Clements v Ellis

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.