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Indefeasibility and Exceptions in Real Property Law

Real Property Law in Queensland question is whether the known cause of action is inconsistent with the Real Property Act, especially s 42 when read with s 43.477 In personam claim defeated by a subsequent indefeasible title [10.373] The final point to make about the in personam exception is that the claimant's right will be defeated if the registered proprietor transfers her or his registered interest to a third party who acquires an indefeasible title free of the earlier claim. For example, where A has a right to set aside a mortgage under the in personam exception, the right will be extinguished if the mortgage is transferred to B and B obtains registration without fraud and where there are no grounds for establishing the in personam exception against B.478 Overlapping claims - fraud and the in personam exception [10.375] We have seen that there are some circumstances where a claim can be categorised as either fraud or within the in personam exception, for example, the claim in Bahr v Nicolay and a claim for accessory liability under the second limb of Barnes v Addy. For many purposes, it may not matter which category is relied upon, but it is probably wise to plead both if the facts support it. The remedies available for each category differ slightly. If fraud is established, an order for rectification of the register by removing the relevant registered interest may be available under s 187 of the Land Title Act 1994. This remedy is not available for a claim under s 185(1)(a) and instead the court will need to make orders against the defendant to transfer property to the plaintiff, along with a vesting order under the Trusts Act 1973.479 The end result is likely to be the same but the form of the orders and procedure is different and more cumbersome. Interest of a lessee under a short lease: s 185(1)(b) [10.380] Section 185(1)(b) of the Land Title Act 1994 provides that the estate of a registered proprietor is subject to the interest of a lessee under a short lease. The term "short lease" is defined as a term for three years or less, or from year to year or a shorter period.480 An equitable lease will be protected by s 185(1)(b).481 A license, as distinct from a lease, is not protected.482 In relation to leases, the word "term" is defined to mean the "period beginning when the lessee is first entitled to possession of a lot or part of a lot under the lease and ending when the lessee is last entitled to possession, even if the lease consists of 2 or more discontinuous periods".483 The practical effect of this provision is that short-term leases do not have to be registered to bind third parties dealing with the land. Short-term leases are, therefore, an express exception to the indefeasibility of a registered proprietor's title. An unregistered short lease which is validly created is a legal interest.484 The operation of s 185(1)(b) is illustrated