Hemer Pty Ltd v Benni (No 2)

Case [2011] SASCFC 143

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court)

HEMER PTY LTD v BENNI & ORS (No 2)

[2011] SASCFC 143

Judgment of The Full Court

(The Honourable Chief Justice Doyle, The Honourable Justice Gray and The Honourable Justice Sulan)

30 November 2011

REAL PROPERTY - TORRENS TITLE - REGISTRATION - EFFECT OF REGISTRATION - GENERALLY

REAL PROPERTY - TORRENS TITLE - INDEFEASIBILITY OF TITLE - CERTIFICATE OR FOLIO OF REGISTER AS CONCLUSIVE EVIDENCE - GENERALLY

REAL PROPERTY - TORRENS TITLE - LEASES - DETERMINATION - FORFEITURE AND RELIEF AGAINST FORFEITURE

Decision relating to the consequential orders to be made following an earlier ruling of this Court concerning the purported forfeiture of a 99 year lease for peppercorn rent over land in suburban Adelaide – Registrar-General noted re-entries in the Register Book – trial Judge refused to make declarations sought or grant any other relief – this Court ordered that the appeal be allowed and the orders of the trial Judge set aside – where, in light of conflicting authority, an issue arose as to the power of the Court, having regard to section 126 of the Real Property Act 1886 (SA), to direct the Registrar-General to amend or correct the Register Book – Court directed that the Registrar-General, with respect to the first and second respondents, cancel the entry made in the Register Book and reinstate the registration of the lease – no comparable order made on that occasion with respect to the third respondent, as the property had been re-mortgaged to a bona fide purchaser for value.

Held: (Gray J, Doyle CJ and Sulan J agreeing) The Court does have power to make an order for cancellation of an entry in the Register Book made under section 126, subject to the operation of the indefeasibility principle in favour of the registered interest of a bona fide purchaser for value – accordingly, the Court cannot direct the Registrar-General to correct the Register Book in relation to the third respondent.

Landlord and Tenant Act 1936 (SA) s 10; Real Property Act 1886 (SA) s 54, s 64, s 67, s 69, s 94, s 122, s 126, s 145, s 148A and s 220, referred to.
Hemer Pty Ltd v Benni [2011] SASCFC 35; Laffer v Gillen [1924] SASR 170; Laffer v Gillen [1924] SASR 514; Gillen v Laffer (1925) 37 CLR 210; Laffer v Gillen (1927) 40 CLR 86; Jennings Industries Ltd v Commonwealth (1984) 69 FLR 189; Templeton v Leviathan Pty Ltd (1921) 30 CLR 34; Re Strahorn (1912) 29 WN (NSW) 7; R v Registrar of Titles (Vic); Ex parte The Commonwealth (1915) 20 CLR 379; Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 59 NSWLR 452; Frazer v Walker [1967] 1 AC 569; Rogers v Resi-Statewide Corporation Ltd (No 2) (1991) 32 FCR 344; Breskvar v Wall (1971) 126 CLR 376; Palais Parking Station Pty Ltd v Shea (No 3) (1980) 24 SASR 425;

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AGLC
Hemer Pty Ltd v Benni (No 2) [2011] SASCFC 143
Case
[2011] SASCFC 143
Decision Date

CaseChat Overview and Summary

The case of Hemer Pty Ltd v Benni (No 2) concerned a dispute over the purported forfeiture of a 99-year lease registered under the Torrens system in South Australia. The Registrar-General had noted re-entries in the Register Book based on applications by the lessors, Ms Benni and Mr Ridge, and Ms Collins. The primary issue before the Full Court of the Supreme Court of South Australia was whether the Court possessed the power, under section 126 of the Real Property Act 1886 (SA), to direct the Registrar-General to amend or correct the Register Book, specifically to cancel the noted re-entries and reinstate the lease.

The Court was required to determine the extent of its power to intervene in the Registrar-General's administrative actions under section 126 of the Real Property Act 1886 (SA), particularly in light of the principle of indefeasibility of title. This involved considering whether the Registrar-General's noting of re-entries was a conclusive determination of the lease's forfeiture or if the Court could review the underlying circumstances. A further consideration was the impact of the indefeasibility principle on the rights of any bona fide purchaser for value who had acquired an interest in the land subsequent to the lease.

The Court reasoned that section 126 of the Real Property Act 1886 (SA) does not prevent a lessee from challenging an administrative act of the Registrar-General. The section's operation is conditional on the Registrar-General being satisfied of re-entry or recovery of possession, and it does not require proof of lawful forfeiture as a fact. The Court affirmed that it has the power to order the cancellation of an entry made under section 126, thereby correcting the Register Book. However, this power is expressly subject to the principle of indefeasibility of title, which protects the registered interest of a bona fide purchaser for value.

Consequently, the Court ordered the Registrar-General to cancel the entry made in the Register Book and reinstate the registration of the lease in relation to the first and second respondents. No comparable order was made concerning the third respondent, Ms Collins, because the property had been re-mortgaged to a bona fide purchaser for value, whose registered interest was protected by the principle of indefeasibility.

Orders

Orders of the court

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Background

Background to the litigation

I have reached the conclusion that the Court does have power to direct that the Register Book be corrected, subject to the rights of third parties. My reasons follow. Background Facts The determination of the present issue is assisted by an understanding of the history of the lease in question. On 13 August 1962, the lease was registered over a portion of the land and was granted for a term of 99 years commencing on 1 July 1962 and expiring on 30 June 2061 at an annual rent of one shilling payable on demand. The lease relevantly provided: I, IAN STANMORE TURNER of 22 Godfrey Terrace, Leabrook, Architectural Draughtsman, being registered as the proprietor of an estate in fee simple subject however to such encumbrances liens and interests as are notified by Memorandum underwritten or endorsed hereon in the whole (Memorandum of Transfer dated 30/6/62 from ROBERT CHARLES CHAPMAN to myself being portion of) of the land comprised in/Certificate of Title Volume 2745Folio 182 being Lot No. 71SUBJECT nevertheless to rights of way and easements to the Minister of Works as thereon mentionedDO HEREBY LEASE to ROBERT CHARLES CHAPMAN of 61 Sunnyside Road, Glen Osmond, Company Director, that portion of the said land above described marked “D” in the plan attached hereto and coloured red SUBJECT nevertheless to a Right-of-Way and easement to the Minister of Works over portion of the land shown in the said plan attached and marked ‘Easement’ to be held by the said Robert Charles Chapman for a term of ninety nine years commencing from 1/7/62 expiring on the 30th day of June in the year Two thousand and sixty one at an annual rental of ONE SHILLING (1/-) payable on demand SUBJECT to the following covenants:-THE LESSEE HEREBY AGREES THAT(1)the said land hereby leased shall be used wholly and solely for the purpose of a garden and for no other purpose whatsoever(2)if demanded by the lessor rates and taxes proportional to the land herein leased are to be the responsibility of the lessee. I, the abovenamed ROBERT CHARLES CHAPMAN do hereby accept this lease of the above described land to be held by me as lessee and subject to the conditions restrictions and covenants above set forth. On 16 August 2000, the land was subdivided into two allotments – allotments 731 and 732. New certificates of title were issued. Certificate of Title Volume 5811 Folio 177 was issued in relation to allotment 731. Certificate of Title Volume 5811 Folio 178 was issued in relation to allotment 732. On 2 October 2000, allotment 732 was transferred to Marnie Benni and Martin Ridge, subject to the lease. Ms Benni and Mr Ridge became the lessors of the lease in respect of that portion of the subject land comprised in Volume 5811 Folio 178. On 6 August 2003, the subject land, allotment 731, comprised in Volume 5811 Folio 177 was transferred subject to the lease. On 11 September 2006, the lease was transferred to Hemer as lessee. On 9 October 2007, the land comprised in Volume 5811 Folio 177 was transferred to Cherise Esme Collins, subject to the lease. Ms Collins became the lessor of the lease in respect of the portion of the subject land comprised in Volume 5811 Folio 177.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The Court has, however, now been advised that arrangements have been made with Westpac for the Registrar-General to correct the Register Book reinstating the lease with priority to the Westpac registered mortgage. In these circumstances, it is unnecessary to consider the alternative remedies that would be available. Conclusion I am of the view that the Court does have power to make an order for cancellation of an entry made under section 126 of the Real Property Act, subject to the operation of the indefeasibility principle in favour of a bona fide purchaser for value. I would make comparable orders to those set out at the outset of these reasons with respect to Certificate of Title Register Book Volume 5811 Folio 177. SULAN J: I agree with Gray J and the orders that he proposes.

Ratio Decidendi

Legal Principle Established

On 22 September 2008, the Registrar-General entered a note of two re-entry applications pursuant to section 126 of the Real Property Act 1886 (SA) in respect of the lease; namely, an application by Ms Benni and Mr Ridge on Volume 5811 Folio 178 and an application by Ms Collins on Volume 5811 Folio 177. Each of these applications contained a declaration that Hemer had failed to pay amounts due and owing in breach of a covenant of the lease and that the lessors had re-entered on the land and taken possession of the land. Consideration Section 126 of the Real Property Act provides:Registrar-General to note particulars of re-entry in Register BookThe Registrar-General, upon proof to his satisfaction of re-entry by the lessor, in manner prescribed by the lease, or under the power in the third subsection of the last preceding section provided for, or of recovery of possession by a lessor, by any proceeding in law, shall note the same by entry in the Register Book, and the estate of the lessee in such land shall thereupon determine, but without releasing him from his liability in respect of the breach of any covenant in such lease expressed or implied. It may be observed that there is nothing in the text of section 126 which compels a conclusion that a lessee of a lease that has been determined by an administrative act of the Registrar-General cannot call that administrative act into question before the Court. Further, the operation of section 126 is conditional upon the formation of an opinion by the Registrar-General that sufficient grounds exist to conclude that either re-entry has occurred, or that the lessor has otherwise recovered possession by legal proceedings. As submitted by the Registrar-General, the section does not impose the more stringent test that lawful re-entry has occurred as a fact. Nor, in contrast to the language used in section 94 of the Act, does section 126 speak in express terms of a ‘lawful forfeiture or determination’.[8][8] The text of section 94 is set out later in these reasons. The Registrar-General’s duties under the Real Property Act are primarily of an administrative nature. The Registrar-General is neither entitled nor equipped to investigate the antecedent circumstances leading to the lodgement of an instrument in the Land Titles Office.[9] It is not the Registrar-General’s role to go behind an instrument produced for registration. It is not the Registrar-General’s role to require proof negativing any fraud or improper dealing where none is suggested on the face of the instrument or by inconsistency with the Register Book.[10] [9] It is to be noted that the powers conferred by sections 54, 220(a) and 220(d) for example authorise the Registrar-General to make requisitions with respect to instruments to require that they comply with the Real Property Act 1986 (SA) and be in the form approved by the Registrar-General. However, these powers do not authorise investigations that go behind the face of the instrument and inquire into the underlying transaction.[10] Templeton v Leviathan Pty Ltd (1921) 30 CLR 34, 53 (Knox CJ), 64 (Higgins J, Starke J agreeing at 72); Re Strahorn (1912) 29 WN (NSW) 7, 8 (Rich J); R v Registrar of Titles (Vic); Ex parte The Commonwealth (1915) 20 CLR 379, 402 (Higgins J).