Tutorial: Exceptions to Indefeasibility 5.1 Veronica and Faye Veronica is the registered owner of an estate in fee simple. Veronica's cousin, Faye, house-sat for her while she was away in America for a year-long sabbatical. During that time, Faye ran into serious financial trouble and forged a transfer of the registered title to herself with the intention of borrowing money on the security of the property. She intended to pay back the money and transfer the property back into Veronica's name once her financial problems had been solved. The transfer to Faye was registered. Subsequently, a mortgage granted by Faye in favour of Profitable Bank Ltd was registered over the title. The bank had no knowledge of Faye's fraud at the time. Answer the following questions: 1. Does Faye have good legal title to the property? Explain why. Yes by indefeasibility, because there is a registered title there is a good legal title. Prima facie indefeasible , only subject to other registered interest unless a exception applies.
2. Can Veronica recover title to the property? If so, what should she do? Need to establish an exception 184(3)(b) - fraud. Is there a definition of fraud? No - go to case law. Fraud - requires a moral turpitude or personal dishonesty by registered proprietor Assets Co - High bar. - Fraud by whom? By registered propriety 184(3)(b) look at faye who is the registered proprietor. - Fraud can be against a current or previous holder of a registered interest. - Fraud - yes, dishonest transfer when not entitled to the property Remedy - s 187(2)(b) - fix register, have faye title cancelled and her title restored. Can also go to register s 15 LTA can hold enquiry under s 19, registrar take steps if fraud is shown. Corrected by registrar Should act quickly, faye has good legal title, if transferred to third party, veronica cant recover the property as the fraud must be from the registered proprietor Veronica should lodge a caveat to freeze registrar. If late and passess to someone else then claim s 188 compensation.
3. Explain what interest Profitable Bank Ltd has in the land. Prima facie registered interest , unless exception applies there is indefeasibility: Fraud - did not know of faye fraud. Did not do anything dishonest Inpersonam - known legal or equitable cause of action- no issue here, no evidence of this or wilful blindnesss. Careless mortgagee - only works if person taking mortgage was not registered proprietor. No exceptions which apply. So interest is good and applies to veronica. So veronica must claim s 188 compensation. Recover value of mortgage from insurance fund to bank. Release mortgage. 5.2 James, Sia and Pradeep Pradeep owns a small shopping centre in Hervey Bay. His interest is fee simple and is registered in accordance with the Land Title Act 1994 (Qld). James Phillips leases one of the lots and uses it as a Warhammer supplies shop. He has a 5 year written lease, which commenced on 12