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3 mere notice is not fraud s 43 it is not fraudulent

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3. Mere notice is not fraud (s 43). It is not fraudulent to register with notice of a prior unregistered interest, thereby destroying it. MEANING OF FRAUD 1. Fraud (s 42) refers to fraud in the acquisition of a currently registered interest. 2. Torrens (statutory) fraud is different from common law or equitable concepts of fraud 3. The meaning of fraud is to be found in the cases. 4. Starting point is Lord Lindley’s dictum in Assets Co v Mere Roihi (see RG 22) Cooper, a land speculator, had been dodgy, got signatures of trustees of mining corps to get Maori land. The trusts never existed. Bank passed it, but shouldn’t have. Mortgaged it to some bank, which went into liquidation. Maoris sued for their land to be returned to them. The NZ CoA held for the Maoris, BUT the PC didn’t. Lord Lindley, 176 at 210: “The fraud which must be proved…can be properly acted upon.” “Brought home” is really a legal concept, in that it can be attributed to the RP. The Act never intended equity to be relevant here. The stuff about having “suspicions aroused” hints at willful blindness. FRAUD AGAINST HOLDER OF PRIOR UNREG’D INTEREST – LOKE YEW 1. Land grant to E of 320 acres 2. LY held 58 acres of this land under unregistered documents 3. PS induced E to sell the 320 acres, undertaking to respect LY’s rights 25
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26 4. After reg’n, PS sought to eject LY 5. PC held that undertaking was false as a statement of present intention and was given fraudulently to induce E to transfer 6. PS’s regd title held defeasible for fraud FRAUD MUST BE OPERATIVE 1. What causal link is required between the fraud and the reg’d interest? 2. In Bank of SA v Ferguson HC said it must operate on the mind of the person defrauded, must have induced some detrimental reliance The fraudulent misrepresentation, upon which defrauded party is agreeing too, must have been induced to have acted to his/her detriment. The Bank was the party really defrauded here (as its staff had forged signatures), and thus were the fraudulent party. Thus, the mortgage couldn’t be indefeasible. There was NO causal link between the fraudulent papers and Ferguson entering the mortgage, as he would’ve done so anyway. HC held its defeasible, and thus Ferguson had to pay back the whole loan still. 3. On the facts in Ferguson, the fraud was not operative POST-REG’N REPUDIATION OF UNDERTAKING - ‘SUPERVENING FRAUD’ 1. Conventional understanding is that fraud must be in the acquisition of the interest or the process of reg’n 2. NZ cases suggest that it is fraud to repudiate after reg’n a contractual undertaking to honour a prior interest. 3. In Bahr v Nicolay (No 2), Mason & Dawson JJ appeared to accept this extension of fraud, but not Wilson & Toohey JJ. BAHR V NICOLAY 1. Bahrs sold to Nicolay for $32,000 subject to three year lease back and a right to re- purchase the land for $45,000 2.
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