Frazer v Walker

By section 62 of the Land Transfer Act, 1952, of New Zealand, a registered proprietor of an estate or interest in land and anyone who dealt with him held his estate or interest absolutely free from encumbrances subject to three specified exceptions, which included fraud, and section 63 protected a registered proprietor against any action for possession or recovery of land subject to five specified exceptions which included fraud. By section 75 a certificate of title, unless the register showed otherwise, was to be conclusive evidence that the person named in it was seised of or as taking estate or interest in the land therein described as seised or possessed of that land for the estate or interest therein specified and that the property comprised in the certificate had been duly brought under Act. Those sections of the Act conferred upon the registered proprietor of an estate or interest in land what had come to be called “indefeasibility of title.” Section 85 gave the court power to direct the registrar to cancel or correct certificates of title or entries in the register but that power did not extend beyond those cases in which adverse claims against the registered proprietor were admitted by the Act.

The appellant, A., and his wife, F., were the registered proprietors under the Land Transfer Act, 1952, of a property subject to a mortgage. F., professing to act on behalf of herself and the appellant, arranged to borrow from the second respondents £3,000 on the security of the property. The second respondents' solicitors prepared a form of mortgage and delivered it to F., who took it to her solicitors for execution. A clerk in the solicitors' office witnessed her genuine signature to the mortgage and also a signature purporting to be that of the appellant which she had previously inserted. Her solicitors forwarded the mortgage document and the certificate of title to the second respondents' solicitors, who paid the £3,000, partly to F.'s solicitors and partly to discharge the existing mortgage. On July 21, 1961, they registered the memorandum of mortgage, together with a discharge of the previous mortgage, at the Land Registry Office. On default by F., the second respondents exercised their power of sale and sold the property by auction to the first respondent on October 26, 1962, and the second respondents executed a transfer to the first respondent, which he duly registered on November 29, 1962. It was conceded that all the respondents acted throughout in good faith without knowledge of F.'s forgery.

As the registered proprietor, the first respondent issue proceedings against the appellant for possession of the property, the appellant counter-claimed against all respondents for a declaration: (1) that his interest in the land was not affected by the purported mortgage or by the auction sale to the first respondent; (2) that the second respondents' mortgage was a nullity, and (3) that the appellant was the beneficial owner of an undivided half-interest in the land, and for an order directing the District Land Registrar (i) to cancel the entries or memorials in the register in favour of the respective respondents and (ii) to restore his name and F.'s name as joint owners of the land. The Supreme Court held that, although the appellant had given no authority to F. to mortgage his interest in the land, the second respondents had obtained an indefeasible title by registration of their mortgage and the first respondent had obtained an indefeasible title as registered proprietor and accordingly gave judgment for the first respondent. The Court of Appeal dismissed an appeal on the sole ground that the first respondent had as bona fide purchaser obtained an indefeasible title. On appeal:—