A recent judgment of the Supreme Court of New South Wales has highlighted an issue for any party seeking to register dealings using the Bulk Lodgment System at Land and Property Information (LPI).

In Barlin Investments Pty Ltd v Westpac Banking Corporation Limited [2012], the Court considered the question of when lodgment of a dealing, memorandum or caveat is complete. At issue were the two systems by which the LPI accepts documents for registration:

  • Bulk Lodgment System – this is where batches of documents are lodged with LPI in bulk by frequent users. Although the cheques presented with the documents are processed at the time the documents are received by the LPI, the documents themselves are not allocated a distinct reference number until they are processed, usually within 24 hours of delivery at the counter, at which time they are entered on to the Integrated Tiling System on which the Torrens Register is based.
  • Face to Face Lodgment – this is where the documents are examined at the time of presentation and if in registrable form, are given a distinct reference number at that time and immediately entered onto the Integrated Tiling System.

The proceedings concerned the lodgment by Westpac of a mortgage for registration at the LPI. The mortgage was granted to Westpac as security for funds advanced for the purchase of the property. After settlement of the purchase the mortgage, transfer and a discharge of mortgage for the previous mortgage to Capital Finance were provided to LPI for lodgment using the Bulk Lodgment System.

On the following day Barlin Investments, which held an unregistered mortgage provided by the vendor of the property, attended the LPI and lodged a caveat on the title to note its interest under that unregistered mortgage. The caveat was lodged using the Face to Face Lodgment System.

Because of the delays associated with Bulk Lodgment System, Barlin Investment's caveat was recorded on the title before the mortgage was processed. As a consequence, Westpac's mortgage was not able to be registered.

Counsel for Westpac argued that because the mortgage had been presented to the LPI prior in time to the caveat, the caveat could not prevent the recording of that dealing in the Register.

However, the judge in the case, Justice Ball, disagreed. He found that simply providing the documents through the Bulk Lodgment System did not constitute lodgment for the purpose of the Real Property Act. Justice Ball held that lodgment consists of both "...presentation and acceptance of the thing being lodged" and said the lodging of a dealing, memorandum or caveat was complete only once it has been allocated a distinctive reference by the Registrar-General.

Although the caveator won that battle, for other reasons the judge found that Westpac's interest in the land had priority over the interest of the caveator and ordered the caveat be withdrawn.

Conclusion

The decision in this case highlights a potentially significant problem with the Bulk Lodgment System at the LPI. Lenders need to be aware that there can be a delay of up to 24 hours between the time a mortgage is provided to the LPI via the Bulk Lodgment System and registration of that mortgage. If in that time a competing interest is registered via Face to Face Lodgment, the lender's priority could well be lost.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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