Property law; Torrens system; registration of encumbrance; effect of failure to register
Facts: A large parcel of land had been divided into several lots. Deguisa became the owner of Lot 3. He wanted to further subdivide Lot 3 to build two townhouses. This proposal was opposed by the owners of other lots, who claimed that Lot 3 was subject to a covenant restricting any further subdivision. Deguisa claimed he was not bound by any such covenant because it was not mentioned on the certificate of title at the time of purchase.
Issue: Is the purchaser of Torrens title land bound by any encumbrance on that land, of which there is no notice on the certificate of title?
Decision: The purchaser is not bound by an encumbrance if no notice of it is given on the certificate of title, even if the encumbrance (in this case a restrictive covenant) was discoverable by means of a wider search of available documents.
Reason: The court said [at 2]:
[T]he Torrens system is characterised by the guarantee of the State that the title which it produces to a person seeking to take an interest in a parcel of land is an accurate and comprehensive statement of the state of the title to that land, as to both the title of the registered owner and the interests of others in that land. With the benefit of that guarantee, a person dealing with a registered proprietor of land need look no further than the registered title and the interests notified on it in order to ensure that his or her dealing does not miscarry.
The court said further [at 88]:
A person who seeks to deal with the registered proprietor in reliance on the State's guarantee of the title of the registered proprietor disclosed by the certificate of title in the Register Book (or its electronic equivalent) is not to be put on inquiry as to anything beyond that which is so notified.