3015LAW Lecture Notes - Lecture 4: Implied License, Knowing Receipt, Practical Reason
1. EXCEPTIONS
Sources
- Overriding statutes
- Special powers conferred on registrar of titles to correct = ss 15 and 186 LTA
- Statutory exceptions = ss 184(3)(a)/185 and 184(3)(b) LTA
1.1. FRAUD = s 184(3)(b) LTA
By fraud . . . is meant actual fraud, ie dishonesty of some sort, not what is called
constructive or equitable fraud. … [T]he fraud which must be proved in order to invalidate
the title of a registered purchaser for value … must be brought home to the person whose
registered title is impeached or to his agents . . . But if it be shown that his suspicions were
aroused, and that he abstained from making enquiries for fear of learning the truth, the
case is very different [to equitable fraud] and [actual] fraud may be properly ascribed to
him.
- Registered proprietor does not need to do more than checking the registrar – unless
suspicion been aroused
Assets v Mere Roihi
Land Title Act
SECTION DETAILS
S 184(1) a registered proprietor (RP) holds their interest subject to registered
interests but free from all other interests
S 184(3)(b) protection of s 184(1) does not apply if there has been fraud by the RP,
whether or not there has been fraud by person from or through whom
the RP has derived registered interest
Actual knowledge
- Constructive notice not enough
- Must be dishonesty
- Actual fraud = intention to deceive; dishonesty/moral turpitude.
oWillingly not doing anything if not about possible fraud
oConscious deception
- Equitable fraud = ‘unfortunate term’ denoting transactions having consequences in
equity similar to those which flow from fraud (but without necessarily any dishonesty or
moral turpitude on the party benefitting).
oIt is in equity
oDoesn’t have to be a moral wrongdoing
-Grgic v ANZ
oBank official of ANZ signed declaration falsely that they knew guarantee loaned.
Mr Grgic refused to guarantee. Imposter signed as Mr Grgic for son and bank
offical granted mortgage and signed. Son defaulted on mortgage. Mr Grgic
argued that ANZ engaged in fraud and therefore mortgage not enforceable. False
declaration = fraud.
oHELD COA = failed to amount to fraud. Bank official acted falsely but not
dishonestly. Bank could have done more but still did not amount to actual fraud.
Bank official would need actual knowledge that person who signed was not Mr
Grgic to warrant fraud.
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-Bank of South Australia v Ferguson
oFerguson sheep and cattle farmer and encouraged by bank person to enter
mortgage. Entered mortgaged. He defaulted and bank wanted money. Fraud
applicable because during application for mortgage the bank had internal doc
statement of financial position that had forged fergusons signature. Person that
forged left but other person did more changes like valuation. The forged
signature was not fraud according to court.
oMust be detrimental reliance on alleged fraud. High Court stated (at 258) that for
fraud to apply … it must operate on the mind of the person said to have been
defrauded and to have induced detrimental action by that person.
- Need for actual fraud confirmed in Australia in Stuart v Kingston : fraud will no longer be
imputed to a RP . . . unless some consciously dishonest act can be brought home to him.
The imputation of fraud based upon the refinements of the doctrine of notice has gone.
oRegardless of what rules might apply in equity does not occur in actual fraud
Recklessness/wilful closing of eyes
Lord Lindley in the Assets case made it clear that wilful blindness may amount to statutory
fraud if the suspicions of RP (or their agent) “were aroused and they failed to make further
enquiries in fear of learning the truth”.
Affirmed = AGC v De Jager
- Needed to borrow $50,000 to start gym business. Needed to get mortgage. French told
them could arrange finance. French AGC said could do with secured the residential
properties. Security there was fraud with signature. Forged Mrs De Jagar signature over
property. French not aware that their had been forgery. But was aware signature not
properly witnessed. Lack of proper witnessing was made aware to employees of AGC.
AGC was put on notice that there was fraud – they were told of lack of proper
witnessing. But mortgage was finalised. Mrs De Jager found out and argued fraud
exception. Mortgage not enforceable against Mrs De Jager Court held for Mrs De Jager –
finding their was fraud as:
- Fraudulent conduct on the part of AGC where agents of AGC:
oabstained from making further inquiries about the mortgage “signature” of Mrs
De Jager;
o and knew that Mrs De Jager stood to gain nothing from the impugned
transaction.
Agency
Two Circumstances from Schultz v Corwill Properties Pty Ltd
1) The principal will be liable where the action of the agent can be “brought home” to the
principal because the agent acts within the scope of their actual or apparent authority
(see, eg, Loke Yew v Port Swettenham Rubber Co)
2) The principal will be liable where the agent has actual knowledge of fraud (not
constructive knowledge) affecting the transaction. The law presumes that the agent has
communicated to their principal what the agent knows. Principal is permitted to give
evidence to rebut the presumption of communication where the fraud is that of the
agent (see, eg, facts in Corwill Properties).
a. Presumed to have knowledge of fraud and must give evidence to omit
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Schultz v Corwill Properties Pty Ltd
Mortgage obtained by fraud by forging signature. Someone acting on behalf of both sides.
Mortgage registered. Court found against Schultz. Person acting for Schultz acted
fraudulently which she was not aware of. Agent acting outside of his ability. Discharge of
mortgage was effective (ending a mortgage – no longer mortgage registered on the
registrar). Registration of mortgage was effective. Indefeasible title claimed for mortgage.
Corwill claimed indefeasible title free of mortgage.
Unregistered interests
The RP is not affected by actual or constructive notice of an unregistered interest affect lot =
s 184(2)(a) LTA
- Mere notice of unregistered interest and acting inconsistently with interest not fraud:
Friedman v Barrett [1962] Qd R 498.
- However = notice rule in s 184(2)(a) does not apply where there is fraud by RP = s 184(3)
(b) LTA
1) Before registration = Loke Yew v Port Swettenham Rubber Co
a. Eusope loke yew interest of 58 acres unregistered. Transfer of fee simple.
Eusope only entered if Port Swettehham accept the unregistered interest of
Loke Yew. Port Swetthham became RP. Glass made contract and both parties
refused at different times. Glass then made it that arrangements need to be
made for Loke Yew but not specific and both signed. Unregistered interest
not port swetthham duty.
b. HELD Interest needs to be recognised. Not affected by mere notice of lease
but they made assurances to persuade eusope to do transfer. Price paid was
consistent of 322 acres less interest of Loke Yew so therefore they are liable
to the interest of Loke Yew. Glass acting within duty and liable? Fraud before
rp. Port made assurances never intended to keep and then acted
fraudulently.
2) After registration = Bahr v Nicolay (No 2)
a. Enter in good faith becomes rp and then fraudulently against assurances
b. Before Bahr = fraud must have occurred before registration
c. Bahr= bahr develop land and wanted to transfer fee simple for $30,000 with
lease for 3 years. Bahrs right to repurchase for $45000. Right to repurchase
was incl in the contract. Nicolay was RP. During 3 year period, nicolay sold
interest to thompsons and they became RP. Contract incl clause for Bahrs
arrangement for right to repurchase. Thompsons acknolwedge right to
repurchase and sent letter acknowledging to Bahrs. Thomp made offer to
bahr to purchase business to revoke the right to purchase. Bahrs refused.
Thompson sought to claim possession from Bahrs. Sued.
d. HELD Satisfied in purchase negotiations leading up to sale thompsons were
not fraudulent (before becoming RP). Once become RP, distinguishing the
right of repurchase, found that this amounted to frand. Subsequent
repudiation still fraud.
SUMMARY – unregistered interests
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Document Summary
Special powers conferred on registrar of titles to correct = ss 15 and 186 lta. Statutory exceptions = ss 184(3)(a)/185 and 184(3)(b) lta. By fraud . is meant actual fraud, ie dishonesty of some sort, not what is called constructive or equitable fraud. [t]he fraud which must be proved in order to invalidate the title of a registered purchaser for value must be brought home to the person whose registered title is impeached or to his agents . Registered proprietor does not need to do more than checking the registrar unless suspicion been aroused. Actual fraud = intention to deceive; dishonesty/moral turpitude: willingly not doing anything if not about possible fraud, conscious deception. Grgic v anz: bank official of anz signed declaration falsely that they knew guarantee loaned. Imposter signed as mr grgic for son and bank offical granted mortgage and signed. Mr grgic argued that anz engaged in fraud and therefore mortgage not enforceable.
