The effect of registration of an interest in Torrens land is to give the registered proprietor an indefeasible title to that interest. The Real Property Act 1900 (NSW) (hereby referred to as RP) in s 42(1) confirms that upon registration the registered proprietor acquires his or her interest free of unregistered interests. This is so even if the registered proprietor, prior to registration, has notice of such unregistered interests.
However, the concept of indefeasible title is not as absolute as it may appear. Exceptions to indefeasibility exist. Where there is an exception to indefeasibility the effect is that the registered proprietor acquires his or her interest subject to the unregistered interest that arises pursuant to the relevant exception. The effect of the exceptions to indefeasibility is to confer priority to holders of unregistered interests over the holders of registered interests in Torrens title land.
The majority of exceptions to indefeasibility are created by s 42(1) of the RP Act, along with the power of overriding statutes.
By s 42 RP an exception to the indefeasible title of a registered proprietor is created in cases of fraud. The fraud must relate to the current state of the title. Fraud by predecessors in title will not affect the current registered proprietor. The essence of the fraud exception is that the fraud must relate to the circumstances in which the registered proprietor obtained his or her registered interest.
The RP does not however set out a comprehensive definition of fraud, although it does stipulate that fraud 'includes fraud involving a fictitious person'.
In Assets Co Ltd v Mere Roihi (1905) AC 176, at 210, the Privy Council defined fraud as follows:
"[B]y fraud in [the Act] is meant actual fraud, that is dishonesty of some sort, not what is called constructive or...