| Ashik Ibrahim (1497/1750 Words) 1

| LLAW3221 Real Property Law

| Problem Assignment

BLACKACRE

There are three current interests in Blackacre. James is the registered proprietor, the Australian Westminster
Bank (AWB) has an unregistered mortgage, and Abdullah has a contract of sale. Historically Alison and
Sajid as well as Douglas were registered proprietors.

After James fulfilled the procedural requirements to acquire legal title he became the registered proprietor
and obtained indefeasibility.1 This means that he has acquired “immunity from attack by adverse claims.” 2
Regardless of whether the document was valid, he has acquired immediate indefeasibility. 3

There are no exceptions to James' indefeasibility of title. There may be an instance of fraud in the fact that
Alison and Sajid had notice of an unregistered interest in Blackacre (that of the mortgage by AWB) and
they more than likely attempted to dishonestly cheat Abdullah of his interest in Blackacre by attempting to
sell him the property when his purchase of the property was made on the assumption that there were no
other interests in the land (as he did have his solicitor check for any encumberances or interests in
Blackacre). However, fraud is only an exception to indefeasibility if it was performed by the current
registered proprietor, James.4

There may have been an issue as to whether his father, Douglas was a bona fide purchaser (having known of
the prior contract of sale) but he did pay consideration and the title was registered. 5 The doctrine of
immediate indefeasibility, however, means that as James has committed no fraud, error, and there was no
void instrument, any roguish behaviour on behalf of Douglas is irrelevant to the quality of his title. 6 In
personam exceptions are equitable in nature, typically operating to remedy dishonest or unconscionable
conduct. It is unlikely any court could find James responsible for a broken (and possibly unpaid) contract
several registered proprietors prior of which he had no knowledge of. The concept of indefeasibility is, after
all 'designed to protect a transferee from defects in the title of the transferor, not to free him from interests
with which he has burdened his own title.'7 However, it is possible that section 69(A) may apply to James as
1 Real Property Act 1886 (SA) s 67, 69.
2 Frazer v Walker [1967] NZLR 1069, 1069.
3 Frazer v Walker [1967] NZLR 1069, 1078.
4 Real Property Act 1886 (SA) s 69 (A).
5 Breskvar v Wall (1971) 126 CLR 376, 380.
6 Frazer v Walker [1967] NZLR 1069, 1078.
7 Bahr v Nicolay (No 2) (1988) 164 CLR 604, 653.
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| Problem Assignment

he was not either a bona fide purchaser for value, as he inherited the property, but he did, in good faith,
acquire the property through or under Douglas.8 The possibility of Douglas not being a bona fide
purchaser could certainly hamper James' indefeasibility.

As the Australian Westminster Bank's mortgage over Blackacre was unregistered James acquired the land
without encumberance, as his title will show.9 This means that if Alison and Sajid defaulted on their
payments, AWB would not be able to obtain the property for sale. As Alison and Sajid applied for the
mortgage correctly and without attempting to dishonestly cheat AWB of its interest in Blackacre AWB
might not have a case in fraud against them. While knowledge of an unregistered interest by Alison and
Sajid does not constitute fraud in and of itself, 10 the mortgage over Blackacre was unregistered due to
simple misfiling and not dishonesty11 or willful blindness.12 It is unclear, however, if the bank would have
some equitable remedy available against Alison and Sajid but the in personam exception would not apply
to the current registered proprietor as it was not an agreement that he had either known of or accepted. It
would not be found that James acted unconscionably. 13

Abdullah’s interest is the most tenuous and he has no chance whatsoever of claiming the land, as even if it is
shown that he was a bona fide purchaser of Blackacre and had paid consideration, he would have a strong
claim on the property that would be extinguished in the case of James proper acquisition. 14 However he
may be capable of suing Alison and Sajid for breach of contract, though if consideration had yet to be paid
there would be no apparent damages to put him back in the place he would have been had the contract
been fulfilled.15

8 Real Property Act 1886 (SA) s 69(A).

9 Real Property Act 1886 (SA) s 69.
10 Real Property Act 1886 (SA) s 72.
11 Assets Co Ltd v Mere Roihi [1905] AC 176, 210.
12 Ibid; Pyramid Building Society (In Liq) v Scorpion Hotels Ltd [1998] 1 VR 188, 194.
13 Vassos v Bank of South Australia [1993] 2 VR 316, 333.
14 Real Property Act 1886 (SA) s 67, 69.
15 L’Estrange v F Graucob Ltd [1934] 2 KB 394, 403.
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| Problem Assignment

WHITEWOOD

There are three interests in Whitewood. Bukhary is the registered proprietor. Carlos and Ned have a
registered lease for three years with an option to renew for another three years as well as an unregistered
agreement adding the option to purchase at the end of the renewal period. Omar had a handwritten
agreement granting him a right of way across Whitewood.

Bukhary as the bona fide purchaser of Whitewood and then registered proprietor has indefeasibility of
title.16 Carlos and Ned's lease for three years was registered. This means that Bukhary's purchase of the
property was subject to the terms of the lease.17

The first option, that of Carlos and Ned's ability to renew for another three years was, as part of the
registered lease, is indefeasible.18 As the covenant touches upon the estate or interest, that of the property of
Whitewood, their priority will extend to the option to renew. 19 However, the second option, that of the
option to purchase at the end of the renewal period was neither incorporated into the registered lease nor
registered separately and thus cannot attract indefeasibility.20

The care of the horse, Persian Gazelle, however, is not intimately connected with the interest created by the
lease and is a mere equitable (personal) interest, not notifiable and unconnected with the purpose of the
Act, and thus is last on the totem pole of interests as it does not acquire indefeasibility. 21 No facts stipulate,
however, that the horse is of issue.

Omar was told by Bukhary (as was Sofia post-contract signing) that he would not deny Omar his right of
way. There is no indication in the facts as to whether or not it is registered which means that barring an in
personam claim, the easement cannot be binding if it is not entered on the certificate of title.22 However, six
months later Bukhary blocks the right of way. It is not, however, fraud. If he had used the claim that he
would not block the right of way as a way of inducing Sofia to sell it may well have been fraud to then go

16 Real Property Act 1886 (SA) s 67, 69; Frazer v Walker [1967] NZLR 1069, 1069, 1078.
17 Real Property Act 1886 (SA) s 118.
18 Mercantile Credits Ltd v Shell Co of Australia (1976) 136 CLR 326, 352.
19 Ibid.
20 Ibid; Real Property Act 1886 (SA) s 67.
21 Ibid.
22 Real Property Act 1886 (SA) s 84.
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back on that promise.23 However, Bukhary only discussed the right of way after the signing of the contract
of sale and therefore it could not have been used to induce Sofia to sign. Similarly, there does not seem to
be any dishonesty in Bukhary's words as he only altered his position months later on the advice of his
architect.24 However, he did make a promise to Omar, which Omar relied upon for 6 months. While it is a
far cry from the 20 years required for a right-of-way by prescription, 25 there was an active promise made by
Bukhary, which might shift the balance. However, it does not seem like Omar has a strong case in regards
to enforcing his right-of-way as he has no strict necessity, express contract, or easement by prescription.

23 Loke Yew v Port Swettenham Rubber Co Ltd [1913] AC 491, 502.

24 Assets Co Ltd v Mere Roihi [1905] AC 176, 210.
25 Golding v Tanner (1991) 56 SASR 482 [20].
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| Problem Assignment

GREENFIELD

There are three current interests in Greenfield. Anthony has a joint-tenancy (registered) as well as Fatima
(registered). The Central Bank of NSW has a registered mortgage over the property as well. However, the
issue arises as to the fraudulent act committed by Anthony (and Zahara) in relation to the acquisition of
the loan from the bank.

Whether or not The Central Bank of NSW acquired an indefeasible interest in the property comes down
to whether or not they committed fraud in acquiring the property without Fatima's consent. 26 However, in
the case of fraud by a bank, the fraud must be “brought home”, 27 therefore a failure to notice that Zahara
was not Fatima was not fraud, however if the clerk had been wilfully blind it would have been. 28 On the
facts it appears that the clerk was not wilfully blind, only new and she did check the credentials of one of
the two parties.29 However, as a bank in New South Wales, it has a statutory obligation to take reasonable
steps to identify mortgagors, so a case could be made on the facts that the bank did not take those steps to
identify one of the mortgagors.30

While a case might be made that the bank (through its agent) was sloppy, it was not fraudulent and
therefore it's encumberance over Greenfield is as a registered interest (s 132) so far indefeasible and can be
exercised.31

Anthony's forgery, as the registered proprietor does not negate his indefeasibility of title, as he did not use
it to obtain that certificate of title.32 However, the bank may be entitled to sue Anthony for fraud.

Depending on whether the amount secured was stipulated in the registered mortgage instrument or a
personal agreement between the borrower and the bank, Fatima may be able to argue that so far as her
interest in the property extends (ie half ) the mortgage is null as she never received any money for the loan,
therefore it cannot be securing anything.33 She could therefore claim that the mortgage only applied to
26 Real Property Act 1886 (SA) s 69(A).
27 Assets Co Ltd v Mere Roihi [1905] AC 176, 210.
28 Ibid; Pyramid Building Society (In Liq) v Scorpion Hotels Ltd [1998] 1 VR 188, 194.
29 Ibid.
30 Real Property Act 1900 (NSW) s 56C.
31 Real Property Act 1886 (SA) s 132, 67.
32 Ibid s 69(A).
33 See Yazgi v Permanent Custodians Ltd (2007) NSWCA 240.
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| Problem Assignment

Anthony's half of the property, leaving her own title indefeasible in the case of Anthony defaulting on his
payments.34

34 Ibid.