In the section ‘From Place to Space’, above, we tried to provide a context for discussion of the Torrens system of land registration, and how the technologies of mapping and writing permitted the imposition of a culturally specific prop-erty regime in post-invasion Australia. In particular, we wished to situate the system of land registration within a broader social and political change that saw the development of land as an increasingly abstract, calculable commodi-ty, able to be bought and sold in a free market.
Before the institution of land registration schemes, conveyancing practice was basically contractual and was ‘constructed on the basis of a practical eval-uation of the fit between formal paper rights and local reputation’. Paper titles usually required a purchaser to take something on trust and to supplement documentary evidence with inspection and inquiry, a local sense of place and memory, a ‘peculiar sort of oral history’.81The allocation of risks and indeter-minacies in a title was achieved through a process of bargaining. What registration of title does is externalise the risks through a scheme of insurance or compensation.82This represents a transition from contractual property to property as something in the public, administrative domain: the register becomes the guarantor or determinant of entitlement.
Central to this idea of State-guaranteed title is the concept of ‘indefeasibility’.
That is, a registered title is conclusive regardless of defects in the transaction which led to the creation of the title, as long as those defects do not come with-in a limited range of statutory or non-statutory exceptions. Such a system is clearly complicit in obliterating the Native Title of indigenous inhabitants, a point particularly apparent in Australian history. Robert Torrens Jnr devised his system in South Australia, a colony whose foundation had been marked by the insistence of the British Colonial Office that the South Australia Commission
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81 Pottage, A, ‘The Measure of Land’ (1994) 57 Modern Law Review361, 365.
82 Ibid, 382.
recognise the property rights of the Aborigines in possession as an early form of Native Title.83The chair of the Commission, Robert Torrens Snr, successful-ly resisted Colonial Office pressure. The South Australian Constitution Act was drafted by the Commission to refer to ‘waste and unoccupied land’. Yet if the land grants made by the Commission were inconsistent with the Colonial Office’s instructions, including those in the Letters Patent,84they were poten-tially open to challenge many years later under a common law system that insisted upon a good ‘chain of title’, that is, a title remaining a valid one from the date of the Crown grant through each transaction. In contrast, the new sys-tem put in place by Torrens’s son, Robert Torrens Jnr, provided for indefeasible title which ‘cured’ any defects which might have lain at the root of the title.85
How does the allocation of risks under Torrens title work in practice? The English case of Frazer v Walker86established the principle of ‘immediate’ inde-feasibility. That is, if a person registers an interest in land for consideration and in good faith, that person achieves good title immediate upon registration.
Torrens statutes generally provide an exception to this principle on the grounds of fraud perpetrated by the party registering,87yet the principle means that if someone forges the registered proprietor’s signature on an instrument, the pur-chaser or mortgagee, not being a party to the fraud, obtains good title and has his or her interest registered. The principle was adopted in Australia in Breskvar v Wall88and recently confirmed in Victoria in the decisions in Vassos & Pettinato v State Bank of South Australia89 and Eade v Vogiasopoulos,90 each involving litigation between two putatively ‘innocent’ parties: the original, defrauded, proprietor and the mortgagee. Consider the following cases:
Grgic v ANZ Banking Group(1994) 33 NSWLR 202.
A $120,000 mortgage over Mr Grgic’s home was taken out to secure a guaran-tee in favour of his son and daughter-in-law. The mortgage was signed by a man purporting to be Mr Grgic in the presence of bank officials who attested to the signature being genuine. The mortgage was later increased by $20,000 and consent to this was obtained by a letter given to the daughter-in-law to convey to Mr Grgic rather than posted to him directly. A further $50,000 over-draft facility was given to the son and daughter-in-law secured by Mr Grgic’s home; the letter of consent to be signed by Mr Grgic again being entrusted to
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83 See Reynolds, above n 53, ch 5.
84 Ibid.
85 The latter-day recognition of Native Title in Australia raises the question of the integration of Native Title with the Torrens system. On the Canadian cases that consider this issue, see Ziff, B, Principles of Property Law, 2nd edn, 1996, pp 422–24, Toronto: Carswell; for a view doubting their applicability to the Australian situation, see Babie, above n 55.
86 [1967] 1 AC 569.
87 For example, s 42 of the Transfer of Land Act 1958 (Vic).
88 (1971) 126 CLR 376.
89 (1992) V ConvR 54–443.
90 (1993) V ConvR 54–458.
the son and daughter-in-law. Despite the forgery, the bank’s registered interest was upheld.
We wonder how reasonable is it to describe the bank as an innocent party in this transaction? Powell JA observed (at 221) that ‘it may be – and probably is – possible, with the benefit of hindsight, to say that [bank officers] Mr Jospe and Mr Sercombe were less meticulous than they might otherwise have been in seeking to establish that the person who was introduced to them as Mr Grgic Snr was in truth the registered proprietor of the subject property’. Nevertheless, Powell JA found it ‘well-established that a person who presents for registration a document which is forged or has been fraudulently or improperly obtained, is not guilty of “fraud” if he honestly believes it to be a genuine document which can be properly acted upon’ (at 222).
Vassos & Pettinato v State Bank of South Australia(1992) V ConvR 54–443.
Peter Vassos, his daughter Anne and son Tommy were registered proprietors of a Melbourne property. Peter asked Tommy to secure a new mortgage over the property at a cheaper rate than the current mortgage of $130,000 and to pay off the existing mortgage. Tommy forged his father and sister’s signatures (along with those of a ‘witness’ and ‘solicitor’) to secure a $500,000 mortgage from the State Bank of South Australia for a personal business venture. The bank at no time communicated with Peter and Anne; Peter discovered the fraud through his own inquiries and sought to have the registered mortgage set aside. The bank’s registered interest was upheld.
(a) The social context
What do these cases say about how migrants are inserted into the structure of home ownership? There are four contextual issues here: the spread of home ownership amongst migrant groups and, related to this, the use of the family home as collateral to support the ethnic small business sector; the role of banks;
and competing meanings of home.
(i) Migrants and home ownership
Over 70% of Australian households live in dwellings they own or partially own, a percentage relatively unchanged since 1961, giving Australia the highest rate of home ownership amongst OECD countries.91The widely held preference for home ownership probably derives largely from the legal (and taxation)
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91 Mowbray, M, ‘Social Justice and the Australian City: Developments in Urban and Housing Policies’ in Wearing, M and Berreen, R (eds), Welfare and Social Policy in Australia: The Distribution of Advantage, 1994, pp 155, 157, Sydney: Harcourt Brace & Co. However, a recent study shows owner-occupation dipping below the 70% mark as more Australians abandon home ownership for renting, a trend linked to economic insecurity, high mobility and marriage breakup: ‘Home Owners Turn to Renting’, Age, 24 February 1997.
advantages of this particular form of tenure.92Historical or cross-national com-parisons reveal that the Australian situation is quite distinctive by international standards. For example, the United Kingdom and the Netherlands have levels of 30% and 44% respectively of public or social rental housing, and only about 10% of private rental provision.93Tenure takes different forms in different soci-eties. The current structure of tenure in Australia flows very much from explicit government policy. Periodically over the last 40 years, first home buyers have enjoyed federal government cash subsidies, tax deductions on mortgage inter-est payments, and various preferential treatments with regard to State government taxes and charges. Little wonder, then, that home ownership has become characterised as the Great Australian Dream. In contrast, the general pattern of private tenants’ rights in Australia is one of limited rights of use, control and security.94Again, there is nothing about private rental accommo-dation per se that attracts these characteristics. For example, private rental accommodation in France can provide lifetime security of tenure with rights of inheritance of the leases.95
Aggregate figures, however, can mask serious inequalities in the structure of property ownership, in particular inequalities in access to different tenures and inequalities in the burden of housing costs relative to income.96Martin Mowbray observes:97
Australians benefit from housing policy and resources unevenly. Despite the high national rate, home ownership varies sharply with type of household.
Married couples with dependent children, for example, are more likely to own a home outright than male sole parents. The latter are, in turn, more like-ly to own a home outright than female sole parents (at 36.8%, 34.8%, and 28.3%
respectively). Of married couples without dependent children ... 55.3% were outright owners.
The reason for differential access is that private home ownership ‘is oriented towards the needs and income circumstances of couples, and in particular, cou-ples with an employed male breadwinner ... [T]he income levels required to cover housing costs for home purchase ... increasingly since the 1970s have come to depend on a combination of two vital factors: the continuous, regular
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92 Paris, C, Housing Australia, 1993, p 41, South Melbourne: Macmillan.
93 Ibid, 42.
94 Winter, I, The Radical Home Owner: Housing Tenure and Social Change, 1993, p 36, Basel:
Gordon and Breach.
95 Ibid.
96 Carter, J, ‘Social Inequality in Australia’ in Saunders, P and Shaver, S (eds), Theory and Practice in Australian Social Policy: Rethinking the Fundamentals, 1993, Vol 1, Sydney: Social Policy Research Centre, UNSW. Carter mentions a third inequality, inequality between particular areas or regions. This is partly to do with the unequal access to resources and infrastructure, but also relates to the new regional distribution of unemployment: see Gregory, R and Hunter, B, The Macro Economy and the Growth in Ghettos and Urban Poverty in Australia, 1995, Canberra: Centre for Economic and Policy Research, ANU.
97 Mowbray, above n 91, 161.
and secure employment of one adult breadwinner, usually the man in a couple household ... and the additional paid employment of women, increasingly important in sustaining the costs of home purchase’.98 Women’s greater responsibility for unpaid household and caring work leads to reduced earning capacity and economic power which results in disadvantage on entering the housing market as single people or sole parents. However, low-income couples (especially those without earned income due to long-term unemployment or disability) are also likely to be excluded from home ownership. One study concluded:99
The resultant aggregate rate of owner occupation is therefore composed of two trends: on the one hand an increased trend towards two-earner couple house-holds who are relatively advantaged in terms of access to owner occupation (so long as the job opportunities and childcare services which support parental earnings are maintained); on the other hand, increased proportions of single people, older people, sole-parent families and long-term unemployed couples likely to be without earned income and therefore disadvantaged in their access to or maintenance of owner occupation.
Migrants in Australia are not a homogenous group, and their participation in housing markets will reflect, to some degree, cleavages of gender, income and access to capital, as well as time of arrival in Australia. Thus migrants partic-ipate in the housing market in different ways: as home owners, public tenants, low-income private tenants and investors-speculators. In the initial period of post-war immigration, however, ‘aliens’ – that is, people neither British sub-jects nor Irish citizens – were specifically prevented from owning land under various State property legislation (which generally predated the Second World War). For example, in Queensland aliens were required to obtain a permit from the Department of Justice to hold real property.100In some States this legisla-tion may not have been enforced, and by the mid-1950s the Federal Department of Immigration was pressuring States to remove discriminatory legislation.101 In 1960, South Australia amended its Real Property Act 1886 to remove restric-tions on the rights of aliens to hold land. Restricrestric-tions continued in the Northern Territory, however, up to 1975 when aliens were still required by the Crown Lands Ordinance to secure prior approval of a conveyance of freehold land or for the transfer of leasehold land held more than a year, and before acquiring an interest in land in Darwin, an alien needed the approval of the Administrator.102
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98 National Housing Strategy, The Housing Needs of Women and Children: Discussion Paper, 1991, p 2, Canberra: AGPS.
99 Ibid, 10.
100 Jordens, AM, Redefining Australians: Immigration, Citizenship and National Identity, 1995, p 67, Sydney: Hale & Iremonger.
101 Ibid, 66–67.
102 Ibid, 67.
Many migrants (predominantly European) arriving in the 1950s bought formerly rented houses in the inner city areas of Sydney and Melbourne. In the 1940s, many such properties were subject to rent control legislation which enshrined rights for sitting tenants. Faced with poor rental returns, landlords could sell to sitting tenants at a reduced price or offer a cash payment to induce the tenant to vacate and then sell with vacant possession on the open market.
When landlords took the latter option, migrants buying the house were often paying a higher price to cover the landlord’s pay-off to the sitting tenant and so were effectively subsidising the former tenants.103 This, in combination with discrimination in accessing finance (discussed below), meant migrants often paid more than the Australian-born for equivalent homes. One study concluded that in North Melbourne ‘in 1955, at the peak of the migrant buying, an Australian buying for owner-occupancy paid $2,600 on average when a migrant paid $4,700 – a difference of $2,100’.104Eventually, the demand by migrant purchasers, followed by a more general growing confidence about the desirability of older residential areas, meant that owner-occupiers showed a considerable return on their investment, above that of the rest of the cities.105 Part of the increased value of properties came from improvements made by the new owner-occupants in a climate of rising real incomes and availability of jobs.106As a result of these structural factors, some migrant groups – Greeks, Italians and Yugoslavs – have obtained a higher rate of home ownership than Australian-born.107
The security of home ownership was a powerful incentive for migrants to become owner-occupiers, but must be seen in the context of a small and dis-criminatory private rental market and an ineligibility for public housing that meant few other options were available to meet housing needs.
(ii) The family home as collateral
While capital gains on the sale of the family home have provided upward mobility for many migrants, the home has also been used as security for bank loans for the creation or expansion of business opportunities. The small business sector in general has grown since the mid-1970s due to economic restructuring.
In Australia, the number of small businesses increased by 15% from 1983–87.
Many minority ethnic groups are overrepresented as small business owners
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103 Kendig, H, New Life For Old Suburbs: Post-war Land Use and Housing in the Australian Inner City, 1979, pp 112–13, Sydney: George Allen & Unwin.
104 Ibid, 115.
105 Ibid, 113–15.
106 Ibid, 115
107 See generally Junankar, PN, Pope, D, Kapuscinski, C, Ma, G, Mudd, W, Recent Immigrants and Housing, 1993, Canberra: AGPS.
compared with the Australian-born.108The cases of Grgic, Vassos and Eade have their origins in commercial business transactions with banks; they in turn become property disputes due to the prevalence of home ownership amongst those involved. These disputes can be represented as a conflict over a house as a strategic commercial asset and house as home. One question for students and teachers to consider is what meaning of the house is reinforced by current property rules relating to indefeasibility?
(iii) Banks and indebtedness
The widespread diffusion of home ownership would be impossible without the existence of mortgage finance. A person is able simultaneously to buy a house with borrowed money, and offer the home thus purchased as security for the loan, while retaining freehold estate in the property throughout the term of the mortgage.109 Thus, the ‘pay-off’ for the perceived advantages of home ownership is to incur the risks associated with long-term debt. This makes banks and lending institutions key players in disputes around fraud and indefeasibility.
Constance Perin makes the point that it might be precisely the debt rela-tionship that makes home ownership so attractive. The difference in the rights and privileges attaching to renting and ownership respectively is not a priori and could be harmonised through legislative change. Further, ownership itself is fragmented by laws and regulations rather than being in any way absolute.
So why does the status of the owner remain higher than that of the renter? The answer, suggests Perin, is the relationship with the banker:110
Through this relationship accreditation for full membership in society is realised, according to the correct chronology of life. For although the single-family house is itself a possession and an asset, often enough a concrete symbol of higher income, it is less that fact which confers higher status culturally and more the achievement of a social relationship with the banker. That is, the banker ‘qualifies’ the homebuyer with a credit rating that is a major threshold of American social personhood crucial in the correct traversal of the ladder of life.
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108 Collins, J, Gibson, K, Alcorso, C, Castles, S, Tait, D, A Shop Full of Dreams: Ethnic Small Business in Australia, 1995, Sydney: Pluto Press.
109 Gray, K, Elements of Land Law, 2nd edn, 1993, p 933, London: Butterworths.
110 Perin, C, Everything in Its Place: Social Order and Land Use in America, 1977, pp 65 – 66, Princeton: Princeton University Press.
CURRICULUM SUGGESTION
Much of the discussion in Chapter 2 on third party guarantees is relevant here in exploring relationships between migrants and banks. Note that in Grgic the bank responded to issues raised in Amadio and dealt with the
‘problem’ of migrant customers by giving the purported Mr Grgic Snr the opportunity to take the guarantee mortgage away in order to take indepen-dent legal advice before he executed it. This was used by Powell JA (at 221) as evidence that the bank was not seeking to take unfair advantage of Mr Grgic.
Studies show that before bank deregulation in 1986, savings banks tended to see non-British migrants as credit risks.111In general, many migrants did not satisfy banks’ preference for borrowers with substantial deposits, a savings record and good incomes. In response, the Federal government, in 1956, funded building societies to induce them to offer finance for home building by migrants.112 Funds were also provided from migrants’ source countries, through building societies, and matched with Federal and State government funds. For example, between 1958 and 1967, the Dutch government provided
£2.6 million that enabled the purchase of more than 3,000 homes by Dutch migrants. Nearly 2,000 Italian migrants bought homes with £1.6 million from a statutory body set up by the Italian government to provide housing credit to Italians world-wide, and in 1967 the Maltese government provided $1.25 million through building societies. In Victoria, a housing society was formed by Greek migrants without assistance from the Greek government.113
Nevertheless, the insistence by Australian banks on granting credit to those with substantial savings records meant many immigrants turned to private lending bodies such as solicitors, and sought multiple loans,114or resorted to vendor finance at what, for the time, were exorbitant rates of interest.115 Banking deregulation may have made it easier for many to gain mortgage finance, especially given the removal of the requirement for a savings record.116
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111 See Junankar et al, above n 107; Kee, P, Home Ownership and Housing Conditions of Immigrants and Australian-Born, 1992, Canberra: AGPS.
112 Jordens, above n 100, 68.
113 Ibid, 68.
114 Junankar et al, above n 107, 48.
115 Kendig, above n 103, 113.
116 However, many innovations in mortgage instruments since deregulation that had the potential to help low income-earners have been offset by high house prices and high interest rates: see National Housing Strategy,Financing Australian Housing: The Issues, 1991, p 16, Canberra: AGPS.