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More on the new Land Transfer Act

03 November 2017 - By Thomas Gibbons

My last update (A New Land Transfer Act, LawTalk 909, August) considered three key issues arising from the Land Transfer Act 2017: the new terminology of “record of title” (RT), the new “manifest injustice” test as an important exception to immediate indefeasibility, and covenants in gross (and the continued role of encumbrances).

This article briefly considers some further issues arising from the new legislation.

Purpose

The purposes and intent of the Torrens system has been debated since, and even before, its inception. It’s a good system, and the reasons why it is good are expressly restated.

The Land Transfer Act 2017 (LTA) aims to:

  • Continue and maintain the Torrens system in New Zealand;
  • Retain the fundamental principles of that system – security of ownership of estates and interests in land, facilitating land dealings, providing compensation, and providing a register of ownership;
  • Reflect the electronic nature of the land transfer register and associated dealings;
  • By these means, maintain the integrity of title to estates and interests in land.

These purposes are stated in s 3, while s 10 restates the purpose of the register:

  • To provide a public record of land subject to the LTA 2017;
  • To provide a mechanism for creating title to estates and interests that (subject to the legislation) cannot be set aside;
  • To facilitate transfers and dealings with estates and interests in land;
  • To facilitate giving effect to the purposes in s 3; and
  • To enable compliance.

That is, to achieve the economic aims of our society, we want a public record of land ownership, we want a strong system of “title by registration”, and we want it to be easy to deal with land.

Fraud

The issue of what does, and does not, constitute “fraud” for the purposes of land transfer legislation has proven vexing. The Assets Co Ltd v Mere Roihi [1905] AC 176 (PC) case demanded “actual fraud, ie, dishonesty of some sort”, while the Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1923] NZLR 1137 decision suggested something in the nature of constructive knowledge could be sufficient to find fraud. The latter approach has often been criticised.

The chosen solution in this instance has been to apply a statutory gloss to a judicial test. “Fraud” now has a specific definition in s 6, though it is really two definitions, with broader application for the purposes of the compensation provisions. In particular, the equitable doctrine of constructive notice is expressly stated not to apply.

The “guaranteed” search

The notion of a guaranteed search is contained within s 172A of the LTA 1952, though the specific wording “guaranteed search” does not appear in the legislation. The “first period” (that is, the period before settlement in which a search copy of a record of title, or SCRT, is to be obtained) has been narrowed to five working days (from 14 days); and the “second period” (that is, the period after settlement which provides protections against further registrations or lodgements) has been narrowed to 20 working days (from two months). These no doubt reflect the faster pace of modern conveyancing, and the faster pace of the technology which enables this.

A small but important point is that the LTA 2017 provides for a “covenant instrument”. Land covenants no longer need be created by easement instrument.

RGL powers

One addition that will be useful in some cases is the ability of the Registrar-General of Land (RGL) to withhold information from the register for a person’s safety. While these provisions are relatively prescriptive in nature, they also provide a clear process (sections 41-43).

The powers of the RGL relating to the removal of easements and profits from the register that were formerly contained in s 70 of the LTA 1952 have been spread across three sections: ss 113-115 of the LTA 2017 help clarify the scope and exercise of the RGL’s powers. The general (but limited) power of the RGL to alter the register has been restated in s 21.

Regulatory Powers

Those with constitutional interests might note s 228, which states that regulations may provide for transitional and savings provisions concerning the Act coming into force, and these may be in addition to, or in place of, the transitional and savings provisions of Schedule 1. Regulations should not override statute law. This section, and regulations made under it, have a time limit of three years, suggesting the draconian (or, put another way, basely pragmatic) nature of this provision has been recognised.


Thomas Gibbons is a Director at McCaw Lewis, and the author of the forthcoming A Practical Guide to the Land Transfer Act 2017.

Last updated on the 3rd November 2017