I. THREE MAIN PRINCIPLES
5.1 In the words of Theodore B F Ruoff:
[I]t is impossible to do better than repeat the five qualities that Sir Robert Torrens aimed to achieve when inventing the system that bears his name. He sought methods that would be reliable, simple, cheap, speedy and suited to the needs of the community.1
5.2 Ruoff believes that to determine whether a Torrens system in any particular jurisdiction fulfils these objectives, one must examine the degree to which the local law and the local administration accord with three fundamental principles, namely the mirror principle, the curtain principle and the insurance principle.2
A. The mirror principle
5.3 The basis of this principle is that the register of title is a mirror which reflects accurately and completely the current facts that are material to title. With certain inevitable exceptions (ie exceptions to indefeasibility) the title is free from all adverse burdens, rights and qualifications unless they are mentioned in the register.3 The “mirror” ideal, that the register should reflect all facts and matters relevant to the title to a parcel of land has not been fulfilled in any Torrens jurisdiction. All jurisdictions in Australia at least have well developed classes of exceptions to the claimed indefeasibility of titles.
5.4 Perhaps the most significant and deleterious breach of the ideal is caused by the increasing number and variety of statutes which derogate from the completeness of the protection given by registration under the system. There is a group of statutes which set up separate systems of interests or registers which can conflict with the Torrens System and other groups which create, or under the authority of which can be created, interests which do not rely for their efficacy on entry upon a separate register but which can in many cases derogate from the completeness and conclusiveness of the Torrens Register.
B. The curtain principle
5.5 The principle requires that the register is the sole source of information for intending purchasers. As the Privy Council has put it, the main object of the Act:
is to save persons dealing with registered proprietors from the trouble and expense of going behind the register, in order to investigate the history of their author’s title, and to satisfy themselves of its validity.4
The curtain principle is usually expressed in individual Torrens statutes in terms that no notice of trusts is to be entered in the register book, thereby implying that they are of no concern to a disponee and it is everywhere expressly stipulated that a purchaser is not to be affected by notice of any trust. This does not mean that a fiduciary is allowed to escape from his obligations for, after registration, he holds the land upon the trusts and for the purposes for which the same is applicable by law although these equities are behind the impenetrable curtain of the register book.
C. The insurance principle
5.6 This principle provides that, if through human frailty (in the Registry), the mirror fails to give an absolutely correct reflection of the title and a flaw appears,
anyone who thereby suffers loss must be put in the same position, so far as money can do it, as if the reflection were a true one.5
5.7 The insurance principle also involves a curative process. Since it is the State rather than the parties which effects the transaction, registration “sometimes confers a better title than the transferor possessed” so that a purchaser can “acquire an indefeasible right, notwithstanding the infirmity of his author’s title”. Thus the insurance principle, properly understood and fully carried out, involves far more than that the owner’s title is guaranteed by the State. It means:
not only that registration will be carried on literally as an insurance undertaking but also that it is the privilege of the Registrar, or the Commissioner, or other responsible officer, on bringing land under the Act, to cure the title of known defects so far as he possibly can. It implies that the whole business of registration ought to be conducted with such an economy of public manpower, public time and public money that the saving which is achieved far outweighs any payment of compensation for errors or omissions which may become necessary from time to time.6
In short, if the Registrar knows that an insurance fund is available and will be utilised on sound insurance principles, he or she can tailor protective requirements to meet only risks of sufficient frequency to justify them.7
II. APPLICATION OF THE INSURANCE PRINCIPLE IN NEW SOUTH WALES
5.8 A detailed examination of the insurance principle at work in New South Wales was undertaken in Chapter 3. Neither the current legislative provisions nor the interpretation of them by the courts results in a truly effective State-backed compensation scheme.
5.9 The compensation provisions of the Real Property Act are deficient in a number of respects. The bases of claim are narrow (ie a claimant must establish a deprivation of land or an interest in land and not simply that loss or damage has been sustained as in Victoria) and legal action must invariably be commenced in order to recover from the Fund. Great care must also be taken in selecting a defendant as the choice of an incorrect defendant may result in compensation being withheld. Where the basis of a claim for compensation is fraud, the claimant must take action against the fraudulent party in the first instance and only in the event of that party’s death, insolvency, bankruptcy or absence from the jurisdiction is action to betaken against the Registrar General.8 If, as Stein notes, the funds “have been so protected by legislation that they have become bloated while, at the same time, parties reasonably entitled have been deprived of compensation”,9 the relevant provisions of the Real Property Act require revision.
5.10 In any event, if recent experience in New South Wales is any guide, where proceedings are commenced against the Registrar General they are likely to be vigorously contested.10 Simpson speaks of the “repulsive tenacity with which some jurisdictions are prepared to resist even valid claims upon the fund”.11
5.11 Similarly, closer scrutiny of the procedures adopted in the Land Titles Office for the examination of a variety of applications or, in other words a more effective implementation of a risk management policy, is required. According to Simpson,12 in the final analysis the actual form of a system, and even the law which governs it, will matter less than the practical wisdom with which it has been adapted to local needs and the competence with which it is administered. In Baalman’s words, Torrens:
did not appreciate the fact that his philosophy might prove to be indigestible to the vast majority of public servants. Otherwise he would have taken the precaution of including more safeguards in order to prevent that which was intended as a public utility from being utilised as a medium for indulging the luxury of making somebody do something.13
Ill. APPLICATION OF THE PRINCIPLE IN VICTORIA
5.12 In many respects the relevant provisions of the transfer of Land Act 1958 (Vic) demonstrate a much more successful attempt at giving effect to the “insurance principle” than the New South Wales legislation. The best example of this, cited throughout the Paper, is the ability under the Victorian legislation for a claimant to take action directly against the Registrar. Alternatively, the Registrar may grant compensation to claimants who are entitled to bring an action for indemnity, without the need for a court hearing.14 In either case, if a payment has been made the Registrar may recover the amount paid from the person actually reponsible for the loss. This approach adopts the principle of subrogation, common in insurance contracts. It allows speedy and uncomplicated settlement of claims without the need for a multiplicity of actions.
FOOTNOTES
1. Theodore B F Ruoff An Englishman Looks at the Torrens System (Law Book Co, Sydney, 1957)6.
2. Id at 8.
3. lbid.
4. Gibbs v Messer [1891] AC 248 at 254.
5. Ruoff, note 1, 13, citing Registrar of Titles v Spencer (1909) 9 CLR 641 at 645.
6. Ruoff, note 1, 33.
7. Thomas W Mapp Torrens’ Elusive Title (University of Alberta, Faculty of Law, Edmonton, 1978) 70.
8. Real Property Act 1900 (NSW) s126(5).
9. Robert Stein “The Torrens System Assurance Fund In New South Wales” (1981) 55 Australian Law Journal 150.
10. M A Neave C J Rossiter and M A Stone Sackville & Neave Property Law Cases and Materials (4th ed, Butterworths, Sydney, 1988) 401.
11. S R Simpson Land Law and Registration (Cambridge University Press, Cambridge, 1976) 181.
12. Id at 23.
13. J Baalman, quoted In “Registration of Title in New South Wales” [1960] Scots Law Times 129 at 130.
14. Transfer of Land Act 1958 (Vic) s109(3)(a).
