conclusive evidence" provisions contained in s.33 andother sections of our Real Property Act. In Boulter v. lochheim and theRegistrar of Titles,43 Shand J. makes a fleeting reference to an action fordamages against the Registrar as an "action on the case" being barred bythe Statute of Limitations. S.127 to which he had referred does contain anexpress limitation of six years but inferentially it could be said that heconsidered that the Statute of Limitations applied to actions under the RealProperty Act possibly in the absence of any other provision.44 Again, GriffithC.J. in Finucane v. The Registrar of Titles45 describes the action of ejectmentas one available to persons unless "barred by some statute or his own actsor conduct" .46

So the situation regarding the application of the Limitation of Actions Act1974 to the action under s.123 remains to be considered by a Court. The betterview would tend to be that the Limitation Statute does apply.

The Supreme Court under s.124 has the power to order rectification of theRegistrar where an order for ejectment has been made under s.123 or underthe Act generally. It is clear that if the plaintiff asked the Court to eject adefendant under that section, and that person was the registered proprietorof an interest the further relief of rectification of the Register by cancellationof the entry of the defendant's should be sought.47 In other words the orderfor cancellation of the entry should include an order for substitution of theplaintiff's name in place of the defendant's name.48

35. Hogg, op.cit., 88.36. [) 897] A.C. 367 (British Honduras Statute).37. Id., at 370 per Lord Watson.38. [) 897] A.C. 367.39. [1936] St.R.Qd. 136.40. See R.J. Douglas and Webb J.J. at pp. 148-149.41. [1897] A.C. 367.42. [1936] St.R.Qd. at 155-156.43. [1921] St.R.Qd. 105.44. Id., at 125 (the cause of action sought to be relied upon accrued 50 years earlier).45. [1902] St.R.Qd.75.46. Id., at 93.47. Loke Yew v. Port Sweetenham Rubber Company [1913] A.C. 491 at 504 per Lord Moulton

(J.C.).48. McElIister v. Biggs (1883) 8 App. Cas. 314, (J.C.) See Lank v. Lank (1973) 22 F.L.R.

384 for the principles applicable in the Court's ordering rectification of the Register. Section47 of the 1877 Act allows the defendant (other than one guilty of fraud) to have the valueof any improvements assessed and no order for possession shall be made unless that valueis paid into Court.

State Indemnified Title in Queensland 21

By s.125 of the Real Property Act of 1861, for the purposes of bringingan ejectment action against any person against whom the remedy is notexpressly barred, his registration as proprietor shall be equivalent to possessionby him of the land.

(3) The Compensation Provisions

(a) The Person DeriVing the Benefit.

If the right to eject a registered proprietor is unavailable, the person deprivedof the interest in the land (or any interest) may bring an action for damagesin certain circumstances under ss.126-128 of the 1861 Act. Although the sidenote to s.126 contemplates actions for damages by persons defrauded againstthe fraudulent proprietors, the full section seems to contemplate a wider scopeto these such actions. Apart from deprivation in consequence of fraud, theaction also contemplates deprivation in consequence of (1) the issue of acertificate of title to any other person, (2) any entry in the register book orof any error or omission in any certificate of title or in any entry in the registerbook.49 Such a deprived person is given the statutory right to prosecute anaction for damages in the Supreme Court against the person who derived thebenefit of fraud or the benefit by such entry, omission or error. Of coursethe latter errors and omissions need not be attended by acts of fraud. Noaction under this section shall be commenced after six years from the dateof deprivation, subject to the exception that any person under a disability,infancy or mental sickness may bring an action within six years after the dateupon which the disability ceased.

The section then goes on to prohibit recovery of damages against a purchaseror mortgagor bona fide and for valuable consideration. This provision, asmentioned, is complementary to s.44 and s.123 (and indeed, s.51 of the 1877Act) all of which dovetail, somewhat poorly from a drafting point of view,to give indefeasibility of title to a registered proprietor. so

At common law any person could recover land against an innocent purchaser,or technically a bona fide purchaser for valuable consideration, if that personcould show a better title than the person in possession. Thus, actions fordamages, except in the case of fraud in which a number of parties were guiltyof complicity,sl for deprivation of an interest in land were unnecessary as theland itself could be recovered. So the action for damages created by s.126,except for fraud perhaps, is an artificial statutory creation just as the term"person deprived of an interest in land" has a meaning ascribed to it by courtswho have endeavoured to interpret the expression in the context of the generalscheme of the Real Property Acts.

(b) Person Deprived ofan Interest in Land.

If a person is deprived of an interest in land someone must derive somebenefit from that deprivation. The Act by s.126 provides that the right of action

49. The only person who could make an omission or entry in the Register Book would be theRegistrar (s.I28).

50. See supra; Fraser v. Walker [1967] 1 A.C. 569, 580 (J.C.).51. The right of action against a person who derived the benefit of a fraud would have existed

at common law; Cox v. Bourne (1897) 8 Q.L.J. 66 at 68 per Griffith C.J.

22 W.D.DUNCAN

for damages shall in the first instance be primarily against the person whoderived the benefit of the fraud or error52 and goes on to provide that, failingrecovery, from him recourse may be had to the Assurance Fund.53

But when can a person be said to be "deprived of land or an estate or interestin land"? Obviously, he is not deprived if he is still able to recover the landby ejectment action from the person in whose name the land stands registered.54

If the land is the name of the fraudulent proprietor then there is no deprivationas an ejectment action will lie against him, as likewise any person to whomfraud can be sheeted home. So much is settled. However, one cannot bedeprived of an interest in land unless one's estate is an estate in possession.Thus s.126 includes "partial" as well as total deprivation. For example, if whenthe time comes for enjoyment of the land, the person who, but for the Actwould be entitled to possession, finds it encumbered in favour of a personagainst whom he has no recourse, he is deprived of land pro tanto within themeaning of the section (s.126).55 This principle was first accepted in Cox v.Bourne56 where the cause of the partial deprivation was not that the plaintiffcould not show an estate in possession but could only recover her estate subjectto the encumbrance of a bona fide mortgagee.57 Thus, the plaintiff had adiminished right of enjoyment which was held to be "partial" deprivationwithirt the meaning of the section so as to allow recovery from the Fund unders.127 in the event of failure to recover against the perpetrator of the fraudwho was ejected.

However, a person is generally held to be deprived (totally) immediatelyhis right to recover possession becomes barred by statute and his titleextinguished.58 This relates to the position whether his interest is divided,undivided, equitable or lega1.59 As the right of action only accrues for six yearsfrom the "date of deprivation" it becomes important to determine this exactpoint of time.

Griffith C.J. in Finucane v. Registrar of Titles60 declared that "deprivation"meant deprivation of the right of enjoyment and that until that occurred therehad not been deprivation or damage under s.126. Thus in that case,remaindermen were not deprived within the meaning of the section until theirestate vested in possession although the right may accrue after the estate hasconsiderably increased in value.61 In Finucane's case the estate did not vestuntil the death of the life tenant some forty years after the first unsuccessfulapplication and the improvements made during that time by the life tenantcould be taken into account when assessing the extent of the claim.62 Likewise,it has been held that beneficiaries may bring an action under the section whentrustees have been statute barred from doing SO.63

Generally the deprivation alleged must be more than deprivation of the

52. Finucane v. Registrar of Titles [1902] St.R.Qd. 75, 93.53. Id., at 93-94 per Griffith C.J.54. Cox v. Bourne (1896) 7 Q.L.J. 53 at 55.55. Finucane v. Registrar of Titles [1902] St.R.Qd. 75 at 94.56. (1897) 8 Q. L.J. 66.57. Id., at 69.58. SSe 13, 24, Limitation of Actions Act 1974.59. Finucane V. Registrar of Titles [1902] St.R.Qd. at 94; Tolley & Co. Limited v. Byrne (1902)

28 V.L.R. 95 at 101 (loss of interest by equitable mortgagee compensable).60. [1902] St.R.Qd. 75.61. Id., at 96.62. Finucane v. Registrar of Titles (No.2) [1947] St.R.Qd. 26 at 31 per Stanley A.J.63. Williams V. Papworth [1900] A.C. 563 at 567.

State Indemnified Title in Queensland 23

expectation of obtaining an estate or interest in the land.64 Further theclaimants of compensation must be able to show that they have been deprivedof an actual interest in the land. For example in Gibbs v. Messer's themortgagees (bona fide) advanced funds on the strength of an instrument whichhad been forged and which was held to be a nullity as it was in the nameof a fictitious person. The Privy Council set aside the forged and fictitioustransfer and mortgage and left the innocent mortgagees without compensation.As the purported instrument was a nullity, it was held to have never createdan interest in the land and therefore there was no deprivation within themeaning of the section.66

There would appear to be other limitations upon the operations of s.126.The section is liberally worded to cover compensation to a person "deprivedof an estate or interest in consequence of fraud" allowing them to prosecutean action for damages against the 'person who derived the benefit of suchfraud'.

The High Court has held that the word "fraud" in that section should belimited to fraud for which the person who becomes registered is responsible.67

A 'fraudulent proprietor' (see the side note to s.126) is one to whom the fraudmay be brought home, through him or his agents.68 Yet, while this is conceded,the Western Australian section (201) which the court was construing identifiedthe person against whom the action may be brought as "the person whoacquired the title to the estate or interest through such fraud".69 TheQueensland section (s.126) describes the defendant as the person who derived"the benefit of such fraud". In the Registrar of Titles v. Franzon,70 becauseof a forgery the person "who acquired the title through such fraud", that is,the mortgagee, did not directly derive the benefit of such fraud as theyremained innocent throughout although they became registered. The forgernever held the title in his name, he merely benefited from misappropriationof the proceeds of the mortgage. Mason J. said that the words in the WesternAustralian statute71 strongly suggested that the section (W.A. s.201) wasdirected to fraud perpetrated by or on behalf of the person who securedregistration. As the mortgagee who secured registration was innocent through­out, it was not possible to contend that they had acquired title through fraud72

and thus the mortgagee was not liable under the section.In other words, if this principle is followed in Queensland, and it is submitted

that s.126 may be wide enough to so permit, then an action will not lie againstan innocent party who becomes registered through the fraud of a third party.That is, however, adopting a restricted interpretation of the expression, "aperson who derived the benefit of such fraud", limiting actions against personsof that description who were directly guilty of fraud or to whom fraud couldbe sheeted home through the act of an agent. In essence, an action would

64 Oakden v Gibbs (1882) 8 V.L.R. 380 at 390-391. The loss must directly relate to dealingsunder the Acts.

65. [1891] A.C. 245.66. See Sim, "The Compensation Provisions of the Act", N .Z. Torrens System Centennial Essays,

1971, 138 at 148-149.67. Registrar of Titles (W.A.) v. Franzon (1976) 50 A.L.J.R. 4.68. Assets Co. Ltd. v. Mere Roihi [1905] A.C. 176, 210 (J.C.).69. (1976) 50 A.L.J.R. at 6 per Mason J.70. Ibid.71. "Person who acquired the title to the estate or interest through such fraud".72. (1976) 50 A.L.J.R. at 6.

24 W.D.DUNCAN

be against any person who derives benefit from the fraud who had knowledgeof it.73

(c) Measure ofDamages.

It has been held that loss or damage must be measured as at the date ofdeprivation, that is, the value of the land at that time including all ~he

improvements.74 Griffith C.l. in Registrar of Titles v. Spencer75 contended thatthe damages must be commensurate with the loss sustained, that the plaintiffmust be put in the same position as far as money will allow as if the wrongfulact complained of had not been done.76 However, Griffith C.l. went on to saythat this sum should not include the value of fixtures erected during theoccupation of the life tenant. This view, however, was overruled by the PrivyCouncil.77 In fact, in an earlier decision Griffith C.l. admitted that the measureof damages might be largely increased by subsequent enhancement of the valueof the land.78 Nothing is said there about fixtures so it may be that His Honourwas referring only to a general increase in capital value of the land itself.Thus, it seems that if the land is improved between the date of deprivation,which could be years later, e.g., after the death of a life tenant, damages willbe properly assessed at the later date and if the land has been improved duringthat period then the plaintiff may benefit accordingly.79 The remaindermen arenot to be responsible for the expenditure by the life tenant of any moneysin improving the property.

"That is her (the life tenant's) affair and must be considered an independent acton her part consequential gain enuring in fact to the remaindermen being nonecessary consequence of the wrong done to them or their interest."80

If an encumbrance has been registered over the land and the plaintiffs areentitled to the land free of encumbrance then the measure of damages willbe the mortgage debt.8l Thus the loss or deprivation may be partial only andthat is not a bar to recovery.82

(4) Remedy Against the Registrar

There are two distinct limbs of the possible actions which may be maintainedagainst the Registrar for damages. Firstly, under s.126 of the 1861 Act wherethe person against whom such action for damages is directed "shall be dead,shall have been adjudged insolvent or shall have absconded out of thejurisdiction of the Supreme Court" an action may be brought against theRegistrar as nominal defendant for the purposes of recovering the said damagesand costs. The section appears to state a fourth basis of recovery where thesheriff returns a warrant (of execution) nulla bona or certified that the fullamount of the claim with costs awarded cannot be recovered from such a

73. Cox v. Bourne (1897) 8 Q.L.J. 66, 69 per Griffith C.J.74. Spencer v. Registrar of Titles [1908] A.C. 235, 240.75. (1909) 9 C.L.R. 641.76. Id., at 645.77. Spencer v. Registrar of Titles [1908] A.C. 235.78. Finucane v. Registrar of Titles [1902] St.R.Qd. at 96.79. Finucane v. Registrar of Titles (No.2) [1947] St.R.Qd. 26 at 31 per Stanley A.J.80. Registrar of Titles v. Crowle (1947) 75 C.L.R. 191 at 201.81. Queensland Trustees Limited v. Registrar of Titles (1893) 5 Q.L.J. 47, 50-51.82. Hogg, op.c;t., p. 390; Cox v. Bourne (1897) 8 Q.L.J. 66 at 69.

State Indemnified Title in Queensland 25

person.83 The section further states that the Assurance Fund will not beresponsible for the payment of any damages after the expiration of six yearsfrom the time that the cause arose and that any absconder who re-enters thejurisdiction shall be liable to be sued by the Registrar for the amount recoveredfrom the Assurance Fund.84

Secondly, an action may be maintained against the Registrar under s.128for loss or damage occasioned by any omission mistake or misfeasance ofthe Registrar or any of his officers or clerks in the execution of their dutiesunder the Act. This section appears to embrace some of the causes of actionunder s.126, for example, in relation to the issue of the certificate of title toany other person and in consequence of any entry in the register book or anyerror or omission in any certificate of title. Such occurrences would be, onewould think, solely within the responsibility of the Registrar and his officers.The position is further complicated by situations where a fraud is committedwhich would only have been possible if there had been misfeasance in theregistry. In such a situation, the fraud and not the misfeasance has been heldthe proximate cause of the loss, so that the action in the first instance wouldbe against the fraudulent proprietor (or person deriving the benefit from thefraud) and then the Registrar under s.128. As Hogg states,85 nice questionsarise when there is more than one proximate cause of the loss.86 If theimmediate cause of the loss is through the perpetuation of a fraud, althoughthere has been mistake or misfeasance by the Registrar, that neglect of dutyby the Registrar, even facilitating the commission of the fraud, will be heldonly the indirect cause of that loss. The rationale for such a finding is thatif the Registrar had properly discharged his duty it is still possible that fraudmay have been committed for which he could have no responsibility.87 In thesecircumstances, a claimant must firstly seek and exhaust his remedies againstthe perpetrator of the fraud (or fraudulent proprietor) before seeking redressagainst the Registrar.

Obviously, to succeed under s.126 and consequently under s.127 it is notnecessary to prove misfeasance by the Registrar in any respect although inpractice there seems no reason why both the claims cannot be joined.88

In Queensland Trustees Limited v Registrar of Titles89 the defendant whoderived the benefit of the alleged error had been adjudged insolvent and theplaintiff was prima facie entitled to recover from the Assurance Fund. Apartfrom this, however, the plaintiff unsuccessfully alleged that the Registrar wouldnot only be a nominal defendant under s.127 but a substantive defendant unders.128 because of misfeasance in refusing to receive a caveat after the timefor lodgement had expired. The latter substantive claim against the Registrarfailed for as Griffith C.l. said,

83. Queensland Trustees Limited v Registrar of Titles (1893) 5 Q.L.J. 46, 49. The two partsof s.127 are not mutually exclusive.

84. The Registrar may sue in his own name and no question of subrogation arises vis a visthe Registrar and the satisfied claimant.

85. Hogg, Ope cit., at 391.86. Oakden v Gibbs (1882) 8 V.L.R. 380.87. Id., at 398-399 per Holroyd J, (failure of Registrar to endorse memorandum upon last

material document lodged; that land had been brought under the Act as a result of whichthe plaintiff advanced money on the land as if it were held under the general law); DistrictLand Registrar v Thompson [1922] N .Z.L.R. 627, 631, (false certificate of correctness forpurposes of registration-s.139 of 1861 Act.)

88. See e.g., Queensland Trustees Ltd. v. Registrar of Titles (1893) 5 Q.L.J. 46.89. Ibid.

26 W.D.DUNCAN

"The Registrar of Titles is not bound to enter up transmission to a person whomhe believes is not entitled to transmission. He will not be guilty of misfeasance ifhe refuses to receive a caveat tendered after the proper time."90

While an alternative right of action may be set up under s.128, the plaintiffmust still seek remedies against individuals at the same time as prosecutingthe claim against the Registrar if such claims are capable of being maintained.However, it is clear that an action will not lie against the Registrar unlessactual damage can be proven. Actual damage in the sense referred to willnot arise until the action of the Registrar has resulted in loss or damage inthe nature of a "deprivation of an interest in land" within the meaning ofs.126 of the Act.91

Yet, the right to claim indemnity from the Assurance Fund through theRegistrar as nominal defendant will not be lost by the fact that there maybe other persons against whom the plaintiff has not sought relief who mayhave derived benefit from the fraud and who are neither dead, bankrupt norabsconders from the jurisdiction.

In Cox v Bourne92 the plaintiff Cox was induced by one Levy to lodge withLevy his deed of grant as security for a loan of £7. Levy forged a transferand procured himself as registered proprietor of the land which he transferredto Dare who mortgaged the land to Walton, such mortgage being registered.Levy and Dare had acted in collusion and were both guilty of fraud althoughWalton was a bona fide mortgagee for valuable consideration. The plaintiffCox could recover the land from Dare subject to Walton's mortgage for whichhe sought an indemnity from the Assurance Fund as being deprived of hisinterest in the land to that extent. Levy, the initial perpetrator of the fraud,having absconded, Cox brought an action against the Registrar of Titles asnominal defendant, Dare and Walton. The Registrar contended that actionshould be exhausted against Dare, the second perpetrator of the fraud, beforerecourse could be had to the Fund. Griffith C.J. (who was also the trial judge)observed,

"It may happen that several people derive benefit from the same fraud but thatthis circumstance is wholly unknown to the person defrauded. Would it be a gooddefence to an action against the Registrar of Titles to allege that another personbesides the person who is dead or insolvent or who has absconded, derived benefitfrom the fraud and that other person is alive, has not absconded and is not insolvent(without also alleging that the fact is known to the plaintiff)? If this is the trueconstruction, the Act sets a trap for the innocent victim of fraud which I cannotthink that the Legislature intended."93

Griffith C.J. concluded that once the conditions set forth in s.127 exist withrespect to the actual and immediate perpetrator of the fraud, the right of actionis complete against the Registrar even if the plaintiff knew of the existenceof other parties to the fraud. 94

90. (1893) 5 Q.L.J. at 49.91. Finucane v Registrar of Titles [1902] St.R.Qd. at 97, per Griffith C.J. (Although this is

not expressly stated in the judgment, it is submitted that it is a fair inference from thediscussion therein).

92. (1897) 8 Q.L.J. 66.93. Id., at 68.94. Id., at 69. (Costs in s.127 includes all the expenses necessarily incurred in establishing the

plaintiff's claim to damages)

State Indemnified Title in Queensland 27

Omission Mistake or Misfeasance of the Registrar under s.128.

The Courts have been generally slow to award damages against the Registrarfor loss or damage caused by his negligence or that of his officers. Just becausethere may be some error mistake or omission in the title does not, of itself,confirm a substantive action against the Registrar. In Dempster v Richard­son95 the error of misdescription in the title was due to an error in measurement,that is, in the original survey of the land. The error was held not to be dueto the misfeasance of the Registrar but to the predecessor in title of theappellant or his surveyor, or in fact the acts of other persons, adjacent owners,which may have barred the appellant's title.96 An action would lie against suchpersons under s.126 and not the Registrar. In other words, some positive actwhich caused the loss must be directly brought home to the Registrar or hisofficers before substantive liability will attach to the Registrar. The words"errors and omissions" are therefore subjective in application and involvesomething more than simply "not there" or "absent from". "Omission" refersto omission in details where such details are authorized by the Act to be madeand are not made.97 The Registrar must have been given (by instrument)authorization to register an interest and failed to do so before there will beproof positive of an omission or misfeasance by him.

8.128 is not restricted in expression as to the probable compensable causesof loss as delineated in s.126. It does not confine itself to loss sustained byregistration by those limited modes. However, in other respects s.128 is muchmore limited in scope than the action under s.127.

The Registrar will not be liable where there is no disconformity betweenthe registration and the instrument on which it was based although thatinstrument is based upon a forgery.98 Certainly, the Registrar has a duty toregister instruments in proper form that are lodged for registration except,of course, where they disclose on their face a breach of trust or some otherimproper dealing99 but it is not the Registrar's duty to require proofs negativingany fraud where there is nothing to suggest it. In essence, it is not competentfor him to examine the propriety of any bargain embodied in an instrumentin proper form presented for registration unless he has strong independentreasons for suspecting fraud. lOo It would be thus difficult to hold the Registraror his officers responsible for registering an invalid or void instrument solicitedthrough fraud which was perfectly proper on its face. 101

Effect ofContributory Negligence ofClaimant

This question, as Hogg points out, is closely linked to the question ofproximate cause of the damage or loss. The Queensland Real Property Actsare silent on the issue of the claimant's contributory negligence in assessingclaims under the compensation provisions. In a New Zealand decision, Miller

95. (1930) 44 C.L.R. 576.96. Id., at pp. 590-591 per Starke J.97. Trieste Investments Pty. Ltd. v Watson (1963) 64 S.R. (N.S.W.) 98, at 104 per Herron

C.J.98. Registrar of Titles v Franzon (1976) 50 A.L.J.R. 4,6.99. Templeton v Leviathan (1921) 30 C.L.R. at 53.

100. The King v The Registrar of Titles (Vic) (1915) 20 C.L.R. 379 at 385.101. See e.g. the Privy Council's remarks in Fraser v Walker [1967] 1 A.C. 569 at 580 where

their Lordships suggested (without deciding the point) that compensation would not bepayable to the appellant.

28 W.D.DUNCAN

v Davy;02 it was held that the matter of contributory negligence could be takeninto account in assessing such claims. In the following year this principle wasapplied in refusing a claim to a person who failed to search the register. 103

The principle involves the assertion that there are certain matters relating totitle which a person dealing with the land must investigate for himself andno recovery could be permitted against the Registrar if loss occurs througha failure to discover a defect in a vendor's title. 104 There is nothing to suggestthat the Crown could not plead contributory negligence in a claim under s.128.

Conclusion

The infrequency of claims upon the Assurance Fund has been commentedupon as being a tribute to the success of the Torrens system. 105 Whilst thereis great truth in this statement and also the fact that successive Registrarsof Titles have stringently guarded against errors and omissions in theregistration of dealings, it does not detract from the proposition that thecompensation provisions are as confused as they are ill-drafted. 106 Remediescertainly exist for a person deprived of any land or an interest in that landand damages may be guaranteed by the Assurance Fund, but the rights ofthe parties in relation to the whole scheme of the Act are so concealed bycomplex and turgid Victorianese that they can sometimes be difficult toidentify. Major sections like s.44 and s.123 are simply not complementary andthe exemption from liability of parties dealing bona fide and for value unders.126 is open to a number of various inerpretations. If State Indemnified Titlein Queensland is a success it is more to the credit of those successive Registrarsin ensuring a high standards of performance and vigilance in their officersthan to the credit of the learned draftsmen who so clumsily constructed oneof the most important buttresses of Torrens' remarkable system.

102. (1889) 7 N.Z.L.R. 515.103. In Re Jackson's Claim (1890) 10 N.Z.L.R. 148; Sim, Ope cit. pp. 155-156.104. Hogg, Ope cit. pp. 393-394; s.10 (1), The Law Reform (Tortfeasors, Contribution

Contributory Negligence and Division of Chattels) Act of 1952.J05. See e.g. Kerr, The Principles of the Australian Land Titles (Torrens) System, 1927, 498.106. For a similar criticism of the N.S.W. sections, see Baalman, Ope cit. pp. 392, 405.