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Registered fee simple v Registered mortgage

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Introduction

Eu-Min Teng NEDLANDS PROPERTY Interests Xena Registered fee simple owner. E Bank Registered mortgage, August 2004. Xena v E Bank Registered fee simple v Registered mortgage Although EB's mortgage document was forged by Albert, and thus void, EB's mortgage gains immediate indefeasibility upon registration, provided the mortgagee EB has not participated in the fraud, personally or through an agent: Frazer v Walker, Beatty v ANZ Banking Group The question is whether Theo's conduct was fraudulent and if so, whether his fraud can be brought home to his employer, Jacksons Lawyers and in turn, to the Jacksons' principal, EB. Does Theo's false witnessing of Xena's signature constitute fraud? Beatty asserts that false attestation would be regarded as statutory fraud, even if the mortgagee's agent believed that the signature was genuine, with the result that the mortgage would be defeasible. However, in Russo v Bendigo an agent who knowingly made a false attestation was not regarded as fraudulent. Statutory fraud includes dishonesty, moral turpitude and a wilful and conscious seeking to defeat or disregard another's rights: per Ormiston JA in Russo. Theo had no reason to believe that Xena had not in fact signed the mortgage and seems to lack moral turpitude. ...read more.

Middle

If Albert was told of Daphne's option, Albert's mere knowledge of Daphne's option, or that his registration would defeat her option interest is not fraud. Comparing Loke Yew v Port Swettenham Rubber Co Ltd, Albert might be fraudulent because had more than mere knowledge of Daphne's unregistered option interest - Albert told Xena that he would acknowledge Daphne's interests. However, Loke Yew is distinguishable because here there is no proven plan of dishonesty by Albert, or that that Xena was induced to give the property to Albert by Albert's statement. Hence there is no fraud by Albert. The weight of authority supports the view that fraud must occur in the period prior to registration: Loke Yew, Wilson and Toohey JJ in Bahr v Nicolay. Even if fraud by Albert is established, it is not clear if the Albert's alleged actual dishonesty occurred before his registration. c) Rights in personam The principle of indefeasibility "in no way denies the right of a plaintiff to bring against a RP a claim in personam, founded in law or equity": Frazer v Walker. For the in personam exception to be invoked, the facts must demonstrate the existence of a known legal or equitable cause of action that is enforceable against the RP: Macquarie Bank Ltd v 64th Throne Pty Ltd - Estoppel Daphne may have an estoppel cause of action against Albert. ...read more.

Conclusion

Hence EB's mortgage interest arguably is not postponed, and will prevail over Frank's interest. Albert v Frank Registered fee simple v Unregistered interest Albert is a constructive trustee for Frank pursuant to a specifically enforceable contract for sale: Lysaught v Edwards. Frank thus has an right in personam against Frank, and Frank's unregistered interest prevails over Albert's title. Conclusion The order of priorities for Swanbourne - Daphne's lease and option, EB's mortgage, Frank's equitable interest, Albert's registered interest. Daphne's caveat prevents the registration of EB's mortgage and Frank's fee simple, and EB from selling the property to a new RP until Daphne's lease and option have lapsed and ceased to exist: TLA s139, s141A. Frank cannot evict Daphne in October 2004 if she exercises her option to renew the lease, as Daphne's option prevails over Frank's equitable interest. Even after settlement, Frank will be unable to register his fee simple, because EB has the Duplicate CT. After EB's mortgage is registered, EB may pass the Duplicate CT to Frank on request. Frank's fee simple may then be registered. Frank's registered fee simple will be subject to EB's earlier registered mortgage: TLA s53. Frank will subsequently have to make mortgage payments to EB, and sue Albert to claim compensation. If Frank defaults, EB may sell the property. 1 ...read more.

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