Breskvar v Wall

was decided on the basis that Breskvar, the holder of the earlier equitable interest, had
armed Petrie, the fraudulent solicitor, with the capacity to create the subsequent
interest and was therefore postponed. The right to set aside for fraud was construed on
its fullest basis (equitable interest) but the issue of whether it was a mere equity or an
equitable interest was not directly decided.

(1971) HCA:

Facts
The Breskvars are registered proprietors of Torrens land in Queensland
In March 1968, they execute a memorandum of transfer for $1200, but leave the
name of the transferee blank
A blank transfer is absolutely void and inoperative according to s 53(5) of the
Stamp Act 1894 (Qld)
In September 1968, Petrie took possession of the transfer and inserted the name of
his grandson, Wall, into the blank space
Breskvar registered the transfer
In October 1968, Wall contracted to sell the land to Alban Pty Ltd
In November 1968, this transfer occurred; Alban was a bona fide purchaser for value
without notice of the Breskvars interest or the fraud that had taken place
In December 1968, the Breskvars discover Walls registration and lodge a caveat
preventing further dealings
In January 1969, Alban lodges its transfer for registration but registration cannot
proceed because of the caveat
The Breskvars seek a declaration that the memorandum of transfer of march 1968
was void and ineffective to transfer title to Wall
The trial judge finds that Wall and Petris conduct is fraudulent
- The Breskvars therefore had a mere equity (Kitto and Menzies JJ in Latec) to
set aside the sale to Wall for fraud
- Meanwhile, Alban has an equitable interest in completion of the sale and
registration of the transfer

Issue
Which should take priority out of a prior mere equity and a later equitable interest?

Reasoning
Note:
- The conduct of the Breskvars (first in time holders) was conceived of as postponing
conduct in terms of reasonable foreseeability
- The Breskvars did caveat upon their discovery that Wall had become registered
proprietor but after Wall had contracted to sell to Alban: this gave rise to the
subsequent equitable interest
Barwick CJ:

- There is thus a competition between the respective interests of the [Breskvars] and
of [Alban] to be resolved on equitable principles

- Applies Abigail v Lapin test to conclude that the Breskvars armed Petri, the
solicitor, and therefore lose priority:
o The creation of the [Breskvars] interest is prior in point of time. It
arose at the time [Wall] became the registered proprietor.
o The priority of the creation of that right will only be lost by some
conduct on the part of the [Breskvars] which must have contributed to
the assumption, false as the event proved, upon which the holder of the
competing equity acted when that equity was created. here the
[Breskvars] armed [Petri] with the means of placing himself or his
nominee on the register. They executed a memorandum of transfer,
without inserting therein the name of a purchaser; they handed over the
relevant duplicate certificate of title and they authorised [Petri], if
occasion arose for the exercise of his powers as a mortgagee, to
complete and register the memorandum of transfer.
o The [Breskvars] therefore lose the priority to which the prior creation
of their interest in the land would otherwise have entitled them.
o the right of the appellants to recover their land from the first
respondent should be postponed to the equitable interest therein of the
third respondent as a purchaser bona fide for value and without notice.
- The case becomes one of an agent exceeding the limits of his authority but acting
within its apparent indicia.

- The effect of a caveat

o Not considered important or relevant, since priority is decided on other
grounds
o Barwick CJ repeats the views his Honour expressed in Just : a failure
to caveat is not to be regarded as of itself a reason for loss of priority
In some circumstances failure to caveat in association with
other conduct may lead to loss of priority

- A majority of Justices did not definitively decide whether the Breskvars right to
have the transaction set aside for fraud was a mere equity or an equitable interest
o Barwick CJ gave the right its fullest possible interpretation (equitable
interest); since even this was insufficient, their claim was bound to fail
regardless of the classification adopted

Walsh J:

- It is not necessary to enter into the question whether [the] appellants should be
regarded as having an equitable estate or interest in land or as having a mere
equity as distinguished from an equitable estate. I am of the opinion that if it is
assumed that [the] appellants had [an] equitable estate after [the] transfer [was]
registered, that interest is not entitled to priority over the interest Alban acquired in
the land.
- Thus, the prior interest of the defrauded mortgagor lost priority because the
Breskvars armed Petrie (this was postponing conduct), not because the interest
was treated as a mere equity

Menzies J:

- Wall did not obtain an indefeasible title because the registration was procured by
fraud
- However, Wall was still registered as proprietor by means of the registration of the
transfer instrument
- The blank transfer, however, with no effect in law or in equity, once it had been
wrongly filled in and lodged with the certificate of title, became the means whereby
Wall was able to become registered proprietor and to deal with [Alban] as such.
- Upon the authorities cited, this, I think, is enough to require the postponement of
the appellants right or claim to that of [Alban]. They did not put Petrie or Wall in a
position to have Wall lawfully registered as proprietor. nevertheless, in executing the
transfer in blank they were in breach of the [Act], and it was their breach of the law
that enabled Wall to become registered proprietor

Cases referred to Breskvar v Wall

Perpetual Trustees Victoria Ltd v Van den Heuvel [2009] NSWSC 57

[89] The plaintiff submitted that although there are occasional references in the
authorities to the proposition that registration of the mortgage validates some parts
of the mortgage (see for example PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643
at 679B per Giles J) strictly there is no validation as such, but rather there is a
statutory scheme provided by the Real Property Act which scheme has the effect of
conferring an estate or interest in land on the mortgagee. The plaintiff cited what was
said by Barwick CJ in Breskvar v Wall at 385.9 that:

The Torrens system of registered title of which the Act is a form is not a system of
registration of title but a system of title by registration.

Mr Leopold contended that while the plaintiff has an enforceable estate or interest in
the property deriving from the registration of the mortgage, the mortgage which is at
common law null and void for all purposes did not become a contract upon
registration.
[90] In my opinion, this submission should be accepted. As was said by Barwick CJ
in Breskvar v Wall at 386:

It is the title which registration itself has vested in the proprietor. Consequently, a
registration which results from a void instrument is effective according to the terms of
the registration. It matters not what the cause or reason for which the instrument is
void.
 Khan as Trustee for Khan Family Trust v Hadid (No 2) [2008] NSWSC 119

[109] In Breskvar v Wall [1971] HCA 70 ; (1971) 126 CLR 376 at 384385,
Barwick CJ said:

These sections are to my mind central to the Torrens system of title by registration:
they make the certificate conclusive evidence of its particulars and protect the
registered proprietor against actions to recover the land, except in the specifically
described cases. Section 44 complements these provisions by providing that the
registered proprietor holds the land absolutely free from all unregistered interests
except
(a) in the case of fraud which means except in the case that the
registration as proprietor was obtained by the proprietors own fraud see
Assets Co Ltd v Mere Roihi;
Thus, except in and for the purposes of such excepted proceedings, the conclusiveness
of the certificate of title is definitive of the title of the registered proprietor. That is to
say, in the jargon which has had currency, there is immediate indefeasibility of title
by the registration of the proprietor named in the register. The stated exceptions to the
prohibition on actions for recovery of land against a registered proprietor do not mean
that that indefeasibility is not effective. It is really no impairment of the
conclusiveness of the register that the proprietor remains liable to one of the excepted
actions any more than his liability for personal equities derogates from that
conclusiveness. So long as the certificate is unamended it is conclusive and of course
when amended it is conclusive of the new particulars it contains.

[110] Thus, with fraud being the only possible relevant exception, it is clearly
established that immediately upon registration of an interest, the registered interest
holder obtains good title.

Hillpalm Pty Ltd v Heaven's Door Pty Ltd [2004] HCA 59

[52] As Barwick CJ said in Breskvar v Wall20.:

The Torrens system of registered title is not a system of registration of title but a
system of title by registration. That which the certificate of title describes is not the
title which the registered proprietor formerly had, or which but for registration would
have had. The title it certifies is not historical or derivative. It is the title which
registration itself has vested in the proprietor.
(emphasis added)

It follows that, when the appellant became registered as proprietor of an estate in fee
simple in the appellant's land, it obtained the title described in the certificate of title.
That title was free from any encumbrance or interest of the kind which the respondent
contends it is now entitled to have created.
Cases applied in the case

Frazer v Walker [1967] 1 All ER 649;

Mayer v Coe [1968] 2 NSWR 747
Abigail v Lapin (1934) 51 CLR 58

The respondent in that case had no claim in personam against the appellant and did
not otherwise fall within the category of those who might successfully claim the land
from the registered proprietor. As is pointed out in Frazer v Walker (1967) 1 AC 569,
at p 586 a claim such as that made in Clements v Ellis (1934) 51 CLR 217 is a claim
to the land for the purpose of the Torrens system. A person in the position of that
appellant had no need to call in aid s 179 of the Transfer of Land Act 1915 (Vic) or its
counterpart in the legislation of another "Torrens" Act. He was a registered proprietor:
he was not merely in the situation of a person contracting or dealing with or taking or
proposing to take a transfer from a registered proprietor nor did he need to rely on
having dealt with a registered proprietor. It is unnecessary for the resolution of the
present case to discuss the function in a Torrens system of such provisions as s 179. It
follows in my opinion from Frazer v Walker (1967) 1 AC 569 that Clements v Ellis
(1934) 51 CLR 217 was not correctly decided. Further in my opinion, Mayer v Coe
(1968) 88 WN (Pt 1) (NSW) 549 and Ratcliffe v Watters (1969) 2 NSWR 146
correctly applied Frazer v Walker (1967) 1 AC 569.

It seems to me that the actual decision of their Lordships in Abigail v Lapin (1934)
AC 491; (1934) 51 CLR 58 governs this case. Here, as there, it can properly be said
that "the case. . . becomes one of an agent exceeding the limitohs of his authority but
acting within its apparent indicia": see (1934) AC 491, at p 508; (1934) 51 CLR 58, at
p 72 and the cases there cited. The appellants therefore lose the priority to which the
prior creation of their interest in the land would otherwise have entitled them.

Legislation considered by this case

Real Property Act 1861 (Qld)

s 33, s 43, s 109, s 123, s 124, s 125, s 126, s 44, s 96
Real Property Act 1877 (Qld)
s 48
Stamp Act 1894 (Qld)
s 53, s 53(5)