Real Property (Priority Notices and Other Measures) Amendment Bill

Introduction and First Reading

The Hon. J.R. RAU (Enfield—Deputy Premier, Attorney-General, Minister for Justice Reform, Minister for Planning, Minister for Housing and Urban Development, Minister for Industrial Relations, Minister for Child Protection Reform) (11:10): Obtained leave and introduced a bill for an act to amend the Real Property Act 1886. Read a first time.

The SPEAKER: Ah, a venerable piece of legislation!

Mr Gardner: An oldie but a goodie.

The SPEAKER: An oldie but a goodie. The Premier once tried to take its administration off me but failed.

Second Reading

The Hon. J.R. RAU (Enfield—Deputy Premier, Attorney-General, Minister for Justice Reform, Minister for Planning, Minister for Housing and Urban Development, Minister for Industrial Relations, Minister for Child Protection Reform) (11:11): I move:

That this bill be now read a second time.

The operation of the national electronic conveyancing system has already commenced in a number of states, with the system initially being used to lodge and discharge mortgages. The first electronic transfer transaction was recently completed in New South Wales. The system operates pursuant to the Electronic Conveyancing National Law in each participating jurisdiction.

The Electronic Conveyancing National Law (South Australia) Act 2013, which enacts the Electronic Conveyancing National Law in South Australia, was assented to by the Governor on 5 December 2013. It provides for the operation of the national electronic conveyancing system in South Australia.

Prior to the commencement of electronic conveyancing in South Australia, significant amendment of the Real Property Act 1886 and other state legislation is required. This bill provides for the first stage of amendments to the Real Property Act 1886.

The bill introduces the first two of four significant statutory reforms that will lay the foundation for the introduction of electronic conveyancing. These two reforms are the strengthening of the verification of identity regime, and the introduction of priority notices. These measures are being introduced now so that conveyancing practitioners can adapt to the changes prior the commencement of electronic conveyancing in South Australia.

The remaining reforms required for the introduction of electronic conveyancing will be the subject of a separate bill. I seek leave to have the remainder of the second reading explanation inserted in Hansard without my reading it.

Leave granted.

Verification of Identity

Since 28 April 2014, parties to conveyancing instruments in South Australia have been required to verify their identity in accordance with the Registrar-General's Verification of Identity Requirements.

The Verification of Identity Requirements are consistent with the nationally-agreed standard for verification of identity which will be mandatory for electronically lodged instruments when electronic conveyancing commences.

The bill amends the Real Property Act 1886 to ensure that the enforcement of the Verification of Identity Requirements in relation to paper conveyancing instruments also has a sound statutory basis, providing legislative consistency in both paper and electronic conveyancing transactions in South Australia.

The bill also creates new offences in relation to verification of identity: making a false statement, producing a false document, and failing to retain a relevant document for the prescribed period of time.

By providing a sound statutory basis for the enforcement of the Verification of Identity Requirements, this amendment to the Real Property Act 1886 will:

(a) reduce the risk of land title fraud and other improper land title dealings; and

(b) strengthen the security, certainty and integrity of the Torrens land title system.

Priority notices

A priority notice is a notice which is lodged against a certificate of title or Crown lease to reserve priority for a pending transaction that will affect that land.

Priority notices will also:

(a) notify parties searching the title that the transaction is pending;

(b) increase the likelihood of fraudulent transactions being detected; and

(c) improve the accuracy of title searches – as currently no record of a conveyance appears on the certificate of title until the registry staff have updated the register book following settlement.

A priority notice can be lodged by any person who intends to lodge an instrument (such as a transfer, mortgage, caveat or heritage agreement). The lodgement of priority notices will not be mandatory.

Priority notices will be effective for 60 calendar days from the date of lodgement. This period of effect is consistent with other Australian jurisdictions. In South Australia, it will be possible to extend a priority notice (once only) for a further period of 30 calendar days. Unlike a caveat, a second or subsequent priority notice can be lodged in relation to the same matter—even if the first notice is still in force.

A priority notice can be lodged for both paper and electronic instruments.

If a priority notice lists more than one instrument, all of the listed instruments must be lodged at the same time in order to gain the benefit of the priority notice.

A priority notice will operate by preventing the registration of any instrument not listed in the priority notice. However, the bill lists a number of instruments which will be registered despite a priority notice. This list includes caveats, statutory charges, court orders, land management agreements, transmission applications and instruments lodged by the Crown.

The bill grants the Registrar-General the power to cancel a priority notice, if he is satisfied that the instruments listed in the notice are unlikely to be registered within 90 days.

The bill includes a civil liability provision which states that if a person institutes proceedings for compensation for loss arising as a consequence of a priority notice, the person who lodged the priority notice bears the onus of proving that he or she was entitled to lodge it.

Crown Leases

The bill also clarifies and modernises other provisions of the 1886 Act. Part 9 of the Real Property Act 1886 deals with registration of Crown leases. The existing provisions in Part 9 are ambiguous in a number of respects and since an amendment in 1990, have not contained an express power to register or record dealings with Crown leases.

The bill amends section 93 to clarify that Crown leases, and instruments dealing with Crown leases, can be (and always could be) registered or recorded in the Register of Crown Leases in the same way as dealings with other land are registered in the register book. This reflects the current and historical practice of the Registrar-General.

The amendments to Part 9 also clarify that an instrument affecting a Crown lease cannot be registered if any consent under legislation governing Crown leases (for example, the Crown Land Management Act 2009 and the Pastoral Land Management and Conservation Act 1989) has not been obtained.

The bill also contains an express provision clarifying the long held understanding that a registered Crown lease, or a registered interest in a Crown lease, is considered to be indefeasible in the same way as an estate or interest in land that is registered in the register book. However, indefeasibility of Crown leases and instruments affecting Crown leases is subject to consistency with the legislation governing Crown leases.

Other amendments

The bill provides the Registrar-General with new powers to direct that documents relating to verification of identity, certification and execution of instruments be presented for inspection. The Registrar-General may also require a person to provide information to him in relation to these matters.

The bill makes it an offence to fail to comply with a direction of the Registrar-General when he is exercising these powers.

In order for the Registrar-General to effectively administer the new provisions relating to verification of identity, certification and execution, the Registrar-General may need to obtain documents or information, to which he would not otherwise have access, using these powers. For this reason, the bill provides that a person is not excused from providing information or a document on the ground that it might incriminate them. However, the bill clearly limits the use that may be made of such information or documents.

The bill also clarifies that certifications given under section 273 of the Real Property Act 1886 must be given by a natural person with personal knowledge of the matters being certified. These certifications are effectively statutory declarations, and a body corporate cannot possess the knowledge required to provide a certification—a lawyer or conveyancer acting for the body corporate must provide the certification. However, in the case of a certification by a body corporate mortgagee, the bill provides that the certification may be given by an employee of the body corporate, provided that the employee has the requisite personal knowledge.

The bill makes it an offence to give a certification without the requisite personal knowledge. In the case of a certification by an employee of a body corporate mortgagee without personal knowledge, both the employee and the body corporate are guilty of an offence.

Finally, the bill amends section 221 of the Real Property Act 1886 by giving the South Australian Civil and Administrative Tribunal (SACAT) jurisdiction to review decisions of the Registrar-General. Currently the Supreme Court has jurisdiction to hear these appeals.

I commend the bill to members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of Real Property Act 1886

4—Amendment of section 3—Interpretation

This clause inserts new definitions of various terms. The participation rules are the participation rules determined by the Registrar-General under section 23 of the Electronic Conveyancing National Law (South Australia). The verification of identity requirements relate to the verification of the identity of a party to an instrument or other document. The term refers to the verification of identity requirements under section 273A.

5—Amendment of section 56—Priority of instruments

This clause amends section 56 to make it clear that provisions of the section dealing with the order of registration and priority of instruments operate subject to new Part 13A (to be inserted by clause 11).

6—Amendment of section 57—Effect of registration of instruments

This clause amends section 57 so that an instrument registered or recorded in the Register of Crown Leases is not deemed to be part of the Register Book.

7—Insertion of section 90G

Proposed section 90G provides a definition of designated Act for the purposes of Part 9. The following are designated Acts:

the Crown Land Management Act 2009;

the Pastoral Land Management and Conservation Act 1989;

an Act that is a relevant act for the purposes of Schedule 1 Part 7 of the Crown Land Management Act 2009;

any other act under which a Crown lease may be granted or which regulates dealings with Crown leases.

8—Amendment of section 93—Execution and registration of Crown lease

Section 93(3) provides that a Crown lease is to be taken to be registered when the Register-General allots a volume and folio number in respect of the lease. New subsection (3a) will provide that a registered Crown lease is able to be transferred, mortgaged and dealt with for the purposes of the Act as if it were a lease registered in the Register Book. The new subsection will make it clear that it has always been the case that a registered Crown lease could be transferred, mortgaged and dealt with for the purposes of the act. Section 93 as amended by this clause will also provide that an instrument lodged in the Lands Titles Registration Office that transfers, mortgages or otherwise deals with a Crown lease will be taken to be registered or recorded, as appropriate, on being entered in the Register of Crown Leases by the Registrar-General. The section as amended further provides, in relation to Crown leases, that if the Registrar-General is not satisfied that any consent required under a relevant designated act has been obtained, he or she may not register a Crown lease, or register or record an instrument that transfers, mortgages or otherwise deals with a Crown lease.

9—Amendment of section 94—Forfeiture etc. of Crown lease

This clause makes a minor correction so as to ensure consistency in terminology.

10—Substitution of section 95

This clause repeals section 95 and inserts 3 new sections relating to Crown leases.

95—Indefeasibility of title under Crown lease

This section provides that section 69, which provides for indefeasibility of title, applies in relation to the title of a person who appears by the Register of Crown Leases to be the proprietor of land subject to a Crown lease as if the person were the registered proprietor of the land and the Crown lease were the certificate of title. It is made clear in the section that section 69 is to be taken to have always applied in this way. The section does not operate to protect the interests of a party to an instrument if any consent required under a relevant designated act was not obtained before the instrument was registered or the instrument is in some way inconsistent with a relevant designated act.

95A—Evidentiary

Under this section, a document purportedly certified by the Registrar-General to be a correct copy of a Crown lease is to be accepted in legal proceedings as conclusive evidence of title to any estate or interest in land that it records and as rebuttable evidence of any other information that it records.

95B—Operation of Part in relation to Crown leases and other instruments subject to other acts

This section makes it clear that nothing in Part 9 of the act (Crown leases) overrides a designated act. To the extent of any inconsistency between the Part and a designated act, the designated act will prevail. The section also provides, for the avoidance of doubt, that registration or recording under section 93, and indefeasibility under section 95, do not prejudice or alter a right or remedy otherwise possessed by the Crown; nor do they have the effect of validating an instrument (or a provision of an instrument) that would not be valid under a designated act.

11—Insertion of Part 13A

This clause inserts a new part.

Part 13A—Priority notices

154—Interpretation

This section provides a definition of the term instrument that applies only for the purposes of Part 13A. An instrument (for the purposes of the Part) is any document capable of registration in the Lands Titles Registration Office, or in respect of which a record is under an act directed, required, or permitted to be made in the register book. The term includes a document that may be registered or recorded in the Register of Crown Leases under section 93.

154A—Person who intends to lodge instrument may lodge priority notice

This section provides for the lodgement of a priority notice in the Lands Titles Registration Office by a person who intends to lodge an instrument. The purpose of a priority notice is to give priority to 1 or more instruments relevant to a particular conveyancing transaction. Priority will only be given to the instruments specified in a priority notice if they are all lodged in the Lands Titles Registration Office at the same time.

The section provides some detail in relation to the content of priority notices and authorises the Registrar-General to determine that a person is a vexatious lodger of priority notices.

154B—Effect of priority notice

Under this section, if an instrument affecting land is lodged in the Lands Titles Registration Office while a priority notice is in force in relation to the land, the instrument may not be registered or recorded in the Register Book or the Register of Crown Leases until the priority notice ceases to have effect. Despite this general rule, the Registrar-General is not prevented by a priority notice from registering or recording an instrument identified in the priority notice if it is lodged in accordance with other requirements. The section does not prevent the Registrar-General from registering or recording certain specified instruments or registering or recording an instrument if necessary in order to give effect to an order, authorisation or event of a specified kind.

154C—Registration of instruments identified in priority notice

This section requires that instruments identified in a priority notice be registered in the order in which they are given priority in the notice. This requirement does not apply if the Registrar-General considers there is good reason for registering the instruments in a different order.

154D—Lodging party need not be informed that instrument cannot be registered or recorded

If a person lodges an instrument affecting land in relation to which a priority notice is in force, the Registrar-General is not required to inform the person that the instrument cannot be registered or recorded in the Register Book or the Register of Crown Leases.

154E—Withdrawal of priority notice

A priority notice may be withdrawn by the person who lodged the notice.

154F—Cancellation of priority notice by Registrar-General

This section provides for the cancellation of priority notices where the Registrar-General is satisfied (on application) that the notice purports to protect the priority of an instrument that is not likely to be registered or recorded within 90 days of the day on which the notice was lodged. The person who lodged the priority notice must be given written notice of the application for cancellation of the notice and is entitled to provide written submissions in response to the application.

154G—Cessation of priority notice

If a priority notice has not been cancelled or withdrawn, it ceases to have effect when all of the instruments specified in the notice have been lodged (though they must all be lodged at the same time) and either registered, recorded, withdrawn or rejected by the Registrar-General. A priority notice may cease to have effect before any of those events occurs if the applicable period following the day on which the notice was lodged comes to an end first. The applicable period is 60 days or, if the Registrar-General has granted an extension of time, 90 days.

154H—Registration of instruments after priority notice is no longer in force

An instrument lodged in the Lands Titles Registration Office that cannot be registered or recorded because it affects land in relation to which a priority notice is in force is to be dealt with when the priority notice ceases to have effect.

154I—Civil liability

This section provides for compensation where a person suffers loss or damage as a consequence of the lodgement by another person of a priority notice where the person was not entitled to lodge the notice or unreasonably refused or failed to withdraw it.

12—Amendment of section 191—Caveats

This clause makes a minor amendment to section 191. For consistency with other provisions, the section as amended will state that a caveat is to be lodged in the Lands Titles Registration Office rather than with the Registrar-General.

13—Insertion of section 220A

New section 220A provides the Registrar-General with powers to require—

the production of instruments, documents or other items;

the provision of information;

the verification of the execution of an instrument or document.

The Registrar-General may only exercise a power under the section for a purpose connected to the administration or enforcement of the Real Property Act 1886 or the Electronic Conveyancing National Law (South Australia) Act 2013 or to protect the integrity of the Register Book or the Register of Crown Leases.

14—Substitution of sections 221 and 222

This clause repeals sections 221 and 222, which provide a person dissatisfied with a decision or direction of the Registrar-General with a power to summon the Registrar-General to appear before the Supreme Court, and substitutes a new section that provides for review of decisions of the Registrar-General by the South Australian Civil and Administrative Tribunal.

15—Substitution of section 232

This clause repeals section 232 and substitutes 2 new sections.

232—Certifying incorrect documents

This section makes it an offence for a person to falsely or negligently provide a certification under section 273(1). It is also an offence under this section for a person who is an employee of a body corporate that is a mortgagee to provide a required certification on behalf of the body corporate if the person does not have personal knowledge of the matters to which he or she is certifying. In that case, the person and the body corporate are each guilty of an offence.

232A—Offences relating to verification of identity

This section includes a number of offences relating to the verification of identity requirements and the participation rules. It is an offence for a person to falsely state that another person's identity has been verified in compliance with the verification of identity requirements or the participation rules. A higher penalty applies if the person makes the statement knowing that it is false. There are also offences relating to making false statements in connection with verifying a person's identity for the purposes of the verification of identity requirements or the participation rules, production of false or misleading records and retention of documents or records.

16—Amendment of section 267—Witnessing of instruments

This clause amends section 267 by repealing subsection (4), which provides the Registrar-General with a power to require the execution of an instrument to be verified.

17—Amendment of section 273—Authority to register

Under section 273, an application for bringing land under the act, and an instrument purporting to deal with or affect land, must be certified as being correct for the purposes of the act. This clause amends the section so that the certification must be provided by a natural person who has personal knowledge as to the matters to which he or she is certifying. If the party required to provide the certification is a body corporate that is a mortgagee, the certification may be given by an employee of the body corporate who has personal knowledge as to the matters to which he or she is certifying.

18—Insertion of section 273A

New section 273A, inserted by this clause, makes it a requirement for the identity of a party to an instrument, or a person executing a document, to be verified in accordance with any prescribed requirements. A regulation prescribing verification of identity requirements may adopt or apply requirements determined by the Registrar-General as in force at a particular time or from time to time. The Registrar-General is required under the section to make the current verification of identity requirements, and all superseded versions of the verification of identity requirements, publicly available.

Debate adjourned on motion of Mr Gardner.