Anderson v Anderson

Court of Appeal (NSW)|2017-05-25|Before: Basten JA, Leeming JA

Council [1996] AC 669 White v Tomasel [2004] 2 Qd R 438; [2004] QCA 89 Texts Cited: L Moses and B Edgeworth, "Taking it Personally: Ebb and Flow in the Torrens System's In Personam Exception to Indefeasibility" (2013) 35 Sydney Law Review 107 Category: Principal judgment Parties: Stephen Anderson as executor of the estate of Minnie Veronica Anderson (Appellant) Marilyn Anderson (First Respondent) Natalie Elizabeth Anderson (Second Respondent) Representation: Counsel: R D Wilson SC, A Karlozian (Appellant) T Lynch SC, R Weaver (First Respondent) C D Wood, J E F Brown (Second Respondent)

Solicitors: Stacks Family Law (Appellant) Greg Walsh & Co (First Respondent) Peters Lawyers (Second Respondent) File Number(s): 2016/297578 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2016] NSWSC 1204 Date of Decision: 01 September 2016 Before: Hallen J File Number(s): 2014/98304

headnote Minnie and Norrie Anderson were married in 1951, and in 1958 acquired title as joint tenants of property in Sans Souci. They had two children, the elder of whom, Stephen, is the appellant. Minnie and Norrie were divorced in 1970, and under the terms of the settlement Minnie had the right to reside rent free in the Sans Souci property for her lifetime or until her remarriage. Soon after the divorce, Norrie married Marilyn, the first respondent, and together they had three children, the oldest of whom, Natalie, is the second respondent. In 2006, Norrie gave a power of attorney to Marilyn and Natalie. Natalie was only authorised to act if Marilyn was "unwilling or unable to act". The power of attorney was dated 28 March 2006, but the trial judge found that Natalie had not in fact signed her acceptance on that date, although she had accepted the appointment no later than 28 June 2012, when the deed of attorney was registered. By 2010, Norrie was residing in a nursing home. Marilyn and Natalie were aware that Minnie had left the Sans Souci property, but were unsure of her whereabouts. In June 2012, Natalie sought advice from a solicitor in respect of the joint tenancy. The solicitor advised that inquiries did not reveal a death certificate for Minnie, and that it was likely she was still alive. Accordingly, the solicitor advised Natalie that the joint tenancy should be severed. On 30 July 2012, Natalie executed an instrument of severance in the presence of her solicitor, which was accompanied by two statutory declarations. The first stated that Natalie was not subject to any legal constraint which would prevent her severing the joint tenancy, and that Minnie's street address was the Sans Souci property. The second stated that Natalie was Norrie's power of attorney. However, while Marilyn was away from Sydney, there was no evidence that she was "unwilling or unable to act". Notice of the intention to transfer was sent to the Sans Souci address, Minnie did not become aware of this notice, and the instrument of severance was registered in late September 2012. Norrie died in 2013. In 2014, Minnie's tutor brought proceedings seeking to set aside the transfer or an order for a constructive trust in her favour. Minnie died in 2015 and Stephen continued the proceedings as her executor. Stephen argued that Natalie had committed fraud within the meaning of s 42 of the Real Property Act 1900 (NSW). Alternatively, Stephen argued that Norrie held his half share of the tenancy in common on constructive trust for Minnie because Natalie was not authorised by the power of attorney when she executed the instrument of severance. Held, by Leeming JA, Basten JA and Sackville AJA agreeing: 1. Natalie's actions had not been shown to amount to actual fraud or moral turpitude given the involvement of her solicitor. The backdating of the power of attorney had no legal significance for the exercise of the attorney and the misstatement of Minnie's address had not been shown to have been accompanied by an intention to deceive: at [1], [39]-[47], [70]. 2. The in personam exception to statutory rights under the Real Property Act 1900 (NSW) requires the plaintiff to have a recognised cause of action at law or equity. Minnie had no right to maintain her interest as joint tenant and no cause of action arising from the fact of an invalid severance: at [1], [50]-[63], [70]. Frazer v Walker [1969] 1 AC 569; Breskvar v Wall (1971) 126 CLR 376; Garafano v Reliance Finance Corporation Pty Ltd (1992) 5 BPR 97,420; Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202, applied.

Judgment

BASTEN JA: I agree with Leeming JA.
LEEMING JA: This narrowly confined appeal is directed to a registered dealing severing a joint tenancy of Torrens title land. The appellant contends that the primary judge erred in failing to find either that the fraud exception or an in personam exception to indefeasibility had been made out. For the reasons that follow, no such error was made, and the appeal should be dismissed.

Uncontroversial factual background

For present purposes, the salient facts can be shortly stated. Without conveying any discourtesy, it will be convenient to refer to the five members of the Anderson family by the names by which they were accustomed to be known.
Minnie and Norrie were married in 1951. She was 33 and he was 23. In 1958 they acquired title as joint tenants of a parcel of land in Sans Souci in southern Sydney. They lived there for some years. The appellant, Stephen, was the older of two children of that marriage. The marriage was dissolved by an order of this Court in 1970 under the Matrimonial Causes Act 1959 (Cth). By consent, the Court ordered that Minnie was to "have the right to reside rent free in the former matrimonial home situated at [Sans Souci] for her lifetime or until her remarriage" and that Norrie was to be responsible for mortgage repayments, the payment of rates, taxes and repairs and maintenance on the home for so long as Minnie occupied it. Custody of the two children was given to Minnie. The orders did not refer to exclusive possession in terms, although it seems likely that their effect was to curtail both co-owners' possession of parts of the land. I shall refrain from considering whether that severed the joint tenancy in equity, something which was not argued by the parties.
Norrie married the first respondent Marilyn shortly after his first marriage was dissolved, when he was 42 and she was 21. The second respondent, Natalie, is the oldest of three children of that marriage. Norrie died in 2013 and Minnie died in 2015. Both lived in (separate) nursing homes prior to their deaths. Marilyn is the executrix of Norrie's estate and Stephen is the executor of Minnie's estate.
On around 25 September 2012, an instrument severing the joint tenancy of the Sans Souci land was registered by the Registrar-General. Upon registration, Norrie and Minnie became registered proprietors as tenants in common in equal shares of the Sans Souci land. There has been a grant of probate in respect of Norrie's deceased estate, and Marilyn, as Norrie's executrix, either is now, or else is entitled to be (the evidence does not disclose which), the registered proprietor of Norrie's interest in land.
The transfer severing the joint tenancy contained two statutory declarations. Both were made by Natalie. The second statutory declaration stated that Natalie was Norrie's attorney under a registered power of attorney. Attention in the appeal focussed upon the first, which was relevantly in the following form: "I solemnly and sincerely declare that to the best of my knowledge and belief - 1. I, Natalie Elizabeth Anderson am not subject to any legal constraint which would prevent [Norrie] Frank Anderson severing the joint tenancy; 2. The full name and street address of each of the other joint tenants is shown below: Miriam Veronica ANDERSON of xxx Sans Souci, NSW, 2219." The address given for Minnie was that of the property the subject of these proceedings.
Both declarations were witnessed by a solicitor, Mr Sean Peters, at his business address in Leumeah, south western Sydney, reasonably close to Natalie's home.
In order to resolve the grounds of appeal, it is necessary to summarise aspects of the evidence leading to the execution of the power of attorney and the instrument severing the joint tenancy. There was much more evidence, including much conflicting testimonial evidence, than is summarised below. What follows is sufficient for the purposes of this appeal, and is derived from contemporaneous documents.
Norrie had given an enduring power of attorney pursuant to the Powers of Attorney Act 2003 (NSW) in March 2006 to Marilyn (as principal attorney) and Natalie (as substitute attorney). The first clause commenced: "I appoint my wife MARILYN ANDERSON of xxx Swansea PROVIDED THAT should my said wife be unwilling or unable to act I appoint my daughter NATALIE ANDERSON of xxx Raby to be my attorney."
At some point in time, both Marilyn and Natalie had signed the document, indicating their acceptance of their appointments as attorneys. Both signatures were dated 28 March 2006. The form made no provision for witnessing their signatures, and neither was witnessed.
On 19 June 2012, Natalie wrote to Mr Peters requesting advice, advising that Norrie had been in a nursing home for the past six years, that Minnie had entered a nursing home in 2010, and that it was not known if she was still alive. Her email continued: "The Sans Souci property, which remains a joint tenancy, has now been vacant for almost 2 years. The council rates on the property have not been paid for up to 20 years. ... Dad had approached Minnie several times over the years to sever the joint tenancy; to sell and share the property but she always refused. The property now sits in a vacant limbo. My mother would like to find out if Minnie is in fact deceased. My mother and father would like to return to Sydney and occupy the property as dad is now approaching 84 years of age and has never had any sole use or enjoyment of the property in question."
Mr Peters responded asking for the terms of settlement and court orders. He said that "[n]ormally a standard order is that all joint tenancies are severed, otherwise your dad could be the sole owner by way of survivorship".
Contemporaneous documents in evidence suggested that Mr Peters met both Marilyn and Natalie on 26 June 2012. He seems to have met at least one of them, because on 27 June 2012, Mr Peters lodged the power of attorney for registration. This was necessary for an instrument severing the joint tenancy executed by Marilyn or Natalie on behalf of Norrie to be registered. Section 36(2) of the Real Property Act 1900 (NSW) empowers the Registrar-General to refuse to accept for lodgment, and to refuse to make a recording or dealing in the register, where an instrument is executed pursuant to an unregistered power of attorney. Consistently with this, the Registrar-General's guidelines, made under s 12D of the Real Property Act, provide that where an attorney executes a dealing, the "power of attorney may be made in any state or country but must be registered in the General Register of Deeds in LPI".
In July 2012, inquiries by Mr Peters revealed that no death certificate for Minnie was available. He advised Natalie towards the end of July 2012 that "this could mean that she was still alive" and: "If this is the case and your father dies first the whole property will go to [Minnie]. Hence, we need to consider whether we should prepare and file a Unilateral Severance of Joint Tenancy so that the property is 50/50". [Typographical errors corrected]
On 29 July 2012, Natalie wrote to Mr Peters: "Mum has said to go ahead with severing the tenancy if it turns out that Minnie is in fact still alive. She would like to know what sort of challenge the other party could put up in this respect and any implications we should consider. Mum has been in Sydney today and will be here til around 12pm tomorrow."
As noted above, the instrument of severance was executed on 30 July 2012. It was executed by Natalie, not Marilyn. It was lodged one or two days later. A letter was sent by the Registrar-General by registered mail to Minnie, at the Sans Souci address stated on the instrument of severance, advising of the fact that the instrument had been lodged, and stating: "If you have not lodged a court order stopping me from registering the dealing severing the joint tenancy within 30 days from the date of this letter, I will register it and the joint tenancy will then be severed as set out in this letter."
However, the letter was not collected and was returned to the Registrar-General. In late September 2012, the severance was registered, and (presumably, although they were not in evidence) new, separate certificates of title, identifying Minnie and Norrie as tenants in common, were prepared.

Reasons of the primary judge

The hearing before the primary judge lasted four days. Although Mr Peters had acted for some period of time for both Marilyn and Natalie, including preparing their defence and witnessing their affidavits, shortly before the trial, Natalie terminated his retainer and appeared for herself, while Marilyn obtained separate representation. Natalie was cross-examined in relation to (a) the dating of the power of attorney, (b) whether she believed that Minnie's street address was the Sans Souci property and (c) whether she considered that she was authorised under the power of attorney, in light of her mother being the principal attorney.
The issues at first instance were more numerous than those on appeal. At trial, Stephen sought to attack the severance of the joint tenancy by establishing an agreement between Minnie and Norrie not to sever the title. The primary judge rejected this, and it forms no part of the appeal. Secondly, evidence was adduced which related to a cross-claim seeking provision under the Succession Act 2006 (NSW) (which was contingent on Stephen setting aside the severance), which his Honour dismissed. That too forms no part of the appeal.
Relevantly for present purposes, the primary judge made the following findings of fact.
First, the primary judge was not satisfied that Natalie had accepted appointment as attorney on 28 March 2006 when it was dated, and had instead back-dated her signature on the document: at [147]. However, his Honour found that she had accepted the appointment no later than 28 June 2012 (when it was registered): at [148], and stated at [149] that: "Nor am I satisfied, having come to the conclusion that the General Power of Attorney was not signed by [Natalie] on the date it bears, that the insertion of the incorrect date demonstrates any knowledge of fraud. As stated, the acceptance by the substitute Attorney could take place at any time before she acted as such."
Secondly, the primary judge found that the severance of the joint tenancy conferred no immediate benefit on Norrie: [150]-[156]. The severance, if effective, denied Norrie any chance to take the whole of the Sans Souci property in the event that his first wife, who was ten years older than him, predeceased him.
Thirdly, the primary judge found that Natalie and Marilyn knew that Minnie was no longer living in the Sans Souci property, and had not been living there for about two years, when the statutory declaration was made: at [218]. His Honour found that Natalie "should have known that she was providing only the address of the property to the Registrar General and that that address was not Minnie's then residential address". There was no evidence of any investigations made by Mr Peters as to her address. However, his Honour added at [220]: "I am not as confident that [Natalie] understood the legal significance of the underlying factual issues upon which she was cross-examined. It appears, in this regard, that she was relying upon the solicitor to assist in taking the necessary steps to effect the severance of the joint tenancy. The intricacies of notice having to be given to other joint tenants are unlikely to have been appreciated by either of [Marilyn or Natalie]."
Fourthly, the primary judge found that at all relevant times, Marilyn was both willing and able to act, but chose not to because it was inconvenient to do so. The consequence was that Natalie did not have power to act as the substitute attorney when she signed the statutory declaration and transfer: at [303]-[320].
Fifthly, the primary judge found that Norrie's medical and mental condition in 2012 was such that he lacked capacity to ratify the actions of Natalie as his attorney: at [325]-[327].
Sixthly, in order to defeat the indefeasible title obtained by Norrie, Stephen had alleged fraud within the meaning of the Real Property Act. The primary judge regarded it as well settled that fraud was actual fraud involving "dishonesty on the part of the registered proprietor in securing his registration as proprietor": Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 614. The primary judge addressed the two aspects of the transfer which had been challenged in Stephen's pleading. 1. In relation to Minnie's address, his Honour said at [392]: "With some hesitation, I have come to the view that [Natalie's] failure was to make further inquiries, which is not fraud, rather than wilful blindness as to the existence of fraud, which is fraud." 1. In relation to whether Natalie was the subject of any legal constraint, and Stephen's claim that she was under a legal constraint because Marilyn was not unwilling or unable to act as attorney, the primary judge found: "I accept [Natalie's] denial that she was not aware of this, believing that [Marilyn] was unable to sign the documents because of the geographical distance and because of the other impositions on her time. In this regard, there was a legal practitioner involved in her doing what she did. He does not appear to have turned his mind to the terms of limitation in the General Power of Attorney upon [Natalie] acting as the substituted Attorney. There is no suggestion that he informed either of [Marilyn or Natalie] of the meaning of the General Power of Attorney in this respect": at [394].
His Honour concluded at [396]: "Bearing in mind the seriousness of the allegations of fraud, having seen and heard [Natalie], I am not satisfied that she really had it in mind to dishonestly mislead the Registrar-General in any material respects and, thereby, influence the Registrar-General to do something materially different from what otherwise would have been done. Nor am I satisfied that there was a deliberate and dishonest trick by her causing Minnie's interest to be converted from a joint tenancy to that of a tenancy in common. More than a lack of bona fides is required. In my view, it has not been shown that [Natalie's] conduct in completing the statutory declaration and the transfer had the element of dishonesty or moral turpitude required for fraud to be established."
Finally, his Honour found at [399] that even if Natalie were guilty of fraud: "Norrie, because of his medical condition, could not have had knowledge, or notice, of what [Natalie] had done. Nor, for the same reason, would he have been able to hold any suspicion, upon which he failed to act by making further inquiries for fear of learning the truth."
In short, the primary judge declined to find fraud sufficient to answer s 42 of the Real Property Act, and further declined to bring any such putative fraud home to Norrie.

Issues on appeal

Stephen advanced two challenges on appeal. The first (grounds 1 and 2) was that the primary judge "had erred in failing to find that [Natalie] had committed fraud in obtaining registration" of the transfer severing the joint tenancy. The circumstances relied on in the notice of appeal were Natalie's lack of authority (because her mother as principal attorney was willing and able to act), Natalie's knowledge that Minnie had not lived at Sans Souci for two years but was living in a nursing home, the backdating of the power of attorney and that Natalie's statutory declaration that she was "not subject to any legal constraint" was false. It was said that "the proper inference or conclusion to be drawn from [those four matters] is that such conduct on the part of [Natalie] amounted to fraud".
The second (grounds 3 and 4) was that the primary judge had failed to determine the claim that Marilyn held her one half interest in the land on constructive trust for Stephen. The basis for the constructive trust was said to be an in personam equity, based on Natalie exceeding the limits of the authority conferred by the power of attorney.

The fraud exception to indefeasibility

There was no dispute that, in order to establish fraud within the meaning of s 42 of the Real Property Act, it was necessary to establish fraud in the sense of moral turpitude which was brought home to the registered proprietor. "'Fraud' in s 42(1) means 'actual fraud, moral turpitude'": Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [192]. Moreover, such fraud by persons from whom a registered proprietor claims "does not affect [the registered proprietor] unless knowledge of it is brought home to him or his agents": Assets Company Ltd v Mere Roihi [1905] AC 176 at 210; Cassegrain v Gerard Cassegrain & Co Pty Ltd (2015) 254 CLR 425; [2015] HCA 2 at [32].
As noted above, the primary judge expressly had regard to each of the four matters which, according to Stephen, produced the result that a finding of fraud was "the proper inference or conclusion". His Honour was critical of aspects of Natalie's conduct. However, his Honour was also conscious of the fact that Natalie had retained a solicitor to prepare the severance, who also knew the terms of the power of attorney, and that Minnie no longer lived at the premises. It is true that Mr Peters, the solicitor, may not have known that the power of attorney had been backdated, but his Honour dealt with this expressly, considering that it did not demonstrate any knowledge of fraud.
It is no small thing for this Court to be invited to make a finding of fraud or other serious misconduct on appeal where one has not been made at first instance. In rare circumstances that may occur. The power to draw inferences and make findings of fact conferred or confirmed by s 75A(6)(b) of the Supreme Court Act 1970 (NSW) when this Court performs an appeal by way of rehearing includes power, in an appropriate case, to make findings of fraud or dishonesty.
One example is Chen v State of New South Wales (No 2) [2016] NSWCA 292 at [28]-[36]. There the evidence overwhelmingly pointed to the adverse finding, namely, that a police officer had attempted (unsuccessfully) to delete photographs thought (wrongly) to have presented her execution of an arrest in a poor light. This Court identified error in the primary judge declining to make that finding. Two points may be highlighted for present purposes. The first is that there was no realistic scope for any intermediate explanation: the attempt to delete the photographs unquestionably occurred and could not have been other than deliberate. The second was that the police officer had not given evidence before the judge at first instance, and so the primary judge did not possess any advantage having seen the officer give evidence which this Court did not possess.
That example illustrates how the principles governing appellate review are applied in such cases. In Hare v Harmer [2009] NSWCA 68, Sackville AJA (with whom Macfarlan JA and Handley AJA agreed) said at [47] that: "Waterways Authority v Fitzgibbon does not necessarily prevent an appellate court, where the trial judge has been shown to have erred on a factual question, from substituting its own findings of fact for those made by the trial judge. It may be that, once the trial judge's error is corrected, the probative evidence on a particular issue points to only one conclusion. Alternatively, if the remaining evidence, although conflicting, presents no issue of the reliability or credit of particular witnesses, the appellate court may be in as good a position as the trial judge to resolve the conflict: cf Warren v Coombes (1979) 142 CLR 531 at 551-552, per Gibbs ACJ, Jacobs and Murphy JJ."
Conversely, and picking up the qualification in the concluding sentence of that passage, Macfarlan JA said (with the agreement of McColl JA and Sackville AJA) in Miller Heiman Pty Ltd v Sales Principles Pty Ltd [2017] NSWCA 106 at [58]: "Generally this Court is not in a position to determine an issue which depends upon the credibility of witnesses in the Court below as it has not seen and heard the witnesses give their evidence and thus cannot form views about their demeanour."
I find it difficult to contemplate circumstances where this Court, not having the advantage of seeing and hearing the denials of a party against whom serious adverse findings are sought to be made, would make such a finding where the same finding was not made at first instance. But it is not necessary to attempt to identify the limits of this Court's appellate jurisdiction in this respect any further. This is a clear case where the finding of fraud which was rejected at trial cannot be made out on appeal, for the following reasons.
First, no real attempt was made to impugn an important matter on which the primary judge relied, namely, the involvement of a solicitor. Mr Peters had no reason to participate in any fraud upon Minnie or the Registrar-General, yet subject to the possibility that he was unaware of the back-dating of the power of attorney, it may confidently be inferred from the contemporaneous documents that he knew all the matters on which Stephen relied. It is true that Mr Peters did not give evidence, and prima facie was ill-advised to act for Marilyn and Natalie, including assisting in their preparation of affidavits on controversial matters relating to the advice he gave them: see now Legal Profession Uniform Law Australian Solicitors Conduct Rules 2015 (NSW), r 27. But that falls short of attacking the basis of the finding that Natalie was entitled to rely upon Mr Peters' expertise.
Secondly, it was well open to the primary judge to conclude that nothing turned on the backdating of the power of attorney. If the purpose of backdating a document is to falsely create the impression that the document was a highly probative contemporaneous record (see for example Fairfax Media Publications Pty Ltd v Cowper [2016] NSWCA 320 at [20]) or to conceal a conflict of interest (see for example Director of Public Prosecutions (Cth) v Northcote [2014] NSWCCA 26 at [27]-[28]) then that may sustain a finding of fraud or dishonesty. Those are cases (and of course there are others) where the essence of the back-dating of a document is to deceive its reader. But so far as the evidence discloses, Natalie did not exercise the power of attorney until after it had been signed and dated by her. Her delayed and backdated signature had no legal significance for the efficacy of the power of attorney after it was registered.
True it is that Natalie accepted in cross-examination that it was inappropriate to backdate a document, and she at first denied having done so. It is to be recalled that she was being cross-examined almost four years after the document was registered, and almost ten years after Norrie had executed it. Stephen has not established error in the conclusion of the primary judge that, insofar as the back-dated document was only ever used after it had been signed, there was no s 42 fraud.
Thirdly, aspects of Stephen's submission are, with respect, somewhat strained. One significant submission, advanced orally and in writing, was to the effect that Natalie believed (wrongly) that the joint tenancy could only be severed if Minnie was no longer in residence. But this does not support a finding of dishonesty. To the contrary, if that evidence be accepted, then Natalie's making a statutory declaration to the effect that Minnie still resided in the San Souci property amounted, on the view said to have been held by Natalie, to advising the Registrar-General of the very fact which would preclude the severance of the joint tenancy. That does not bespeak an intention to deceive.
Fourthly, the findings sought by Stephen are serious. They attract the strictures in s 140 of the Evidence Act 1995 (NSW), reflecting in part what was stated by Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361 and 362 to the effect that the court feel an "actual persuasion" and that such findings "should not be produced by inexact proofs, indefinite testimony, or indirect inferences".
I am far from satisfied, having regard to the seriousness of the finding, that Natalie was guilty of fraud in the sense of moral turpitude. The address stated on the document was Minnie's last known address. Further, for what it is worth, the address was typed on the document and I would infer that that was done by the solicitor's office in advance of Natalie signing it. The backdating of the power of attorney does not persuade me there was fraud, for the reasons already stated. A submission that Natalie was aware that her exercise of the power of attorney was contrary to its terms and that this was evidence of fraud was withdrawn at the outset of the appeal. That was the proper course to take. The power of attorney was given to Mr Peters, registered by him, and his office drew up the instrument of severance. In circumstances where Natalie was signing as attorney in the presence of her solicitor, it would require much more evidence than is presently available to persuade a court that she knew that she was exceeding the limits of her agency.
For those reasons, Stephen has failed to demonstrate that the primary judge was wrong to make findings falling short of fraud amounting to moral turpitude on the part of Natalie. Grounds 1 and 2 are not made out.
Finally in relation to those grounds, it is to be recalled that the person who obtained the benefit of registration as a tenant in common was not Natalie, nor for that matter Marilyn, but Norrie. Stephen accepted the need to bring home the fraud to the registered proprietor or his agents. Stephen invited this Court to impute the fraud by Norrie's agent Natalie to Norrie. That submission would in turn require attention to be given to what was said, slightly tentatively, by Hodgson JA in Davis v Williams [2003] NSWCA 371; 11 BPR 21,313 at [34], as to whether and to what extent there is a sufficiently close connection between the agent's wrongful act and the scope of the agent's engagement. That cannot readily be done in the abstract, and is best left to a case in which precise findings of fraud by the agent have been made.

In personam claim

Alternatively, Stephen submitted that even if s 42 fraud was not established, the one half interest in the Sans Souci property was nonetheless held on constructive trust for Minnie. That claim was said to be based merely on the fact that Natalie was not authorised by the power of attorney. Her exercise of power pursuant to the power of attorney was said to fall within the statement of principle as to equitable fraud in Nocton v Lord Ashburton [1914] AC 932 at 954 to the effect that a person who misconceives the extent of the obligation which a court of equity imposed upon him or her, "however innocently because of his ignorance", will have violated an obligation which he was taken by the Court to have known, with the result that the conduct is labelled fraudulent.
Stephen thus submitted that Natalie had "committed equitable fraud" by causing the joint tenancy to be severed, and that it did not matter that the interest in land had been transmitted to Marilyn as executrix. Stephen relied on the statements of principle by Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 716 and Black v Freedman (1910) 12 CLR 105 at 110 to the effect that where property is obtained by fraud, or where money has been stolen, it will be held on constructive trust.
The basal difficulty with this submission is that the premise of an in personam claim against a registered proprietor is that the plaintiff has a claim founded in law or in equity: Frazer v Walker [1967] 1 AC 569 at 585; Breskvar v Wall (1971) 126 CLR 376 at 384-5; Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 613, 637-8, 653-6. The expressions "personal equity" and "right in personam" encompass only known legal causes of action or equitable causes of action: Garafano v Reliance Finance Corporation Pty Ltd (1992) 5 BPR 97,420; Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 at 222. It is clear from Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [193]-[196] that only certain causes of action operate against a registered proprietor so as to give rise to an exception to indefeasibility, as Gleeson JA observed, with the agreement of Sackville AJA and me, in Despot v Registrar General of New South Wales [2016] NSWCA 5 at [164].
There is a debate in the authorities whether, in accordance with one reading of the reasons of Hayne J in Vassos v State Bank of South Australia [1993] 2 VR 316 at 333, a registered proprietor is not susceptible to an in personam claim unless the proprietor is acting unconscionably or unconscientiously. Without being exhaustive, the narrower view may be seen in the dissenting judgment of Davies JA in White v Tomasel [2004] 2 Qd R 438; [2004] QCA 89, which was preferred by Campbell J in Battenberg v Union Club [2005] NSWSC 242; 215 ALR 696 at [53]; the wider view may be seen in the judgment of McMurdo J, with whom Williams JA agreed, in White v Tomasel and the review by Brereton J in Harris v Smith [2008] NSWSC 545 at [55]-[68].
It is not necessary to resolve that issue in this appeal. However, if the requirement of unconscionability means only that equity regards the assertion of a registered proprietor's statutory rights as unconscientious in circumstances where a plaintiff has a recognised cause of action at law or in equity, then the requirement adds nothing to the premise that there is a known cause of action at law or in equity which is not inconsistent with the Real Property Act 1900 (NSW). Alternatively, if there are known causes of action at law or in equity which, merely because they lack an element of unconscientiousness, are defeated by the rights of a registered proprietor, then it is difficult to see a statutory basis for such differential treatment. I respectfully agree with the observation that "the concept of 'indefeasibility' [is] less helpful than the words of the various statutes ... in defining what claims fall outside Torrens protections": L Moses and B Edgeworth, "Taking it Personally: Ebb and Flow in the Torrens System's In Personam Exception to Indefeasibility" (2013) 35 Sydney Law Review 107 at 114. And it should not be forgotten that the statutes do not speak with one voice: compare for example the exception in s 185(1)(a) of the Land Title Act 1994 (Qld) in cases where there is "an equity arising from the act of the registered proprietor".
There is to my mind much to be said for the proposition that the only question is whether the known cause of action is inconsistent with the Real Property Act 1900 (NSW), especially s 42 read with s 43. For one thing, that would that seem to accord with first principle. For another, it would appear to accord with authority. That is how I read Tadgell JA's statements in Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 at 156 and 157 that "there is neither room nor the need, in the Torrens system of title" and "I think it is not possible, consistently with the received principle of indefeasibility as it has been understood since Frazer v Walker and Breskvar v Wall". His Honour was thereby observing that a claim for knowing receipt was not available because it was inconsistent with statute: where registration was honestly obtained, there was no "receipt" of property, even if the registered instrument was forged, because that would be inconsistent with an essential aspect of the statutory scheme, namely, title by registration. Of course, that reasoning was endorsed by the High Court in Farah at [194]-[196].
But what cause of action did Minnie have? It was said that Minnie had the "right" to remain as joint tenant until such time as the joint tenancy was validly severed. It was expressed in oral submissions thus: "Consistent with Minnie's position as an equitable joint tenant, Minnie was entitled to the title being retained as a joint tenancy until such time as it was validly severed." "The arrangement between them was that Minnie was entitled to require that the title be retained as a joint tenancy until such time as it was validly severed. SACKVILLE AJA: That's true of all legal joint tenancies, yes. WILSON: Norrie was under a personal obligation to deal with the title in an appropriate way. If it was going to be severed, it needed to be severed appropriately and validly." "WILSON: The personal equity arises from the fact that Norrie was under an obligation to deal with the title in a particular manner. In other words, if he was going to sever the joint tenancy, and I'm repeating myself, it would have to be done validly. Minnie had a right in equity to require him, if he was going to sever, to do it validly. SACKVILLE AJA: Yes. Well, that's just begging the question, if you don't mind me saying so."
With respect, those formulations do not advance the argument, for the reasons indicated by Sackville AJA during argument. The proposition that Minnie had a "right" to insist that the joint tenancy only be severed in accordance with law is no more nor less than its converse, which is that Norrie had a right (more precisely, a power) unilaterally to sever the joint tenancy.
The proposition advanced on behalf of Stephen shows the ambiguity in the word "right", and underscores the utility of the more careful language of "power" and its correlative "liability" advocated by Hohfeld: see W Hohfeld, Fundamental Legal Conceptions As Applied In Judicial Reasoning (Lawbook Exchange reprint, 2000) pp 50-51.
Stephen readily and properly accepted that Minnie's interest as registered owner as a joint tenant was susceptible to unilateral severance in accordance with s 97 of the Real Property Act. That section is after all titled "Severance of joint tenancy by unilateral action". It gave Norrie power to sever Minnie's and his interests as joint tenants, and correspondingly rendered Minnie's interest liable to be severed. It strains language to say that Minnie had a right to preserve her interest as joint tenant until it was extinguished in accordance with s 97; that is to say no more than that Minnie was a joint tenant. And it is with respect quite wrong to say that Minnie had a cause of action to preserve her interest as joint tenant in accordance with s 97.
It is considerably more accurate to say that Minnie was subject to a liability that her interest could be severed in accordance with s 97. As senior counsel for Marilyn put it: "In the context of the Real Property Act, people who enter into joint tenancy do so on the basis that their tenancy may be severed as provided for by the Act. There is no personal obligation that arises from the fact of joint tenancy. And the only question is whether the tenancy has been severed, as provided for, or as permitted by, the Act."
Another way of observing the absence of any cause of action enjoyed by Minnie is to note that, putting to one side Minnie's primary case that there was an agreement not to sever the joint tenancy (which case was rejected at trial and outside the scope of Minnie's appeal), Minnie did not point to any claim based on estoppel or other cause of action in law or equity giving rise to an in personam right against Norrie. That is because no such claim or cause of action was available.
The position is thus seen to be entirely different from the case of a thief considered in Black v Freedman, where the victim has a number of causes of action, both personal and proprietary, against the thief and volunteers who receive the stolen property: see Fistar v Riverwood Legion and Community Club Ltd (2016) 91 NSWLR 732; [2016] NSWCA 81 at [36]-[43] and [89]-[93]. It is entirely different from the constructive trust considered in Westdeutsche at 715. There Lord Browne-Wilkinson said that: "Although the mere receipt of the moneys, in ignorance of the mistake, gives rise to no trust, the retention of the monies after the recipient bank learned of the mistake may well have given rise to a constructive trust". Stephen's submission recalls that rejected by King CJ with the agreement of Williams J in Palais Parking Station Pty Ltd v Shea (1980) 24 SASR 425 at 429-30, 442.
That is not to say that Minnie was not entitled to ask the Registrar-General to take steps confirming that Natalie was validly authorised by Norrie to execute and lodge the instrument of severance. But she could not prevent the severance. That is why she relevantly had no cause of action. Her interest in the joint tenancy was inherently precarious, in that it was subject to being severed by unilateral conduct by the other joint tenant, Norrie.
In truth, such rights as Minnie had which devolved to Stephen depended merely on Norrie predeceasing her before the instrument of severance was registered. That is not a legal or equitable cause of action. Instead, it merely reflects a basic incident of the nature of Minnie's interest under a joint tenancy.
Stephen complained that the primary judge had not separately addressed this aspect of the case. For the foregoing reasons, there is nothing in it.
That is sufficient to resolve this aspect of the appeal. However, it is not the only difficulty Stephen confronts. Stephen's case as advanced was that a constructive trust should be imposed upon Norrie upon the registration of the instrument of severance, and he invoked the principle that "a person cannot take or retain a benefit from a fraud committed on his or her behalf": Davis v Williams at [37]. But this requires overturning the finding that Norrie received no benefit.
Registration merely changed the nature of the interest in the Sans Souci property held by Norrie. Norrie was always going to be at least a co-owner of the Sans Souci property while he lived, and the severance of the joint tenancy denied him any chance of ever being the sole owner of the property. Where is the error in the primary judge finding that Norrie received no benefit when the instrument of severance was registered?
The tenor of Stephen's submissions focussed on the benefit said to have been received by Marilyn (as executrix) and Marilyn and Natalie (as beneficiaries under Norrie's will - which provided that if when he died he owned half of the Sans Souci property, then it was held on trust for Marilyn as to one half and for Natalie and her brother and sister as to the other half). But once again, neither Marilyn nor Natalie herself received any property when the dealing was registered. When the instrument was registered, Marilyn and Natalie still had no more than a hope that the newly severed interest in the Sans Souci property might be devised to them if Norrie predeceased them. Their hope may have risen to an expectation. Even so, it remained a classic example of something which is not property: Re Lind [1915] 2 Ch 345.
True it is that with the benefit of hindsight, it is now known that Norrie has died and Marilyn is alive (just as it is known that Norrie predeceased Minnie - but for which this litigation would not have occurred at all). But that does not alter the fact that Marilyn and Natalie received no property when the instrument of severance was registered. At the highest, they received a benefit more than a year later, when what may have been their expectation (that Norrie would predecease them) eventuated. That seems to be, to say the least, some distance removed from the principle to which Hodgson JA referred in Davis v Williams. When the issue was raised in argument, Stephen came close to accepting as much. That said, it is not necessary to express a concluded view on the point.

Orders

For those reasons, the appeal must be dismissed. I turn to costs. Marilyn and Natalie were represented by separate solicitors and counsel on the appeal. Both were necessary parties, and both were entitled to separate representation if they so chose. However, there was no divergence of interest between them (hence, for example, most of the submissions directed to repelling a finding of fraud on the part of Natalie were made by counsel appearing for Marilyn). As was flagged during the hearing, although costs must follow the event, there is no occasion for the unsuccessful appellant to bear two sets of costs: see Taylor v Owners - Strata Plan No 11564 (No 2) [2013] NSWCA 153 at [6]. The form of orders I propose is taken from HP Mercantile Pty Ltd v Hartnett [2017] NSWCA 79.
I propose the following orders:
Appeal dismissed.
Appellant to pay the respondents' costs of the appeal on the basis that the respondents are to be treated as having been represented by the same counsel and the same solicitors, with the intent that the respondents be allowed a single set of costs.
SACKVILLE AJA: I agree with Leeming JA.

Amendments 09 June 2017 - Cover sheet: spelling of Counsel's name corrected. 11 December 2017 - [6] - "Registrar General" replaced by "Registrar-General" DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 December 2017

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