The reference

1. A major review of Victorian land law is being carried out by the Victorian Law Reform Commission. One of the matters being considered is the compensation scheme that applies to the land registration system in the Transfer of Land Act 1978 (hereafter called the Victorian Act). On 20 January 1988, the New South Wales Commission received a similar reference covering the land registration system in the Real Property Act 1900 (NSW) (hereafter called the New South Wales Act).

2. Trends in judicial decisions and the size of compensation claims were the major impetus for the New South Wales reference which was made under the Commission’s standing reference on cooperative law reform projects with other Law Reform Commissions. The Commissions intend to produce a joint Report to their Attorneys General making similar recommendations.

The Torrens system and the compensation scheme

3. Compensation was a principal feature of the South Australian Real Property Act 1861 which was the model for all Torrens systems in Australia. It was included to ensure that individuals would be compensated for any loss that they sustained as the result of a certificate of title being granted in error or through fraud or misrepresentation. It was assumed that the conversion of old system land to the Torrens system of registered titles would almost certainly cause loss through interests accidentally omitted from the register or titles procured by fraud.

4. Provision of a right to seek compensation removed one of the main objections to the registration system - the expectation that people would lose existing interests in land through mistakes in bringing land on to the Register. The original South Australian scheme provided for payment of compensation to people who suffered loss of that type as well as for other types of losses caused by errors in the registration process, and losses suffered as a result of fraud. Although provision was made for State compensation, claimants were required to seek compensation from the person responsible for the loss before claiming from the State.

5. The compensation schemes originally included in the New South Wales and Victorian legislation introduced in 1862 closely followed the scheme of the earlier South Australian legislation. The New South Wales scheme remains unchanged. The Victorian scheme was substantially amended in 1954 to exclude State compensation for loss arising from fraud or negligence of a claimant’s solicitor or agent.