Real Property And Conveyancing Amendment Bill

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Speakers - Page Mr Donald; Anderson Mr James; Kinross Mr Jeremy; Yeadon Mr Kim
Business - Bill, Second Reading

REAL PROPERTY AND CONVEYANCING AMENDMENT BILL

Second Reading

Debate resumed from 17 September.

Mr D. L. PAGE (Ballina) [7.41 p.m.]: I lead for the coalition on this legislation. I indicate at the outset that, while I will be raising two reservations about the bill - and I have advised the Minister’s office about the nature of those reservations - the coalition will not oppose the legislation. The bill amends certain parts of the Real Property Act 1900 and the Conveyancing Act 1919. These amendments deal principally with the severance of joint tenancies, the survival of actions for sale or partition, caveats, and the service of notices in respect of plans. As a general comment, it would seem that this bill will make for clearer and better administration of property and conveyancing related matters.

An important aspect of the legislation is that it provides the right to unilaterally sever a joint tenancy and for the giving of notice to the other joint tenant that that has occurred. This confirms the common law right of a joint tenant to sever the joint tenancy by transferring his or her interest to himself or herself. It is important to understand why this is sometimes necessary. Under a joint tenancy the rule of survivorship applies. In other words, if one joint tenant dies, the other automatically acquires the deceased tenant’s share in property. However, circumstances such as a marriage break-up or some other matter can mean that one joint tenant no longer wishes his or her share to be left to the other joint tenant. The courts have recognised the right to sever a joint tenancy and this legislation confirms that right in statute law to put the issue beyond doubt.

When a joint tenancy is severed, a tenancy in common comes into place. However, a question arises as to what happens when, say, one tenant in a joint tenancy involving three or more people wishes to sever the joint tenancy. Advice to me from the Land Titles Office is that the severing tenant would become a tenant in common with the other tenants, but that the other tenants could maintain their joint tenancy as before. I would be grateful if the Minister in his reply will confirm that that is the case. I wish to raise two matters that have been drawn to my attention by the Law Society of New South Wales, both of which relate to proposed new section 97. In a letter dated 19 September the Law Society of New South Wales stated:

The first matter of concern is the inclusion of the words "or by a third party" in sub-section 2 of the new section. The Law Society is concerned that possibly those words could be judicially interpreted as providing the statutory authority for a third party to severe the interest held by a party in a joint tenancy. It is understood that the only circumstance envisaged in the use of those words is in connection with the transfer of a bankrupt joint tenant’s interest in land to the trustee in bankruptcy. The Law Society contends that the joint tenancy is not severed by a third party in that instance; severance occurs by operation of law upon the making of the sequestration order, vesting (without further assurance) the bankrupt’s property in the trustee. It would then be open to argue that, since the words "or by a third party" cannot refer to a trustee in bankruptcy, they imply a statutory power for someone, other than a party to the joint tenancy, to exercise the power of severance contained in sub-section 1. The Law Society recommends that the words "or by a third party" be deleted from the second line of sub-section 2.

As I read the letter, essentially the Law Society is saying that it does not believe it is necessary to include that reference to a third party because the situation in relation to bankruptcy cannot occur at law and the inference may be drawn by judges in the future that somehow a third party may have rights in relation to a joint tenancy which are not intended in this legislation. The second matter that has been raised by the Law Society arises from the use of permissive rather than mandatory language in dealing with actions to be taken by the Registrar General under subsection (2). The Minister referred in his second reading speech to the Registrar General taking on the responsibility for giving notice of a severance transfer to the non-severing joint tenants. The Minister confirmed that the Registrar General cannot accept that responsibility for old system title as he will for Torrens title land.

It is essential that non-severing joint tenants be notified of the registration and, arguably, the lodgment of a severance transfer. The section should impose an obligation on the Registrar General to give notice to non-severing joint tenants. If succeeding generations or beneficiaries under trusts were to lose their entitlements in land by reason of a fraudulent severance transfer of which they were totally unaware, they should be entitled to claim compensation from the Torrens Assurance Fund. As drafted, the legislation empowers the Registrar General to give notice, but does not impose any obligation to do so. Where there is no obligation it is difficult to argue whether a duty has been overlooked or omitted.

The Law Society contends that the State guarantee of title requires that the actions legislated under section 97(2) should be mandatory and not merely permissive. In other words, the Law Society of New South Wales is of the view that the Registrar General should be obliged to notify the
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joint tenant who is not the initiator of the severance. That should be an obligation rather than a voluntary arrangement to make it perfectly plain to future generations who may feel aggrieved that people who ought to have been notified were in fact notified.

To summarise the two concerns, according to the Law Society it would be better if the words "or by a third party" were deleted from the second line of proposed section 97(2). Secondly, the requirement to report the severing of a joint tenancy by the Registrar General should be mandatory rather than voluntary so that people who lose their entitlements in land by reason of a fraudulent severance transfer of which they were totally unaware should be entitled to claim compensation from the Torrens Assurance Fund. The other provisions of the legislation seem to be reasonable. The provision that ensures that an application for sale or partition to the Supreme Court involving joint tenants survives the death of one of them merely guarantees that the severing joint tenant’s intentions are not frustrated by his or her death. In other words, if someone wishes to make application to the court for the severance of a joint tenancy and subsequently dies, that person’s rights will be protected. The intentions of the person who wanted to sever the joint tenancy will be respected even though he or she may be deceased.

The other provisions clarify the circumstances in which a caveat which is not in proper form will be ineffective, and allows a person to lodge a caveat against an application for abandonment of an easement. Again, these appear to me to be reasonable provisions. In summary, the Opposition does not oppose the legislation, but I would appreciate clarification of the situation when the joint tenancy involves more than two people. Secondly, the points raised by the Law Society of New South Wales are worthy of closer examination and I urge the Government to consider the two minor amendments that society has suggested, to make the legislation clearer and better.

Mr ANDERSON (St Marys) [7.50 p.m.]: I support the bill, which amends the Real Property Act and the Conveyancing Act, the legislative cornerstones of property and conveyancing law in New South Wales. The amendments in the bill are intended to enhance the effectiveness of those Acts, to improve their administration and to assist the smooth and ordered running of conveyancing in this State. One amendment concerns the survival of actions for sale or partition of property under section 66G of the Conveyancing Act. The purpose of the Act is to make it clear that proceedings of that kind will not be defeated by the death of one party.

Section 66G provides an important facility for people who own property together. It entitles them to apply to the Supreme Court for an order for the sale or partition of their property. The section was introduced as one of a series of important amendments to the Conveyancing Act in 1930 and has proved to be very useful to landowners in this State. Under section 66G proceedings can be taken in the Supreme Court in respect of any property, other than chattels, that is held in co-ownership. That covers property held either in joint tenancy or as a tenancy in common. An application for sale or partition is usually brought when one or more of the co-owners wishes to have the property sold or partitioned but the owners cannot agree. The Supreme Court is authorised to appoint trustees for the sale or partition of the property. The trustees then implement the court’s order.

The New South Wales Law Reform Commission considered one aspect of section 66G in its recent report on joint tenancies. In that report the commission raised the question as to whether the rule of survivorship would apply to actions pursuant to section 66G between joint tenants. As the Minister has already pointed out, the rule of survivorship means that the property of a deceased joint tenant will automatically vest in the surviving joint tenants. Normally an action will survive a person’s death. That is due to the terms of the Law Reform (Miscellaneous Provisions) Act 1944, which displaced the common law rule that an action died with a person, and made it clear that an action would continue to survive for the benefit of the deceased person’s estate.

However, if the rule of survivorship does apply in cases for actions for sale or partition and a party who is a joint tenant dies then the property in dispute would vest completely in the survivor. That would effectively terminate the action, and the deceased’s estate would be left with no right to continue that action. The commission concluded that it was unclear whether an action pursuant to section 66G by a joint tenant would continue after his or her death. The commission went on to recommend that section 66G be amended to make sure that actions involving joint tenancies survive the death of one of them so that his or her estate can continue the action. If this amendment were not made, the question would be left unresolved until tested in the courts. That would impose a difficult and expensive burden on the parties. Failure to act would maintain the element of doubt that exists at present. Through this amendment, that doubt can be easily avoided. I commend the amendment to section 66G, and I commend the bill to the House.

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Mr KINROSS (Gordon) [7.54 p.m.]: I join the honourable member for Ballina, the shadow minister for land and water conservation, in expressing reservations about this bill. I have a specific reservation about proposed new section 97(2) and its reference to the severing of a joint tenancy by a third party. As the honourable member for St Marys has said, this legislation is important. Property is an important source of revenue for the State and is one of the most important assets for an individual. An interesting amendment to the legislation was occasioned by the decision of Justice Young in J. A. Westaway & Son Pty Ltd v Registrar General and Ors, an unreported judgment of 6 September 1996, wherein His Honour held that a caveat that is under requisition but has been uplifted from the Land Titles Office remains effective as an injunction against the registration of dealings so long as there is a reference noted to it in the register.

This amendment will seek to overcome that decision by stating that if there is any uplifting of the title, that will be ineffective for that duration. Therefore there is an attempt to bring dealings and caveats that are uplifted to occupy a similar position. As has been stated, the Opposition will not oppose the amendment. I, as a regular legal practitioner - although less so in contractual and conveyancing matters - would appreciate the Minister for Land and Water Conservation replying to the specific matters raised by the honourable member for Ballina. I ask whether there is a specific reason for the commencement date of 1 January 1998. It may be that provision is being made to allow the Law Society and other practitioners to note the change in the law.

Mr YEADON (Granville - Minister for Land and Water Conservation) [7.57 p.m.], in reply: I thank the honourable member for Ballina, the honourable member for St Marys and the honourable member for Gordon for their contributions to the debate. I addressed the key aspects of this bill in my second reading speech so I shall not canvass them in their entirety again. The honourable member for Ballina has raised several issues and I shall respond to his concerns. The honourable member for Ballina was concerned that the bill would widen the severing of a joint tenancy. I assure honourable members that such is not the case. Under this amendment the common law position remains the same. If there are more than two joint tenants, severance by one joint tenant will not affect the joint tenancy between the others. For example, if there are three joint tenants and one of them severs unilaterally, the remaining two joint tenants hold their two-thirds interest in the property as joint tenants between themselves, but as between them and the person who has severed the joint tenancy they hold an interest as tenants in common.

The amendment does not give any new rights to sever a joint tenancy. In circumstances in which the right to sever a joint tenancy does not already exist the amendment will not assist someone seeking to sever. There has been a suggestion that the terms of proposed new section 97 of the Real Property Act will expand the category of people who can sever a joint tenancy. That is not the intention of the bill. At present there are a number of people, in addition to the joint tenants, who can register documents at the Land Titles Office that have the effect of severing a joint tenancy. Those people include the trustee of a bankrupt, a mortgagee exercising a power of sale and a sheriff selling pursuant to a writ. The application of proposed new section 97 is limited to those rights which currently exist in respect of a transfer to oneself, thus confirming that the common law right applies to Torrens title land. The proposed new section does not create any new or additional rights.

The final concern of the honourable member for Ballina was whether the obligation to serve notice should be stated in the amendment. He is concerned that the notification by the Registrar General is not mandatory. It is unnecessary to state the obligation to serve notice in the new section. At present the joint tenant is free to sever a joint tenancy without telling anyone. The amendment introduces a new approach to advising people when their joint tenancy is severed. The amendment is necessary only to allow the Registrar General to call for information. At present he does not have that authority. He already has the power elsewhere in the Real Property Act to serve notices. The addition of further statements on the service of notice would be merely repetitive.

The Registrar General has been carrying out his obligations in respect of Torrens title land since 1863. He carries out a range of functions and duties such as registering dealings and plans, converting land from old system title to Torrens title and providing information and services to the public. The Registrar General carries out those and other duties without any express direction in the Real Property Act. In fact, many of the functions of the Registrar General are not the subject of express directions in the Real Property Act. He has developed and operates the world’s most technologically advanced land titles system without express statutory dictates.

I can safely say that the Registrar General can be relied upon to carry out this additional service
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without an express statutory direction to do so. In addition, making the service of notice a statutory obligation would lead to waste through the issue of unnecessary notices. A notice of the type envisaged in section 93 is simply not necessary in every case where a joint tenancy is severed. Often the two parties will know precisely what they are doing; they will have reached agreement and there will be no need to serve notice on them because they will already know what is occurring.

In a case in which a joint tenancy is unilaterally severed the amendment gives the Registrar General the power to obtain information so that he is then able to notify the other party or parties. Only in certain cases when it is clear to the Registrar General that he needs to serve the notice will he indeed serve it. For example, the following dealings can bring about the unilateral severance of a joint tenancy when they affect one joint tenant’s interest: a transfer by one joint tenant to a third party, a transfer by the sheriff pursuant to a writ, a transfer by a mortgagee or a chargee exercising a power of sale, foreclosure, and bankruptcy applications.

In some of those cases a notice will obviously be unnecessary. When a mortgagee or the sheriff sells one joint tenant’s interest in land, the other joint tenants are bound to become aware of the transaction. That is particularly true because the certificate of title is needed to register all of these dealings other than a transfer by the sheriff. In cases when it is clear to the Registrar General that the other joint tenant would be aware of the transaction, such as a transactions in relation to which they produce the certificate of title, the Registrar General would exercise his discretion and refrain from sending notice.

Indeed, if it were otherwise the system would be more complicated, time consuming and costly. That is not the intent of the bill. That in turn could result in increases in fees and charges, thereby impeding the current common law right to sever a joint tenancy. As I said in my second reading speech, the bill is about ensuring that the two Acts with which it deals can operate more effectively and efficiently and at the least cost to the people who use the service. To make the service of notice mandatory would simply put in place a rigid system that would have the opposite effect. I commend the bill to the House.

Motion agreed to.

Bill read a second time and passed through remaining stages.

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