Reverberations in the Torrens system: a new Land Transfer Act in New Zealand

Pages87-107
DOIhttps://doi.org/10.1108/JPPEL-12-2018-0035
Publication Date08 July 2019
AuthorElizabeth Toomey
SubjectProperty management & built environment,Building & construction,Building & construction law,Real estate & property,Property law
Reverberations in the Torrens
system: a new Land Transfer Act
in New Zealand
Elizabeth Toomey
Faculty of Law, University of Canterbury, Christchurch, New Zealand
Abstract
Purpose On 12 November 2018, New Zealand'sLand Transfer Act 2017 came into force. The purpose of
this paper is to pinpoint some of the signicantchanges in the Act that challenge the fundamental concepts of
the Torrens systemof registration.
Design/methodology/approach The paper addresses three signicant reforms: a denition of land
transfer fraud; the concept of immediate indefeasibility with limited judicial discretion and its impact on
volunteersand the Gibbs v. Messeranomaly; and the compensation regime. Case studies illustratethe effect of
these changes.
Findings The limited legislativedenition of fraud reects the common law and allows for any necessary
exibility. The new Act reiterates the principle of immediate indefeasibility but qualies it with the
introduction of some judicialdiscretion. This is a novel concept for the courts and will undoubtedly be dealt
with cautiously.The author voices some disquiet with regard to some of the guidelines set out in s 55(4) of the
Act. The compensationprovisions introduce an element of an owner'sculpability. An owner now runs the risk
of reducedcompensation if there has been a lack of proper care.
Research limitations/implications The implications of this research are fundamental for New
Zealand'sland transfer system.
Practical implications The limited judicial discretion will challenge the courts of New Zealand. The
new compensationprovisions will ensure that an owner's carelessnesswill be accountable.
Originality/value This study is one of the rst to analyse the LandTransfer Act 2017 (New Zealand). Its
value extendsbeyond New Zealand shores as it has implications for global landtransfer systems.
Keywords Fraud, New Zealand, Compensation, Discretion, Indefeasibility, Torrens
Paper type Research paper
1. Introduction
New Zealand has a world-leading land title registration system, but the legislation that
governed the Land Transfer Act 1952 (LTA 1952) was outdated in terms of technology and
other changes. Reform was well overdue.
In 2007, the Law Commission, in conjunction with Land Information New Zealand
(LINZ), undertook a review of the 1952 Act, and in 2008, the Law Commission released a
detailed Issues Paper and invitedsubmissions on a range of matters[1]. The review resulted
in the Law Commissions 2010 Report[2]. This set out a series of recommendations for
reform and included a draft Land Transfer Bill. The recommendations were aimed at
modernising, simplifyingand consolidating the land transfer legislationfor enhanced clarity
and accessibility. Various versions of this initial draft Bill underwent intense scrutiny for
seven years, and culminatedin the passing of the Land Transfer Act 2017 (LTA 2017) on 10
July 2017. It cameinto force on 12 November 2018.
While the new Act retains the core principles of the Torrens system, it includes some
signicant reforms[3].
Torrens
system
87
Received20 December 2018
Accepted19 March 2019
Journalof Property, Planning and
EnvironmentalLaw
Vol.11 No. 2, 2019
pp. 87-107
© Emerald Publishing Limited
2514-9407
DOI 10.1108/JPPEL-12-2018-0035
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2514-9407.htm
This paper addressesthree signicant changes:
denition of land transfer fraud;
immediate indefeasibility with limited judicial discretion; volunteers; the Gibbs v.
Messer anomaly; and
the compensation regime.
Throughout thispaper, case studies are used to illustrate the effectof these changes.
2. A denition of land transfer fraud
There was no denition of fraudin the LTA 1952, although s 182 stated thatnotice of an
unregistered interest shall not of itself be imputedas fraud. Insofar as it refers to fraud, s
182 has been replaced by s 6 of the LTA 2017.
The Law Commission recommended that such a denition be included in a new Act. It
considered it unwise to dene fraud in an exclusive wayas that could create inexibility. It
noted that most submitters commenting on its Issues Paper preferred a limited legislative
denition conrming the leading cases, such as Assets Co Ltd v. Roihi (Assets Co) and
Waimaha Sawmilling Co Ltd v.Waione TimberCo Ltd (Waimaha)[4]. Assets Co denes land
transfer fraud to the extentthat it is dishonesty (not constructive fraud) by or broughthome
to a registered owner whose title is challenged, or by their agent. Waimaha holds that it is
fraud if the designed objectof a transfer is to cheat a person of a known existing right.
Thus, the aim of the denition is to improve certainty and reduce litigation while at the
same time allowing scope for judicial development of the concept of fraud when necessary[5].
The denition in the LTA 2017 comprises:
6 Meaning of fraud
(1) For the purposes of this Act, other than subpart 3 of Part 2, fraud means forgery or
other dishonest conduct by the registered owner or the registered owners agent in
acquiring a registered estate or interest in land.
(2) For the purposes of subsection (1), the fraud must be against:
the registered owner of an estate or interest in land; or
the owner of an unregistered interest if the registered owner or registered
owners agent:
in acquiring the estate or interest had actual knowledge of, or was wilfully
blind to, the existence of the unregistered interest; and
intended at the time of registration of the estate or interest that the
registration would defeat the unregistered interest.
(3) For the purposes of subpart 3 of Part 2, fraud means forgery or other dishonest
conduct by any person.
(4) The equitable doctrine of constructive notice does not apply for the purposes of
deciding whether conduct is fraudulent.
Analysis of s 6 of the LTA 2017
A number of points withregard to this denition require comment.
The exception in s 6(1) relates to compensation. The legislative intention is that
fraud for the purposes of compensation should not be limited to dishonest conduct
by the registered owner or his or her agent in acquiring the registered estate or
interest but also cover fraud by a third party more generally[6].
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