Ali v Nand [2009] FJHC 284; Civil Action 265 of 2007 (9 February 2009)

IN THE HIGH COURT OF FIJI
WESTERN DIVISION AT LAUTOKA
CIVIL JURISDICTION

Civil Action No. 265 OF 2007

No. 02 of 2009

IN THE MATTER OF THE LAND TRANSFER ACT
AND IN THE MATTER OF THE JUDGMENT in the Action No. 123 of 1996L

BETWEEN:

MOHAMMED FAROUK ALI
Plaintiff

AND:

AMBIKA NAND f/n Purna Nand previously of Ba, now of New Zealand
First Defendant

AND:

THE DIRECTOR OF LANDS
Second Defendant

AND:

THE REGISTRAR OF TITLES
Third Defendant

AND:

ATTORNEY GENERAL OF FIJI
Fourth Defendant

AND:

RESERVE BANK OF FIJI
First Interested Party

AND:

SASHI KIRAN PRATAP
Second Interested Party

Appearances: Dr M S Sahu Khan for the Plaintiff
Mr Green for 2nd, 3rd and 4th Defendants
Mr P Knight for the first interested Party
Mr M K Sahu Khan for the second interested Party

Date of Hearing: 4 December 2008
Date of Judgment: 9 February 2009

Coram: Datt J.

JUDGMENT

The claim

[1] The second interested party, Sashi Kiran Pratap, referred to as the ‘Purchaser’ filed a notice of motion dated 3 September 2008 together with an affidavit in support dated 2 September 2008 claiming that she purchased a Crown Lease Number 16375 from Ambika Nand, when the mortgage No 201344 was not registered on the new lease number 16375 in accordance with the provisions of section 60 of the Land Transfer Act, Cap [131] referred to as the "Act", therefore she claimed the mortgage was not validly transferred on the new lease and ought to be discharged.

The pleadings:

[2] This is a most unusual claim commenced by the purchaser, by notice of motion which contains convoluted pleadings where neither the plaintiff nor the defendant have claimed any dispute between them but remained parties to the proceedings. Initially, the claim was between the purchaser and the vendor Ambika Nand, but after the parties compromised their dispute, the purchaser decided to seek an order for removal of the mortgage against the Registrar General claiming that on the relevant date, he did not comply with section 60 of the Land Transfer Act.

[3] I considered that it was inappropriate for the second interested party, referred to as the purchaser to have commenced these proceedings under order 15 rule 4 and rule 6 (2)(b) of the High Court Rules, without proper pleadings, furthermore, it was discovered at the trial that not all relevant documents were served on the first and the second interested parties.

[4] The parties filed affidavit evidence and submitted voluminous amounts of legal and factual materials in their submissions in substitution of appropriate pleading. Pleadings in this matter should have been filed to comply with the principles explained by His Honour Mr Justice Connors in James Michael Ah Koy v Native Land Trust Board & 14 other Defendants, HBG 546 of 2004, where his Honour stated,

"The first object of the pleadings is to define and clarify with precession the issues and questions which are in dispute between the parties and fall for determination by the Court. Fair and proper notice of the case an opponent is required to meet must be properly stated in the pleadings so that the opposing parties can bring evidence on the issue disclosed as in Esso Petroleum Company Limited v Southport Corporation [1956] AC 218, at 328.

[5] I might also make reference to J A Westaway & Son P/L v Registrar General & Ors [1996] NSWSC 413, where there were five parties to the proceedings but the pleadings were filed in accordance with the rules. In this case, the pleadings failed to comply with Order 5 and Order 18 of the High Court Rules.

[6] Despite the irregularity and non compliance, I considered that the purchaser’s application could be entertained by the court under section 165 of the Land Transfer Act, when I considered to invoke the inherent jurisdiction of this Court under Order 2 rule 1 to waive such requirements in order to resolve the dispute between the parties.

[7] The plaintiff did not file any affidavit in this claim between the purchaser and the Bank but claimed that he relied on an agreement between the parties which granted the purchaser the right to register her transfer when the two encumbrances, the mortgage and the caveat remained on the new lease.

The subject Land

[8] The evidence revealed that Ambika Nand was the owner of the Crown Lease No 5375 described as Lot 13 in Plan BA 2298, and Lot 10 in Plan BA 2301, both situated at Ba. The Crown lease was registered in his name on 12 March 1979 for a period of 10 years. He took a mortgage from the British American Insurance Company Limited number 201344 which was registered by the Registrar of Titles, referred to as the "Registrar".

Background

[9] This matter has a very long and complicated conveyancing history. Initially, the claim was between the plaintiff and the defendant, which was settled by way of terms of settlement. Thereafter the parties commenced the ‘joinder’ actions with different parties and different course of actions. The application before the court had seven parties, four counsels and approximately 20 legal issues without any pleadings. I noted that neither the plaintiff nor any of the defendants were seeking any remedy or relief under the claim before the court.

[10] Ambika Nand, the mortgagor, fell in arrears in his mortgage repayments for a long time. There were continuous extensions of time granted by the Bank to discharge the mortgage but AMBIKA NAND did not take the opportunity to finalize his mortgage debts. He was also indebted to the plaintiff, who obtained judgment which was registered on the lease. This judgment will be subject to scrutiny in my assessment when the question of ownership of the lease will be considered.

[11] On 24 August 1999 the mortgage was transferred, firstly to the Commissioner of Insurance at 11.30am, by dealing number 466887 and again at the same time on the same date it was transferred to the Reserve Bank of Fiji, the first interested party, referred to as the "Bank" by dealing number 466888. I noted that the consent to transfer the mortgage was endorsed on the mortgage; the Registrar of Titles had recorded the transfer of the mortgage in favour of the Reserve Bank of Fiji on 24 August 1999.

[12] On expiry of the Crown lease number 5375 on 1 January 1984, the Director of Lands issued a new Crown lease number 16375 in favour of Ambika Nand for a further 30 years commencing from 1 January 2004. The new lease was registered by the Registrar of Titles on 5 April, 2006.

[13] At the time the Registrar ‘registered’ the new lease, he was required to comply with section 60(1) of the Land Transfer Act [Cap 131] referred as the "Act", which required him to transfer the memorials from the old lease onto the new lease. The purchaser claimed that the Registrar did not comply with the requirements in section 60(1) when he issued the new lease, therefore, the mortgage was invalidly recorded on the new lease and should be discharged. This was the purchaser’s substantive argument to have the mortgage discharged from the new lease.

[14] The Purchaser lodged her transfer on 25 October 2006 for registration and claimed that she carried out a search on the lease and discovered that the mortgage in favour of the Bank was not endorsed on the new lease 16375. She claimed that this entitled her priority over the Banks’ mortgage, since she had lodged her transfer when the Registrar had not endorsed the mortgage on the new lease.

[15] The purchaser’s second argument was that the Registrar did not comply with section 60(1) at the time he transferred the memorials from the old lease to the new lease. Counsel submitted that the words required to identify the types of lease to be registered, whether it was "renewal of" or in "substitutions for a lease previously registered". This question required interpretation with the facts in this claim.

[16] Ambika Nand, the first defendant, the original registered proprietor of the land was not represented at the hearing. He now resides in New Zealand. He did not participate in this claim, his substantive claim was finalized by the terms of settlement between the plaintiff and the defendant.

[17] In this claim the critical question for consideration was that the purchaser was required to show by evidence particulars of all the encumbrances recorded on the new lease number 16375 at 11.15am on 25 October 2006. This was only possible for the purchaser to have established had the purchaser obtained and submitted title search of the lease under section 30 of the Act which was the fatal evidence not submitted in evidence.

The application before the court

[18] On 4 September 2008, the purchaser’s solicitors filed a notice of motion seeking the following orders:

[i] That the mortgage No 201344 noted on Crown Lease Number 16375 has not been validly registered on the Crown Lease No 16375.

[ii] That the mortgage no 201344 is not binding on the second interested party because inter alia:-

(a) It was not validly registered prior to the transfer being lodged and registered with the Registrar of Titles in October 2006.

(b) It was not registered in Crown Lease Number 16375 before the transfer to the second interested party was lodged with the Registrar of Titles and accepted by him for registration in October 2006.

[iii] Such further or other relief as to this Honorable court deems fit.

[iv] Costs

Submissions

Dr M S Sahu Khan’s submission on behalf of the plaintiff

The plaintiff did not file any evidence in this matter.

[19] In summary, he claimed that the Registrar of Title did not comply with section 60(1) of the Act when he transferred the encumbrances from the old lease to the new lease. His argument was that the Registrar did complete the notation of the encumbrances as required by section 60(1) at the time the purchaser lodged her transfer. He referred to over 20 sections in the Land Transfer Act, concerning registration of transfer and priority arising there from.

[20] In his submission, counsel for the plaintiff labored persistently that the purchaser’s transfer was registered on the day it was lodged, she was entitled to priority as from that date. I noted that Counsel's argument in the original claim against the first defendant was that the transfer "was not registered" as deposed in PREM SINGH's affidavit sworn on 23 January 2008 on behalf of the plaintiff. In paragraph 8 he stated,

"As to paragraph 16 of the said affidavit since the transfer to Sashi Kiran Pratap as presented to the Registrar of Titles was not registered the issue of the rights of the Plaintiffs had noting to do with actions of the Registrar of Titles in not registering the purported transfer to Sashi Kiran Pratap ..."

In addition counsel submitted numerous sections in the Land Transfer Act and Limitation Act. His substantive argument was that the purchaser’s transfer was registered on the day it was lodged at the Titles Office in accordance with section 60 of the Act, which was contradicted by the evidence of his clerk Prem Singh as referred to above.

[21] Mr M K Sahu Khan’s submission on behalf of the "Purchaser"

He submitted more than 19 paragraphs in his written submissions which could be summarized as follows:

That the Registrar did not comply with section 60(1) of the Land Transfer Act, when the purchaser lodged her transfer for registration; counsel claimed that the mortgage was not recorded on the new lease, therefore the purchaser’s title should take priority over the mortgage. He canvassed the question of priority over the mortgage and also submitted consideration of indefeasibility of the purchaser’s title. I have analyzed each of his submission together with the documents annexed to in the purchaser's affidavit which I have considered later.

[22] Mr R. Green’s submission on behalf of the first second and the third defendants

Mr Green, on behalf of the Registrar of Titles, made brief submission as follows:-

He stated that the Registrar of Titles complied with section 60(1) at the time he registered the new lease number 16375, he referred to paragraph 11 of the affidavit of TULSI RAM, deposed on 17 January 2008, and claimed that the Registrar recorded the encumbrances including the mortgage on the new lease on or about the 19 October 2006.

[23] Mr P. Knight’s submission on behalf of First interested party, the "Bank"

Mr Knight relied on TULSI RAM’S affidavit deposed on 17 January 2008 and affidavit of Barry Whiteside sworn on 17 October 2008. He made oral and written submissions on factual and legal issues in support of the Bank's claim that the mortgage was endorsed on the old title and referred to on the new title on 19 October 2006, when the plaintiff’s transfer was lodged on 25 October 2006. He referred to the applications of section 30 and 31 of the Act.

[24] Counsel submitted that it was not crucial to the operation of section 60(1)(a) that the two words, ‘renewal of’ or ‘ in substitution for’ should have been noted on the new lease. He submitted that it was not essential for the actual words to have been endorsed on the new lease but claimed that the Registrar was required to provide a clear indication as to whether it was the "renewal" or "in substitution" for the old lease.

Assessment of evidence

The mortgage to British America Insurance Company Limited

[25] On 6 September 1982, Ambika Nand obtained a mortgage advance from the British American Insurance Company Ltd in the sum of $30,000.00 plus interest. On 17 May 1983 the mortgage No 201344 was registered on the old Crown lease number 5375 by the Registrar.

Transfer of Mortgage to the Reserve Bank of Fiji

[26] The mortgage number 201344 was subsequently transferred from the British American Insurance Company Limited to the Reserve Bank of Fiji. After examining the above mortgage document, I noticed that the transfer of mortgage was endorsed in favour of the Reserve Bank of Fiji with proper seal endorsement by the Registrar. Counsel for the purchaser claimed that this was invalid, the Bank should have re-registered the mortgage at the Titles Office. I noted that the transfer was endorsed on the mortgage and had the signature of the Registrar. Counsel for the purchaser was required to submit the basis on which the Bank was required to re-register the mortgage again when the Registrar had consented to the transfer which was recorded on the mortgage document. I accepted the transfer of the mortgage number 201344 was endorsed correctly and noted on the mortgage document by the Registrar on 24 August 1999.

Transfer of mortgage no 201344 from old lease No 5375 to the new lease 16375

[27] After the new lease number 16375 was issued in favour of Ambika Nand, the Registrar was required to transfer all encumbrances recorded on the old lease number 5375 onto the new lease number 16375, in accordance with section 60 of the Act. Coincidentally, all the matters concerning the registration of the mortgage on the new lease and the purchaser’s registration of the transfer occurred between 19 and 25 October 2006.

[28] The purchaser’s substantive claim was that at 11.15 am on 25 October 2006, when she lodged the transfer for registration, the mortgage was not endorsed on the title. The only procedure by which the purchaser was required to establish this fact was by submitting a "copy of title search" under section 30 of the Act. Regrettably, this certificate was not submitted, hence the dispute between the parties escalated. I reiterate that the title search would have conclusively established the purchaser's claim, it would have revealed all the encumbrances recorded on the title, on the relevant date but this evidence was not submitted at the hearing.

Why the need for consent orders of 19 June 2008?

[29] After the purchaser completed the purchase of the new Crown lease from Ambika Nand, she was unable to register her transfer, (which was in contradiction of her earlier statement that her transfer was registered on 25 October 2006), she sought consent from the parties to register her transfer, subject to the purchaser having the right to dispute, that the mortgage was not registered on the new lease on the date she lodged her transfer.

[30] The purpose of the consent order was to allow the purchaser to register her transfer while the two encumbrances, the mortgage and the caveat remained endorsed on the leasehold title. The purchaser failed to realize that the basis of her substantive claim was that her transfer was already registered as claimed in her affidavit upon which she was seeking priority and indefeasibility of title over the Bank’s mortgage.

[31] Counsel for the purchaser did not submit any evidence to show when the purchaser’s transfer was registered on the new lease, it would only have been after consent orders were made on 19 June 2008. The purchaser’s contention was that her transfer was registered by the Registrar on 25 October 2006 as claimed in her affidavit, but this argument contradicted the purpose of obtaining consent order, this in my view was a significant contradiction.

The plaintiff claimed the Bank did not have Locus Standi- in this claim.

[32] Counsel for the plaintiff submitted that the first interested party, the Reserve Bank of Fiji, did not have locus standi in this action. After considering all the evidence, submissions, and after examining the old lease number 5375, on which mortgage document number 201344, was validly endorsed and later transferred to the new lease 16375, I concluded that the Bank had the legal standing as the mortgagee to be joined as a party to the proceedings even though there was unsatisfactory pleadings.

[33] I noted that on mortgage number 201344, there was a memorial on top of the page which stated that the said mortgage was transferred from the British American Insurance Company Limited to the Reserve Bank of Fiji. I concluded that the first interested party, the Reserve Bank of Fiji, had the locus standi in this proceeding.

The Bank’s claim that the Plaintiff had no standing to this claim

[34] The plaintiff and the defendant were the original litigants in the proceedings which were concluded by terms of settlement between the parties. The proceedings against the defendants and interested parties were joined as interested parties without proper pleadings.

[35] The plaintiff did not identify the basis on which he brought this claim against the parties, particularly when he claimed orders against the Bank without disclosing any interests that he might have acquired in relation to the mortgage debts owed to the Bank.

Plaintiff’s claim that the Bank’s claim was statute barred

[36] Counsel for the purchaser submitted that section 8(1) of the Limitation Act Cap 35, provided that the Bank was prevented from seeking payment on the mortgage after 20 years. I considered the application of section 8 and section 12 of the Limitation Act and section 77 of the Property Act.

[37] I considered that section 12 of the Limitation Act applied in this case and gave a fresh accrual of the mortgage debt since the mortgagor made payment and sought extension of time for payment. I further noted the application of section 77 of the Property Act also gave the mortgagor the right to issue notice of demand of payment where the default continued for one month, but clause 8 reduced the time to 7 days to institute recovery action against the mortgagor.

[38] The substantive claim

The purchaser’s solicitors filed a notice of motion seeking orders that the mortgage number 201344 was firstly, not recorded validly on the crown lease number 16375, at the time the purchaser lodged her transfer for registration when the Registrar accepted the transfer for registration, therefore, the mortgage was not binding on the purchaser.

Assessment of Plaintiff’s clam

[39] The plaintiff’s claim was neither against the defendant, nor against the first interested party, therefore, he simply failed to demonstrate any connection with the Bank’s mortgage and the basis on which the plaintiff was challenging the Bank’s claim to seek waiving of the mortgage charge created on the new lease which was in the name of AMBIKA NAND. To put it mildly, pleadings in this matter continued to be enlarged by affidavit evidence in substitution of appropriate pleadings when the substantive matter was finalized between the plaintiff and the first defendant.

[40] Counsel for the plaintiff submitted, without any affidavit evidence that the purchaser’s transfer was registered on the date she lodged her transfer, but there was no supporting evidence. Moreover, this was not the evidence the plaintiff submitted against the first defendant before the matter was settled between the original parties. In PREM CHAND’S (the clerk) affidavit sworn on 5 March 2008, at paragraph 5(ii) he stated,

"The registrar of title has not signed a memorial and I had been advice by Doctor M S Sahu Khan, the solicitor for the plaintiff and verily believe the registrar of title has not obviously accepted the transfer by SASHI KIRAN PRATAP in the form presented to him therefore there was not registration of the transfer and I had been advised by Doctor MS Sahu Khan and verily believe that until the registrar of titles signed the memorial no dealing is registered and accordingly for what ever reason is for the registrar not accepting the transfer their judgment gave yet registered by the plaintiff takes procedures under the Torrens system".

[41] I found that this evidence contradicted the submissions made by the plaintiff’s counsel.

[42] From the above evidence it became obvious that the purchaser failed to demonstrate what encumbrances were recorded on the title on 25 October 2006, at the time she lodged her transfer for registration. The only evidence which was required under section 30 of the Act was not submitted at the hearing.

[43] I further noted that counsel for the purchaser and the plaintiff submitted more than 20 sections in the Act as well as those referred to by counsel for the Bank for assessment in this matter without any pleadings.

Assessment of Purchasers claim

[44] The first and foremost requirement for the purchaser to have established on balance of probabilities, was that at 11.15 am on 25 October 2006, the mortgage number 201344 was not recorded on the new lease number 16375 issued in the name of AMBIKA NAND. The second matter the purchaser was required to establish that the Registrar did not comply with section 60(1) (a) of the Land Transfer Act, whereby he failed to endorse the memorials on the new lease after he transferred the encumbrances from the old lease onto the new lease. I shall deal with both the matters in the same sequence as submitted by counsel for the purchaser, as follows:-

[a] In paragraph [8] of his submission, counsel claimed that at 11.15 am on 25 October 2006, the purchaser lodged the transfer for registration, which was allocated dealing number 597010.

[b] Counsel for the purchaser at paragraph 8 of his submission stated that: "On 25 October 2006, the transfer document were lodged and registered at 11.15 am and was numbered 597010 but not signed by the Registrar of Titles due to the prior mortgage in favour of British American Insurance Company Limited registered on 17 May 1983 and caveat lodged by the Director of Lands and registered on 30 May 1988".

The above was conclusive evidence to suggest that the purchasers’ memorial was not registered. In addition, I evaluated Prem Singh’s affidavit sworn on 5 March 2008, I noted paragraph 4(i) which was in the following terms:-

"The Plaintiff denies that the said transfer document was registered with the Registrar of Titles as claimed".

[c] In paragraph (9) of his submission, counsel for the purchaser claimed that the brining forward of the mortgage on to the new title was invalid, void, by virtue of section 60(1)of the Land Transfer Act. This was the purchaser’s second substantive claim against the Registrar which was intended to affect the Bank’s mortgage security.

[d] I carefully examined the application of section 60(1) (a) (b) and (c) and also (2) (3) and (4) of the Act and came to the conclusion that the Registrar did accept the purchaser’s transfer on the above date, but he did not register the memorial because, there was registered mortgage on the lease title.

[e] In paragraph 13, counsel submitted that the mortgage should not have been endorsed on the lease, because section 8 of the Limitation Act rendered the debt statute barred.

[f] I examined section 8 of the Limitation Act [Cap 35] and its application to this claim and came to the conclusion that the Bank did not abandon the debt. The Registrar was complying with section 60(1) when he transferred the memorials from the old lease onto the new lease number 16375. I referred to section 8 and 12 of the Limitation Act, and also section 77 of the Property Law Act, [Cap 130]. I accepted that the mortgagor was making repayments to the mortgagee after the Bank had made several demands for payment, it gave the mortgagee fresh accrual of charge, which had not expired as provided in section 8 of the Limitation Act. As I have stated previously, this matter should have been pleaded in accordance with the High Court Rules Order 18. The submissions made by counsel did not give other parties the right to respond to the legal issues claimed on behalf of the purchaser.

[g] Counsel, in paragraph (14) (15) and (16) of his submissions claimed that the purchaser SASHI KIRAN PRATAP was never the mortgagor on the Crown Lease 16375 therefore, the mortgage should not have been transferred on the new lease. Since the purchaser signed the contract to purchase the property, it was upon the vendor to give discharge of the mortgage on settlement. I did not consider that the question of ‘executors, administrators, or assigns’ was applicable. In this case, if the usual conveyance practice was adopted, then the vendor would have handed the mortgage discharge to the purchaser at settlement. This submission was meaningless.

[h] Counsel in paragraph 17 of his submission claimed that the subject land was a protected Crown lease, under section 13 of the Crown Lands Act Cap 132 applied, which required the consent of the Registrar of Lands before any dealing could have been made with the subject land.

[i] I examined the mortgage number 201344 registered in favour of the British American Insurance Company Limited by the mortgagor, Ambika Nand, on the old lease number 5375. I accepted that on 4 April, 1983 the Director of Lands gave consent to register the mortgage. In the present case, the transfer of mortgage from old lease to the new lease by the Registrar did not come within the meaning of a dealing under section 13 of the Crown lands Act, the Registrar was complying with statutory duty under section 62(1) to transfer the encumbrances on the new lease therefore section 13 of the Crown Lands Act did not apply.

[j] Counsel for the purchaser submitted considerable number of cases referring to obtaining consent under section 13 of the Crown Lands Act, in support of his case and referred to Phalad v Sukhraj [1978] 24 FLR 170, and Court Bros v Sunbeam transport [1969] FLR 206 at 210. Unlike the facts in the above case, the Registrar in this case was exercising his statutory duty under section 60 (1) and (4) to endorse the mortgage from the old lease on to the new lease. It was not a dealing between parties when consent under 13 of the Crown Lands Act was required.

[k] Counsel further submitted that section 40 of the Act applied and also submitted that Fraser v Walker [1967] A C 569, 580, was applicable. I have discussed the application of the above decision in the section referring to indefeasibility of titles.

[45] Based on the facts, I came to the conclusion that the purchaser’s transfer was accepted for registration, but not registered on the new lease number 16375. Only after registration by the Registrar in compliance with the Act, the purchaser would have become entitled to seek protection as explained in Fraser v Walker or section 40 of the Act. Counsel also made reference of Court Brothers v Sunbeam Transport [1969] 13 FLR 206, at 210, but the facts in this case was not applicable in the present case.

[46] After considering all matters submitted by the counsel for the purchaser, it became obvious that there were substantial matters in conflict between the parties, which could not be resolved without the parties filing proper pleadings to ensure that all disputed matters could be properly assessed.

The need for Final Search

[47] In conveyancing practice, it is the purchaser’s solicitor’s fundamental duty to obtain a final search before settlement and to scrutinize each document to ensure that there were no additional encumbrances registered or noted on the title which would prejudice the purchaser’s settlement. The result of failure to obtain final search was discussed in the recent case by the High Court of Australia in Black v Garnock, discussed below.

Whether the encumbrances were validly recorded on the new lease on 25/10/06

[48] Under this heading the purchaser was required to prove on balance of probabilities that at the time she lodged her transfer, the mortgage was not recorded on the new lease at the Titles office. Counsel for the purchaser claimed that on 25 October 2006, the Registrar had not transferred the Bank’s encumbrance on the new lease. This was the basis of the purchaser’s substantive argument to seek priority over the mortgage. The legislature provided a procedure to establish matters recorded on the folio of the register by incorporating section 30 in the Land Transfer Act. Proof of matters recorded on the register could only be established by supportive evidence under section 30 of the Act.

[49] Counsel for the Bank disputed the purchaser’s claim and submitted that on 19 October 2006, Messrs Cromptons, solicitors, acting on behalf of the Bank, hand delivered a letter requesting the Registrar to endorse the mortgage on the new lease. This was disclosed in TULSI RAM’S affidavit sworn on 17 January 2008, where he stated that the Registrar had endorsed the mortgage on the new lease on or about 19 October 2006.

[50] In the absence of the title search under section 30 of the Act, I accepted TULSI RAM’S evidence when he stated that the memorials from the old lease were endorsed on the new lease on or about the 19 October 2006.

[51] Counsel for the purchaser submitted that at the time the purchaser lodged her transfer on 25 October 2006, the Registrar had not recorded or brought down the mortgage on the new lease, but there was no supportive evidence to show the matters recorded on the folio of the new lease number 16375.

[52] The Bank replied that the purchasers’ allegation was misconceived, the Registrar complied with section 60(1) at the time he registered the new lease in favour of Ambika Nand, he made a notation on top of the lease, the type of lease he was registering on behalf of the mortgagor. Counsel for the Bank submitted the encumbrances were recorded in compliance with the Act, therefore the mortgage was validly endorsed on the new lease. This was the main dispute between the parties.

[53] After examining the documents and after assessing the evidence submitted by counsel for the purchaser and the Bank, and without the proof of title search I came to the conclusion, that the Registrar had made a notation on top of the new lease and that the encumbrances were validly recorded on the new lease number 16375.

[54] The next question which counsel for the purchaser submitted was that, if the encumbrances were validly brought on the new lease, then he argued that the Registrar did not endorse the correct wording on the lease as required in section 60(1) of the Act.

Did the Registrar comply with section 60 (1)(a) of the Act?

[55] The second issue which the counsel for the purchaser submitted was that if the Registrar had validly brought down the encumbrances on to the new lease, then he failed to comply with requirements of section 60(1) of the Act. I shall examine the application of this section in relation to transferring endorsements from old lease to new lease. Section 60(1) of the Act required the Registrar to identify the type of lease he was intending to register in the folio of titles and to state in memorial, whether,

(a) it is in renewal of or
(b) in substitution for a lease previously registered lease. I shall examine which one of the two leases the Registrar registered for AMBIKA NAND.

Section 60 states,

60.-(1) Where in the case of a lease which is registered under the provisions of this Act and is subject to any encumbrances appearing in the register, a new lease is registered against the same land and the Registrar is satisfied that-

(a) it is in renewal of or in substitution for a lease previously registered;

(b) the lessee is the person registered as the proprietor of the prior lease at the time of the registration of the new lease or at the time of the expiry or surrender of the prior lease, whichever is the earlier, or the personal representative of that person; and

(c) the lessee or the registered proprietor of any encumbrance to which the prior lease was subject at the time of its expiry or surrender or the personal representative of the registered proprietor so requests, the Registrar shall state in the memorial of the new lease that it is in renewal of the prior lease or in substitution for the prior lease, as the case may be.

(2) In every such case the new lease shall be deemed to be subject to all encumbrances to which the prior lease is subject at the time of the registration of the new lease or at the time of the expiry or surrender of the prior lease, which ever is the earlier.

(3) For the purposes of subsections (1) and (2) all references in any Act or in any agreement, deed, instrument, notice or other document whatsoever to the prior lease or to the estate or interest of the lessee there under shall, unless inconsistent with the context or with the provisions of this section, be deemed to be references to the new lease or to the estate or interest of the lessee there under, as the case may be.

(4) Upon the registration of a new lease in any case to which subsection (1) applies, the Registrar shall enter a memorial on the new lease of all encumbrances to which it is deemed to be subject as aforesaid in the same order amongst themselves of their priority under this Act over the prior lease.

[56] Counsel for the purchaser claimed that the Registrar failed to endorse on the new lease, whether (a) it is in renewal of or (b) in substitution for a lease previously registered. He claimed that the inappropriate expression or statement used on top of the new lease was contrary to the provisions contained in this section; therefore, it rendered the mortgage invalid. He argued that the exact words as provided in section 60(1)(a) were required to be printed in the memorial of the new lease.

[57] Counsel for the Bank replied that the Registrar was not required to write the exact words as provided in section 60(1) but to provide sufficient particulars which identified whether it was "renewal" of the old lease or "in substitution of the lease previously issued". In this regard, I referred to paragraph 8 of the plaintiffs counsel’s submissions filed on 24 November 2008, where he stated,

"However, here in the new lease which is the said second lease number 16375, there is no memorial entered at all as required by section 60(1) that the new lease is in renewable of the prior lease or in substitution for the prior lease."

[58] After examining the above lease document marked ‘C’ annexed to the affidavit of SASHI KIRAN PRATAP, I noted that it was a photocopy of a Crown lease, it did not have the Crown Lease number on top of the document, but it was numbered at the bottom, it was a photocopy and did not comply with Section 11(2) and (3) of the Civil Evidence Act 2002, therefore, it became inadmissible document. In absence of this document, the purchaser did not have any claim.

[59] Section 60(1) empowers the Registrar to transfer memorials from old lease to new lease. This section imposed a duty on the Registrar to carry out various procedural duties in order to comply with section 60(1) (a) (b) of the Act, but paragraph (c) imposed a duty as to when and how the Registrar was to carry out his duty in section (a) and (b) above. These conditions are:-

[60] That under section 60(1) (a), the Registrar is required to be satisfied that it was,

(a) Either a renewal or in substitution of the previous lease, and

(b) Required the Registrar to be satisfied that the lessee is the same registered proprietor is the same person as in the old lease, the land is same as in the old lease, and the new lease issued to the person, was the same person.

(c) Imposed a duty and a direction, to endorse the memorials from the old lease on the new lease at the request of either the owner or the registered proprietor of any encumbrance.

[61] The purchaser claimed that the words ‘renewal’ or ‘in substitution of’ were not recorded on the new lease on 25 October 2006. Counsel for the purchaser further claimed that the words printed on top of the new lease as ‘Encumbrances b/f from C L 5375", did not comply with the provisions of section (a) of the Act.

[62] The purchaser’s argument in above paragraph required analyzing the meaning of the words, "Encumbrances B/F from C/l 5375", which became the crucial factor requiring statutory interpretation of the legislative enactment for determining, whether the writing meant that the lease was a "renewal of the old lease’ or in "substitution’ of the old lease". In this context, I firstly referred to the writing on top of the new lease. It stated that it was [b/f] meaning, brought forward from old lease No 5375, but since there was a new lease number, the Registrar accepted that this was a new lease and not renewal of the old lease.

[63] The section refers to only two types of leases, one being the "renewal" of the old lease and the other was issued in "substitution for a lease previously registered". This phrase required examination of the intention of the legislature when it empowered the Registrar to deal with one of the two distinct types of leases under this section.

[64] The Registrar’s action to transfer the memorials under section 60(1) from the old lease to the new lease could be analyzed as follows:-

Under section 60(1) there are three different sub sections which require the Registrar to carry out his duty when registering a new lease from an old lease. The Registrar was required to transfer encumbrances from the old lease to the new lease number 16375, only if the Registrar was satisfied that the person named in the old lease, and the subject land was the same as in the proposed new lease. If the "land" and the "person named in the old lease" were the same, then if requested by an interested party, as provided in section (c), the Registrar was under legal duty to transfer the memorials onto the new lease. My findings on this question were as follows:-

Section 60(1)(a)

[65] In section 60(1)(a) the legislature referred to two different types of leases. It was necessary to examine the overall intention of the Parliament when the legislation imposed a duty on the Registrar when analyzing the application of section 60(1) of the Act, to determine whether it was a ‘Renewal’ or in ‘substitutions for a lease previously issued’.

[66] After examining the two words, ‘renewal’ and ‘in substitution for a lease previously issued’ it was obviously clear, that the Registrar did not use the words "Renewal’, therefore, by applying the process of elimination, the Registrar could have only intended to register the second type of lease provided under the Act. In this context, it became relevant to consider the writing on top of the new lease, words "Encumbrances B/F from CL 5375". I considered the Registrar did not have to use the actual words, except that he had to identify which of the two types of leases he was considering to register. I could not find any reason to depart from applying the literal rule in interpreting the above section. The rules for interpretation was explained in Cooper Brooks Pty Ltd v Commissioner of Taxation [1981] HCA 26; [1981] 55 ALJR 434, the judgment of the High Court of Australia was relevant on this point. The court observed,

"Where the court had to examine, amongst other things, the circumstances justifying departure from the literal rule and to the adoption of more liberal approach". Gibbs C J, stated that, "There is a need to ascertain Parliamentary intention by looking at the words used in the context".

[67] In this case, I did not find any absurdity, ambiguity or inconsistency which required further interpretation of section 60(1)(a). The question of dealing with absurdity in a legislation was amply explained in R v The Judge of City of London (1892)1 Q B 273, at 290.

[68] In my view the "new lease" was clearly issued to AMBIKA PRASAD in substitution of the prior lease, therefore, I was satisfied that the Registrar complied with paragraph (a) of the Act. I now refer to paragraph (b) of the Act.

Section 60(1)(b)

(i) The next question which the Registrar had to be satisfied with was section 60(1) (b). Under this section the Registrar was required to examine whether the lessee was the same person whose name was on the old lease to whom the new lease was being granted, and the land description was the same as in the old lease, then he would register the new lease.

(ii) I accepted that the Registrar complied with this section since the name in the old lease was AMBIKA NAND and the new lease was issued to AMBIKA NAND and the land was same as in the old lease.

Section 60(1)(c)

(i) Thirdly, in my assessment I concluded that under section 60(1(c) there were two different requirements imposed on two different parties.

(a) Firstly, there had to be a request by an interested party to endorse the memorial on the lease, which the Bank did in this case by producing a letter dated 19 October 2006, which was sent to the Registrar requesting him to endorse the mortgage memorial on the new lease. The date was a significant factor for consideration in this case. The second leg of this section required the Registrar to carry out the request, bearing in mind the operations of section 60(1) (a) and (b), to endorse the encumbrances on the new lease.

(b) Section 60(1)(c) imposed a duty on the Registrar that after he was satisfied with the matters contained in paragraphs (a) and (b) he was to endorse the encumbrances on the new lease upon being requested by an interested party to execute the action under section 60(1)(c) and to endorse the mortgage memorial on the new lease. I was satisfied that the Bank complied with section 60(1)(c) of the Act. I was further satisfied, in absence of a title search, after accepting the evidence of TULSI RAM that the Registrar endorsed the memorials on or about the 19 October 2006. I considered that the Registrar complied with section 60 (a) (b) and (c) of the Act. I was further satisfied that on or about 19 October 2006 the mortgage was endorsed on the new lease title.

[69] I was satisfied that while the Registrar did not write the actual words ‘renewal’, he did not register renewal of the lease. He therefore registered the second lease in ‘substitution’ for a lease previously issued.

[70] Counsel for the purchaser placed considerable emphasis on a photocopy of new lease annexed to the purchaser’s affidavit, which I have analyzed in this judgment, but this document was inadmissible since it was not endorsed as required by section 11 (2) and (3) of the Civil Evidence Act. This photocopy of the lease was not even certified true copy of the original lease.

[71] I considered that the Registrar’s action in endorsing the encumbrances on top of the new lease substantially clarified the type of lease he had registered. The obvious conclusion was that since the Registrar did not endorse the word, ‘Renewal’ on the new lease, and made the notation " encumbrances B/F from CL5375" could only be concluded to mean that he issued the second form of lease referred to in that section. An explanation of the validity of a incomplete endorsed of memorial was explained by Barwick C J in Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd [1971] HCA 9 (18 April, 1971, as follows,

"Indeed, the partial description of what it did achieve was clearly in adequate. If a statement of the nature of the instrument requires a statement of what it affects, the endorsement was insufficient as a memorial. On the other hand, if the nature of the instrument is that it is a memorandum of transfer and does not for its statement require a specification of what the instrument achieves, the endorsement, in my opinion, constituted a memorial and the memorandum of transfer was therefore duly registered under the Act of 1862"

His Honour further commented,

"It is not necessary, in my opinion, to make a memorial effective as the registration of a dealing that the endorsement should particularize to any extent what the instrument does. It is sufficient to state whether it is a transfer or a mortgage etc. Thus in my opinion, the endorsement on a certificate of title of a statement ‘Memorandum of Transfer No 7922 dated 15th May 1872 produced and entered on the 15th day of June 1872 at 12 o’clock noon’ would be sufficient memorial and upon endorsement on the certificate of title the memorandum of transfer would be duly registered and form part of the Register Book".

[72] In assessing section 60(2), of the Act, I concluded that after the Registrar was satisfied with the matters contained in section 60(1) (a) (b), and after he was requested by the interested party, the Bank in this case, to register the charge onto the new lease, as provided in section 60(1)(c), the Registrar had the duty to endorse the encumbrances on the new lease.

[73] Section 60(2) states that:

"In every such case the new lease shall be deemed to be subject to all encumbrances to which the prior lease is subject at the time of the registration of the new lease or at the time of the expiry or surrender of the prior lease, whichever is the earlier".

[74] The above section provided the Registrar the authority, only after he was satisfied with paragraph (a), (b), (c) then to transfer the memorials on the register of a new lease. The Registrar was then required to note on the new lease priorities as provided in section 60(4) to enter the memorials with the same order of priority as it was recorded in the old lease.

[75] After examining the purchaser’s and the Bank’s evidence, I concluded that the interpretation of the words noted on top of the new lease provided a clear identification that it was a new lease. I was satisfied that despite the Registrar not using the exact words as required in section 60(1) (a) of the Act, the Registrar used the words on top of the new lease which in my opinion relevantly described the type of lease he intended to register, thus complied with the section 60(1) (a) of the Act.

[76] The purchaser had the right to lodge a caveat on 24 October 2006 under section 106 of the Act to protect her equitable interest after executing the contract for sale and purchase. There was no evidence that the purchaser lodged a caveat on the lease after the execution of the agreement.

[77] The purchaser’s entire claim in this matter would have been resolved, had the counsel for the purchaser submitted a certificate of title search under section 30 of the Act. When counsel was questioned, where was the title search, to which he replied, "I was not the solicitor acting on the purchaser therefore I do not have copies of the search."

[78] I shall now consider the following three matters claimed by the purchaser as follows:-

[a] The purchaser’s claim of priority over the mortgage

[b] Purchasers right to have lodged a caveat under section 106 of the Act to protect her interest,

[c] Purchasers claim for indefeasibility of title over the Bank’s mortgage

The purchaser’s claim for PRIORITY over the mortgage

[79] The purchaser claimed that the transfer was registered on 25 October 2006, and she claimed that the transfer was registered validly on the new lease when the mortgage encumbrance was not endorsed on the new lease. She claimed she acquired priority over the mortgage charge. Under this heading, it is intended to examine paragraphs (a) and (b) of the application before the court, whether the Registrar had validly recorded the mortgage on the lease at 11.15 am on 25 October 2006, at the time when the purchaser lodged her transfer for registration.

[80] The purchaser’s substantive claim was that she was entitled to priority over the mortgage as provided in section 23, 24, and 25 of the Act, from 25 October 2006 when she lodged her transfer for registration.

[81] The purchaser did not submit any evidence of title search under section 30 of the Act or submitted any evidence that she lodged a caveat to protect her interest on or before 25 October 2006. Section 30 of the Act provided,

"Where any person desires information as to whether a proprietor is able to deal with the land, estate or interest comprised in his instruments of title free from any caveat, instruments presented for registration, order, injunction or other cause known to the registrar but not appearing on the instrument of title, such person might apply, in be prescribed manner and on payment of the prescribed fee, for a search certificate".

[82] Since there was no search certificate submitted at the hearing, then section 31 applied which meant the purchaser was deemed to have had notice of the matters endorsed the date on the title. The section 31 provides as follows,

"A search certificate issued under the provisions of section 30 shall refer to the dealing or encumbrance last noted on the instrument of title in order to show the state of the register at the time of such issue but not for the purpose of informing the applicant for such search certificate as to the contents of, or endorsements on, the instrument of title. Such applicant may inspect the instrument of title and shall be deemed to have knowledge of all that which such an inspection would have revealed"

[83] Counsel for the purchaser submitted that section 40 provided the purchaser the indefeasibility of title against the Bank, since the Registrar had not endorsed the mortgage on the new lease. I did not consider that section 40 of the Act gave any protection to the purchaser since her transfer was not registered by the Registrar until after the consent orders were obtained by the parties on 19 June 2008.

[84] In order to ascertain priority of the purchaser against the Bank’s mortgage, I examined the following documents with the lease copy annexed to the purchaser’s affidavit:-

[a] Affidavit of Tulsi Ram deposed on 17 January 2008, referring to annexure TR3, which was Crown Lease number 16375.

[b] Affidavit of Prem Chand deposed on 22 August 2007, which had annexure marked B, was a copy of the lease issued by Registrar of Titles.

[c] An affidavit of Sashi Kiran Pratap deposed on 2 September 2008, had annexure C being a copy of the same Crown lease registered by the Registrar of Titles.

AFFIDAVIT OF TULSI RAM dated 17 January 2008

[85] I examined annexure "TR3" which was the Crown lease number 16375 containing 8 pages, in the affidavit of TULSI RAM. The most significant evidence was that it stated, CERTIFIED TRUE COPY’ and was dated 15 January 2008, it was signed and sealed by the Registrar. The other examination revealed as follows:-

[a] The examination of this document was crucial to the whole case. In the last page, there were endorsements, the first notation stated ‘Encumbrances B/F from C/L 5375".

[b] Immediately underneath the above notation was MORTGAGE, endorsement No 201344 which was signed by the Registrar, and had the seal affixed to it.

[c] The next memorial was CAVEAT No 260056 which was also signed and had the seal affixed to it.

[d] The third memorial was Transfer- 597010- stated as registered no 25/10/2006 at 11.15am in favour of SASHI KIRAN PRATAP, but there was no signature or the seal affixed to this memorial.

[e] The next memorial was an entry of judgment 609879 in favour of Mohammed Farook Ali, against AMBIKA NAND, this was registered on 31 July, 2007, at 12.40pm. This was conclusive evidence that on the above date the mortgagor, AMBIKA NAND was still the registered owner of the Crown lease, therefore, the purchaser’s transfer could not have been registered as claimed.

[86] I noted that the annexure referred to above in TULSI RAM’S affidavit complied with section 11 of the Evidence Act.

AFFIDAVIT OF PREM CHAND dated 17 January 2008

[87] The second annexure marked "BB" which I examined was annexed to PREM CHAND’S affidavit sworn on 17 January 2008. This document contained only 2 pages of the lease number 16375 annexed to it. I noted that this copy was NOT a certified true copy of the lease and was undated on top of the lease, and was not verified by the Registrar. I noted the following endorsements on page 2 as follows:-

[a] The encumbrances were same as I stated in the above affidavit of TULSI RAM.

[b] The mortgage was second endorsement; it was numbered, signed, and had the seal of the Registrar.

[c] The Third memorial was the CAVEAT, 260056 which was signed and sealed by the Registrar.

[d] The fourth memorial was TRANSFER in the name of SASHI KIRAN which stated Registered 25/10/2006 at 11.15am. This memorial was not signed or had the Registrar’s seal. Clearly, it was only an endorsement which had not been registered in the book of folio.

[e] The endorsement of judgment in favour of Mohammed Farook on 31 July, 2007 at 12.40pm. This memorial was signed but not sealed by the Registrar.

AFFIDAVIT OF SASHI KIRAN PRATAP First Annexure of the Lease

[88] I examined the final annexure marked "C’ and "D" attached to the affidavit of SASHI KIRAN PRATAP, deposed on 4 September 2008, containing 8 pages. I noted the following:

[a] The first annexure marked "C" annexed to the lease was unverified photocopy. Since it was unverified copy, it did not comply with section 11 (2) of the Civil Evidence Act 2002. I considered the above document was inadmissible.

[b] Annexure C in my view was not a true copy of the lease, since there were many different features as compared to the second document which was registered by the Registrar.

AFFIDAVIT OF SASHI KIRAN PRATAP The second Annexure

[a] The second annexure to the same affidavit was marked "D", which contained 8 pages of the new lease number 16375. I noted the following memorials endorsed on the lease,

[i] The first notation on top of the page contained the same notation as in the annexure to TULSI RAM’S affidavit,

[ii] The second memorial was the MORTGAGE noted to be same.

[iii] The third memorial was the endorsement of the CAVEAT, it was same as in TULSI RAM’S affidavit. [I noted significant difference in the rubber stamp used in the two different documents, therefore, I concluded that this could not have been a photocopy of the original lease held by the Registrar in his folio.

[iv] The memorial, TRANSFER in favour of SASHI KIRAN PRATAP, was NOT same as in the annexure marked "TR3" in the affidavit of TULSI RAM. I found the discrepancy in the following respect:- even though there was an alleged signature above the name of the Registrar; it did not match with the signature the Registrar placed in the memorial of entry of judgment in favour of Mohammned Farook Ali. The writing was not the same.

[89] My finding on the above document was that the signature above the notation of Registrar of Titles was not same, when compared to the signature in the memorial in which the judgment was entered. If the Registrar had entered and completed the purchaser’s memorial on 25 October, 2006, as claimed by the purchaser, he could not have entered judgment against AMBIKA NAND on 31 July, 2007.

[90] After examining 6 pages of certified copy of the new lease number 16375 annexed and marked D, to the affidavit of SASHI KIRAN PRATAP, dated 4 September 2008, I compared the above annexure with the annexure BB annexed to the affidavit of PREM CHAND sworn on 17 January 2008, and compared them with the annexure marked TR3 annexed to the affidavit of TULSI RAM deposed on 17 January 2008, I made the following findings:

[91] The two signatures placed above the name Registrar of Titles on the same page was not the same as the signature disclosed in the memorial of the judgment.

[92] In addition, there was further evidence submitted by the plaintiff, in the affidavit of PREM SINGH, sworn on 5 March 2008, where he stated in paragraph 4(i) that,

"The Plaintiff denies that the said transfer document was registered with the Registrar of Titles as claimed".

[93] After reviewing all copies of the new lease I came to the conclusion that although the purchaser’s transfer was lodged with the Registrar of Titles for registration at 11.15 am on 25 October 2006, it was not registered to give her any priority over the interest of the Bank’s mortgage.

Priority only by registration and not by lodgment

[94] Section 23 of the Act provides priority of title by registration of the document which must comply with section 21 of the Act. But in this case the purchaser could not seek priority of any interest against the mortgage which was registered first in time before the purchaser lodged her transfer. I accepted the evidence of TULSI RAM, that the mortgage memorial was endorsed on the new lease on or about the 19 October 2006, while the purchaser’s evidence was that she lodged her transfer on 25 October 2006. The purchaser was deemed to have had notice of all the encumbrances including the mortgage charge registered on the lease.

[95] In order to seek priority or interest in the title, the purchaser was required to submit evidence in compliance with section 8 (1) of the Act, that the Registrar had registered the purchaser’s transfer, but there was no evidence that the purchaser’s transfer was fully endorsed by the Registrar on 25 October 2006.

[96] The question of priority between the two competing interests was explained by the High Court of Australia in Black v Garnock [2007] HCA 31 where their Honours Gummow and Hayne JJ, stated,

"The Torrens system of registered title of which the Act is a form is not a system of registration of title but a system of title by registration", as explained in Breskvar v Wall [1971] HCA (1971) 126, CLR 376, per Barwick CJ.

"The purchaser had no priority of title, unless the transfer was first registered on the register by the Registrar".

[97] An unregistered interest which the purchaser had after executing the sale and purchase agreement, was not capable of any protection unless the purchaser lodged a caveat on the new lease which would have preserved her entitlement as exception to the indefeasibility, as explained in Leros v Terara [1992] HCA 22; [1992] 174 CLR 407.

[98] In this case the question of the purchaser’s priority as provided in section 37 of the Act did not arise. The purchaser’s transfer was accepted by the Registrar some times after the consent orders were made by the parties on 19 June 2008. Regrettably, there was no proper evidence put before the court as to the actual date the Registrar had entered the purchaser’s memorial on the lease.

[99] Mr Knight offered to tender a search of the lease from the Bar Table, which I considered was inappropriate way to tender evidence without the document first being annexed to an authoritative affidavit.

[100] After comparing the copy of the lease annexed to the purchaser’s affidavit, as well as in TULSI RAM’S and PREM SINGH’S affidavit, I came to the conclusion that the copy of lease annexed to the purchaser’s affidavit did not comply with section 8 of the Act, accordingly, I considered that the purchaser’s transfer was not accepted by the Registrar as claimed by the purchaser.

[101] The requirement of Section 8(1) is:-

"The registrar shall cause to be kept a seal of office, and all certificate of title and other documents purporting to be sealed with such seal and signed by the registrar or a deputy registrar shall be admissible in evidence without further proof".

[102] I noted that the annexure upon which the purchaser relied in seeking priority, was not properly attested, and lacked the seal of the registrar, therefore it was an invalid photocopy of the new lease, it was unverified and did not have the seal of the Registrar. I was not persuaded to accept that it was fully endorsed and approved by the Registrar. In Bursill Enterprises v Berger Bros Trading Co [1971] HCA 9; (1971) 124 CLR 73, Barwick C J explained,

"Of course if the endorsement was not such a memorial the memorandum of transfer remains unregistered and no further matter with respect to it arises in this case in so far as the memorandum does not create an easement".

[103] The purchaser’s transfer was not fully endorsed in compliance with section 8 and 21 of the Act since there was no serial number, the time and the date was not endorsed, therefore it did not comply as a correct memorial on the lease. The unverified copy document only had the name printed above the name of the Registrar.

[104] From the evidence submitted by the purchaser, it appeared that the purchaser believed that her transfer was registered at the time she lodged to be entered into the "Presentation Book" under section 20 of the Act. Priority of interest did not arise at the time of lodgment of transfer but only after registration of the document by the Registrar as provided in section 21 of the Act. This section provides as follows:-

Section 21(1) states

"Every instrument of title shall be deemed and taken to be registered under the provisions and for the purposes of this act as soon as the same has been signed by the registrar and marked with a serial number in the register, and instrument purporting to transfer or in any way to affect made subject to the provisions of this act or any estates or interest there in, shall be deemed to be so registered it soon is a memorial thereof as therein described has been entered in the register upon the folium constituted by each existing instrument of title affected by such dealing."

[105] Furthermore, the priority only arises after the document was registered by the Registrar as compared to having accepted it for registration. Section 37 of the Act provides,

"No instrument until registered in accordance with the provisions of this act shall be effectual to create, vary, extinguish, or pass any estate or interest or encumbrance in, on or over any land subject to the provisions of this act, but upon registration the estate or interest or encumbrance shall be created, varied, extinguished or passed in the manner and subject to the covenants and conditions expressed or implied in the instrument".

[106] After examining the documents, I was satisfied that the purchaser’s transfer was lodged on 25 October 2006 for registration, but it was not registered on that date.

[107] The purchaser's priority could only have arisen after the Registrar completed the endorsement on the new lease as provided in section 23 of the Act.

Section 23 of the Act

"Except as otherwise provided in this act, every instrument presented for registration shall, unless it is a Crown Grant, be attested by one witness, and shall be registered in the order of time in which this time is presented for that purpose, and instrument registered in respect of or affecting the same estate or interest shall notwithstanding any express, implied or constructive notice, be entitled to priority according to the date of each registration and not according to the date of each instrument itself, and the Registrar, upon registration thereof, shall into a memorial of the same in the registrar and, if such instrument is in duplicate as herein provided, he shall deliver the duplicate to the person entitle thereto, and as soon as it has been registered, every instrument shall, for the purposes of this act, be deemed to be embodied in the register as part and parcel thereof"

[108] The purchaser’s priority of registration could have occurred only after the transfer had been registered by the Registrar as provided under section 37 of the Act, which provides,

"No instrument until registered in accordance with the provisions of this act shall be effectual to create, very, extinguish or pass any estate or interest or encumbrance in, on or over any length subject to the provisions of the estate, but upon registration the estate or interest or encumbrance shall be created, varied, extinguished or passed in a manner and subject to the covenants and conditions expressed or implied in the instruments"

[109] After considering the application of the above section to the facts in this case, I came to the conclusion that the purchaser failed to submit evidence that her transfer was registered 25 October 2006.

[110] In case where a transfer was not fully described on the folio, the court held that priority could not arise until the transfer was fully endorsed, as explained by the High Court of Australia in Bursill Enterprises v Berger Bros Trading Co [supra] where the Court explained that

"That in this case the folio was not fully described the transfer of an interest subsequent to the interest holders took their interests subject to the original import of the document and not the register".

[111] The incontrovertible evidence before the court was that on 31 July 2007, AMBIKA NAND was still the owner of the new lease number 16375 when the purchaser entered judgment against him.

[112] After examining the purchaser’s evidence seeking priority over the mortgage, I came to the conclusion that since the purchaser’s transfer remained unregistered after the registration of judgment, she had no claim for any priority against the mortgage. Priority arises only after registration as explained in Black v Garnock, [which was comprehensively discussed in the NSW Law Society Journal, September 2007, Vol45 No 8, at page 51, authored by Sasha Ivantsoff and explained in Breskvar v Wall [supra, per Barwick CJ], that title was by system of registration.

The relevance of entry of judgment against the mortgagor on 31 July, 2007

[113] On 31 July, 2007, the Registrar endorsed and signed the judgment on the new lease number 16375 in favour of the plaintiff. This was indisputable evidence that the purchaser’s transfer was only noted on the new lease but not registered on the lease. Therefore, the purchaser claimed that she acquired legal title on 25 October 2006 which could not be justified.

[114] The Registrar could not have entered judgment against AMBIKA NAND on 31 July, 2007 if the purchaser had become the registered proprietor on 25 October 2006 as she claimed.

[115] The purchaser was entitled to lodge a caveat to protect her interest when she carried out the title search before lodging her transfer with the Titles office.

[b] Lodgment of caveat under s 106 of the Act

[116] The purpose for lodging a caveat on a Crown lease was to protect the purchaser’s interest after execution of agreement for sale and purchase. It was incumbent upon the purchaser’s solicitors to have lodged a caveat on 24 October 2006 after they completed the first title search on the Crown lease number 16375, as explained in:-

Black v Garnock [2007] HCA 31, where the High Court of Australia, referring to the principles in J & H Just (Holdings) Pty Ltd Bank of New South Wales HCA 57 [1971] 125 CLR at 552, where Barwick C J stated,

"Its purpose is to act as an injunction to the Register General to prevent registration of dealings with the land until the notice has been given to the caveator. This enables the caveator to pursue such remedies as he may have against the person lodging the dealing for registration. The purpose of caveat is to give notice to the world or to the persons who may consider dealings with the registered proprietor of the caveator’s estate or interest though if noted on the certificate of title, it may operate to give such notice"

[117] The purchaser’s counsel stated that a search was carried out on 24 and 25 October 2006 pursuant to section 30 of the Act, but this vital evidence was not tendered at the trial. Furthermore, there was no evidence that the purchaser’s solicitors lodged a caveat under section 106 of the Land Transfer Act, to protect the purchaser’s equitable interest. The caveat was only for lodgment and not for registration, as explained in,

J A Westaway & Son Pty ltd v Registrar General & Ors [1996] NSWSC 413( 6 September 1996), per Young J, Equity Division.

[118] In Cambridge Credit (Fiji) Ltd v W.F.G Limited [1975] 21 FLR 182, the Fiji Court of Appeal at page 185 stated,

"Section 106 of the Fiji Act is designed to protect unregistered instruments in land. For instance an agreement for sale and purchase, and unregistered mortgage, an agreement to give a mortgage or an option to purchase land are just a few examples of unregistered instruments which are cable of being protected by the lodging of a caveat".

The court, further discussed the specific requirements for compliance under section 106 and further noted,

"The respondent must however, bring itself within the provisions of section 106 in order to do this must satisfy the court that the following are fulfilled:

(1) That it is a person claiming to be entitled to or to be beneficially interested in any land estate or interest under the act and

(2) That it is so climbing by very few of any unregistered agreement or other instrument or transmission or any trust expressed or implied or otherwise howsoever".

[119] It has been generally accepted principle that a holder of the equitable estate is entitled to lodge a caveat in order to protect its interests in land. In Abagail v Lapin (1934) A C 491, at p 500, the Privy Council stated,

" For the general protection of equitable interest or estates, the act provides that a caveat may be lodged with the registrar by any person claiming as cestui que trust, or under any unregistered instrument or any other estate or interest; the effect of the caveat is that no instrument will be registered while the caveat is in force affecting the land, estate or interest until after a certain notice to the person lodging the caveat. Thus, though the legal interest is in general determined by the registered transfer, mortgages or other changes, the register may bear on its face and notice of the equitable claims, so as to warn persons dealing in respect of the land and to enable the equitable claimant to protect his claim by enabling him to bring an action if his claim is disputed "

[120] Similar sentiments were expressed by Fatiaki J in Sir Sathi Narain v Phyllis Kathleen Malley [1988] 34, FLR 118, at 120, and also by Pathik J in Fong v Weathrall [2005] FJHC 416, (10 November 2005).

[121] I further noted that it was a purchaser’s solicitor’s duty to protect the purchaser as explained in Black v Garnock [discussed above]. The purpose of lodgment of a caveat on the register of folio of charges was to prevent anyone else dealing with the land until the caveat was removed.

[122] The claim for priority arising after registration of a document was explained in Black v Garnock [supra] as per Callinan J observed,

"It was a further practice of those conveyances’ to effect the actual settlement of the agreement by the exchange of all relevant instruments and funds at that office, simultaneously with a search of the register, to verify that no other such caveat or record of dealing had been lodged that might obstruct, delay or detract from the registration of their clients instruments to perfect their estates or interest."

[123] In my opinion, the purchaser was entitled to lodge a caveat to protect the purchaser's interest prior to settlement. The purchaser's responsibility to protect its equitable interest after the exchange of contracts was explained by Callinan J in Black v Garnock [supra] stated,

"It used to be the practice of careful conveyances, acting for persons acquiring registrable estates or interest in Torrens land, to lodge with the officials in charge of the register, a caveat as soon as the agreement for the relevant dealing was made, in pre-emptive protection of their clients prospective legal estates or interests pending completion of the agreement and registration of the instruments perfecting them"

Purpose of lodging the caveat

[124] The right to lodge a caveat was to preserve equitable interest of the kind the purchaser claimed against the lease was explained by court in Woodberry v Gilbert [1907] 3 Tas. L R 7, where Clark J, established 7 different instances where a claimant could exercise the right to register a caveat on title. In this case, the purchaser having acquired equitable interest became entitled to such a right to lodge a caveat to protect her interest, which was recently explained by the High Court of Australia in Black v Garnock [discussed above].

[125] The failure to lodge a caveat to protect the equitable interest was further explained by the High Court of Australia in Butler v Fairclough [ 1917] HCA 9, 23 CLR 78, per, Griffiths, Barton, Issacs, Duffy, Rich, JJ held,

"The plaintiff by omitting to lodge a caveat before the defendant paid the purchase monies and obtained his transfer, had lost priority arising out of his equitable interest having been created first in point of time and the registration of the defendant’s transfer was valid notwithstanding the existence of the plaintiff’s caveat and the omission of the registrar to notify the plaintiff of the defendant’s application".

[126] Had the purchaser lodged the caveat on 24 October 2006, she would have prevented the Registrar from endorsing further encumbrances unless as in this case, the Registrar had the statutory power to transfer encumbrances from the old lease to the new lease as provided in section 60(1)(4) of the Land Transfer Act.

The significance of Section 30, 31 and 32 of the Act

[127] Section 30 of the Act provides evidence of matters, encumbrances in charges registered on the title. The purchaser was required to establish by evidence that on 25 October 2006 the mortgage was not registered on the title. The only way the purchaser could have established this fact would have been by submission of verified copy of the title search. In this case, there was no evidence submitted by the purchaser that she complied with the procedures to protect her interest as explained in Black v Garnock [supra]. The requirements to complete a conveyancing transaction is amply described by Professor Andrew Lang in his book, Estate Agency, Law & Practice in New South Wales, at page 161, paragraph, where he states,

"Shortly before settlement, the purchaser’s solicitor arranges for a final search, ie, to check whether there have been any dealings or notifications registered or lodged for registration since the date of the title search before or just after the exchange of contracts"

[128] Counsel for the purchaser made exhaustive submission that the purchaser obtained indefeasible title after she lodged her transfer which he claimed was registered on 25 October 2006, but the evidence as explained above did not support the claim. Moreover, if the transfer was not registered, the purchaser was not entitled to seek indefeasibility of title. The purchaser did not obtain the benefit of section 32 of the Act.

Purchasers claim for Indefeasibility of title after 25/10/2006

[129] Indefeasibility of title only arose after the purchaser’s transfer was registered by the Registrar, which was protected by sections 39 and 40 of the Act. In my assessment, I concluded that the encumbrances were endorsed on the mortgage number 201344, and the caveat number 260056 on the new lease title. The purchaser lodged the transfer on the 25 October 2006.

[130] The purchaser would have been entitled to indefeasibility of title, if at the time of lodgement; the Registrar had completed the purchaser’s memorial to comply with section 8 of the Act, and had placed his signature with his seal. This was not the case in the purchaser’s memorial.

[131] The purchaser’s transfer was accepted but the registration was not fully completed. Counsel for the purchaser referred to the principles in Fraser v Walker [ 1967 ] I AC 569, where the Privy Council considered the meaning of ‘indefeasibility of title’ and gave a practical description of the immunity from an attack by adverse claims in respect to the same land which the registered proprietor enjoyed. Counsel also submitted that the purchaser’s title was protected under section 40 of the Act. I agree if only the purchaser’s transfer had been registered by the Registrar, but the evidence was that the Registrar had only accepted the transfer, acceptance was not registered.

[132] The question of Indefeasibility of title has been explained in several decisions in Australia, New Zealand and in the United Kingdom, some of which are,Assets Co Ltd v Mere Roihi [1905] UKLawRpAC 11; [1905] AC 176; Boyd v Mayor of Wellington [1924] NZGazLawRp 58; [1924] NZLR 1174; Frazer v Walker [1967] 1 AC 569; Barskvar v Wall (1971) 126 CLR 376, which I have referred to in this case. In Chasfild Pty Ltd v&Taranto [1991]. There hase has been further conceptualization of the meaning of indefelity irtation with whah what is t is usually called ‘deferred indefeasibility’, this was quickly corrected by Hayne J (then of the Supreme Court of Victoria) in Vassos v State Bank of South Australia [1993] VicRp 74; [1993] 2 VR 316 and (as a member of the Victorian Court of Appeal) in Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188. In the latter case, Chatfield Pty Ltd v Taranto [1991] VicRp 16; [1991] 1 VR 225 was formally overruled: at 191 (Hayne JA). There is considerable amount of literature and judicial pronouncements on this topic, but the underlying concept still remains, that unless the purchaser was registered, she was not entitled to defeasibility of her title.

[133] Brennan J in Bahr v Nicolay [No2] [1988] HCA 16; (1988) 164 CLR 604, 653 explained the application of indefeasibility in the following terms,

"The indefeasibility provisions are designed to protect a transferee from defects in the title of the transferor, not to free him from interests with which he had burdened his own title"

[134] The fundamentals of indefeasibility of title was explained by the High Court of Australia in a recent decision in Leros Pty Ltd v Terara Pty Ltd [1992] HCA 22, in the following terms:-

"It is an incident of the indefeasibility of the title of the registered proprietor not only that he or she holds free form prior unregistered interests, except those specified in s 68, but also that he or she has the capacity to transfer a title to the interest of which he or she is proprietor to a successor, free from such unregistered interest.

[135] In this case, the purchaser had the unregistered interest arising from the sale and purchase of the lease, she did not lodge a caveat on title, after the contract were signed by the parties. Indefeasibility only arises after the registration of title has occurred, when the proprietor takes free from all unregistered dealings.

[136] In examining the purchaser’s claim for indefeasibility of title, I made reference to Barnes v Addy [1874] L R [1874] UKLawRpCh 20; 9 Ch App 244, Farah Construction Pt Y Ltd v Say Dee Pty Ltd [2007] HCA (Unreported – 24 May 2007, and also the article by Dr Mathew Harding Faculty of Law, The University of Melbourne, reported at austlii/MULR/2007/ 15html. One of the virtues of indefeasibility of title under the Torrens system is that even a fraudster can obtain an indefeasible title upon registration as explained in Breskavar v Wall [1972] 126 CLR 376. In this case the High Court of Australia accepted the principles established in Fraser v Walker [supra] and also explained the principle of indefeasibility of title in Mayer v Coe [1968] 88 WN (NSW) Pt 1 549, where the court made further reference to acquiring indefeasibility even if on a void instrument, provided the transferee was not a party to fraud.

[137] The purchaser’s entire case for priority and indefeasibility was based on her claim that at the time her transfer was lodged, it was registered, on the same day. The only evidence the purchaser was required to tender was a title search under section 30 of the Act to show that the mortgage was not transferred on the new lease. Since she failed to submit this evidence, then she was bound by the operations of section 31 under the following terms,

The section 31 provides,

"A search certificate issued under this provisions of section 30 shall refer to the dealing or encumbrances last noted on the instrument of title in order to show the state of the register at the time of such issue but not the for the purpose of informing the applicant for such search certificate as to the contents of, or the endorsements on, the instrument of title. Such applicant may inspect the instrument of title and shall be deemed to have knowledge of all that which such an inspection would have revealed."

[138] Since the purchaser failed to submit the relevant title search under section 30, she was bound by the encumbrances noted on the title as provided in section 31 of the Act.

[139] In the absence of the title search, I was persuaded to accept the undisputed evidence by TULSI RAM’S that the memorials were brought down on the new lease on or about the 19 October 2006 before the purchaser lodged her transfer on 25 October 2006.

The Pleadings

[140] There was no evidence submitted by the plaintiff to entitle him to prosecute this claim. There were several affidavits filed in this matter when the claim was being litigated between the plaintiff and the defendant. The Bank became a party to these proceedings on 2 May 2008. The parties attempted to replace pleadings by substituting affidavit evidence and submission, which I considered were totally inadequate in this case. The Bank and the Registrar of Titles were unable to submit appropriate evidence, particularly in relation to the affidavits filed by the parties in their substantive claim.

Findings:

[141] From the evidence, I concluded that the Registrar of Title had endorsed the new lease number 16375 with the two memorials from the old lease number 5375 on or about the 19 October 2006.

[142] I further concluded that the purchaser lodged her transfer for registration at the office of the Registrar of Titles on 25 October, 2006.

[143] From the documents and the evidence, I concluded that the purchaser’s transfer was lodged on 25 October 2006, but it was not registered in compliance with section 8 of the Act.

[144] I further concluded that the purchaser was not entitled to any priority or could have acquired indefeasibility of her title, when her transfer was not registered by the Registrar on 25 October 2006, because there was undercharged mortgage registered on the new lease.

[145] I further noted that the Registrar complied with section 60(1) when he transferred the memorials from the old lease to the new lease. In addition, I accepted that the memorials including the mortgage was endorsed on the new lease on or about the 19 October 2006 when the purchaser lodged the transfer 7 days after, on 25 October 2006, when she had full knowledge of the encumbrances recorded on the title as provided in section 31 of the Act.

[146] The purchaser was entitled to protect her interest by lodging a caveat on the leasehold title, but there was no evidence that this was done, therefore, the purchaser was not provided any protection after the contracts were exchanged, as explained in the most recent decision in Black v Garnock, [2007] referred to above.

[147] Finally in my opinion, the matter should have been commenced by way of a writ of summons with the statement of claim which would have provided the defendant the opportunity to plead the defenses it claimed. The plaintiff failed to disclose any cause of action against the defendants or the interested parties when he did not even file any evidence in this claim. However, I noted other documents in the file which were not in form of evidence submitted on behalf of the plaintiff. I recommend the parties to examine the article in the NSW Law Society Journal, as referred to above for their future guidance.

[148] I make the following orders:

1 Order that the notice of motion filed by the second interested party be dismissed.

2 Order that the plaintiff’s claim be dismissed.

3 Order that the mortgage number 201344 was validly transferred and registered on the new lease number 16375 from the old lease number 5375 on or about 19 October 2006.

4 Order that the Registrar complied with section 60(1) of the Act at the time he transferred the encumbrances from the old lease onto the new lease number 16375 which at that time was registered in the name of AMBIKA NAND.

5 Order that the purchaser’s transfer lodged for registration on 25 October 2006 was subject to the mortgage number 201344 registered on the new lease.

6 Order that the purchaser’s transfer was lodged on 25 October 2006 for registration but was not registered on the new lease on that date.

7. Order that cost follow event, the second interested party to pay costs to all the other parties, as agreed or taxed.

C. Datt
JUDGE

AT LAUTOKA
9 February 2009