The trial of a cause in Van Diemen's Land (Terry v. Spode, 1835), led to the exposure of a fatal error in land titles throughout the colonies. Spode had claimed and taken possession of a portion of land occupied by Terry, who brought an action of ejectment: the jury gave a verdict in his favour; but it was stated by counsel that both grants were "defective and void in law."

This error had been discovered by Mr. Alfred Stephen (1829). The secretary of state was consulted, and authority received by Arthur to amend the form. The royal instructions had authorised the governors to grant lands, which they had always issued in their own names, instead of in the name of the king. The judges stated that in every case, whether of a subject or the king, a conveyance must be made in the name of the owner, and not of the attorney. These grants were, therefore, utterly void. In New South Wales the defect was cured by special legislation; but in Van Diemen's Land every grant was subject to an ordeal. Those already issued by Arthur had been legally worded after the defect was discovered; but the government of New South Wales continued the invalid form, until the judgment of the court led to its revision.[173]

The importance of settling the titles to land was universally felt, but the difficulties were not easily overcome. Prior to 1826, the Van Diemen's Land grants were drawn up in New South Wales. They were full of errors of all kinds: the boundaries, quantity, and names were mis-described; the land intended for one man was conveyed to another; inaccurate charts, on which grants were marked, multiplied mistakes; the surveyors ran their chains over the land, and marked off five or six farms in as many hours. They erased and altered their descriptions: accurate measurement discovered that many were without a title to the land in their possession, or that their grants were partly occupied by a next neighbour. The dates of these instruments were often arbitrary, yet they bound to cultivation and non-alienation, and often within years already past. Some printed forms contained stipulations not applicable, and became inoperative on the face of them: they described hundreds of acres in excess, but stated that those beyond the king's instructions, should be taken as not granted at all.

When Mr. Alfred Stephen pointed out the defect in form, the government concealed the mistake until the king granted authority for correcting the error by royal warrant, received in 1830. It now became necessary to ascertain disputed titles. It was proposed by some to establish them by a general act: against this course Mr. A. Stephen protested, and pointed out consequences, that proved his objections were just. Many of these illustrate the idle and fraudulent manner in which the public business is often transacted. A grant issued in 1823, gave one side-line 32 acres, written over an erasure. An investigation took place: a record book kept in Hobart Town shewed a similar erasure. The same entry had been preserved at New South Wales, and there it was 22 acres: the holding party was innocent; but his title was invalid. Still more extensive erasures were discovered in a valuable property; the entire description had been changed and another substituted. At Richmond, two persons selected land adjoining each other: their grants had been exchanged, and he who was thus deprived of the most valuable, resorted to a chancery suit for its recovery. At Norfolk Plains a great many farms were located and occupied for a number of years. They commenced their measurements from opposite points, and each farm gradually approximated. When their lands were surveyed by the grant deeds, every owner found that his side-line advanced upon his neighbour, until at last the central proprietor saw his estate absorbed. In Oatlands, two properties were measured according to the common practice: the side-lines were guessed at; one cultivated, and the other sold his property; but when measured, the improver of his estate discovered that his homestead, and nearly one hundred acres of his land fell by description to his neighbour.

At Bagdad Rivulet, a surveyor measured eight grants adjoining. All the bearings given in the grants were mistaken: to adjust them, one would lose the back of his farm and take his neighbour's, who would go on the next location and obtain a well cultivated farm.

To have confirmed all former titles would have been obviously unjust. In 1823, a location was given, but abandoned. Sorell advised a settler that came after to take the land, which he did. For fourteen years he lived there, and spent £3,000: the original owner re-appeared with a Brisbane grant, as a claimant of this property.

Colonel Arthur adopted Stephen's recommendation in 1831, and announced in the Gazette, January following, its approval by the secretary of state.

All existing grants being invalid, the settlers depended on the justice of the crown to perfect their titles. The royal warrant of the king authorised the renunciation of claims founded on the informality, and deeds drawn in the king's name, containing the same conditions as the governors' grants, were offered at 5s. Now, however, the grants contained a true description of the land, and the name of the rightful possessor. The loose system of conveyancing, formerly expressed rather the intention than the act of transfer. Property had been subdivided, especially in the town: these parcels, however small, were now conveyed direct to the actual owner, subject to their proportion of quit rent. Possession and reputed ownership, were taken as a title. Those whose property was in excess, or less than their description, had their proportion of quit rents adjusted. The governor threatened with resumption lands obtained by exhibiting false pretensions to capital, or alienated before the period prescribed, or by collusive sheriff's sales. Oblivion was granted to breaches of conditions, when not fraudulent, on payment of 6d. per acre fine. Commissioners, James Simpson and George Frankland, Esqrs., were appointed to carry out this admirable plan (1832).

An act, constituting the caveat board a court of equity and good conscience, was passed in 1835. The gentlemen who framed it held the board, "in the sacred light of a court," although the concurrence of the governor was necessary to render its decisions valid. Commissioners were appointed to examine on oath. They were empowered to obtain a verdict from a jury in a special case: by appealing to the judge of the supreme court, they could submit a feigned issue for trial. In clear cases, however, after three months' notice, they were permitted to adjudicate. The decisions of this board have usually satisfied the public: they have been nearly always confirmed, and have prevented boundless litigation.[174]

Many surveyors were employed, who acted in the several districts (1838). The survey of 100 acres was effected for £5, of 2,000 for £20. The list of locations being published, the surveyor-general held a movable court, to identify and arrange the boundaries. It was part of his duty to mediate between the contending parties. These preliminaries being settled, the commissioners issued grants to such as made good their claim.