Diemasters v Meadowcorp and Jain v Registrar General [2001] NSWSC 495

Diemasters v Meadowcorp and Jain v Registrar General [2001] NSWSC 495

The mortgagees retain priority over the purchasers because the discharge and transfer were tainted and procured by fraud; under Torrens title law, neither purchaser (even if one is innocent) can obtain protection as joint tenants when one is complicit; furthermore, Jain's claim for compensation fails because the loss did not arise 'as a result of the operation of the Act' but by fraud preceding registration.

Parties
First Plaintiff (3238/2000): Diemasters Pty Limited; Second Plaintiff (3238/2000): Kensington Nominees Pty Limited; Third Plaintiffs (3238/2000): George and Esther Gherlenda; Fourth Plaintiff (3238/2000): Teresa Ruth Steiner; First Defendant (3238/2000): Meadowcorp Pty Limited; Second Defendant (3238/2000), Plaintiff (1374/2001): Narendra Kumar Jain; Third Defendant (3238/2000), Second Defendant (1374/2001): Charles Chelliah; First Defendant (1374/2001): Registrar General
Jurisdiction
Australia
Judgment Date
18 June 2001
Procedural Posture
Combined Proceedings (mortgagees Seeking Priority and Possession; Purchaser Seeking Compensation) / Judgment After Trial
Outcome
Mortgagees succeeded; Jain’s claim for compensation dismissed
Legal Topics
Torrens System Fraud and Priority, Discharge of Mortgage by Fraud, Priority of Interests Under Torrens Title, Entitlement to Compensation From Assurance Fund, Bona Fide Purchaser for Value, Joint Tenancy and Fraud
Property Law Equity Conveyancing Torrens System Fraud and Priority Discharge of Mortgage by Fraud Priority of Interests Under Torrens Title Entitlement to Compensation From Assurance Fund Bona Fide Purchaser for Value +1 more

Case Brief

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Parties

Diemasters Pty Limited

First Plaintiff (3238/2000)

Kensington Nominees Pty Limited

Second Plaintiff (3238/2000)

George and Esther Gherlenda

Third Plaintiffs (3238/2000)

Teresa Ruth Steiner

Fourth Plaintiff (3238/2000)

Meadowcorp Pty Limited

First Defendant (3238/2000)

Narendra Kumar Jain

Second Defendant (3238/2000), Plaintiff (1374/2001)

Charles Chelliah

Third Defendant (3238/2000), Second Defendant (1374/2001)

Registrar General

First Defendant (1374/2001)

Procedural Posture

Combined Proceedings (mortgagees Seeking Priority and Possession; Purchaser Seeking Compensation) / Judgment After Trial

Legal Issues

  1. 1 Whether mortgagees have priority over purchasers where discharge of mortgage was obtained by fraud
  2. 2 Whether incoming purchaser is entitled to the protection of s43A Real Property Act 1900 in circumstances of fraud
  3. 3 Whether an innocent joint tenant can take title unencumbered where the other joint tenant is party to the fraud

Ratio Decidendi

The mortgagees retain priority over the purchasers because the discharge and transfer were tainted and procured by fraud; under Torrens title law, neither purchaser (even if one is innocent) can obtain protection as joint tenants when one is complicit; furthermore, Jain's claim for compensation fails because the loss did not arise 'as a result of the operation of the Act' but by fraud preceding registration.

Court Disposition

Mortgagees succeeded; Jain’s claim for compensation dismissed

Orders

  • Declare the plaintiffs are entitled to have mortgage 5034297 remain registered with priority.
  • Order discharges of mortgage be delivered up for cancellation.