New Zealand Law Students Journal
Last Updated: 14 January 2013
A COMPARATIVE ANALYSIS:
THE CONSEQUENCES OF FRAUD IN THE ENGLISH AND NEW ZEALAND LAND TITLE REGISTRATION SYSTEMS
There is a striking contrast, between the New Zealand and
English1 land registration systems, to the approach taken and often
the outcome to fraudulent transactions. To illustrate this, take the
situation in the well known New Zealand case, Frazer v Walker.2
The Privy Council held that a bona fide mortgagee and then subsequent
purchaser, whom had acquired title to the farm property by
virtue of a previous
fraudulent transaction, were both to be protected by the indefeasibility
provisions in the Land Transfer
Act (LTA) 1952. Mr Frazer, the
defrauded previous registered proprietor, was entitled to compensation
for his loss.
Conversely, the application of this factual situation to the
English Land Registration Act (LRA) 2002 is likely to result
different outcome. As Mr Frazer was still in actual occupation of the farm, an
English Court would probably find for him
by rectifying the land title. The
subsequent purchaser who had been deprived of their interest would be
entitled to compensation.
The legal justification to these divergent consequences and further
comparisons between the two title registration systems
expanded on in this paper. More specifically three fundamental
questions will be analysed: firstly,
does a registered proprietor who
makes a fraudulent3 transfer remain protected as the
registered proprietor over the property? Secondly, is a bona fide purchaser
protected where there is a previous fraudulent transfer?
∗ Candidate for LLB(Hons); BCom, University of Canterbury.
1 Although this paper refers solely to England, the term encompasses England and
2 Frazer v Walker  1 AC 569.
3 Fraudulent transfers are absolutely void (forgery is
The New Zealand Law Students’ Journal (2007) 1 NZLSJ
thirdly, in what circumstances is a registered proprietor of property
required to recognise an unregistered interest which
exists over that property?
These questions involve the subsequent transfer of registered property. The
effect of first registration
in England will not be evaluated.4
Due to the complexity, especially in England, in answering these three
primary questions it was not possible, to also consider
outcomes would differ if the fraudulent transfer was to a volunteer
A. Registration of Title
Security of land ownership is essential. As Hammond J stated, ‘if there is any area of the law in which the absolute security is required, without equivocation, it must be in the area of security of title to real property.’5
The tool for providing this security in England is no longer, as may be
perceived by many, predominantly prescribed by a common law
system.’ Legislation6 has dramatically changed the nature
and consequences of conveyancing to compulsory registration of
title. New Zealand is no stranger to this concept with the ‘Torrens
system’7 of title registration being at the forefront of our
land law.8 It is therefore not necessary to look at the principles
specific to deeds conveyancing in this paper, as these will play only
limited role in the future of both jurisdictions.
Legislation is absolutely paramount, especially when considering land
title registration principles. Advocates of title registration
began laying claim to the concept in 1862, shortly after it was
implemented in South Australia. However,
the 1862 Act proved to be a
4 Land Registration Act 2002, s 3 - 22 and schedule 1.
5 Register-General of Land v Marshall  NZHC 791;  2 NZLR 189 at 198-199.
6 Currently compulsory title registration is governed by the LRA 2002; previously LRA
7 Named after the founder, Sir Robert Torrens, who sought to improve security and cure the defects common with unregistered deeds title transactions.
8 Although the ‘deeds system’ is still in existence (Deeds Registration Act 1908) it is of virtually no application today due to title registration proclaimed by the Land Transfer
Acts: Land Transfer Act 1870; Land Transfer Act 1885; Land Transfer
(Compulsory Registration of Titles) Act 1924; and currently
the Land Transfer
Act 1952. This current Act has undergone many amendments, including the notable
Land Transfer (Computer Registers
and Electronic Lodgement) Amendment Act
A Comparative Analysis of Land Title Registration Systems
failure.9 The later statutes were not much better in declaring
that indefeasibility was impossible. 10 The LRA 192511 was
the breakthrough influence in creating sweeping changes to the law of title
registration in England. This statute remained virtually
unaltered for the
rest of the century slowly extending compulsory title registration over
England and Wales. Complete
coverage was achieved in 1990.12
The recently enacted LRA 2002 has been heralded as a ‘conveyancing
revolution,’13 most significantly introducing electronic
computer registration. Whilst the LRA 2002 is revolutionary, it depends on
1925 for much of it conceptual foundation. The LRA 2002 is to bring
about not a system of registration of title, but a system
of title by
registration.14 This has signified a momentous shift of
ideology in England from the concept of possession to that of qualified
In order to understand the legal justification of the three fundamental
questions posed in this paper, the legislative concepts at
the foundation of
registration in each jurisdiction need to be explained. This is essential in
determining the conclusiveness
that registration confers on
transferees for consideration. The statutory approaches in providing security
are conceptually very different. England has not followed
in the footsteps of New Zealand and other Commonwealth nations
implementing a Torrens registration system. Instead England opted for
its own unique scheme. While the general aim
of all title registration schemes
is that the register should reflect, to a degree,
9 Title registration was not compulsory and there was no indemnity fund for errors and fraud in the title. The system was also extremely expensive due to obtaining detailed enquiries as to boundaries. E Cooke, ‘E-Conveyancing in England: Enthusiasms and Reluctance,’ in D Grinlinton (ed), Torrens in the 21st Century (2003) at 278.
10 Land Transfer Act 1875; Land Transfer Act 1897 introduced limited compulsion and an indemnity fund. However the status of the indemnity fund was of virtually no use following the decision in: Attorney-General v Odell  UKLawRpCh 59;  2 Ch 47.
11 Amendments to the LRA 1925 were made in 1936, 1986, 1988 and 1997.
12 C Harpum, Megarry & Wade - The Law of Real Property (6th ed, 2000). On December 1st
1990 the whole of England and Wales was subject to compulsory registration. In March
2003 around 90% of titles were registered.
13 L Chamberlain, ‘The Land Registration Act 2002: A Conveyancing Revolution’– Pt 1  152 NLJ 1093.
14 Per Barwick CJ, Breskvar v Wall (1971) 125 CLR 376 at 385 in Law Commission and
HM Land Registry, Land Registration for the Twenty-first Century: a Conveyancing Revolution, No.
271 (London, 2001).
three fundamental principles:15 a mirror,16
insurance,17 and the curtain,18 these are not
absolute and in England19 especially there has been some deviation
from aspects of these.
1. Land Registration in New Zealand: Land Transfer Act 1952
The foundation of New Zealand’s LTA is that a registered proprietor is deemed to have a conclusive indefeasible title to land on registration.20
As Lord Wilberforce stated, ‘indefeasibility of title is a convenient
description of the immunity from attack by an adverse claim to the land or interest in respect of which he is registered.’21 The paramount statutory provisions from which this concept is derived are sections
62,22 63,23 182,24 and 18325
LTA 1952. However, as these sections
15 T Ruoff, An Englishman looks at the Torrens System (1957).
16 The register should be an accurate and conclusive reflection of the relevant interests affecting the land. As Lord Oliver in Abby National Building Society v Cann  UKHL 3;  1 AC 56 at 78C stated, the governing principle of land registration is that land should be regulated by and ascertainable from the register alone.
17 The accuracy of the register should be guaranteed if the register is found to be inaccurate. There should be state compensation available.
18 A purchaser of land is not concerned with interests which lie behind the register.
19 See generally: A Pottage, ‘The Originality of Registration’ (1995) 15 OJLS 371.
20 Bahr v Nicolay (No. 2)  HCA 16; (1988) 164 CLR 604 at 613. This protection does not pass until registration: LTA 1952, s 41. As illustrated in Sutton v O’Kane  2 NZLR 304 and NZ Meat Nominees v Sim (1990) 1 NZ ConvC 190.
21 Frazer v Walker  NZLR 1069 at 1075-1076.
22 LTA 1952, s 62: This essence of this section is that a registered proprietor of land shall, except in the case of fraud, hold the land subject to that notified on the register of title but absolutely free from all other interests whatsoever. There are three exceptions to this in s 62.
23 LTA 1952, s 63: The essence of this section is that no action for the recovery of land can be brought against a registered proprietor: ... (c) except where the registration was obtained by the fraud of the registered proprietor. There are also 4 other statutory exceptions.
24 LTA 1952, s 182: The essence of this section is that ‘a person who without fraud, deals with the registered proprietor is not obliged to inquire into the circumstances in which registration was obtained and is not affected by notice of any trust or unregistered interest. Knowledge of the existence of a trust or unregistered interest is not of itself to be imputed as fraud.
25 LTA 1952, s 183: No action for recovery of land, or for
damages, can be brought against a person who became registered, bona fide,
for value on the ground that his or her predecessor became registered through
fraud or error of any kind or under any void or
proclaim, the concept of indefeasibility is not absolute. There are
numerous exceptions, with the most notable of these
2. Land Registration in England: Land Registration Act 2002
In England the conclusiveness of registration is determined by section
58 LRA 2002.26 Although, section 2927 is equally
significant and could broadly be translated as the English equivalent to New
Zealand’s indefeasibility sections.
This states verbatim:
(1) If a registrable disposition of a registered estate is made for valuable consideration, completion of the disposition by registration has the effect of postponing to the interest under the disposition any interest affecting the estate immediately before the disposition whose priority is not protected at the time of registration.
(2) For the purposes of subsection (1) the priority of an interest is
(a) in any case if the interest –
(i) is a registered charge or subject of a notice in the register, (ii) falls within any of the paragraphs of Schedule 3, or
(iii) appears from the register to be excepted from the effect of
This section, at first glance, appears to indicate that land title is conclusive to a purchaser, even when there is forgery. This would support the New Zealand approach of immediate indefeasibility.28
However on closer examination it is clear that this section substantially
(a) Overriding Interests
Elaborating on section 29(2)(a)(ii), the paragraphs listed in schedule
26 LRA 2002, s 58 (1): If, on the entry of a person in the register as the proprietor of the legal estate, the legal estate would not otherwise be vested in him, it shall be deemed to be vested in him as a result of the registration. (2) Subsection (1) does not apply... in which some other registration requirement remains to be met (these requirements are specified in schedule 2, it is not necessary to examine these at all in this paper).
27 Previously LRA 1925, s 20. LRA 2002, s 30 is identical to the provisions in s 29 and relates to charges (mortgages).
28 Immediate indefeasibility will be explained below.
29 LRA 2002, schedule 3, these overriding interests include: (1)
leasehold estates in land
are unregistered interests which override registered dispositions. The
special protection given to these is the
and fundamental difference that emerges between the paramount statutory
provisions of New Zealand and England.
Gray and Gray describe overriding
interests as, ‘a crack in the mirror from which the Land
Register is meant to
reflect’30 as this is a total exception
to the normal registration principles. The effect of overriding interests is
that they are binding
and enforceable against the registered
proprietor or a subsequent registered proprietor,31 regardless
of whether they are registered on the title, and even if there is no
knowledge of their existence. This means
that purchasers may be in for a
‘nasty shock’ if they fail to inspect the property and make
Two conditions must be established before any overriding interests are to
take effect. First, the interest must subsist ‘immediately
disposition’ and affect the estate subject to the disposition.33
Secondly, priority must be protected at the time of registration as an
unregistered interest falling within one of the categories
in schedule 3.
The most significant of the overriding interests in schedule 3, which can
directly impact on how priorities
are determined when there is a
fraudulent transfer or when recognising an unregistered third party’s
interest, is the protection
given to a person in actual occupation of
property. The other overriding interests are of less significance to this
paper so will not be examined in detail.
not exceeding seven years; (2) interests of persons in actual occupation; (3) easements and profits a prendre; (4) customary and (5) public rights; (6) local land charges; (7)-(9) mines and mineral interests; (10)-(14) five miscellaneous provisions (franchise, manorial right, right to rent which was reserved to the Crown, non-statutory right in respect of an embankment or sea or river wall and a right to payment in lieu of tithe). Guidance on the operation of overriding principles in the LRA 2002 can be derived from case law relating to the LRA 1925.
30 K Gray & S F Gray, Elements of Land Law (4th ed, 2005).
31 LRA 2002, schedule 3(2). Previously, LRA 1925 s 70(1)(g); Law Commission and HM Land Registry, Land Registration for the Twenty-first Century: a Conveyancing Revolution, No. 271 (London, 2001) para 8.55.
32 S Cretney & G Dworkin, ‘Rectification and Indemnity: Illusion and Reality’  84
33 LRA 2002, schedule 3.
(b) A Proprietor in ‘Actual Occupation’
An essential preliminary question to consider is in what circumstances can
a proprietor in England claim the protection of
being in actual
occupation of property? It is worth examining this issue separately as this
will significantly impact on the
three fundamental questions which will be
subsequently discussed. To be in ‘actual occupation’ two
must be established: that the claimant has an interest in the land;
and that they are in actual occupation at the date
disposition.34 A useful ‘mathematical’ formula is
provided by Gray and Gray:35
‘Interest’ + ‘Actual Occupation’ – ‘Inquiry’
= ‘Interest which overrides’
An ‘interest’ is restricted to a normal proprietary
interest in the land (not personal rights). These are rights capable of
enduring through different ownerships, according to
of title to real property.36 The specific interests that are
capable of binding a registered proprietor will be listed below, mainly
when considering the
It is important to note though, that it is the rights of the occupier
that are protected by the status of being an overriding disposition, not the
occupation itself.37 Occupation without an interest does not
create an overriding interest.38 Occupancy has thus been described
as a ‘trigger’ which activates the statutory protection of the
rights.39 A successful claim does not
automatically mean the claimant is entitled to a right of occupation in the
property either. In some
situations there may be this right while in
others, the interest which overrides is completely unrelated to actual
34 LRA 2002, schedule 3(2). The issue of priority is decided at the time of the completion of the purchase, not registration.
35 K Gray & S F Gray, Elements of Land Law (4th ed, 2005).
36 National Provincial Bank Ltd v Hastings Car Mart Ltd  Ch 655 at 696 per Russell LJ.
37 National Provincial Bank Ltd v Ainsworth  UKHL 1;  AC 1175.
38 City of London BS v Flegg  UKHL 6;  AC 54 at 74 per Lord Oliver.
39 K Gray & S F Gray, Elements of Land Law (4th
The second element to establish is whether a person is in
actual occupation of the land. This is defined in the statute: ‘if
he, or his agent or employee, is physically present there.’40
While this definition seems to be self-explanatory much litigation has
occurred to determine where the line of ‘physical presence’
be drawn. As this is a question of fact41 the courts have been
unwilling to lay down a code or catalogue of situations when occupation is
established.42 A consideration which will be taken into account
though, is not only the length of time one may be absent from a property, but
also the reason for it.43 As Lord Oliver stated,44
there must be ‘some degree of performance and continuity
which would rule out a mere fleeting presence.’ Actual
occupation has been
held to include such situations as: the presence of the owner’s
builders on partly derelict property;45 a separated wife who visited
the property everyday to look after the children;46 and where an
occupier had gone elsewhere to give birth to her child but while away
her husband had transferred the house,
for consideration, to a friend who
changed the locks and prevented her from returning.47
However in Strand Securities Ltd v Caswell 48 the
Court of Appeal held that leaving one’s furniture in a flat, having a key
to the flat or making occasional use of it49 was not enough to
constitute actual occupation.
Occupation of premises rather than houses has not been considered as
frequently. In Malory Enterprises Ltd v Cheshire Homes (UK) Ltd 50
fencing a derelict property and other typical ownership activities such as
storing items was held to represent actual occupation.
However in Epps v
40 LRA 2002, schedule 3(2)(2).
41 William & Glyn’s Bank Ltd v Boland  UKHL 4;  A.C. 487, applying the LRA 1925, s 71(g).
42 Hodgson v Marks  Ch. 892 at 932 per Russell LJ.
43 Stockholm Finance Ltd v Garden Holdings Inc  NPC 162. A lady who had not set foot in her London home for over a year was held to no longer be in actual occupation of it.
44 Abbey National Building Society v Cann  UKHL 3;  1 AC 56 at 93.
45 Lloyds Bank Plc v Rosset  Ch 958.
46 Kingsnorth Finance Co Ltd v Tizard  1 WLR 783.
47 Chhokar v Chhokar  FLR 313, note - this issue did not arise in the Court of
48 Strand Securities Ltd v Caswell  Ch 958 at 981.
49 Affirmed in Epps v Esso Petroleum Ltd  1 WLR 1071.
50 Malory Enterprises Ltd v Cheshire Homes (UK) Ltd 
EMCA Civ 151.
Petroleum Co Ltd 51 Templeton J held that parking cars on
vacant land would not suffice, as occupation was not obvious. Conversely
though, parking a
car in a garage did amount to actual
These cases demonstrate that in reality, physical presence is not always easy
to determine. English land law has opted to
grapple with this factual
issue instead of having confidence in the conclusiveness of the register as is
preferred in New Zealand.
A sub-issue which has also arisen is whether it is necessary to occupy the
entirety of the premise over which the overriding
interest is claimed.
In Ashburn Anstalt v Arnold 53 Fox LJ commented that
‘the overriding interest will relate to the land occupied but
not anything further.’ Conversely the Court of Appeal, in the
recent case, Ferrishurst Ltd v Wallcite Ltd 54 declined to
follow the earlier precedent which has placed a far more onerous burden on
the purchaser.55 The Court of Appeal held that a purchaser was
bound by an option to purchase agreement regarding the whole title, not just
was occupied. This extension is an additional step in the wrong
direction from the conclusiveness of a title and even further
the difference between the New Zealand and English land title registration
systems. If this case was decided in England
presently, a different outcome
would probably eventuate due to the statutory provision that ‘the
overriding interest must
relate to land for which there is actual
occupation.’56 This does not rule out the possibility of a
person being held to have actual occupation if they do not have physical
every little part of it though. The question to be asked is
whether the conduct of the occupier suffices as actual occupation of
area claimed.57 This interpretation would be consistent with the
51 Epps v Esso Petroleum Co Ltd  1 WLR 1071.
52 Kling v Ketson Properties Ltd (1984) P & CR 212.
53 Ashburn Anstalt v Arnold  Ch 1 28, applying the LRA 1925, s 71(g).
54 Ferrishurst Ltd v Wallcite Ltd  Ch 355, applying the LRA 1925, s 71(g).
55 Law Commission and HM Land Registry, Land Registration for the Twenty-first Century: a
Conveyancing Revolution, No. 271 (London, 2001) para 8.57.
56 LRA 2002, schedule 3(2)(1).
57 R Smith, Property Law (4th ed, 2004) at
(c) Limitations to a Proprietor in Actual Occupation
However, the LRA 2002 contains two main statutory limitations where a
purchaser may take free of an overriding interest where there
unregistered proprietor who is in actual occupation.58 The
first of which is if an inquiry was made before the disposition and this had
not been disclosed when it could have reasonably
The burden of enquiry is on the purchaser who must therefore
discover those in actual occupation and ask what their interest
in the property
is. Asking the seller is not sufficient.60 The second limitation is
if there is an interest belonging to a person whose occupation would not
have been obvious on a reasonably
careful inspection of the land at the time of
the disposition and which the person to whom the disposition is
made had no actual knowledge at the time.61 It is not the interest
which has to be apparent, but the occupation of the person having the
interest.62 The test of occupation, as stated, is whether it was
obvious on a reasonably careful inspection of the land. This test is
suggested to be less demanding than constructive notice.63 The
purpose of this section is to protect a purchaser where occupation is neither
known nor readily ascertainable.64 The onus therefore rests on the
Contrasted with New Zealand’s land transfer system, the
status accorded to a proprietor in actual occupation
of land is an
58 LRA 2002, schedule 3(2)(1). There are two other statutory limitations: (a) which relate to the Settlement Land Act 1925; (d) future leases, postponed for 3 months. A non- statutory limitation is that a spouses statutory possession rights are not capable of being overriding interests - Family Law Act 1996, s 31(10). Otherwise purchasers would need to make enquires in a large number of cases.
59 LRA 2002, schedule 3(2)(1)(b), this is a reformulation of LRA 1925, s 70(1)(g).
60 Hodgson v Marks  Ch 892.
61 LRA 2002, schedule 3(2)(1)(c).
62 Law Commission and HM Land Registry, Land Registration for the Twenty-first Century: a
Conveyancing Revolution, No. 271 (London, 2001) para 8.62.
63 C Harpum, Megarry & Wade - Law of Real Property (6th ed, 2000) at 12-068. This limitation to actual occupation could be argued if this factual situation was to occur now in cases such as: Abbey National Building Society v Cann  UKHL 3;  1 AC 56 and Lloyds Bank Plc v Rosset  Ch 958.
64 Law Commission and HM Land Registry, Land Registration for the Twenty-first Century: a
Conveyancing Revolution, No. 271 (London, 2001) para 8.62.
concept, out of kilter with the purpose of title registration envisaged by
Sir Robert Torrens. Therefore, it could be held that Torrens
protects static (rights of parties as registered on the title) rather than
dynamic security (purchasers taking
free of any overriding interests
which are not registered on the title).65 In that respect an
overriding interest is the ‘stumbling block’ on registration of
As the legislative foundations of registration and conclusiveness of title in England and New Zealand have been explained, it is now appropriate to investigate and compare the consequences of fraudulent transactions. There has been very little mention in England of fraud.67
The main reason suggested for this, is that where a void (forged) transaction
has been registered, the English land registration
statutes have used the
concepts of actual occupation and of mistake (relating to rectification)68
as a mode of inquiry.
B. The First Fundamental Question
The first fundamental question to be addressed is whether a registered
proprietor who previously made a fraudulent (void) transfer
of property to
themself remains protected as the registered proprietor? This is an
undemanding issue. The void transfer has to
be of no effect. The fraudulent
registered proprietor obviously must lose possession and title to the
property in question
as it would be unthinkable to allow otherwise. In New
Zealand the LTA 1952 specifically states fraud as an exception to
indefeasibility.69 Section 85 also enables the High Court to cancel
or correct the computer register against the fraudulent registered
proprietor.70 The position in England, while not as visibly clear in
the statute, is the same. While registration vests legal title in a
65 E Cooke and P O’Connor, ‘Purchaser Liability to Third Parties in the English Land
Registration System: A Comparative Perspective’ (2004) 120 LQR 640.
66 Sir John Stewart-Wallace, ‘Principles of Land Registration’, at 32 in R Smith, Property
Law, (4th ed, 2004).
67 R Smith, Property Law, (4th ed, 2004).
68 LRA 1925; LRA 2002 states that the register may be rectified where there is a mistake. This is intended, according to the Law Commission’s Report (No. 271, para 8.15), to include fraud.
69 LTA 1952, s 62 and s 63.
70 LTA 1952, s 85 was applied in Efastratiou v Glantsching
 NZLR. 594. The registrar also has the power to correct the register,
applying LTA 1952, s 81.
proprietor, like New Zealand, the defrauded true proprietor can undertake proceedings in court to establish that the title is void and seek rectification of the register. Rectification will reverse the transaction on the grounds that registration was a mistake even if this prejudices the fraudulent proprietor in possession of the land.71
Obviously no indemnity will be payable as the transfer was wholly a
result of their own fraud.72
C. The Second Fundamental Question
This question is more difficult. Should a bona fide purchaser for value be
protected where there is a fraudulent transfer? Therefore
fraud is against
a previous registered proprietor. An example of this scenario is where: land was
initially fraudulently transferred
from (P) to (A), who obtained
registration and then on-sold the land for valuable consideration
to a bona fide
purchaser, (B). The issue is whether (P) can claim the
registered title to the property from (B). This is a complex issue, which
a problem for any land registration system. There are two innocent parties and
one must lose. Should an innocent bona fide
purchaser for value be deprived
of their interest in the property or should the innocent transferor who has
of their interest lose the claim to recover the property? The
approach and conceptual basis taken, when analysing the conflicting
interests in this scenario, illustrates an essential difference between
the two title registration systems. The answer
in New Zealand is rather more
simplistic than the myriad of possible outcomes under the English LRA
1. New Zealand’s Answer
In New Zealand this question has experienced considerable litigation and
academic discussion. The degree of legitimacy the court
assigns to the
principle of registration, by a bona fide purchaser under a void
transfer, is central in determining
which innocent party has priority.
There was originally uncertainty as to whether the doctrine of deferred
indefeasibility73 or immediate indefeasibility74 would
prevail.75 The Privy
71 LRA 2002, schedule 4(3)(2)(a).
72 LRA 2002, schedule 8(5)(1)(a).
73 T Bennion & D Brown & R Thomas & E Toomey, New Zealand Land Law (2005). A
title obtained fraudulently can be defeated only if it is
‘perfected’ by a subsequent bona
Council in the landmark decision, Frazer v Walker,76 held
in favour of the doctrine of immediate indefeasibly, conferred by sections
62, 63 and 183 LTA 1952. Thus, registration
of title by a bona fide purchaser
for value was conclusive even via a previously fraudulent transfer.
However this decision
is likely to cause harsh results in some
situations.77 It is possible that a person still in occupation of
property would be ejected. Nevertheless, this position is preferred and has
been affirmed on numerous occasions both in New
Zealand78 and Australia.79 Applying the scenario above,
if the registered proprietor (B) is a bona fide purchaser for value80
they will be protected by the immediate indefeasibility provisions in the
LTA 1952. This will also clearly apply to a subsequent
bona fide purchaser. The
defrauded transferor (P) would be entitled to receive compensation from
the state.81 If for instance, (B) is a registered bona fide
mortgagee under a forged transfer, then similarly no claim will be
as (B) is protected by immediate indefeasibility.82
(P) would be restored as the registered proprietor but subject to
(B)’s mortgage83 and (P) could then claim compensation to
remove the interest.
fide purchaser for value.
74 A bona fide purchaser for value, in the absence of fraud, will obtain an indefeasible title to the property on registration.
75 This question was left open in Gibbs v Messer  UKLawRpAC 2;  AC 248 (transfer to a fictitious person). In Assets Co Ltd v Mere Roihi  UKLawRpAC 11;  AC 176 (three consolidated appeals) it was
considered that registration of a void instrument does not confer an indefeasible title; Boyd v Mayor of Wellington  NZGazLawRp 58;  NZLR 1174 held that registration of a void instrument under the LTA, conferred an immediately indefeasible title.
76 Frazer v Walker  1 AC 569.
77 NZ Property Law and Equity Reform Committee, ‘The decision in Frazer v Walker,’ June 1977, 9.
78 Most notably in Housing Corp of NZ v Maori Trustee  2 NZLR 662; Morrison v BNZ
 3 NZLR 291.
79 Applying similar ‘Torrens legislation’ to New Zealand’s: Mayer v Cole  2 NSWLR
747 (Aus); Breskvar v Wall (1971) 126 CLR 376 (Aus).
80 The position of volunteers has not yet been determined in New Zealand.
81 LTA 1952, s 172(b). Compensation will probably not be available for a forged transfer to a fictitious person as was held in Gibbs v Messer.
82 LTA 1952, s 183.
83 The analogous Australian case to this example is Heron v Broadbent (1919) 20 SR (NSW)
2. England’s Answer
The concept of ‘indefeasibility’ is foreign to English land registration statutes, cases, Law Commission Reports and textbooks. It has provoked very little litigation at all as there is a completely different ideology to registration. While registration in England similarly applies a
‘statutory magic’84 that confers immediate legal title85 on the newly registered proprietor, this is subject to the possibility that the register is
‘altered.’86 Both an overriding interest and grounds for rectification can
result in derogation of title from a registered proprietor.
New terminology under the LRA 2002 refers to alteration, with rectification being a subset of this.87 Alteration is where any change is made to a register of title. It does not affect rights. It has the effect of ensuring the register accurately reflects the legal position of the title.88
Alternatively, rectification is correcting a mistake89 where a registered
proprietor of the property is prejudiced.90 This affects
rights. While there is no guarantee of title itself in England, an indemnity
provided by schedule 8(1) LRA is
available where any person suffers
loss by reason of rectification of the register. This indemnity
provision can therefore be viewed as similar in nature to that offered in New
Zealand to a defrauded
party. Rectification and an indemnity are complementary
remedies. Rectification will first be determined and then compensation will
available to the party who loses their claim. An alteration however is
deemed to cause no loss under the Act and
therefore no indemnity is
While the outcome when applying the English approach to land
84 Argyle Building Society v Hammond (1984) 49 P & CR 148 per Slade LJ at 153. Under s
29(1) LRA 2002 as long as the registered proprietor is unaware of the forgery and provides valuable consideration they will obtain good title on becoming registered.
85 LRA 2002, s 58 and Law Commission and HM Land Registry, Land Registration for the
Twenty-first Century: a Conveyancing Revolution (London, 2001) para 1.10.
86 Slade LJ used the word ‘rectified.’ The terminology is substantially different under the
LRA 2002. The correct word to now use is ‘altered.’ This is explained below.
87 LRA 2002, s 65 and schedule 4.
88 N P Gravells, Land Law (3r d ed, 2004).
89 Correcting a mistake includes a registered forged transfer, though neither the LRA
2002 nor the Law Commission’s Report (No. 271) expressly state this.
90 LRA 2002, schedule 4(1).
registration will occasionally render the same result as would be seen in New
Zealand, the theoretical basis for doing so is entirely
simplicity, analysis of a fraudulent transfer against a previous registered
proprietor in England has been divided
into three situations. Firstly,
where there is an overriding interest by a defrauded proprietor still in
of the property. Secondly, (in the absence of an overriding
interest) where title is transferred into the name of the fraudulent
then transferred on for consideration to a bona fide purchaser or a mortgagee.
And thirdly, (in the absence of any overriding
interest) where a title is forged
and transferred directly to an innocent bona fide purchaser for value.
(a) A Defrauded Proprietor who is in
Actual Occupation of the Property
The first factual situation involves the determination of whether a defrauded
registered proprietor is entitled to have title to the
property returned to
them by virtue of being in actual occupation and thus having an
overriding interest. A claim to an
equitable remedy, such as alteration of the
register, is considered a proprietary interest and can bind innocent
transferees.91 However as explained above, it is critical that
the person claiming alteration is deemed to be in actual occupation of the
(is physically present there).92 If a defrauded proprietor
(P) is in actual occupation of land then the register would be altered to
reflect this. Normally
as the new registered proprietor (B) is already
bound by the interest prior to the alteration, no compensation is
for there is considered to be no loss.93 However a
special exemption to this principle appears to exist under schedule
8(1)(2)(b) LRA 2002 where there has been a forgery.94 A victim, (B),
deprived of title to property by a person in actual occupation, (P), may be
91 LRA 2002, s 116. Cases which illustrated this under the LRA 1925 are: Chowood Ltd v Lyall (No. 2)  2 Ch. 156; Blacklocks v JB Developments (Goldaming) Ltd  Ch 183; DB Ramsden & Co Ltd v Nurdin & Peacock plc  1 EGLR; Collins v Lee  2 All ER
332 at p 338 (where doubts were raised as to fraudulent misrepresentation); Holaw (470) Ltd v Stockton Estates Ltd (2001) 81 P & CR 404 at 69; Malory Enterprises Ltd v Cheshire
Homes (UK) Ltd  EMCA Civ 151 at 81.
92 This is subject to the provisions, as explained, in the LRA 2002, schedule 3(2)(1)(b).
93 The loss is caused by the overriding interest not alteration of the register.
94 D J Hayton, Registered Land (3r d ed, 1981);
R J Smith, Property Law (4th ed, 2003). This point has not
been argued in court and will only rarely occur.
to have suffered loss and therefore be entitled to an indemnity on the
register being altered. This should be the correct interpretation
to take in
England for compliance with the ‘insurance principle.’ If for
instance (B) happened to be a registered bona
or (B) was a bona fide purchaser and (C) was a bona fide mortgagee, then
similarly alteration would occur and the mortgagee would
be entitled to an
indemnity.96 As was already explained, actual
occupation by a proprietor in New Zealand (LTA) is irrelevant and
plays no part
in determining priority to land.
(b) Title is Transferred to the Fraudulent Party and then onto a
Bona Fide Purchaser (or Mortgagee) for Value
The second factual situation concerns if, or in what
situations, rectification of land title will be ordered
absence of an overriding interest) to deprive a registered proprietor of their
legal title. There is no immediate
indefeasibility provision(s) in the
LRA 2002. Rather than the registered title of a bona fide purchaser for value
under a void
transfer being absolutely paramount,97 the purchaser
will usually98 be protected provided they are in possession of
the property.99 This is if land is ‘physically in their
possession.’100 In Kingsalton v Thames Water
Developments101 the Court elaborated on this concept to state
that ‘a proprietor will normally be in possession, unless
As already seen, the Act also uses the expression
‘actual occupation’ when referring to an overriding interest. It is
suggested that this is a narrower
95 Protected under LRA 2002, s 30.
96 Collins v Lee  2 All ER 332, applying LRA 1925. The Court of Appeal allowed rectification against both the registered proprietor and the mortgagee. If the LRA 2002 was applied alteration would similarly be ordered to cancel both the transfer and interest with an indemnity available.
97 See Frazer v Walker  1 AC 569.
98 LRA 2002, schedule 4 (3)(2) and 6(2).
99 Re Haigh’s Case [Eng] – unreported.
100 LRA 2002, s 131(1) & (2) defines certain relationships which give rise to possession without physical occupation. Occupation can be transferred to another and can include: a landlord is protected if a tenant is in occupation (Freer v Unwins  Ch 288), a mortgagor is protected if a mortgagee is in occupation, licensor is protected if a licensee is in occupation and trustee is protected if a beneficiary is in occupation.’
101 Kingsalton v Thames Water Developments  1 P & CR 184 at 21, applying the LRA
concept than the term ‘possession.’102 Although
there is often an overlap where both terms will be satisfied, possession
is of separate application than actual
occupation. The focus here is on the
present registered proprietor, not the previous one.
There are two presumptions in the LRA 2002. While in light of Nouri v
Marvi,103 these presumptions may be seen as only fettering the
‘discretion of the registrar to rectify,’ they will nevertheless
still be highly persuasive for a court when exercising its
discretion.104 The first presumption is if a registered proprietor
is deemed not in possession of the land, the existence of grounds for
must lead to the rectification unless there are exceptional
circumstances which justify a refusal to rectify.105 If
rectification succeeds here the registered proprietor will be
compensated by the indemnity fund.106 Depriving a registered
proprietor in possession of property from losing their interest is
still one of the central aims
of the LRA 2002. This is the second presumption.
At the point when rectification of the register is demanded if the registered
proprietor is in possession, then rectification will not take place
without their consent and an indemnity will be paid to the claimant with the
However this is not without exception. There are two situations when the
protection of a proprietor in possession can be overturned
rectification allowed: where the registered proprietor has caused or contributed
to the mistake by fraud or carelessness,107 or unless
102 Strand Securities Limited v Caswell  EWCA Civ 1;  1 All E.R. 820 at 826 & 829-830. While leaving furniture in a flat will not satisfy as being in actual occupation, this may be sufficient to establish possession. However the ambit of how much wider possession is than actual occupation is not clear.
103 Nouri v Marvi  1 EGLR 71 per Judge Rich QC – interpreting Peter Gibson LJ's judgment in Kingsalton v Thames Water Developments  1 P & CR 184 was of the opinion (obiter dicta) that the courts discretion to rectify was ‘unfettered.’
104 Ibid – the court will look at the ‘policy of the statute.’
105 LRA 2002, schedule 4(3)(3) and 6(3); Law Commission and HM Land Registry, Land
Registration for the Twenty-first Century: a Conveyancing Revolution, No. 271 (London, 2001) para
10.18 and 10.22.
106 LRA 2002, schedule 8(1)(2)(b) relates to schedule 8(1)(1)(a). These provisions also existed under the LRA 1925.
107 LRA 2002, schedule 4(3)(2)(a). An issue which has not been
determined yet is what behavior would amount to carelessness. Examples under the
LRA 1925, s 82(3)(1), are found in: Re 139 High Street Deptford  Ch
884 at 890-892 and Claridge v Tingey 
would be unjust for the alteration not to be made.108 The use
of the double negative ‘unjust’ and ‘not to be made’
seems to indicate that the person seeking rectification
must have a strong
case.109 Factors that the court may take into account
include the length of undisturbed possession, the need for the land,
expenditure on it, and the indemnity position.110 The burden here is
reversed onto the claimant.
Rectification therefore allows for an element of discretion. There is also discretion under the indemnity provision of the Act. It is unlikely in this situation that an indemnity would be paid. Schedule 8(5)(1) and (2) LRA 2002 states that an indemnity will not be payable where the claimant’s loss is suffered wholly or partly as a result of their own fraud, or may be reduced where the loss that is suffered is partly as a result of their own lack of care.111 Applying the hypothetical example above: if (A) fraudulently transfers (P)’s title to themselves, becomes registered, and later sells the land to (B), so as long as (B) is deemed to be in possession and is unaware of the forgery it is likely that (B)’s title will not be rectified. B will have ‘good title’ under sections 29(1) and 58
LRA 2002, with (P) entitled to receive an indemnity.112
A variation on this factual situation is instead of the void transfer being
to a bona fide purchaser for value, the transfer
is to a bona fide
mortgagee. If (A) fraudulently transfers (P)’s property (who is not
in actual occupation) to
themselves and then obtains a
registered mortgage over the property from (B), the title would
rectified in (P)’s favour.113 However the
issue remains what should happen to (B)’s (the mortgagee’s)
registered interest, created before the rectification?
Should the interest
remain protected on the title or should there be a secondary rectification? The
case, Norwich and Peterborough BS
1 WLR 134 at 140-141.
108 LRA 2002, schedule 4(3)(2)(b) and 6(2)(b).
109 R Smith, Property Law (4th ed, 2003).
110 Examples under the LRA 1925 [s 82(3)(c)]: Johnson v Shaw  1 P & CR 123, rectification was ordered; Horrill v Cooper (1998) 78 P & CR 336 at 345-347, rectification was ordered; Epps v Esso Petroleum Co Ltd  1 WLR 1071 at 1080-1083 grounds for rectification were not satisfied.
111 See Dean v Dean 80 P & CR 457.
112 LRA 2002, schedule 8(1)(1)(b).
113 LRA 2002, schedule 4(3)(2)(a).
v Steed 114 established that rectification against a
subsequent mortgagee requires independent grounds. Therefore it is logical in
that where there is fraud, the title will be rectified on these
independent grounds to remove the mortgagee’s interest.
The basis for
doing so is that the mortgagee can not claim that they are in
‘possession’ of the property; it is the
fraudulent mortgagors who
are in possession.115 The rectified title will thus reflect its true
position before the fraudulent transfers occurred.116 All is not
lost for the mortgagee though. Due to the nature of title registration they will
be entitled to an indemnity from the state.117 In comparison with the
New Zealand LTA the register will remain unaltered. However the registered
proprietor will receive compensation
to pay the mortgage off.
(c) Title is Fraudulently Transferred Directly to a
Bona Fide Purchaser for Value
The third factual situation is subtly different than the previous and although it would not be thought that the consequences would be any different, the English courts have managed to distinguish it. This is where (A) forges (P)’s signature (who is not in actual occupation) and directly transfers the title to a new bona fide registered purchaser for value (X). The issue is whether (X)’s title is protected. Applying section
58 LRA 2002 it would prima facie seem that (X) is protected. Even a
person who is registered as proprietor (transferee) of a legal estate, on the
strength of a forged
transfer, should nonetheless obtain the legal
estate.118 Thus the statutory processes as described above
should be applied. However application of the corresponding previous
114 Norwich & Peterborough BS v Steed  Ch 116.
115 LRA 2002, schedule 4(3)(3) and 4(8), the court has the power to change the priority of interests. The title was not rectified in Re Leighton’s Conveyance  1 All ER 667 applying LRA 1925 (however this case was based on undue influence and not fraud).
116 See cases applying the LRA 1925, s 82: Argyle Building Society v Hammond (1984) 49 P & CR 148 and subsequently: Norwich & Peterborough BS v Steed  Ch 116. Secondary rectification was precluded against the charge of the innocent mortgagee as the transaction was voidable not void (this was a question of construction applying LRA
1925). If there was a forgery though (thus a void transfer, LRA 1925 s 82(g)) rectification
would have been permitted and an indemnity to the mortgagee available.
117 LRA 2002, schedule 8(1)(2)(b).
118 Law Commission and HM Land Registry, Land Registration for the Twenty-first Century: a
Conveyancing Revolution, No. 271 (London, 2001) para 9.4.
provision119 suggested otherwise, even if the registered
proprietor is in possession. It therefore seems that section 58 does not protect
The initial case, Attorney-General v Odell 120 involved a
forged transfer by the chargee’s solicitor to Odell who was wholly
innocent. The Court rectified against Odell
on grounds that he never had
‘good title’ and was therefore not even entitled to an
position remained, applying the LRA 1925, on different
grounds. In Malory Enterprises Ltd v Cheshire Homes (UK) Ltd121
the Court of Appeal held that there was no disposition122
giving absolute title on the strength of a forged transfer. The new
registered proprietor (legal owner) was subject to the rights
of the defrauded
party as the beneficial (“true”) owner holding the property on
trust for them. Therefore, surprisingly,
the purchaser will not receive
The issue of compensation under the LRA depends on whether ‘good
title’ is obtained by a transferee. Presently the answer
to this question
is not clear. If the transferee does not obtain good title, there cannot be any
mistake under the legislation,
and therefore rectification is not
available. The indemnity cannot be claimed as this is dependent on
rectification.123 The favourable view is that legal, ‘good
title,’ should be found under a directly forged transfer. A contrary
seems to be bizarre, unjust and lacks logic. It is unwise to
have a further distinction to these principles of land registration
the premise that the fraudster imitated the registered proprietor and
transferred the property to an unaware bona fide
purchaser. These precedents
should be overruled on the grounds that there was a misunderstanding as to the
effect of registration
(in light of sections 58 and 29 LRA 2002). The decision
in Malory undermines the conclusiveness of the register and
119 LRA 1925, s 69.
120 Attorney-General v Odell  UKLawRpCh 59;  2 Ch 47 applying the LTA 1875; R J Smith, ‘Forgeries and Land Registration’ (1985) 101 LQR 79, this is effectively supporting a deferred indefeasibility doctrine.
121 Malory Enterprises Ltd v Cheshire Homes (UK) Ltd  EMCA Civ 151 applying the
LRA 1925. The reasoning is equally applicable to the LRA 2002.
122 A disposition is essential under s 29 LRA 2002. If there is no disposition then this section cannot apply.
123 LRA 2002, schedule 8 (1)(2)(b).
also inconsistent with the earlier precedent of Argyle BS v Hammond.124
For the sake of simplicity and confidence in the register it is hard to see
the precedent in Malory progressing any further.
The three situations that have been described illustrate the complexity, lack
of conclusiveness in the register and the completely
different conceptual basis
for land title registration in England. Having the status of being in
possession and/or an overriding
interest is pivotal. New Zealand,
sensibly, does not recognise any such concept. It must be commended
though that the
statutory priority system in England is destined to be
acceptable most of the time as the proprietor in possession or
in actual occupation usually wishes to keep the property and not receive
There is generally far greater reluctance in New Zealand to alter
the position of the register. Immediate indefeasibility dictates
that the bona
fide purchaser for valuable consideration or mortgagee would receive title to
the property, and the defrauded previous
registered proprietor would be
compensated. The advantage of this approach is its simplicity which may in
turn bolster public
D. The Third Fundamental Question
The third fundamental question to be analysed is one of the most
difficult issues faced by any registration scheme:126 if or in what
circumstances is a registered proprietor of property required to
recognise an unregistered interest
which exists over the property? The
purchaser’s wrongdoing here affects not the vendor’s interest, but
third parties. For instance if (X) holds an unregistered
interest in the land, of which (Z) has become the registered proprietor,
issue is whether (X) is able to have their interest recognised.
1. New Zealand’s Answer
The approach adopted in New Zealand is to determine whether the
124 Argyle BS v Hammond (1984) 49 P & CR 148.
125 R J Smith, ‘Forgeries and Land Registration’  101 LQR 79 at 88.
126 R J Smith, Property Law (4th ed,
registered proprietor’s conduct amounts to fraud. If so, then
the registered proprietor takes title subject to
interest claimed, as the indefeasibility protection under the LTA 1952
is no longer available. Section
182 LTA states that a registered proprietor is
not affected by notice of any trust or unregistered interest and that
of any trust or interest shall not be imputed as fraud.127
The LTA does not define fraud though; this is left to judicial
interpretation. Therefore something more than mere knowledge
The courts, in a series of early cases, used obiter dicta to assist in
drawing a perimeter around the sphere of behaviour that would be
considered fraudulent. This is still applied in
In Assets Co Ltd v Mere Roihi 128 the Privy Council held
that fraud is confined to ‘actual’129 personal
‘dishonesty’ of some kind, not what is called
‘constructive’ or ‘equitable’ fraud.130
Then in Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd 131
Salmond J elaborated on the concept of ‘dishonesty’132
to adopt a ‘duty of an honest man’ test.133 The
Privy Council in Waimiha134 also expressed that it is
fraudulent ‘if the designed object of a transfer is to ‘cheat a man
of a known existing right.’
While this obiter dictum is of some
help, it is essentially a question of fact, at the date of registration, in
determining whether conduct is considered fraudulent.
This can often be a thin
line, as the cases have suggested.135
127 Pre LTA 1952, in Locher v Howlett (1894) 13 NZLR 584 at 595-596, Richmond J held that notice of a trust or unregistered interest is not fraud.
128 Assets Co Ltd v Mere Roihi  UKLawRpAC 11;  AC 176 at 210 (PC).
129 This is a conscious, subjective knowledge which may also include wilful blindness.
130 TBF Ruoff, ‘Protection of the Purchaser of Land (1969) 32 MLJ 121. A person may not benefit from avoiding information which he or she would have discovered had the enquiries usually made by a prudent purchaser been made.
131 Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd  NZGazLawRp 32;  NZLR 1137 at 1175 (CA).
132 Ibid at 1173. Dishonesty is a wilful and honest disregard and violation of the rights of other persons.
133 Ibid. This is whether the purchaser knew enough to make it his duty as an honest man, to hold his hand, and either make further inquiries, abstain from the purchase, or purchase subject to the rights.
134 Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd  AC 101 at 106 per Lord
135 Cases where a registered proprietors conduct was considered
fraudulent: Loke Yew v Port Swettenham Rubber Co Ltd  UKLawRpAC 11;  AC 491;
Efstratiou v Glantschnig  NZLR 594; New Zealand Meat Nominees v
Sim (1990) 1 NZ ConvC 190, 498; Jessett Properties Ltd v UDC Finance Ltd
 1 NZLR 138; Swann v Secureland Mortgagee Investments Nominees Ltd
If it is a proprietor’s purpose on registration to defeat an
unregistered interest, then obviously this conduct would not attract
protection of indefeasibility.
2. England’s Answer
(a) Overriding Interest
The approach taken in England is not surprisingly, entirely different.
The protection conferred to an unregistered third party
is not based on any
issue of fraud but whether the unregistered party has an overriding
interest.136 If so, then regardless of notice the purchaser will
be bound to honour that interest. The most common situations where there is
an overriding interest is if the claimant has an unregistered leasehold estate
in land not exceeding seven years,137 or the interest holder is in
actual occupation of the premises. An unregistered lease in the property is
according to the statutory provisions in the LRA
2002.138 However the protection of a proprietor in
actual occupation of property is less so. Although the LRA 2002 now requires
interests capable of being classified as overriding to be noted in the
register,139 there are several that will still be protected so long
as the holder of the interest is in actual occupation of the property.
These include: a legal140 or equitable lease or
tenancy;141 beneficial interest
licq)  2 NZLR 144; Ward v Keane 21/8/92, CA 11/91; Hopman v Peka 4/11/98
CP132/94; Tuscany v Gill (2001) 4 NZ Conv 193 at 446.
Cases where a registered proprietor’s conduct was not considered fraudulent: Waimiha
Sawmilling Co Ltd v Waione Timber Co Ltd  AC 101; Harris v Fitzmaurice  NZLR
975; Bunt v Hallinan  NZCA 98;  1 NZLR 450; NZ Guardian Trust Co Ltd v Ashby 16/7/86 CP
727/86; Talyanicich v Index Developments Ltd 28/3/91 CP 1330/90; Crinklewood Holdings Ltd
v C V Quigley & Sons Nominees Ltd  1 NZLR 463; Laing v Lanron Shelf Co No 56 Ltd  1 NZLR 562; Auckland CC v Man O’War Station Ltd 19/8/97 CP 1355/83; CN & NA Davies Ltd v Laughton  3 NZLR 705; Duncan v McDonald  3 NZLRE 669; Town & Country Marketing Ltd v McCallum (1998) 3 NZ ConvC 192 at 698.
136 LRA 2002, schedule 3, above n 29.
137 Leases of 7 years or more are registrable dispositions and thus have no effect in law until registered.
138 LRA 2002, schedule 3(1).
139 R J Smith, Property Law (4th ed, 2003).
140 Ashburn Anstalt v Arnold  Ch 1 at 27D.
141 Greaves Organisation Ltd v Stanhope Gate Property Co Ltd
(1973) 228 EG 725 at 729.
under an implied (bare) trust142 or some other trust of land;143 estate contract;144 unpaid vendors lien;145 protected or statutory tenant;146 and a tenants right to recoup repair costs from the future rent owed to the landlord.147 One overriding interest of particular importance was determined by the House of Lords in William & Glyn’s Bank Ltd v Boland.148 It was held that interests of beneficiaries (a wife) of trusts for sale149 was an interest in the land and thus protected as ‘overriding.’150
This decision represented a large expansion to the negative of
registration.151 If an overriding interest exists then alteration of
the title will occur. However as the registered proprietor takes subject
any overriding interests prior to alteration, no indemnity can be claimed as
they have suffered no loss. This decision merely
reflects the existing
entitlement. If such a provision, giving priority to certain overriding
interests of proprietors
in actual occupation existed in New Zealand, then
in several situations a registered proprietor would be bound by the interest
prior to registration. Obvious examples in New Zealand where the courts have
held the registered proprietor to be innocent of fraud
and thus take free of the
interest, when they are likely to be bound by the interest in England, include
the factual situations found
in Harris v Fitzmaurice152 and
Bunt v Hallinan.153
142 Collins v Lee  2 All ER 332 at 336.
143 William & Glyn’s Bank Ltd v Boland  UKHL 4;  AC 487; City of London BS v Flegg  AC
54; Lyus v Prowsa Developments Ltd  2 All ER 953; Popely v Heltfield Properties Limited  EWHC 368 – where the claimant sought to establish a constructive and resulting trust.
144 For example an option to purchase: Webb v Pollmount Ltd  Ch 548 at 603 & a right of pre-emption (s 155 LRA 2002): Homsy v Murphy (1997) 73 P & CR 26 at 35.
145 This is a right which one person has to either retain the property of another or have a right over it until a claim against the other is satisfied (P Spiller, Butterworths NZ Law Dictionary (6th ed, 2005)) – Ferristhurst Ltd v Wallcite  Ch 355 at 367.
146 Barclays Bank plc v Zaroovabli  Ch 321 at 328.
147 Lee-Parker v Izzett  1 WLR 1688 at 1693.
148 William & Glyn’s Bank Ltd v Boland  UKHL 4;  AC 487 applying the LRA 1925, s 71(g).
149 Trusts of Land and Appointment of Trustees Act 1996 - the term a ‘trust for sale’ is now known as a trust of land.
150 Applying LRA 1925, s 70(g).
151 E Cooke, ‘E-Conveyancing in England: Enthusiasms and Reluctance,’ in D Grinlinton (ed), Torrens in the 21st Century: (2003) at 280.
152 Harris v Fitzmaurice  NZLR 975.
153 Bunt v Hallinan  NZCA 98;  1 NZLR 450.
(b) No Overriding Interest
There will be some situations in England where an unregistered
proprietor will not have an overriding interest in the
land. But does that mean
that a registered proprietor, who for instance has actual
knowledge of the interest and
purchases the property with the object of
defeating that interest (akin to fraud in New Zealand), can take free of it?
There is very
little authority on this question in the English land
registration system. The LRA 1925 and 2002 seem extremely reluctant to
tangled in this debate. Cross J154 emphatically stated,
‘notice of something which is not on the register of the title in question
shall not affect a transferee
unless it is an overriding interest.’ Does
this indicate that this question is completely closed then? There was a
of hope cast by Graham J in Peffer v Rigg.155 It is
this decision, which did not concern any issue of an overriding interest that
has been branded as the ‘root of the English
systems unease’ with
Torrens fraud.156 Graham J held that a registered proprietor was
bound by an unregistered interest on three grounds,157 the most
notable of these being a lack of good faith (equivalent to Torrens fraud).
Section 20158 of the LRA 1925 seemed to state that a registered
proprietor for valuable consideration would take free of the
unregistered interest, regardless of whether there was good
faith or notice. Graham J recognised that while the legislation’s
intention was to simplify matters of title as much as possible, this
particular section cannot be interpreted as broadly
So he read in tandem with section 20 the definition of a
purchaser: ‘in good faith for valuable consideration.’160
This view would not enable a purchaser with knowledge of an interest to
take advantage of the Act and secure to himself a flawless
title which he ought
154 Strand Securities v Caswell  2 All ER 956, there was no actual occupation.
155 Peffer v Rigg  1 WLR 285.
156 E Cooke and P O’Connor, ‘Purchaser Liability to Third Parties in the English Land
Registration System: A Comparative Perspective’ (2004) 120 LQR 640.
157 There was only nominal (not sufficient) consideration under s 20(4) LRA 1925; and a constructive trust was held to exist.
158 Equivalent to LRA 2002, s 29.
159 Peffer v Rigg  1 WLR 285 at 294.
160 LRA 1925, s 3 (xxi).
obtain.161 Good faith was essential to the transaction.
Strong criticism162 has been directed at Graham J’s judgment, that in consideration of the issue he ignored section 74 LRA 1925 which states, ‘notice of a trust does not affect the register nor any person dealing with the land.’ While the analysis may have been wrong, the result must be correct. There was clear knowledge of the trust and a dishonest intention to defeat it on purchasing the property. Peffer, factually, closely resembles the New Zealand case of Efastratiou v Glantschnig.163 The New Zealand Court of Appeal found in similar fashion, but in a far more direct manner due to the LTA provisions, that suspect behaviour between the husband and a purchaser did amount to fraud in depriving his wife of her interest (being a breach of a constructive trust). The speed of the transaction (with no inspection of the property), and the nature of it (the property was transferred for cash at 60% below its market value) had the deliberate purpose to defeat the unprotected rights of the transferor’s wife. Applying Peffer to the law in NZ the registered proprietor’s behaviour would result in fraud. It is unfortunate to note that there is no judicial comment in England of any Commonwealth registration principles relating to fraud which may have been of assistance. The decision in Peffer has never been directly overruled. However, persuasive authority to do so was reached by the House of Lords in Midland Bank Trust Co Ltd v Green.164
This case does not represent title registration though and can be
distinguished on this point.165 However its facts and reasoning are
persuasive and could well be applied to registered land. Lord
that the Court will have no regard for the motive of
transactions which would be necessary for determining whether one had good
‘to make the validity of the transaction dependant on a
161 Peffer v Rigg  1 WLR 285 at 295.
162 M P Thompson, ‘Registration, Fraud and Notice’  CLJ 280. Graham ignored the deliberate decision that notice should be irrelevant to registered land (Report of the Acquisition and Valuation of Land Committee (1919) Cmd 424, para 32) and also cases which emphasised the irrelevance of notice: Strand Securities v Caswell  2 All E.R.
956; Parkash v Irani Finance Ltd  Ch 101, Plowman J stated that ‘one of the essential
features of registration of title is to substitute a system of registration of rights for the doctrine of notice.’
163 Efstratiou v Glantschnig  NZLR 594.
164 Midland Bank Trust Co Ltd v Green  UKHL 7;  AC 513.
165 Created under the Land Charges Act 1925.
person’s mind, seems to make distinctions equally difficult to analyse
in law as to establish in fact.’166 It is submitted that this
reasoning should not be adopted with relation to registered land. It is
necessary and possible
to look at the conduct and intention of the
purchaser, as is done when determining fraud in a Torrens system.
‘actual dishonesty’167 precisely requires
categorising the purchaser’s motive which Lord Wilberforce does not
The issue of whether good faith is required now is not expressly addressed by the LRA 2002. As land registration is a statutory concept168 there needs to be some ‘door’ in the legislation to enable importation of this requirement. However there is no definition of a
‘purchaser’ in the LRA 2002 and thus the words of section 29 are
to be interpreted without any assistance. If the
courts interpret the
list referred to in section 29 as exhaustive, then arguments for
the importation of notice
will be futile. The Law Commission was far
clearer than the LRA 2002 though. It emphasised that knowledge (actual
notice) of an unprotected interest or bad faith would not have any affect
upon the statutory protection of the purchaser.169 No
sympathy is shown for those in England who do not protect their
The absence of good faith in the LRA 2002, strong criticism and
misapplication of the statutory requirements in Peffer, and the
general reluctance for the English courts to adopt any common law principles of
notice leaves the jurisdiction with a clearly
different approach for dealing
with unregistered third party interests over registered land. The focus in
England is likely
to be directed solely at whether an
unregistered third party has an overriding interest. It seems clear, in the
of an overriding interest, that an unprotected interest is
defeated by a registered disposition regardless of if
166 Midland Bank Trust Co Ltd v Green  UKHL 7;  AC 513 at 531.
167 Waimiha Sawmilling Co v Waione Timber Co  AC 101.
168 E Cooke and P O’Connor, ‘Purchaser Liability to Third Parties in the English Land
Registration System: A Comparative Perspective’ (2004) 120 LQR 640.
169 Law Commission and HM Land Registry, Land Registration for the Twenty-first Century: a
Conveyancing Revolution, No. 271 (London, 2001) para 5.16.
proprietor acted wholly fraudulent. The only option available to the
claimant is to establish a personal claim (akin to that
of an in personam
claim in New Zealand).170 E Cooke171 suggests that
as the avenue for any requirement of good faith is no longer available, the
in personam claim will develop far further than anticipated. This
comment seems correct as the courts surely would not permit the ‘statute
to be used as an instrument of fraud.’
While the status accorded to a person who has an overriding interest
weakens the concept of title registration, it should at least
be mentioned that
surprisingly, systems like New Zealand’s that do not accord
paramount status to unregistered
interests, are destined to face more
litigation under the fraud exception to indefeasibility. However as so few
this is a valuable trade off.
This paper has focused on comparing the consequences of fraudulent land
transactions between England and New Zealand by directing
these three fundamental questions. As submitted, there are few similarities
between the land title registration systems.
The English LRA is founded upon
and deals with the fraudulent transfer of property on a wholly different
and in a far more complicated manner. This subsequently makes
the task of directly comparing cases between each jurisdiction a challenge
the judgments are naturally focused on the relevant legislation. As the LRA 2002
has only recently been enacted, one can only
wait with interest for future
judgments so that additional comparisons between the jurisdictions can be
170 An in personam claim arrises out of a proprietors own conduct.
171 E Cooke and P O’Connor in ‘Purchaser Liability to Third Parties in the English Land
Registration System: A Comparative Perspective’ (2004) 120 LQR 640.