Clements v Ellis - [1934] HCA 18

ELLIS AND OTHERS

RESPONDENTS.

PLAINTIFFS, DEFENDANT,

ON APPEAL FROM THE SUPREME COURT OF Torrens System-Registration of dealing-Land subject to mortgage-Sale of unen-

cumbered estate-Forged discharge of mortgage-Purchaser registered as pro- prietor of unencumbered estate-Effect of registration-Transfer of Land Act 1915 (Vict.) (No. 2740), secs. 47*, 53*, 67*, 72*, 163*, 179*-Transfer of Land MELBOURNE, Act 1928 (Vict.) (No. 3791), secs. 47*, 53*, 67*, 72*, 163*, 179*.

The registered proprietor under the Transfer of Land Act (Vict.) of land subject to a mortgage sold to a purchaser under a contract expressed to be subject to the existing mortgage," though in fact the parties had agreed that the mortgage was to be discharged, and the purchaser was to receive an unencumbered title. In pursuance of the contract the purchaser gave a cheque for the purchase money to the husband and * The Transfer of Land Act 1915

manner as to preserve their priorities (Vict.) provided -By sec. 47: "

the particulars of all dealings and tificates of title shall be in duplicate in

matters affecting the land by this Act the form in the Third Schedule hereto;

required to be registered or entered." and the Registrar shall keep a book to

By sec. 53: " Every instrument be called the Register Book,' and

shall be registered in the order of and as shall register or enter by binding up

from the time at which the same is therein " the Crown grant is and one of

produced for that purpose; and instru- the certificates of title, and shall deliver

ments purporting to affect the same the other original (hereinafter called the

estate or interest shall, notwithstanding duplicate) to the proprietor.

any actual or constructive notice, be grant and certificate shall constitute a

entitled to priority as between them- separate folium of such book and the

selves according to the date of regis- Registrar shall endorse thereon in such

tration and not according to the date

51 CLR 218

agent of the vendor, who handed it to one, B, for the purpose in part of his paying off and procuring a discharge of the mortgage. B, having misappropriated such part of the money as was required to discharge the mortgage, prepared a discharge of mortgage, forged thereon the signatures of the mortgagees, and lodged the forged discharge of mortgage at the Office of Titles, together with a transfer, which disclosed no encumbrance, signed by the vendor and purchaser, for registration. An unencumbered certificate of title was subsequently issued to the purchaser. The Supreme Court of Victoria (Lowe J.) held (1) that the forged discharge of mortgage was a nullity, and (2) that the purchaser not having dealt at all with the registered proprietors of the mortgage, did not obtain either a valid transfer of the mortgage or a valid instrument of discharge, and, consequently, could not become effectively registered as proprietor of the land free from encumbrance. On appeal to the High Court :-Rich J. was of opinion that sec. 72…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Clements v Ellis

Details

AGLC: Clements v Ellis [1934] HCA 18
Case: [1934] HCA 18
Decision Date: 11 June 1934

CaseChat Overview and Summary

The case of *Clements v Ellis* involved a dispute concerning the registration of land under the Transfer of Land Act 1915 (Vict.). The plaintiffs, as executors and trustees, were the registered mortgagees of a property. The registered proprietor of the land, Lily Holmes, sold the property to the appellant, Edwin Thomas Clements, under a contract that stipulated the mortgage would be discharged and an unencumbered title provided. However, the purchase money was entrusted to Holmes' husband, who misappropriated funds intended to pay off the mortgage. He then forged the mortgagees' signatures on a discharge of mortgage and lodged it with a transfer of the land to Clements at the Office of Titles. An unencumbered certificate of title was subsequently issued to Clements. The Supreme Court of Victoria held that the forged discharge was a nullity and that Clements had not acquired an effectively unencumbered title.

The High Court was required to determine the legal effect of the forged discharge of mortgage and the subsequent registration of the transfer to the purchaser. Specifically, the court had to consider whether the purchaser, despite the forged discharge, obtained an indefeasible title to the land free from the registered mortgage, and how the provisions of the Transfer of Land Act, particularly sections 47, 53, 67, 72, and 179, applied in this scenario. The central issue was whether the purchaser's registration conferred indefeasibility of title when the discharge of the prior encumbrance was a forgery.

The High Court was equally divided. Rich and Evatt JJ. were of the opinion that the purchaser should succeed, with Rich J. finding that section 72 of the Act provided complete protection to a bona fide purchaser without fraud, and that the purchaser was properly registered as proprietor of the land free from encumbrance. Conversely, Dixon and McTiernan JJ. held that the appeal should be dismissed. Dixon J. reasoned that the conditions for indefeasibility were not met as the transferor was not registered in respect of an unencumbered estate at the time of transfer presentation, and a prior registered interest is not destroyed by a forged instrument unless a subsequent bona fide purchaser for value takes from someone entitled to deal with the register. McTiernan J. concluded that the discharge and transfer became operative simultaneously, meaning the purchaser never dealt with the registered proprietor of an unencumbered estate.

As the High Court was equally divided, the appeal was dismissed, and the decision of the Supreme Court of Victoria was affirmed. This meant that Edwin Thomas Clements was not considered the registered proprietor of the land free from the mortgage.

Orders