Ausbao (286 Sussex St) Pty Ltd v The Registrar-General of New South Wales - [2021] NSWSC 1651 - NSWSC 2021 case summary — Zoe

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Ausbao (286 Sussex St) Pty Ltd v The Registrar-General of New South Wales

[2021] NSWSC 1651

Supreme Court of NSW|2021-05-31|Before: Robb J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2021-05-31

Before

Robb J

Catchwords

(2007) 13 BPR 24,675 Comserv (No 1877) Pty Ltd v Figtree Gardens Caravan Park [1999] NSWSC 124
(1999) 9 BPR 16,791 Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572
[2001] NSWSC 495 Emma Tait Nominees Pty Ltd v Laprese [2020] VSC 508 Glensaugh Pty Ltd v Registrar-General [2001] NSWSC 1114
(2001) 10 BPR 19,311 Hawkins v Clayton (1988) 164 CLR 539 at 544

Source

Original judgment source is linked above.

Catchwords

(2007) 13 BPR 24,675 Comserv (No 1877) Pty Ltd v Figtree Gardens Caravan Park [1999] NSWSC 124(1999) 9 BPR 16,791 Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572[2001] NSWSC 495 Emma Tait Nominees Pty Ltd v Laprese [2020] VSC 508 Glensaugh Pty Ltd v Registrar-General [2001] NSWSC 1114(2001) 10 BPR 19,311 Hawkins v Clayton (1988) 164 CLR 539 at 544[1988] HCA 15 Henville v Walker (2001) 206 CLR 459[2001] HCA 52 Kirkland v Quinross Pty Ltd [2008] NSWSC 286(2008) 14 BPR 26,979 Kumar v Registrar-General of New South Wales [2021] NSWSC 1103 Lincu v Registrar-General [2019] NSWSC 568Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332[1994] HCA 4 South Western Sydney Local Health District v Gould (2018) 97 NSWLR 513

Judgment (48 paragraphs)

[1]

section 129(2)(b) LAND LAW - Torrens title - Compensation for loss of interest in land - Torrens assurance fund - Where the Registrar-General argued that the plaintiff is excluded from the right to compensation by reason of section 129(2)(e) of the Real Property Act 1900 (NSW) because the loss or damage arose because of an error or miscalculation in the measurement of land - Where the plaintiff argued that the definition of "measurement" was limited to the process of ascertaining a size within the context of s 129(2) - Where the Registrar-General argued the definition included both the process and the outcome - Where the Court found that "measurement" had the meaning as contended for by the Registrar-General - Where the Court held that the Registrar-General has established that the plaintiff is excluded from the right to compensation by reason of section 129(2)(e) LAND LAW - Torrens title - The register - Whether a deposited plan was registered in the Torrens register under the Real Property Act 1900 (NSW) or in the register of plans under the Conveyancing Act 1919 (NSW) - Where the plaintiff argued the deposited plan was registered in the Torrens register - Where the Registrar-General argued it was registered in the register of plans - Where the Court found that the deposited plan was registered in both the Torrens register and the register of plans Legislation Cited: Civil Liability Act 2002 (NSW) Conveyancing Act 1919 (NSW) Conveyancing Legislation (Notice of Sale) Amendment Act 1992 (NSW) Local Government Act 1919 (NSW) Professional Standards Act 1994 (NSW) Real Property Act 1900 (NSW) Real Property Amendment (Compensation) Act 2000 (NSW) Real Property Amendment (Land Transactions) Act 2009 (NSW) Real Property and Conveyancing Legislation Amendment Act 2009 (NSW) Cases Cited: Australian Executor Trustees (SA) Limited v Kerr [2021] NSWCA 5 Australian Hi-Fi Publications Pty Ltd v Gehl [1979] 2 NSWLR 618 Bank of Western Australia Ltd v Coppola (No 2) [2012] NSWSC 1495 Boyton v Clancy (1998) 9 BPR 16,585 Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 59 NSWLR 452 Chandra v Perpetual Trustees Victoria Ltd [2007] NSWSC 694; (2007) 13 BPR 24,675 Comserv (No 1877) Pty Ltd v Figtree Gardens Caravan Park [1999] NSWSC 124; (1999) 9 BPR 16,791 Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572; [2001] NSWSC 495 Emma Tait Nominees Pty Ltd v Laprese [2020] VSC 508 Glensaugh Pty Ltd v Registrar-General [2001] NSWSC 1114; (2001) 10 BPR 19,311 Hawkins v Clayton (1988) 164 CLR 539 at 544; [1988] HCA 15 Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 Kirkland v Quinross Pty Ltd [2008] NSWSC 286; (2008) 14 BPR 26,979 Kumar v Registrar-General of New South Wales [2021] NSWSC 1103 Lincu v Registrar-General [2019] NSWSC 568; (2019) 19 BPR 39,351 National Australia Bank Ltd v Thirup [2011] NSWSC 911 Potts v Miller (1940) 64 CLR 282 Registrar-General v Rigby (Land and Environment Court (NSW), Bannon J, 29 June 1995, unreported) Registrar-General v Tuckfield (1991) 6 BPR 13,831 Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4 South Western Sydney Local Health District v Gould (2018) 97 NSWLR 513; [2018] NSWCA 69 Svanosio v McNamara (1956) 96 CLR 186 Thomas v Registrar-General [2018] NSWSC 1517 Trieste Investments Pty Ltd v Watson (1963) 64 SR (NSW) 98; 81 WN (Pt 2) (NSW) 136 Voudouris v Registrar-General (1993) 30 NSWLR 195 Wassell v Ken Carr Bobcat & Tipper Hire Pty Ltd [2021] NSWSC 1415 Texts Cited: Brendan Edgeworth, Butt's Land Law (7th ed, 2017, Lawbook Company) F Ticehurst and P Blair, Baalman and Wells Land Titles Office Practice NSW (5th ed, 1998, looseleaf, Lawbook Co) Greg Stilianou, Land Titling Law and Practice in NSW (2013, Lawbook Company) R A Woodman, K Nettle, F Ticehurst, P Butt, L Hughes and J Stuckey-Clarke, Woodman & Nettle, the Torrens system in New South Wales (2nd ed, 1996, looseleaf, Thomson Reuters) Category: Principal judgment Parties: Ausbao (286 Sussex St) Pty Ltd (plaintiff) The Registrar-General of New South Wales (defendant) Representation: Counsel: G A Sirtes SC/ H Grace (plaintiff) H Altan (defendant)

[4]

Acquisition of the Land by Ausbao 286

Ausbao 286 was incorporated for the purpose of acquiring land at 286 Sussex Street in the City of Sydney (the Land), and it is for that reason that it was given the name that it bears. Ausbao 286 is a subsidiary of Ausbao Pty Ltd (Ausbao), which itself is owned by a corporation owned by the People's Republic of China. Ausbao has engaged in the business of the acquisition and development of commercial and residential properties in Australia through special purpose vehicles such as Ausbao 286.
On 26 November 2013, Ausbao 286 purchased the Land for a price of $55 million. The Land was described in the contract for sale by reference to four lots in identified deposited plans. Those deposited plans described the area of each of the four parcels that made up the Land as having a total site area of 1,337.4 m². Ausbao 286 discovered after the completion of the contract for sale that the total site area of the Land was in fact only 1,255.9 m². Ausbao 286 has treated errors in the areas described in three of the lots as de minimis. The present claim is based on Ausbao 286's discovery that lot 1 in DP 657427 (the Lot) has a site area of 502.3 m², rather than that shown on the plan of the Lot (the Plan) of 588 m², being a discrepancy of 85.7 m².
Ausbao 286 acquired the Land, upon which an existing commercial building was erected, for the purpose of redevelopment. The Land was offered to the market in the information memorandum that was circulated to potential buyers on the basis that redevelopment for commercial or combined commercial and residential purposes represented its highest and best use, and that the site area was 1,337.4 m². The computer folios and the deposited plans for the four lots were included in the electronic data room inspected by Ausbao 286 for the purpose of making its bid in response to the information memorandum and were also annexed to the contract for sale. Ausbao 286 made its bid to purchase the Land based upon its inspection of the deposited plans for the four lots and determined its bid price on the basis that the site area was 1,337.4 m². The site area of the Land was a critical determinant under the relevant planning instruments of the maximum floor area of the completed redevelopment, having regard to floor space ratio limitations. The final estimated floor area of the redevelopment was a critical factor in Ausbao 286's assessment of the market value of the completed development, and consequently the price that Ausbao 286 could commercially offer for the Land, having regard to cost and risk factors and Ausbao 286's judgment as to a satisfactory rate of return.
Ausbao 286's case is that, had it known the true site area of the Lot, it would have offered a price of no more than $47.5 million to $50 million. In par 20 of its amended statement of claim, Ausbao 286 sought compensation of $5.0 million to $7.5 million, as well as the amount of additional stamp duty that it paid because of the higher purchase price, and legal, valuation and other professional costs that it has incurred in making its claim for compensation. At the hearing, Ausbao 286 changed its claim to one based upon the value of the chance that it lost of succeeding in acquiring the Land for a lesser price than $55 million, assessed by Ausbao 286 on the same basis as it originally determined its bid price, but starting from the true site area of the Land as being 85.7 m² less than 1,337.4 m². I will return to the issue of the quantification of Ausbao 286's compensation claim below.

[5]

Entitlement to compensation

As observed by Kunc J in Lincu v Registrar-General [2019] NSWSC 568; (2019) 19 BPR 39,351 (Lincu) at [105]: "…Looking at the structure and words of s 129, I accept the RG's submission that it clearly and unambiguously contains two parts which operate concurrently and invite a two stage inquiry". Ausbao 286 must first establish that it has suffered loss or damage falling within one of the sub-paragraphs of s 129(1). Ausbao 286 will then be entitled to compensation from the Torrens Assurance Fund unless the loss or damage falls within one or more of the categories listed in s 129(2). In the present case, Ausbao 286 asserts that it has suffered loss or damage falling within s 129(1)(a) and (c). The Registrar-General denies this is so but adds that any loss or damage suffered is wholly denied a right to compensation by the application of s 129(2)(a), (b) and (e).
Sections 129(1) and (2) relevantly provide: (1) Any person who suffers loss or damage as a result of the operation of this Act in respect of any land, where the loss or damage arises from - (a) any act or omission of the Registrar-General in the execution or performance of his or her functions or duties under this Act in relation to the land (including any such act or omission of the authorised operator), or … (c) any error, misdescription or omission in the Register in relation to the land, or … is entitled to payment of compensation from the Torrens Assurance Fund. (2) Compensation is not payable in relation to any loss or damage suffered by any person - (a) to the extent to which the loss or damage is a consequence of any act or omission by that person, or (b) to the extent to which the loss or damage - (i) is a consequence of any fraudulent, wilful or negligent act or omission by any solicitor, licensed conveyancer, real estate agent or information broker, and (ii) is compensable under an indemnity given by a professional indemnity insurer, or … (e) where the loss or damage arises because of an error or miscalculation in the measurement of land, or …
The Registrar-General accepts that an officer of the Registrar-General made a mistake (to use a presently neutral word) when the area of 588 m² for the Lot was inserted in DP 657427 at the time the Plan was prepared in the Registrar-General's office, for the purpose of describing the Lot in the computer folio that was prepared for the Lot. The manner in which the mistake was made will be considered more fully below. The Registrar-General says that, nonetheless, Ausbao 286's reliance on that area as part of the basis of its determination of the bid price to offer for the Land does not entitle it to compensation from the Torrens Assurance Fund.
Although there was no issue that the site area of the Lot was understated in the Plan, it is also accepted by the parties that the relative location and dimensions of the boundaries of the Lot were correctly stated in the Plan. Although the boundaries comprised straight lines, the Lot is irregular in shape, and it is not possible to compute its true area by any simple arithmetical process based upon the dimensions of the boundaries.

[6]

Outline of the parties' arguments

Ausbao 286's case at trial was relatively straightforward. First, s 129(1)(a) is satisfied because an aspect of the operation of the Act is the execution of the provisions of the Act by the Registrar-General, as authorised by s 4. Section 31B obliged the Registrar-General to maintain a Register, which, in a manner that will be considered below, included the preparation of the Plan and the use of the Plan in the creation of the computer folio for the Land. I will henceforth refer to the Register as the Torrens Register to distinguish it from the Register of Plans maintained by the Registrar-General under the Conveyancing Act 1919 (NSW). The insertion of the incorrect area for the Lot in the Plan was an act of the Registrar-General in the performance of the Registrar-General's functions under the Act in relation to the Land. Ausbao 286's reliance on the incorrect area caused it to suffer loss or damage. Further, s 129(1)(c) is also satisfied because the statement of the incorrect area in the Plan was an error or misdescription in the Torrens Register in relation to the Land.
The Registrar-General's first response was to deny that any loss or damage suffered by Ausbao 286 was a compensable loss arising from the operation of the Act, because the requirements of s 129(1) were not satisfied. The Registrar-General's case was that the Torrens system maintained by the Act only guarantees title to property and not the validity of subsidiary information that may be included in the Torrens Register such as the dimensions or areas of land. Section 129(1) should be construed having regard to the true objects of the Act and should not give a right to compensation for errors in information with whose accuracy the Act is not concerned. This response focused on the wording found in the chapeau to s 129(1), being "suffers loss or damage as a result of the operation of this Act in respect of any land".
The Registrar-General relied upon a subsidiary argument concerning the operation of s 129(1)(a) to the effect that, if the Act did not require the Registrar-General to perform his functions or duties in a particular way, any error made by the Registrar-General by some action that was not required was not a relevant act or omission. As the Registrar-General was not required to insert areas of lots in deposited plans, the error in the site area in the Plan was not a relevant act or omission of the Registrar-General.
As I will explain below, after the hearing, the Registrar-General relied upon an additional argument as to why any loss suffered by Ausbao 286 was not a result of the operation of the Act. The Registrar-General submitted that the Plan was registered in the Register of Plans maintained by the Registrar-General under the Conveyancing Act and it was not registered in the Torrens Register maintained under the Act, so any error in the Plan did not involve the operation of the Act.
Secondly, the Registrar-General said that s 129(2)(a) applies because the statement of the area of a lot in a deposited plan in connection with the computer folio of that land is neither conclusive under the Act nor accepted, as a matter of long-standing conveyancing principle, as being a sufficiently reliable indication of area to warrant reliance by an intending purchaser. Ausbao 286's loss or damage was, according to the Registrar-General, wholly caused by its own failure to take steps, by proper survey, to satisfy itself as to the true area of the Land, particularly having regard to the significance placed by Ausbao 286 on the site area as the basis for determining a bid price as high as $55 million.
Thirdly, the Registrar-General said that Ausbao 286 is disentitled to compensation from the Torrens Assurance Fund under s 129(2)(b) because its conveyancing solicitor was negligent in himself relying on the site area of the Lot in the Plan and not advising Ausbao 286 that that course was unsafe, and that a survey was the only recognised and reliable way to determine the true area of land proposed to be purchased.
Finally, the Registrar-General said that s 129(2)(e) applies because the statement of the incorrect area of the Lot in the Plan was an error or misdescription in the measurement of land.
Ausbao 286, in turn, responded to the Registrar-General's reliance on s 129(2)(e) by saying that "measurement" in par (e) referred solely to the process of measuring relevant features of land, and not to a statement of the value of some measured attribute of the land, such as its area. In the present case, the Registrar-General's officer did not undertake any process of measurement of the Lot. Instead, the officer transposed the area of the former lot, of which the Lot forms part, from the plan forming part of the relevant earlier certificate of title, without allowing for the fact that the Lot had a reduced area because of an intervening resumption of part of the former lot for road widening purposes.

[8]

Precursor to the present compensation provisions

The current provisions of the Act dealing with compensation for loss or damage as a result of the operation of the Act were introduced by the Real Property Amendment (Compensation) Act 2000 (NSW) (the Amendment Act). Relevant amendments were then made by the Real Property and Conveyancing Legislation Amendment Act 2009 (NSW) (the Further Amendment Act) and the Real Property Amendment (Land Transactions) Act 2009 (NSW) (the Land Transactions Act).
Section 126(1) as in force immediately before the commencement of the Amendment Act provided: (1) Any person deprived of land or of any estate, or interest in land: (a) in consequence of fraud, or (b) through the bringing of such land under the provisions of this Act, or (c) by the registration of any other person as proprietor of such land, estate, or interest, or (d) in consequence of any error, omission, or misdescription in the Register, may bring and prosecute in any Court of competent jurisdiction an action for the recovery of damages.
The former s 126(2) provided that the right of action was generally required to be brought against the person who had benefited from the deprivation of land that was suffered by the claimant, as described in s 126(2)(a) to (c), being the person: (a) upon whose application the land was brought under the provisions of this Act, (b) upon whose application the erroneous registration was made, or (c) who acquired title to the land, or the estate or interest therein, through the fraud, error, omission or misdescription.
An exception allowed the claim to be brought against the Registrar-General, as nominal defendant, in limited cases where land had been included in two or more folios of the register or where a folio had otherwise incorrectly been created. Section 126(4) provided, in broad outline, that the person against whom an action for the recovery of damages could be brought ceased to be liable upon a transfer of the relevant land bona fide for value. The effect of s 126(5) was that, in cases where the relevant person had ceased to be liable under s 126(4), or that person died, became bankrupt, was insolvent, or could not be found within the jurisdiction, the action for damages could be maintained against the Registrar-General as nominal defendant, and any damages payable could be recovered out of the Torrens Assurance Fund.
Section 127(1) of the Act then provided: Any person sustaining loss or damages through any omission, mistake, or misfeasance of the Registrar-General or any of the Registrar-General's officers or clerks in the execution of their respective duties under the provisions of this Act, or by the registration otherwise than under section 45E of any other person as proprietor of land, or by any error, omission, or misdescription in the Register, and who by the provisions of this Act is barred from bringing proceedings in the Supreme Court or the District Court for possession of that land, or other proceedings or action for the recovery of such land, estate, or interest or to whose claim every such proceedings or action would be inapplicable may, in any case in which the remedy by action for recovery of damages as hereinbefore provided is inapplicable, bring an action against the Registrar-General as nominal defendant for recovery of damages.
The structure of the compensation provisions in the former Part 14 is substantially different to the equivalent provisions in the present Part 14. There are two primary differences for present purposes. In certain circumstances, the Registrar-General was made the nominal defendant to a claim for damages by a person who had been deprived of land or of an estate or interest in land within the meaning of s 126(1). For the purposes of such a claim, the four factors set out in pars (a) to (d) (which are broadly equivalent to the present s 129(1)(e), (d), (b) and (c) respectively) only gave rise to a claim for damages if the claimant had been deprived of land or of an estate or interest in land. That limitation probably had the effect of confining the availability of damages to cases that involved the application of the indefeasibility provisions in the Act as a result of the operation of one of the factors. That is, to some extent, the former compensation provisions were drafted in a way that tended to conform with the Registrar-General's present submission as to how the implied limitation to the operation of the present compensation provisions to loss or damage caused by the operation of the indefeasibility provisions should operate.
Section 127(1) of the Act in its earlier form gave claimants who had sustained loss or damage through any omission, mistake, or misfeasance of the Registrar-General or his officers in the execution of their respective duties under the Act, or the registration of other persons as proprietors of land, or by any error, omission or misdescription in the Torrens Register, a right to claim damages, but only in circumstances where the claimant was barred from bringing proceedings for the possession or recovery of the lost land, estate or interest, or in certain other circumstances. Relevantly, there were no expressly stated restrictions or exceptions such as are now found in s 129(2).
Consequently, the only way that the extent of the Registrar-General's liability for his own or his officers' omission, mistake or misfeasance, or his nominal liability for damages payable by others, could be restricted was by finding limitations on the Registrar-General's liability in the construction of the compensation provisions or by implication. The structure of the present Part 14 is quite different, as the factors giving rise to the right to compensation are listed in s 129(1), and the factors that exclude liability are expressly listed in s 129(2).

[9]

The Law Reform Commission Report

The present Part 14 was introduced by the Amendment Act in 2000, following a lengthy review of the recovery and compensation provisions in the Act carried out by the New South Wales Law Reform Commission that culminated in Report 76 (1996) - Torrens Title: Compensation for Loss (the LRC Report).
Relevantly, the Law Reform Commission recommended the establishment of a new compensation scheme in the following terms (footnotes omitted): 5. A New Compensation Scheme STATE GUARANTEE OF TITLE Recommendation 1 State guarantee of title should be retained and a new statutory scheme should be introduced with greater focus on insurance principles. 5.1 The Commission recommends the introduction of a new statutory scheme, which will replace the current statutory compensation provisions and preclude any existing common law rights against the Registrar-General. Under the proposed scheme, persons suffering loss will be able to claim directly against the Registrar-General, without commencing a court action. The proposed scheme, in addition to according more closely with genuine compensation and insurance principles, should reduce litigation and related costs. The Registrar-General will be subrogated to any common law or statutory rights of the claimant against any person (including any form of association) which has contributed to the claimant's loss or any fund which is liable to indemnify the claimant against the loss or the person responsible for the loss. Persons suffering loss as a result of the operation of the Torrens system will still be able to commence proceedings against any third party responsible for the loss without involving the Registrar-General, subject to a notification requirement. BASIS OF RECOVERY AGAINST REGISTRAR-GENERAL Recommendation 2 Any person suffering compensable loss arising out of the operation of the Torrens system and its administration should be able to claim compensation directly from the Registrar-General by lodging a claim with the Land Titles Office. Recommendation 3 Compensation should be available for losses (whether or not involving deprivation of land) arising out of the operation of the Torrens system which result from fraud, negligence, the bringing of land under the Real Property Act, errors in the Register, and errors and loss of documents in the Land Titles Office. 5.2 The Commission is of the view that compensation should be available for losses resulting not only from mistakes in the Land Titles Office and forgery, but also from fraud generally and the negligence of third parties, such as solicitors and surveyors, where neither a mistake in the Land Titles Office nor forgery is involved. The definition of "loss" should include loss arising from the reliance by a claimant or plaintiff on a statement or representation in the Register. This definition, together with the basis for recovery being a loss arising in consequence of any error in the Register, will enable a claimant to recover loss arising from the mistake or negligence of his or her surveyor, solicitor, other agent, or the agent of a predecessor-in-title. Volunteers should not, in principle, be excluded from compensation. If a volunteer does not become entitled to compensation it will not be because he or she is a volunteer, but because he or she has suffered no compensable loss in reliance on the Register. 5.3 Losses which arise from an error or a misdescription in the Register, whether or not involving a mistake by the Registrar-General, should be compensated. Compensation should be available where "errors, omissions or misdescriptions" relate to those entries required by the RPA to be made as well as factual "errors, omissions or misdescriptions." …
Although it will not be conclusive for the purpose of determining the proper construction of the relevant provisions in the Act, it may be noted that Recommendation 2 referred to "compensable loss arising out of the operation of the Torrens system and its administration". The recommendation therefore appears to have gone beyond the position presently adopted by the Registrar-General that compensation is limited to losses arising from the application of the provisions in the Act that deal with title to land. That is because the recommendation extended to losses arising out of the administration of the Torrens system. Further, Recommendation 3 included that compensation should be available for losses not involving deprivation of land.
It appears from a comparison of the recommendations made in the LRC Report and the new Part 14 that the Parliament did not wholly accept the recommendations. The LRC Report recommended a system of compensation based upon insurance principles that would have extended more widely than the compensation available under the new Part 14. In particular, the new Part 14 does not provide for compensation for loss or damage suffered by claimants as a result of the actions of their own agents, such as solicitors. Compensation is also not available for any loss or damage caused by reliance on any statement or representation in the Torrens Register.
The LRC Report did not recommend the adoption of all of the exceptions now found in s 129(2).
On the other hand, the Parliament did accept the recommendation that the availability of compensation be extended to loss or damage that did not involve deprivation of land.

[10]

The second reading speech

In the second reading speech in the Legislative Assembly for the Bill that was enacted as the Amendment Act, the Minister said (substantially abbreviated for present relevance): The Real Property Amendment (Compensation) Bill will modernise and simplify the compensation scheme established under the Real Property Act. The bill will clarify the rights of parties and provide a clear framework for the making and determination of claims by an administrative process. This will assist in the efficient determination of claims on the Torrens Assurance Fund and will benefit genuine claimants by expediting the settlement of claims. The Torrens Assurance Fund underwrites the State guarantee of land titles in New South Wales under the Torrens title system … The object of the Torrens system is to provide certainty of title to land. The State guarantees the validity of the title of persons who become registered as proprietors without fraud on their own part … The provision of compensation by the State is an essential component of the State guarantee of land titles. … The Torrens Assurance Fund provides monetary compensation not only to a person who is deprived of land by the operation of the Torrens system but also to a person who suffers loss through a mistake in the Land Titles Office or through an error, omission or misdescription in the register of titles. … The amendments contained in this bill have had a long development period and are based on a great deal of research and consultation conducted by the New South Wales Law Reform Commission. In January 1988, the commission received terms of reference to inquire into the operation of the compensation provisions. The commission then published discussion and issues papers in 1989 and released its final report entitled "Torrens Title: Compensation for Loss" in August 1997. The bill is based upon the recommendations of the Law Reform Commission and addresses the practical difficulties that the Registrar-General has encountered in administering the claims scheme. The bill will not change the underlying principles that have governed the Torrens Assurance Fund since its establishment. At present, the provisions relating to the payment of compensation are contained in part 14 of the Real Property Act, together with provisions relating to the civil rights and remedies that are available to persons who are deprived of land, or who otherwise suffer loss, as a consequence of the operation of that Act. Part 14 also contains provisions relating to the judicial review of the actions of the Registrar-General. …
I will defer setting out the extract from the second reading speech concerning the purpose of the enactment of s 129(2)(e) until I deal with the proper construction of that provision below.
The explanatory note to the Real Property Amendment (Compensation) Bill 2000 simply said in relation to s 129: Proposed section 129 specifies the circumstances in which compensation is payable from the Torrens Assurance Fund, and the limitations on the payment of compensation.
The use of the word "specifies" in this context suggests a legislative intention to state exhaustively both the circumstances in which compensation is payable and the limitations on the payment of compensation.
When introduced by the Amendment Act, s 129(1) included pars (a) to (f). Paragraph (g) was then added by the Land Transactions Act. Subsection (2) was amended by the Further Amendment Act which inserted pars (j) to (o), and then the Land Transactions Act which inserted par (p).

[12]

Ausbao 286's case

Ausbao 286 accepted that, having regard to the chapeau to s 129(1), it had to establish that it (i) had suffered loss or damage (ii) "as a result of the operation of this Act" (iii) arising from either an "act or omission of the Registrar-General in the execution or performance of his or her functions or duties under [the] Act in relation to the land" (s 129(1)(a)), or an "error, misdescription or omission in the Register in relation to the land" (s 129(1)(c)).
I will defer consideration of issue (i), being Ausbao 286's claim that it suffered loss or damage, until I consider the issue of compensation at the end of these reasons.
As to the requirements of the chapeau, Ausbao 286 submitted that it was only necessary that it establish that the factors listed in s 129(1) upon which it relied had materially contributed to its loss or damage. Ausbao 286 relied upon the following statement of principle by Austin J in Kirkland v Quinross Pty Ltd [2008] NSWSC 286; (2008) 14 BPR 26,979 (Kirkland) at [70] and [71]: [70] Earlier in these reasons for judgment I referred briefly to the test of causation applicable in an action for negligence. In my opinion the statutory language ("as a result of the operation" of the Act, and "where the loss or damage arises from" stated matters) enunciates substantially the same test of causality, namely the common sense test expounded by the High Court in March v Stramare. That was the view taken by Bryson J in the Challenger Managed Investments case, at [86]. More recently, his Honour has explored the issue in another s 129 case, Chandra v Perpetual Trustees Victoria Ltd [2008] NSWSC 178 (7 March 2008). There he described tort law's "pragmatic approach rather than one founded in a highly defined enquiry" (at [17]). He added: Practical limits have to be imposed when deciding causation. At some point which has to be recognized by an assessment based on common sense, facts or events become too remote, or too little connected with an outcome to be treated as causes of the outcome: even though they must have existed for the outcome to occur. [71] A consequence of applying the negligence test of causation is that s 129(1) can probably be satisfied by showing that the operation of the Real Property Act materially contributed to the loss without being its dominant cause (compare Reiffel v CAN 075 839 266 Ltd (2003) 132 FCR 437 ; 45 ACSR 67; [2003] FCA 194 at [69] and cases there cited).
Kirkland has been cited with approval by Darke J in Thomas v Registrar-General [2018] NSWSC 1517 at [50] and by Kunc J in Lincu at [110], as well as by Quigley J in Emma Tait Nominees Pty Ltd v Laprese [2020] VSC 508 at [23].
The submission made by Ausbao 286 as to why it had satisfied the first stage was, as I have explained above, straightforward. As to s 129(1)(a), it was submitted that the creation of the Plan containing an error as to the site area of the Lot was an act of the Registrar-General in the execution or performance of his functions or duties under the Act in relation to the Land, as the Registrar-General's duties and functions included the maintenance of the Torrens Register under s 31B. In this case, the error occurred in the course of maintaining the Torrens Register, in that the Registrar-General transposed the area that had been shown on an old deposited plan onto a new deposited plan without appreciating that the area of the land to which those deposited plans related had changed. Ausbao 286's loss and damage is said to have arisen from this act of transposition.
Furthermore, Ausbao 286 submitted that s 129(1)(c) was satisfied because the Plan was registered in the Torrens Register in relation to the Land and it contained the error referred to.
The submissions assumed that the Plan had become part of the Torrens Register, which is an assumption belatedly challenged by the Registrar-General. I will deal with the validity of that assumption separately below, and for the moment will accept that the Plan became part of the Torrens Register.

[13]

Registrar-General's response - principal objective of the Act

The Registrar-General submitted that Ausbao 286 had not satisfied the first stage. That was not just because of its submission that the Plan did not become part of the Torrens Register, but because of a submission that s 129(1) was not necessarily satisfied in cases where one of the factors in s 129(1)(a)-(g) was established and that factor had caused the claimant to suffer loss or damage. The Registrar-General submitted that the entitlement to compensation is subject to an additional requirement that arises out of a consideration of the legislative scheme of the Act, which leads to the conclusion that the object of the Torrens system is to provide certainty of title to land. It is not, according to the Registrar-General, and never has been, to guarantee the accuracy of any dimensions or areas of any land that may be referred to in deposited plans or any other records kept on the Torrens Register. It has always been recognised by the common law that dimensions shown in title diagrams and registered plans may not be correct.
The Registrar-General submitted that this object of the Torrens system was inherent in the Act and was a reason for finding that s 129(1) had not been satisfied in this case, quite separately from the Registrar-General's reliance upon the exception available under s 129(2)(e) based upon the submission that the error in the Plan was an error or miscalculation in the measurement of land.
The Registrar-General relied upon the following extract from the judgment of Bryson J (as his Honour then was) in Comserv (No 1877) Pty Ltd v Figtree Gardens Caravan Park [1999] NSWSC 124; (1999) 9 BPR 16,791 at [30], where his Honour said: … [i]dentifying the land described and accepting the indefeasibility of title to that land are quite different things. The Certificate of Title certifies title and does not certify that the land has all the dimensions and characteristics attributed to it in the Deposited Plan (emphasis added).
The Registrar-General relied upon similar statements in Registrar-General v Tuckfield (1991) 6 BPR 13,831 per Bannon J, Boyton v Clancy (1998) 9 BPR 16,585 and Registrar-General v Rigby (Land and Environment Court (NSW), Bannon J, 29 June 1995, unreported).
The following extract from Butt's Land Law (7th ed, 2017, Lawbook Company) (Butt's Land Law) at [2.480] was cited by the Registrar-General: In practice, registered plans (lodged with the Registrar General) are relied on as correctly depicting the boundaries of the land in the plan. However, this reliance is not always justified, for sometimes the plans are inaccurate or ambiguous. And where land is under Torrens title, registration of title based on the plan does not guarantee that stated boundaries are accurate. The "conclusiveness of the Register" does not extend to conclusiveness of the boundaries of the land described in the Register.
The Registrar-General also noted the observations in Baalman and Wells Land Titles Office Practice NSW (5th ed, 1998, looseleaf, Lawbook Co) at [206.675] wherein it is noted that: "In the case of a lot in a compiled plan or a compiled residue lot (that is, where a lot is not defined by survey), there is no certainty that the stated or deducted area is correct", and that "since 1 September 1983 the Registrar-General has not checked the area of any lot in a deposited plan lodged for registration".
The effect of this argument seems to be that s 129(1) must be construed having regard to the fact that the primary purpose of the Act in maintaining the Torrens System is to guarantee title to land, and not subsidiary matters that may be found in documents on the Torrens Register, such as the dimensions and areas of land. The provisions in the Act providing for compensation should impliedly be restricted to compensating claimants who have suffered loss or damage as a result of the operation of the Act in so far as it provides for indefeasibility of title. As it has historically been understood that information produced in the operation of the Act or recorded under the Act does not establish the accuracy of such subsidiary information, the compensation provisions should be applied in a way that does not compensate claimants who have suffered loss as a result of accepting the accuracy of the subsidiary information.
As I understand the Registrar-General's specific reliance on the words "as a result of the operation of this Act in respect of any land" in the chapeau to s 129(1), he submits that those words have a greater effect than requiring that one of the factors in s 129(1)(a)-(g) be a material cause of the loss or damage suffered by the claimant. In addition, the loss or damage must result from the operation of the Act. That is, the loss or damage must result from the operation or application of a provision in the Act that affects title to land, being primarily the provisions that provide for indefeasibility of title.
This submission appears to distinguish between alternative meanings of the word "operation" in relation to the Act. One meaning would be that everything required or authorised to be done by the Act in the operation of the Torrens System would involve the operation of the Act. The other would give "operation" a narrower meaning in that some provision of the Act would be required to directly cause the circumstance that gives rise to the loss or damage.
The Registrar-General relied upon the observation of Windeyer J in Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572; [2001] NSWSC 495 (Diemasters), where his Honour said at [37] that "the purpose of compensation by access to the Fund is to balance disadvantage which can otherwise be brought about by indefeasibility of title." The Registrar-General also relied upon the statement of Johnson J in National Australia Bank Ltd v Thirup [2011] NSWSC 911 at [75] that "the compensation provisions in Part 14 of the Real Property Act 1900 are intended to address the hardship that may be caused by the effects of indefeasibility." The Registrar-General also cited Bank of Western Australia Ltd v Coppola (No 2) [2012] NSWSC 1495 at [52].
While these judicial statements may be accepted as articulating the principal purpose of the compensation provisions in the Act, having regard to the prominence of the provisions that relate to indefeasibility and the manner in which those provisions may cause loss to innocent parties, the Judges who made them were not dealing with the present question, and it should not be assumed that they intended to state exhaustively the purpose of the operation of the Torrens Assurance Fund.
The Registrar-General's submission requires that the chapeau to the subsection be read narrowly and that the section be read down to conform to the supposed principal object of the Act. Its acceptance would significantly reduce the availability of compensation from the Torrens Assurance Fund. That would run counter to the recommendations in the LRC Report. It would involve the imposition of a limitation on a beneficial change to the Act that is not required by its express terms.

[14]

Ausbao 286's response

Ausbao 286's response to the Registrar-General's argument relied upon the following observation of Windeyer J in Diemasters at [34]: The words "as a result of the operation of the Act" are new. It is quite unlikely that they were intended to make access to the Assurance Fund more restrictive than under the old s 126, which it replaced. That is apparent from the report of the New South Wales Law Reform Commission, Torrens Title: Compensation for Loss, No 76 (1996) and the second reading speech of the Minister: (Parliamentary Debates, Legislative Assembly, 3 May 2000 at 5187).
Ausbao 286 noted that this passage has been cited with approval by Kunc J in Lincu at [121]. Ausbao 286 submitted that ordinarily, a person will suffer "loss or damage as a result of the operation of" the Act where he or she is deprived of an interest in land through the registration of some dealing, but submitted that s 129(1) is not limited to that situation.
Diemasters was a case where land was subject to a registered mortgage. The registered proprietor fraudulently procured the discharge of the mortgage by the use of stolen and forged bank cheques. The registered proprietor sold the land to two joint purchasers and delivered a transfer of the land to them. When the mortgagees discovered the fraud, they lodged a caveat to prevent registration of the discharge of mortgage. The purchasers were unable to procure the registration of the transfer to them free of the original mortgage whose discharge had been procured by fraud. Consequently, although the purchasers had paid a price for the land, they could only acquire title subject to the original mortgage. The mortgagees succeeded in obtaining a declaration that they were entitled to have the mortgage remain registered and the discharge of the mortgage delivered up to them for cancellation.
Windeyer J found that one of the joint purchasers was a party to the fraud. The other purchaser applied in separate proceedings for an order for compensation from the Torrens Assurance Fund. The issue was whether, under s 129(1)(e), the applicant had been deprived of land as a consequence of fraud.
Windeyer J dismissed the application for compensation from the Torrens Assurance Fund on the ground that the applicant, though an innocent purchaser, was bound by the fraud of the other purchaser as the contract to purchase was entered into by the two purchasers jointly rather than as tenants in common: see [28].
However, Windeyer J dealt in his reasons with the argument of the Registrar-General that the innocent purchaser had not suffered any loss or damage "as a result of the operation of [the] Act". His Honour said at [32]-[37]: [32] This is a difficult matter. In general the compensation provisions of the Act were introduced because, in the absence of fraud on the part of a person obtaining title by registration, the act of registration conferred an indefeasible title on the transferee. This left the person subject to the fraud with only a claim for compensation or damages from the Fund or, under the old s 126, from the fraudster. It follows that in the ordinary case deprivation is the result of some interest lost as a result of the doctrine of indefeasibility, through registration of a subsequent dealing obtained by reason of fraud of a party or of mistake on the part of the Registrar-General, although such lost interest can be an unregistered prior interest such as an unregistered mortgage or a mortgage by deposit of title deeds, defeated by fraudulent application for a new certificate of title and subsequent registered mortgage. In the instant case, however, the interest of the mortgagees, which prevents Jain from obtaining an unencumbered title, is not a subsequently acquired registered interest. It is a right or an interest to retain priority as registered mortgagee by having the discharge delivered up for cancellation. The interest of Jain on the other hand arises under contract to purchase an estate in fee simple free from encumbrance and transfer pursuant thereto it being the obligation of Meadowcorp to deliver a clear title. [33] Had the land been under Old System title Jain, as bona fide purchaser for value without notice, would have taken a clear title had he received a re-conveyance from the mortgagees to Meadowcorp or a statutory discharge operating as a re-conveyance and a conveyance from Meadowcorp. It follows from this that it is because the land is under the Act that the mortgagees have maintained their priority. Thus the fact that Jain has not obtained unencumbered title is because the land is under the Act. The question is whether this failure, which has almost certainly caused damage to Jain, arises as a result of the operation of the Act through Jain having been deprived of an unencumbered title as a consequence of fraud. … [37] As I have said this a matter of considerable difficulty. Nevertheless the purpose of compensation by access to the Fund is to balance disadvantage which can otherwise be brought about by indefeasibility of title. In principle I can see no reason to restrict access to the Fund to persons claiming that their interest has been lost through the registration of some subsequent dealing as a result of fraud. There is no particular logical reason why compensation should not be available to persons suffering damage as a result of fraud which has enabled the proprietor of a registered interest to maintain an indefeasible title to such interest based upon its continued registration. Such damage seems to me to arise out of the operation of the Act.
In substance, the conclusion reached by Windeyer J was that it was not essential to the requirement for loss or damage to be caused by the operation of the Act for a person entitled to a prior interest in land under the Act to be deprived of that interest by reason of the registration of a subsequent interest which gave the person entitled to that subsequent interest an indefeasible title that defeated the interest of the first person. Loss or damage could be caused by the operation of the Act, if the continued registration of a prior interest prevented a person who became entitled to a subsequent interest from becoming entitled to an indefeasible enjoyment of that interest, because of the continued indefeasibility of the prior interest. In both cases the loss or damage was caused by the indefeasibility provisions in the Act.
Consequently, his Honour went no further than to recognise a slightly wider sense in which the indefeasibility provisions in the Act may cause loss or damage than the usual or most common one. Windeyer J's statement: "Nevertheless the purpose of compensation by access to the Fund is to balance disadvantage which can otherwise be brought about by indefeasibility of title" appears to support the Registrar-General's submission that the object of the compensation provisions in the Act is to protect claimants who suffer from the application of the indefeasibility provisions. However, it must be remembered that the context in which the statement was made was an application for compensation under s 129(1)(e) on the basis that the claimant had been deprived of an interest in land as a consequence of fraud. Accordingly, it was natural for his Honour to approach the issue from the perspective that the indefeasibility provisions in the Act were the source of the loss or damage suffered by the claimant.
Windeyer J's observations should not therefore be treated as having been intended to apply to all of the paragraphs of s 129(1).
Ausbao 286 also cited Butt's Land Law at [12.1430] which states (footnotes omitted): Under s 129 of the Real Property Act 1900 (NSW), as under s 120, compensation is payable only where the loss or damage arises "as a result of the operation of this Act". So also under s 129 the requirement that the loss or damage be suffered "as a result of" the operation of the Act introduces a causation link, but it is probably satisfied by showing that the operation of the Act materially contributed to the loss or damage, without being its dominant cause. In the normal situation, a person suffers loss "as a result of the operation of this Act" where he or she is deprived of an interest through registration of some subsequent dealing. However, s 129(1) is not restricted to this situation. For example, it can apply where a person suffers loss through the maintenance on the register of a registered interest which the person thought (mistakenly) had been given up. An example is where a purchaser had completed the purchase expecting that a registered mortgage would be removed by registration of a discharge of mortgage, only to find that the mortgagee was able to restrain registration of the discharge on the ground that it had been obtained by fraud; this left the purchaser unregistered and subject to the still-registered mortgage.
Although it is true that the learned author states that s 129(1) is not restricted to the situation where a claimant is deprived of an interest through registration of some subsequent dealing, the alternative examples given still involve the situation where the loss or damage that is suffered is caused by the direct operation of a provision in the Act. The learned author relied on the authority of Diemasters.
Ausbao 286 also relied upon the following statement of Bryson J (as his Honour then was) in Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 59 NSWLR 452 (Challenger) at [84]: I see s 129 and Pts 13 and 14 as machinery which among other effects, give assurance to the Registrar General that he is to go ahead and administer the Real Property Act in a confident and effective manner, without paying undue attention to the readily discernible possibility that in any particular transaction the Registrar General may have been deceived and may be acting on a wrong basis. If there is something suspicious the Registrar General can investigate it, but if not he can decide to act on what is put before him. The Registrar General is enabled to act on the confident basis that if he has made a decision which is later shown to be wrong, there is an assurance fund out of which any loss or damage can be paid for. The meticulous, expensive and perilous examinations and re-examinations in each transaction of titles, powers and the basis on which action was taking place which characterised the general law or old system of title are replaced by an effective system in which title consist of entries in the Register and the plainly discernible possibility that this will cause loss or damage either through mistakes which inevitably arise in public administration or without any mistake having been made, will be reliably paid for if it matures into fact. Recognising loss or damage and paying compensation become normal parts of the workings of Torrens System, and are not enormities requiring the intervention of the law of tort. The Torrens System pursues efficiency and promptitude in establishing land titles, and deals with the risks which pursuit of these advantages brings with it.
However, his Honour also said (emphasis added): [67] Conceptions basic to the Torrens System of title by registration, and the primacy given to the Register, require that where the operation of the Torrens System imposes loss or damage, compensation should be made available by the State. It can be readily foreseen that no matter how much care and skill are exercised by public officers who conduct registration processes and maintain the Register, the workings of the Torrens System will from time to time impose loss and damage; and it can also be readily foreseen that no matter how competent and well-intentioned the public officers are, from time to time they will make mistakes which will have consequences in the Register and will cause loss and damage… … [74] Where a plaintiff alleges that there has been some fault in an act, omission, error, misdescription or otherwise, the plaintiff may prove it in the course of proving that the loss or damage arises from one of the cases in paras (a) to (f). Paragraph (e), relating to a person's having been deprived of land as a consequence of fraud, will usually arise in a situation where some fraud has been practised which cannot be said to involve any fault of the Registrar General, who with others was a victim of it. The overall control mechanism in s 129(1) is that the plaintiff must have suffered loss or damage as a result of the operation of the Act; and the workings of indefeasibility will usually have a part in the plaintiffs' rights' being in a worse situation than he was entitled to have them but for the operation of the Act. … [76] … Overall a regime is established in which loss or damage as a result of the operation of the Act is compensated for as part of the ordinary workings of the Torrens System. Compensation is not an extraordinary remedy, and is not reserved for faults, blunders or enormities. (Emphasis added)
This aspect of Bryson J's judgment was quoted by Kunc J in Lincu with apparent approval at [120].
It is important to note that Bryson J used the word "usually" twice in [74]. His Honour has plainly chosen his words carefully. It would be wrong to attribute to his Honour an intention to state a generality when he said that "the workings of indefeasibility will usually have a part in the plaintiffs' rights' being in a worse situation than he was entitled to have them but for the operation of the Act".
Diemasters and Challenger are therefore equivocal on the issue of whether, on the basis of the primary purpose of the Act or the proper construction of the chapeau to s 129(1), the entitlement to compensation is limited to loss or damage that results from the application of the provisions in the Act concerning title to land and indefeasibility, or whether the right to compensation covers any loss or damage that results from the operation of the Act more generally in respect of its administration.

[15]

Consideration

The Registrar-General's submissions give relatively little attention to the wording of the new s 129, which is significantly different in content and structure from the provisions that it replaced. Instead, the submissions focus on the chapeau to s 129(1), the supposed object of the Act, and they seek to impose by implication a narrowing effect on the right to compensation.
As I have already noted, s 129(1) expressly lists the factors that give rise to a right to compensation, while s 129(2) expressly lists the exceptions to that right. It is improbable that the Parliament would adopt this structure with the apparent intention to facilitate clarity in the entitlement to compensation, and then obscure that clarity by implying a tacit limitation on the right to compensation for loss or damage that resulted from the operation of some unidentified provisions in the Act.
To the extent that the Parliament may have intended that compensation be available for loss or damage resulting from the operation of the provisions in the Act that deal with title to land and indefeasibility, that result will follow naturally where the loss or damage arises from one of the factors in s 129(1)(b), (c), (d) or (e). That is, where the loss or damage arises from one of those factors, it will almost certainly be as a result of the direct operation of the indefeasibility provisions in the Act.
If that is so, there is no need to treat the chapeau to s 129(1) as having any effect other than to make clear the requirement that the relevant factors be a material cause of the loss or damage.
On the other hand, there are some factors in s 129(1) that may cause loss or damage but that would not result from the operation of the provisions in the Act that deal with title to land and indefeasibility. The Registrar-General's argument that only loss or damage caused by the provisions in the Act that deal with title to land and indefeasibility may be the subject of compensation is a generalisation. The validity of that generalisation will be denied if s 129(1) may be satisfied by the occurrence of factors causing loss or damage that do not involve the provisions of the Act that deal with title to land and indefeasibility.
One such factor appears in s 129(1)(g), which provides; (1) Any person who suffers loss or damage as a result of the operation of this Act in respect of any land, where the loss or damage arises from - … (g) any error of the Registrar-General in recording details supplied in the notice referred to in section 39 (1B), is entitled to payment of compensation from the Torrens Assurance Fund.
The terms of s 39(1B) are: (1B) The Registrar-General may - (a) refuse to accept for registration - (i) a dealing purporting to transfer or otherwise to deal with or affect any estate or interest in land under the provisions of this Act, or (ii) an application to effect a change in the name of a registered proprietor, or (b) refuse to register such a dealing or application, or (c) reject such a dealing or application, if it is not accompanied by a fully completed notice in the approved form.
Section 129(1)(g) has the effect that the first stage of the entitlement to compensation from the Torrens Assurance Fund will be satisfied if a claimant suffers loss or damage as a result of any error of the Registrar-General in recording details supplied in the notice. As appears from the Registrar-General's Guidelines published by NSW Land Registry Services (the Guidelines), the notice referred to in s 39(1B) is called a Notice of Sale or Transfer of Land (NOS) and is Form 10-0520.
Section 39(1B) was inserted into the Act by s 3 and Schedule 1 of the Conveyancing Legislation (Notice of Sale) Amendment Act 1992 (NSW).
The Guidelines provide the following advice: A Notice of Sale is used by NSW LRS to notify the local council, water supply authority and relevant rating authorities of changes in ownership of the properties. s39(1)(B) [read: s 39(1B)] of the Real Property Act 1900 requires a Notice of Sale to be lodged in all cases where the registered proprietor name on title changes, including a change of name. Once a dealing is registered the local council, water supply authority and relevant rating authorities are automatically informed of the change and their records are updated.
See also Greg Stilianou, Land Titling Law and Practice in NSW (2013, Lawbook Company) at [12.170].
Section 129(2)(p) was inserted into the Act by the Land Transactions Act at the same time as s 129(1)(g). It provides: Compensation is not payable in relation to any loss or damage suffered by any person - … (p) where the loss or damage arises from the provision by the Registrar-General of information supplied in the notice referred to in section 39 (1B) (subject to subsection (1) (g)).
The purpose of the addition of these two paragraphs to s 129 appears to be to create a right of compensation where loss or damage is caused by an error made by the Registrar-General in recording the details supplied in a notice of sale, but to ensure that compensation is only available where the loss or damage is the result of a recording error by the Registrar-General.
The loss or damage to which s 129(1)(g) is directed is not entirely clear. The Explanatory Note to the Real Property Amendment (Land Transactions) Bill 2009 simply stated that the purpose of the addition of the two paragraphs was to "clarify that compensation is not payable in relation to any loss or damage arising from the provision by the Registrar-General of information supplied in a notice of sale except in relation to an error of the Registrar-General in recording the details supplied in such a notice". In the second reading speech in the Legislative Assembly, the Minister merely said: "Section 129 of the Real Property Act will be amended to clarify the circumstances in which compensation may be payable from the Torrens Assurance Fund in relation to the information provided in a notice of sale."
There is a clear implication in the statements of purpose that the objective of the amendments was to place a limit on the circumstances in which compensation would be available for loss or damage that resulted from the provision by the Registrar-General to relevant rating authorities and government agencies of information contained in notices of sale lodged by parties with dealings sought to be registered. Compensation would not be available unless it was the Registrar-General who caused the loss or damage by making an error in recording the information. There is a clear assumption that, absent the amendments, compensation may be payable in respect of loss or damage that simply resulted from the Registrar-General providing the information in a notice of sale to relevant rating authorities and government agencies.
Presumably, the amendments were directed at possible loss or damage caused by the Registrar-General having provided incorrect information to rating authorities and government agencies and that information having been acted upon for such matters as the determination of land tax or council rate obligations. Although the relevant loss or damage does not appear to have been specifically identified, it is clear that it is not loss or damage that results from the application of the provisions in the Act dealing with title to land and indefeasibility.
Similar observations may be made about the application of s 129(1)(f), which applies where the claimant has suffered loss or damage arising from "an error or omission in an official search in relation to the land".
Official searches are the subject of Part 11A of the Act, which provides a mechanism by which members of the public may requisition the Registrar-General to issue certificates of the result of searches of manual folios and computer folios, as well as searches of the historical record required by s 32 to be kept by the Registrar-General: see ss 96C, 96D and 96G.
Before the enactment of the Amendment Act in 2000, s 96I(1) provided that, where a person dealt with land in reliance on the correctness of an official search, and as a result of an error in, or omission from, that official search the person suffered loss or damage in so acting, the person was permitted to bring an action against the Registrar-General for the recovery of damages. Any damages recovered were to be paid out of the Torrens Assurance Fund.
Section 96I(1) was repealed by the Amendment Act, which replaced the existing Part 14 with the new Part 14 (which includes s 129(1)(f)). It was evidently thought expedient as part of the reform, which replaced the role of the Registrar-General as the nominal defendant for claims for damages by the role of the administrator of claims for compensation from the Torrens Assurance Fund, for the provision governing the entitlement to compensation for loss or damage suffered as a result of errors in official searches to be included in s 129.
Although it may be that the provisions of the Act that deal with indefeasibility of title may provide the background against which losses as a result of claimants acting on erroneous official searches may be suffered, in no real way can it be said that such losses will have resulted from the operation of the Act, where the operation referred to is said to strictly be the effect of the indefeasibility provisions. Rather, the operation of the Act in this context must mean the general administration of the Act in so far as it relates to the issue of official searches.
Thus, the Registrar-General's argument that the expression "as a result of the operation of this Act" in the chapeau to s 129(1) always refers to the operation of the provisions of the act dealing with title to land and indefeasibility is disproved as a generalisation by the exceptions in s 129(1)(f) and (g). I see no reason why the factor in s 129(1)(a) should be treated differently.
Support for this conclusion may be found in the decision of Austin J in Kirkland. In that case the claimants' loss arose out of the fact that a developer had sold lots 'off the plan' to a number of purchasers who purchased on the basis of the lot numbers in the development plan. On completion of the development, the strata plan was registered and the Registrar-General, acting upon a request that was not consented to by all lot owners, changed the numbers of the lots in the strata plan. This act caused confusion, as purchasers and mortgagees who thought they had interests in lots with particular numbers in fact had interests in lots with different numbers. As Austin J said at [69]: "… The critical question under s 129, in the present circumstances, is whether all or any of the categories of loss or damage claimed by the plaintiffs is recoverable against the Fund on the ground that it is loss or damage 'as a result of the operation' of the Act which has arisen out of the act of the Registrar-General in changing lot numbers on 1 February 2005 or out of the misdescription of lot numbers made on that occasion." Although the lot numbers were changed, the various contracts and mortgages had the effect that the parties acquired interests physically in the correct lots. Those lots simply had different lot numbers than was expected. Ultimately, the Registrar-General corrected the error.
So far as the indefeasibility provisions were concerned, all parties were at all times protected, as they acquired their interests in the correct physical lots. As Austin J said at [20] "… It was also submitted that the re-numbering pursuant to the Request, which was a 'dealing', in no way affected the registration of the plaintiffs' mortgage, in light of s 41. That is correct, and it is also correct that the plaintiffs and the other interest-holders had the protection of indefeasibility of title under s 42. But again, that protection did not prevent the Registrar-General from altering lot numbers so that the registered estates or interests, while still estates or interests in respect of the same physical properties, became estates or interests in respect of properties designated by new numbers."
Austin J held that the claimants were entitled to compensation under s 129(1) (a) and (c) for losses suffered as a consequence of the process of causing the correct lot numbers to be given to the lots. Kirkland is authority against the Registrar-General's argument that the chapeau to s 129(1) introduces a requirement that loss or damage is only compensable from the Torrens Assurance Fund if it has resulted from the provisions in the Act dealing with title to land and indefeasibility. In that case, the claimants were found to be entitled to compensation notwithstanding that the claimants at all times had an indefeasible interest in the physical property that they intended to purchase.
I therefore reject the Registrar-General's argument that the entitlement of a claimant to compensation for loss or damage caused by one of the factors in s 129(1) will by implication be limited to loss or damage caused by the operation of the provisions in the Act that deal with title to land and indefeasibility. The purpose of the chapeau to s 129(1) is to require that the occurrence of one of the factors in the paragraphs results from the operation of the Act, in the wider sense of its general administration, so that a material cause of the loss or damage should be the occurrence of one of those factors.
The result is that the two stage process of determining a claimant's entitlement to compensation, as stated by Kunc J in Lincu, is a complete statement of the correct approach, without the necessity for the Court to find in addition that the loss or damage has resulted from the operation of the provisions in the Act dealing with title to land and indefeasibility.

[16]

Registrar-General's response - significance of Registrar-General's duties

In addition, the Registrar-General put what I understand to be a related but different submission as to why Ausbao 286 had not satisfied the first stage in these proceedings. It was submitted that there could only be an act or omission of the Registrar-General in the execution or performance of his or her functions or duties under the Act in cases where the Act imposed upon the Registrar-General a duty or requirement in the administration of the Act. Such a duty or requirement extended to what should be included in any document prepared by the Registrar-General or document incorporated in the Torrens Register. If the claim relates to a function of the Registrar-General that is not mandated by the Act, or to a duty that is not imposed on the Registrar-General by the Act, then there can be no enlivening of s 129(1).
The Registrar-General submitted that s 129(1) was not satisfied in this case because nothing in the Act required the Registrar-General to insert any area in the Plan. According to this submission, a particular step taken by the Registrar-General will not be a relevant act or omission if the Registrar-General was either not able to take that step or was not required to do so.
The Registrar-General relied on Trieste Investments Pty Ltd v Watson (1963) 64 SR (NSW) 98; 81 WN (Pt 2) (NSW) 136 (Trieste). The issue in Trieste was whether the absence of a recording on a certificate of title that part of the land had been resumed after the creation of the certificate of title fell within the expression "any error, omission, or misdescription in any certificate of title", within the then current wording of s 127(1). The Full Court of this Court decided, by majority of Herron CJ and Nagle J (Ferguson J dissenting), that it did not. Both judges in the majority acknowledged that they found the issue of statutory interpretation to be a difficult one. The Chief Justice said at 102, in relation to the plaintiff's contention that it was entitled to rely on the certificate of title, and that its loss was due to an error, omission or misdescription in the certificate of title, that: "I concede that there is much to be said for this contention and my mind fluctuated during the argument". The decision turned on the fact that, in 1929, the relevant time, there existed no statutory provision which required or authorised the registration of a resumption of land for a public road. Herron CJ said at 102-3 (footnotes omitted): Read in isolation and divorced from a consideration of the scheme of the Act, the words error, omission or misdescription appear to cover the present case. But the fallacy, I think, lies in asserting that the Act achieves complete indefeasibility. For the apparent indefeasibility is qualified. Section 32 contains the authority of the Registrar-General to register dealings. It empowers him to record only particulars of instruments, dealings and matters required by the Act to be registered or entered. Nothing else is to be registered. A public road or highway is not an easement and in New South Wales could not, prior to 1930, be registered: Howell v District Land Registrar.
The Chief Justice's conclusion is found at 104, where his Honour said: In my opinion the words 'error or omission' are subjective in application and connote something more than simply not there or absent from. Whilst misdescription is a word of greater objectivity, none the less it conveys the same notion of a mistake in a description authorized to be made under the Act. Considered in light of the rest of the Act and of the Torrens system generally, I think the first two words relate to errors or omissions in details where such, by the Act, are authorized to have been made and are not made. I do not base my opinion on any want of duty by the Registrar-General but upon the scope of his authority conferred by the Act to note or register this resumption. As a result the section does not, I think, apply because the certificate does not or because entries on the register do not correspond with the facts. As no registration of the resumption was authorized at the date of its gazettal, it cannot be said to have been an error to omit it…
The other judge in the majority, Nagel J, said at 109 in relation to the use of the words 'error, omission or misdescription' in the section: … Each of these words appears to me to convey the concept of something lacking from the register book which would be expected to be in it, and I do not think that it can be said that there is 'an error, omission or misdescription', if, consonant with the provisions of the Act, the particular entry might or might not be found on the register. Unless one closes one's eyes completely to the remainder of the Act it seems to be difficult to say anything can be in error or omitted or misdescribed unless it is an error, omission or misdescription contemplated by the Act itself.
The minority judge, Ferguson J, interpreted the relevant part of s 127 in more literal terms, where he said at 106-107: As to the third category, it seems to me that it is completely divorced from any breach of duty. Otherwise it would add nothing to the first category. In my opinion the legislature intended it to deal with the factual situation existing at the relevant time…
It should be noted that s 31A now makes provision for the creation of a folio of the Torrens Register for resumed land and provides for the making by the Registrar-General of relevant entries in the Torrens Register.
The decision of the majority in Trieste was approved by the Court of Appeal in Australian Hi-Fi Publications Pty Ltd v Gehl [1979] 2 NSWLR 618 (Australian Hi-Fi). An easement that would have been recognised at common law was not recorded on the certificates of title for the supposed dominant and servient tenements. The registered proprietor of the servient tenement sought to establish that it was not bound to give effect to the easement claimed. On that case, the registered proprietor of the dominant tenement would be entitled to an indefeasible title, free of the benefit of the supposed easement under s 42, unless the exception to indefeasibility that was then created by s 42(b), being: "in the case of the omission or misdescription of any right-of-way or other easement created in or existing upon any land" was established.
Mahoney JA, with whom Reynolds and Samuels JJA agreed, relevantly said at 622 (footnotes omitted): The meaning of "omission": According to what is, I think, its primary meaning, "omission" involves two things: that something is "not there", and that it is so because something which should have been done was not done: see, e.g., the discussion of "omission" in R. v. Phillips. It is, in a particular context, possible to see the term as meaning only that the relevant thing is "not there"; this may be the meaning adopted by Ferguson J. in his dissenting judgment in Trieste Investments Pty. Ltd. v. Watson; see also Wilkinson v. Spooner. But I do not think that that is the meaning intended in s. 42. Section 42, apart from the subsequently added par. (d) and certain amendments made by s. 10 (k) (iv)-(v) of the Real Property (Amendment) Act, 1970, which do not, however, affect the general sense of the section, is in the form in which it was originally enacted: see 26 Vic. No. 9, s. 40. Each of the three paragraphs has, from its original enactment, looked to some defect in the operation of the system of registration of title… These paragraphs, in my opinion, look to the operation of the Act and, at least primarily, its operation by the Registrar-General, and they take effect if what ought to have been done under the Act, or by the Registrar-General, has not been done. I think "omission" in s. 42 (b) should be given a corresponding meaning. This is the meaning which has been adopted in relation to the term in s. 127: see Trieste Investments Pty. Ltd. v. Watson; see also Pryce v. McGuinness.
Trieste and Australian Hi-Fi were cases in which the relevant certificates of title did not, in the first, depict the correct dimensions of the land by reason of the omission of a recording of the effect of a resumption, and in the second, record the existence of an easement that was enforceable under the common law. The Full Court in Trieste focused on the meaning of the words "error or omission". In Australian Hi-Fi, the Court of Appeal was concerned with the word "omission". Where the significant fact is that something that could have been recorded in the Register is "not there", as the extract from the judgment of Mahoney JA set out above shows, there is scope for argument about whether that mere absence is sufficient, or whether it is necessary, as well, that there be a requirement for the making of the absent entry in the Register. These authorities support the conclusion that, in the particular statutory circumstances considered, the mere absence of information in the Register does not establish an error or omission, and it is necessary that there be an obligation on the Registrar-General to include the information.
In the present case, the inclusion by the officer of the Registrar-General of the incorrect area of the Lot in the Plan was a positive error, in the sense of an act of commission. It was in no sense an omission. The making of an error by a positive act is not subject to the same logic as was considered in Trieste and Australian Hi-Fi. In my view, the insertion of the incorrect area of Lot 1 was a step taken in recording the description of the Lot in the folio of the Torrens Register, as was required by s 32(1)(a). That is so, even if the decision to include the area was not specifically required by the Act and was only a step chosen by the officer as the appropriate means for the Registrar-General to comply with the duty imposed by s 32(1)(a). Consequently, the error that was made by the positive act of the Registrar-General's officer was not an act that was not required or permitted by the Act.
However, even if the correct view was that the statement of the incorrect area of the Lot in the Plan was a step that was not required or permitted by the Act, it was still a positive act of the Registrar-General done in the execution of the provisions of the Act and was in fact an error or misdescription in the Register for the purposes of s 129(1)(c).
In this respect, I prefer and would follow the reasoning of Hodgson J (as his Honour then was) in Voudouris v Registrar-General (1993) 30 NSWLR 195 (Voudouris). In that case, the deposited plan that was lodged with the Registrar-General and the relevant certificate of title noted the area of a lot purchased by the applicants as about 1,062 m², when its actual area was only about 800 m². The error was made by the surveyor who prepared the deposited plan. Hodgson J held that the Registrar-General was entitled to rely upon the surveyor's certificate, so that the inclusion of the incorrect area did not constitute an "omission, mistake or misfeasance of the Registrar-General … in the execution of [his] duties" within the meaning of s 127 of the Act in the form that was current before the commencement of the Amending Act.
However, on the issue of whether there was an "error … or misdescription in the Register" within the meaning of s 127 as it then stood, Hodgson J said at 200: The next question is whether there was "any error … or misdescription in the Register" within the meaning of s 127(1). I note that in Baalman, The Torrens System in New South Wales, 2nd ed (1974) at 412 (cf Woodman and Nettle, The Torrens System in NSW, at 648), it is asserted that the learned author of the first edition considered that "error, omission, or misdescription in the Register" was probably included in the words "omission, mistake, or misfeasance of the Registrar-General"; and the author goes on to say that this view appears to have been justified by the judgments of Herron CJ and Nagle J in Trieste Investments Pty Ltd v Watson (1963) 64 SR (NSW) 98; 81 WN (Pt 2) (NSW) 136; although the author goes on to refer to the dissenting judgment of Ferguson J. However, Trieste concerned a matter which could not, under the legislation as it then existed, be noted on the register at all; and it was this that the majority relied on in reaching their conclusion that there was no error, omission or mis-description in the register. In the present case, undoubtedly the correct area could have been stated on the register, and I see no basis for saying that there is no error in the register, simply because the error is one for which a surveyor was responsible rather than the Registrar-General. Thus, I do not think Trieste is in point; and I do not think it justifies the sweeping statement in Baalman, to which I have referred. In my view, there was an error or mis-description in the register in the present case.
The strength of this reasoning is not diminished by the fact that (as has been seen from the Second Reading speech concerning the enactment of the Amendment Act that has been set out above) the judgment in Voudouris may have influenced the Parliament to amend the Act by inserting s 129(2)(e).
Furthermore, as Bryson J (as his Honour then was) said in Challenger in relation to the operation of s 129(1): [72] In Cirino v Registrar General (1993) 6 BPR 13,260, Cole J said (at 13,263): Second, 'omission' where used in s 127 does not necessarily involve failure to comply with a duty. It merely means absence of a material entry (Dobbie v Davidson (1991) 23 NSWLR 625 (compare Trieste Investments Pty Ltd v Watson (1963) 64 SR (NSW) 98)). 'Omission' has the same meaning in s 42(1)(b) as it does in s 126 and where secondly appearing in s 127(1) (see Priestley JA in Dobbie at 647). In my view "omission" where it appears in the present Pt 14 should be understood in the same way. [73] An omission of the Registrar General in the execution of performance of functions or duties (as in (a)) may involve something which could be regarded as a fault; an act of the Registrar General in the execution or performance of functions or duties under the Act (also as in (a)) very well may not. An error or omission in an official search as in par (f) would probably involve some fault; an error, misdescription or omission in the Register referred to in par (c) might well involve some fault but very well might not, depending on how the error, misdescription or omission arose. There will be many situations of fact in which there has been no fault of any kind of the Registrar General but a person who suffers loss or damage has an entitlement to payment of compensation. [74] Where a plaintiff alleges that there has been some fault in an act, omission, error, misdescription or otherwise, the plaintiff may prove it in the course of proving that the loss or damage arises from one of the cases in par (a)-par (f). Paragraph (e), relating to a person's having been deprived of land as a consequence of fraud, will usually arise in a situation where some fraud has been practised which cannot be said to involve any fault of the Registrar General, who with others was a victim of it. The overall control mechanism in s 129(1) is that the plaintiff must have suffered loss or damage as a result of the operation of the Act; and the workings of indefeasibility will usually have a part in the plaintiffs' rights' being in a worse situation than he was entitled to have them but for the operation of the Act. … [82] In my view there is nothing in the text of either s 129 or related sections which indicates that the acts or omissions to which par (a) relates are limited to acts or omissions which involve some fault, or some failure to comply with a duty. On the literal reading of s 129, any act of the Registrar General of which the decision to issue an issue of a duplicate certificate of title under s 111(2) is an example, falls within subpar (a) irrespective of whether the decision was right or wrong, judged as of the time when it took place or judged retrospectively. To give meaning to the concept of loss or damage it must become known at some time, whether or not it could be known at the time of the act or omission, that the act or omission should not have happened; otherwise the concept of loss or damage does not have any content.
Accordingly, I do not accept the Registrar-General's submission that, in a case where the Registrar-General makes a positive statement in the Torrens Register that is an error or a misdescription in fact, the statement should not be treated as having that quality if the Act did not positively require the Registrar-General to make that statement. As I have said above, I consider, in any event, that the Registrar-General was in a general sense authorised to make the statement, as part of the obligation to include a description of the Lot in the folio of the Torrens Register that was created for the Lot.
This conclusion says nothing about cases where the nature of the error or omission is the absence of information that could have been included in the Register. In that situation, it is possible that Trieste and Australian Hi-Fi may still be determinative, notwithstanding the amendments to the Act made by the Amending Act.

[17]

I will now deal with the issue that emerged after the end of the hearing concerning the identification of the register in which the Plan was registered.
In the course of preparing my reasons for judgment I came to appreciate that the parties had not touched upon a number of issues that I thought may be important. Consequently, I arranged for my Associate to send an email to the parties on 17 June 2021, which included the following question: 3. In par 17G of his report, Mr Stilianou states: "On 2 June 1995, departmental plan DP 657427 was registered…" Was DP 657427 registered under Part 23 Division 3 of the Conveyancing Act or was it registered under some provision of the Real Property Act? Having regard to the definition of the Register in s 31B of the Real Property Act and also the definition of "dealing" in s 3 and the reference to "instruments of a prescribed class" and "records required by the regulations to be kept as part of the Register", was the departmental plan DP 657427 included in the Register? This question raises the issue of whether or not deposited plans registered under the Conveyancing Act are included in the Register.
In part, the reason for this question was that DP 657427, which gave rise to the Plan, was a departmental plan. It was prepared by an officer of the Registrar-General for the purpose of creating a manual certificate of title, after part of the lot of which the Lot is the residue was resumed for the purpose of road widening. It was not apparently a plan of survey, and it was not clear to me where departmental plans were registered.
The response by the parties may suggest that I got more than I bargained for. The parties made further oral submissions on 8 July 2021. The parties sought and were given leave to file further evidence and submissions.
The Registrar-General provided to the Court a supplementary expert report of Mr Greg Stilianou dated 10 August 2021. Ausbao 286 delivered objections to Mr Stilianou's report.
Ausbao 286 then delivered an expert report of Ms Margaret Colleen Hole AM dated 1 September 2021. Objections to that report were provided by the Registrar-General.
The Court has not been asked to relist the proceedings for oral argument on the objections or for cross-examination of the experts.
The Registrar-General served supplementary submissions dated 12 August 2021 concerning the issue dealt with in Mr Stilianou's report. Ausbao 286 served submissions in response dated 1 September 2021. On 15 September 2021, the Registrar-General served written submissions in reply.
When I asked question 3 set out above, I thought I had asked a question of fact. The departmental plan would either be registered in the Torrens Register or alternatively it would be registered in the Register of Plans. I thought the answer to the question would be uncontroversial. Figuratively speaking, if there was any doubt, a clerk wearing a cardigan would wander around the relevant part of the Registrar-General's office and find where the departmental plan was in fact registered. If I actually thought this, I was naive. The registers, in whatever form they now exist, are apparently maintained electronically. Even then, I may have thought that, by reference to the maintenance of file numbers for electronic records, it would be a simple matter to ascertain whether a departmental plan was registered in the Torrens Register or the Register of Plans. Apparently, that thought would be wrong, and the answer to the question that I have posed involves the resolution of arcane questions of law.
The Registrar-General has taken the position that the departmental plan was registered in the Register of Plans. Ausbao 286 denies that position and submits that in fact the departmental plan has been registered in the Torrens Register.

[19]

Preparation of the Plan

Ausbao 286's land titles expert, Mr Robert David Williamson, provided a report dated 27 June 2019. The Registrar-General's expert, Mr Stilianou, provided a report dated 31 July 2020. Mr Williamson set out the results of his investigation of the process engaged in by the Registrar-General that led to the error being made as to the site area of the Lot in the Plan at par 20 of his report. Mr Stilianou engaged in the same process at par 17 of his report. Mr Williamson did not express disagreement with this aspect of Mr Stilianou's report in his 27 January 2021 report in reply. The expert witnesses were not called for cross-examination at the hearing.
Accordingly, I have produced the following summary as an amalgam of the evidence given by the two expert witnesses: 1. The Lot formed part of the land in certificate of title volume 4290 folio 24, which was issued on 13 June 1929. 2. The land in the certificate of title was stated to be an estate in fee simple in the land shown as Lot A in the plan that accompanied Transfer B816491. The plan that accompanied this Transfer was catalogued as file plan DP 181693. Consequently, the land in certificate of title volume 4290 folio 24 was Lot A in DP 181693, which was drawn and edged red in the certificate of title. 3. The land was described as having an area of 23.25 perches, or thereabouts, which converts to approximately 588 m². 4. On 3 September 1974, plan of acquisition DP 571666 was registered, which notes The Commissioner for Main Roads' proposal to acquire part of Lot A in DP 181693 for the purposes of the Main Roads Act 1924. The transfer took place by Transfer No P251398. The part of Lot A in DP 181693 that was transferred had an area of 91.1 m². 5. At the time of the transfer of part of Lot A in DP 181693 to The Commissioner for Main Roads, a new certificate of title for the transferred land was not issued. The Commissioner for Main Roads' title to the transferred land remained in certificate of title volume 4290 folio 24. 6. On 23 December 1975, Transfer P357129 was registered, which had the effect of recording the original registered proprietor of the whole of Lot A in DP 181693 as being the registered proprietor of part of that lot, being the residue of the land after the transfer of part thereof to The Commissioner for Main Roads. 7. On 23 August 1978, the Registrar-General issued a new certificate of title for the residue of the original lot, being volume 13683 folio 1. A copy of this certificate of title is at Annexure H to Mr Williamson's first report. The Plan is the second page of the certificate of title, and clearly, from its position in the four-page document, was incorporated in the physical certificate of title. 8. Certificate of title volume 13683 folio 1 included a sketch of the residue land, being the Lot, which was depicted as being "PT A" and having an area of 588 m². 9. The area of 588 m² was the correct area of the land comprised in the original certificate of title volume 4290 folio 24. The officer of the Registrar-General who prepared the sketch that was included in certificate of title volume 13683 folio 1 made a transposition error by stating the area of the residue Lot as being the same as the original lot, which did not allow for the fact that an area of 91.1 m² had been transferred to The Commissioner for Main Roads. 10. On 2 June 1995, the Registrar-General prepared DP 657427. This plan shows the Lot as being Lot 1 in DP 657427. It is depicted with an area of 588 m². The purpose for preparing the departmental plan DP 657427 was stated to be for providing a unique identifier to the land illustrated so as to create a computer folio of the Torrens Register. 11. Consequently, the Registrar-General perpetuated in DP 657427 the error that had originally been made at the time of the preparation of certificate of title volume 13683 folio 1. 12. Although on 2 June 1995 a computer folio of the Torrens Register for the Lot was issued, certificate of title volume 13683 folio 1 remained the current edition of the certificate of title for that land.
It was Mr Stilianou's observation in par 17G of his report that on 2 June 1995, departmental plan DP 657427 was "registered" that prompted my question as to the identification of the register in which the registration had taken place.

[21]

Objections to further expert evidence

I do not propose to rule on the objections made to either additional expert report paragraph by paragraph. I do not propose to treat the opinions expressed by either expert as to the legal significance of any statutory instruments as being evidence in the conventional sense that may cause the Court to accept one expert's opinion over another on the basis that it prefers the evidence of that expert witness. To that extent, I will treat the opinions expressed by the experts as submissions.
Notwithstanding that this may weaken the effect of the expert evidence, that evidence in this context remains very useful, as it provides a comprehensive overview of the interrelationship of obscure aspects of statutory law and regulations that would otherwise be relatively impenetrable to the Court, or which would give rise to an unacceptable risk of error as a result of the Court analysing the effect of the provisions on its own. There are some areas of the law - and this is one of them - where reaching the correct conclusion will be aided by long experience in and familiarity with the practical operation and interrelationship of the relevant legal provisions.
At the end of the day, the conclusions that I reach will be my own. Though, it is likely that the advantage of having the two expert witnesses' reports will be to reduce the risk of error flowing from my unfamiliarity with the practical workings of the different registers.
I will, however, keep in mind the particular objections made by the parties in so far as they may have a bearing on the weight to be given to the opinions expressed by the expert witnesses.
In Ausbao 286's supplementary submissions dated 1 September 2021, it made specific objections to Mr Stilianou's supplementary report on the ground that he had not started working for the Registrar-General until April 2007; that is, 12 years after the departmental plan was registered. It also submitted that the Court would not find that Mr Stilianou was an independent witness, as he was employed as the Senior Lawyer by the Registrar-General, and then NSW Land Registry Services, at the time when Ausbao 286 lodged its administrative claim for compensation on 30 September 2016. Additionally, one of Mr Stilianou's "core responsibilities", as disclosed in his curriculum vitae, was "defending the practices of the Registrar General in his administration of the Torrens Register".
As the Registrar-General pointed out in his submissions in reply, these objections were not taken by Ausbao 286 in response to Mr Stilianou's original report, and the hearing was conducted on the basis that the Court should regard Mr Stilianou as a genuine independent expert witness.
Given what I have said above concerning the use to which I will put the additional expert evidence reports, I do not think it is necessary for the Court to give detailed reasons concerning how it will use the evidence in the new reports. I should say, however, that I have no doubt that Mr Stilianou has provided the opinions in his supplementary report genuinely to the best of his independent professional ability.
It just happens to be the case that a matter that should be obvious depends for its resolution on contestable issues as to the application of the legal provisions that govern the operation of the two registers, and, as will be seen, the resolution of the dispute is not helped by the fact that, over time, there have been wholesale changes in the legislative arrangements that govern the operation of the registers.

[22]

Registrar-General's case - identity of Register

I will first set out the basis of the Registrar-General's case, drawing where appropriate on Mr Stilianou's supplementary report and the Registrar-General's supplementary submissions dated 12 August 2021.
Mr Stilianou said that land dealings and plans are presented to the Registrar-General for registration. They can be registered in the Torrens Register or the Register of Plans, but not both. The provisions of the Act govern registration in the Torrens Register and the provisions of the Conveyancing Act govern registration in the Register of Plans. Mr Stilianou said that, based on his knowledge, background and experience with the land titles office practice, the two Acts deal with different subject matters but "practically, their provisions operate side-by-side, and this is because of the way in which the Torrens Register has been established in its computerised form." I note Ausbao 286's submission that it is unclear what is meant by "operate side-by-side" and that it "would cause an undue waste of time to admit" this evidence.
Each parcel of Torrens title land is comprised in a folio of the Torrens Register. Initially, those folios were maintained by the Registrar-General in paper form. Now, those folios have been mostly converted to an electronic form. In a computer folio of the Torrens Register, a parcel of land can be searched by reference to its folio identifier.
Mr Stilianou said at par 20: A folio identifier is underpinned by the current plan provisions in section 7A of the Conveyancing Act 1919. Each parcel of Torrens title land is drawn in a plan of survey - these are deposited plans and strata plans. A plan of survey that is registered in the Register of Plans will be attributed with a unique registration number and will be made publicly accessible (for a fee). We can recognise these as the numbers with the prefix 'DP' or 'SP'. Each parcel of land that is drawn in that plan will be labelled with a unique lot number. The lot number, together with the plan's registration number, together, make up the folio identifier.
Mr Stilianou then said that, on the facts of this case, on 2 June 1995, departmental plan DP 657427 was registered in the Register of Plans. On that same day, a computer folio of the Torrens Register was issued, namely folio identifier 1/657427. At that time, certificate of title volume 136831 folio 1 was the current edition of the certificate of title for that land, and so it remained until 12 October 2000, when the certificate of title was lodged with the Registrar-General for the purpose of registering a particular transfer and mortgage. Upon registration of those land dealings, the Registrar-General cancelled certificate of title volume 13683 folio 1 and issued the new certificate of title for the land in the computer folio.
Mr Stilianou's evidence therefore was, in substance, that certificates of title and computer folios evidencing title to Torrens land are registered in the Torrens Register and plans, including departmental plans, that are given a DP number are registered in the Register of Plans.
Then, in pars 23 to 29 of his supplementary report, Mr Stilianou explained his conclusion by reference to what he suggested were the relevant statutory provisions.
I note that Ausbao 286 objected to all of these paragraphs, substantially on the basis that the legislative provisions relied upon by Mr Stilianou did not exist when DP 657427 was registered, and that Mr Stilianou has purported to give expert opinions concerning the proper interpretation of the Conveyancing Act.
I will nonetheless set out the basis of Mr Stilianou's opinion as follows. He said that s 7A of the Conveyancing Act defines what it means for a plan to be a "current plan" and includes a "registered plan". Section 7(1)(a) of the Conveyancing Act includes a "plan of identification" that is registered in accordance with Division 3 of Part 23 of the Conveyancing Act within the meaning of "registered plan". Section 7(1)(e) of the Conveyancing Act also includes within the meaning of "registered plan" a plan that is registered for the purpose of showing land in a lawful division.
Then, s 195(1) of the Conveyancing Act defines what is included in the meaning of "plan of identification" and, relevantly, includes in sub-par (f) of that definition a plan that defines the boundaries of the residue of an existing lot after part of that lot has been compulsorily acquired.
Therefore, on the facts of this case, departmental plan DP 657427 can be categorised as a plan of identification because it defined the boundaries of the residue of Lot A in DP 181693 after part of that land had been compulsorily acquired.
Mr Stilianou also opined that, on the facts of this case, departmental plan DP 657427 can also be categorised as a plan that is registered for the purpose of showing land in a lawful division, because it shows a parcel in a lawful division of land.
According to Mr Stilianou, when the Registrar-General registers a plan in the Register of Plans (under Division 3 of Part 23 of the Conveyancing Act) affecting Torrens title land, the Registrar-General must affix the Registrar-General's seal to the plan and may create such folios of the Torrens Register as is considered appropriate: see Conveyancing Act s 195G(1).
I note that s 195G of the Conveyancing Act provides: (1) Where the Registrar-General is satisfied that a plan lodged under section 195A(1) or (2) is in registrable form, the Registrar-General shall register the plan by affixing the Registrar-General's seal to the plan or otherwise making a record of that seal with respect to the plan in such manner as the Registrar-General considers appropriate and, where land comprised in the plan is under the provisions of the Real Property Act 1900, may create such folios of the Register kept under that Act as the Registrar-General considers appropriate.
This section refers to the Registrar-General being satisfied that the plan lodged under s 195A is in registrable form.
Section 195A(1) refers to plans being "lodged with the Registrar-General for registration under this Division" (emphasis added). As will be seen, the reference to plans being lodged with the Registrar-General, which may not be apt to apply to a plan prepared by the Registrar-General, has significance to Ausbao 286's response.
Mr Stilianou's conclusion was that, on the facts of this case, the Registrar-General affixed his seal to departmental plan DP 657427, and a folio of the Torrens Register for the land in that plan, being folio identifier 1/657427, was created.
In substance, the opinion expressed by Mr Stilianou was that the departmental plan prepared by the Registrar-General was a plan of identification and, in this case, also a plan showing land in a lawful division, and that they are registered in the Register of Plans under the Conveyancing Act when the Registrar-General affixes his seal to the plan. It is the folio identifier, formerly the certificate of title, that is registered in the Torrens Register.

[23]

Ausbao 286's case - identity of the Register

In Ms Hole's 1 September 2021 report, she responded seriatim to each paragraph of Mr Stilianou's report.
Ms Hole explained in par 15.4 that DP 657427 is comprised of two pages, the first page being a photocopy of the diagram from volume 13683 folio 1, showing a plan of the Lot with several additions added to the photocopy. The second page shows on the left-hand side page 1 of the prior certificate of title volume 13683 folio 1, reproduced by photocopy and the stamp "cancelled see auto folio" is shown. Among other additions, charts on each page contain the statement that: "This plan has been created to provide a unique identifier to enable the issue of an automated Torrens Title for the land comprised in folio of the register".
Ms Hole expressed the opinion in par 16.1 that DP 657427 was entered in the Torrens Register on 2 June 1995.
Ms Hole gave her reasons as follows. Section 31B provides for the Torrens Register, and requires the Registrar-General to maintain a register for the purposes of the Act, and that the Torrens Register is comprised of various items including "dealings": s 31B(2)(b).
Section 3(1)(a) defines "dealing" as: Any instrument other than a grant, caveat or priority notice, including an electronic form of that instrument, being an instrument - (a) that is registrable or capable of being made registrable under the provisions of this Act, or (b) in respect of which any recording in the Register is by this or any other Act or any Act of the Commonwealth required or permitted to be made.
The definition of "instrument" in s 3(1)(a) is: Any grant, conveyance, assurance, deed, map, plan, will, probate, or exemplification of will, or any other document in writing or in electronic form relating to the disposition, devolution or acquisition of land or evidencing title to land.
Ms Hole then set out the following part of s 32: (1) The Registrar-General creates a folio of the Register for land by making a record of - … (c) such particulars, as the Registrar-General thinks fit, of - (i) other estates or interests, if any, affecting the land, and (ii) other information, if any, that relates to the land or any estate or interest therein and is included in that record pursuant to this or any other Act (including an Act of the Parliament of the Commonwealth) or an instrument made under any such Act, and by allocating a distinctive reference to the record so made.
On the basis of these provisions in the Act, Ms Hole expressed the following conclusions in response to pars 16 and 17 of Mr Stilianou's report: 16.2 In my opinion the provision in the Real Property Act 1900 and the Conveyancing Act 1919 relating to plans are not mutually exclusive. Part of the land comprised in Volume 13683 Folio 1 was purchased by the Commissioner for Main Roads. The land subject of this purchase was excluded from the land that became Lot 1 DP657427. The diagram shown on Volume 13683 Folio 1 is part of a registration under the Real Property Act 1900 by provision of the creation of a title pursuant to s32. 17. In my opinion the provisions in the Real property Act 1900 and the Conveyancing Act 1919 provide a hybrid situation where a plan on a certificate of title becomes part of the Torrens Title register. In this particular instance the error in the area was perpetrated in the preparation of the diagram shown on Certificate of Title Volume 13683 Folio 1. Departmental Deposited Plan 657427 in being prepared using the plan from Volume 13683 Folio 1 perpetuated the error.
In response to Mr Stilianou's explanation of the legislative basis for his opinion, Ms Hole pointed out that the legislative provisions upon which Mr Stilianou relied were not in force as at 2 June 1995, when DP 657427 was registered.
The essence of Ausbao 286's response to the Registrar-General's position based upon Mr Stilianou's supplementary report is found in par 8 of its 1 September 2021 submissions in response. Put simply, that response is that s 195G of the Conveyancing Act concerns plans lodged under s 195A. Deposited Plan 657427 was not "lodged" with the Registrar-General under s 195A, as it was prepared by the Registrar-General. It does not follow from the fact that the Registrar-General has affixed his seal to a plan that the plan must have been registered under s 195G, even though plans lodged with the Registrar-General under s 195A are deemed to be registered when the Registrar-General's seal is affixed to them.
In any event, Ausbao 286 submitted that the Registrar-General has a freestanding power to create folios pursuant to s 32 of the Act and that the presence of the seal is not determinative of whether the plan was lodged under s 195A of the Conveyancing Act.
Ausbao 286 relied upon the opinion of Ms Hole that the provisions of the Act and the Conveyancing Act relating to plans are not mutually exclusive, so that it is possible for a plan to have been registered under the Act, even if it had also been registered or was capable of registration under the Conveyancing Act.
Ausbao 286 submitted that the Court would therefore find that DP 657427 was entered into the Torrens Register on 2 June 1995.
Ausbao 286 supported this submission, in par 9, by identifying the references in Division 3 of Part 23 of the Conveyancing Act that referred to plans "lodged" with the Registrar-General and submitted that the Division "does not govern the registration of plans that are prepared and registered by the Registrar General internally pursuant to its functions under the RP Act".
Ausbao 286 submitted, in par 14, that DP 657427 was registered in the Torrens Register because it was a "dealing" for the purpose of s 31B(2)(b), the terms of which have been set out above. In short, Ausbao 286 submitted that under s 31B, the Torrens Register was to be comprised of "dealings registered therein under this or any other Act". "Dealing" is relevantly defined in s 3(1) as including any instrument which is registrable or capable of being made registrable in respect of any recording in the Torrens Register that is by the Act or any other Act required or permitted to be made. As at 2 June 1995, the term "instrument" was defined to include "any other document in writing relating to the disposition, devolution or acquisition of land or evidencing title thereto".
Ausbao 286's case is that DP 657427 is an instrument for the purposes of s 3(1) of the Act because it is a "plan". It does not need to relate "to the disposition, devolution or acquisition of or evidencing title thereto" because that qualification only applies in respect of "other documents" on the proper construction of the definition of "instrument".
In the alternative, Ausbao 286 submitted, in par 22 and following, that if the Court finds that DP 657427 was required to evidence title to land in order to qualify as an "instrument" in the statutory sense, it did so.

[24]

Registrar-General's reply - legislation governing Registers

The Registrar-General responded in his 15 September 2021 submissions to Ausbao 286's argument that Mr Stilianou had explained his opinion by reference to statutory provisions that were not in force on 2 June 1995, when the Registrar-General had prepared DP 657427, by accepting that different statutory provisions applied but then submitting that there were equivalent statutory provisions that had materially the same effect as the statutory provisions referred to by Mr Stilianou.
The Registrar-General appended to the reply submissions a comparative summary of the relevant legislative provisions in effect in 1995 and 2021. The summary identified changes in the provisions of the Act and the Conveyancing Act that were included in those acts at the two dates. The summary also explained how provisions in the Act and the Conveyancing Act in effect in 2021 containing definitions, such as of "current plan" and "plan of subdivision", had materially equivalent definitions in the Local Government Act 1919 (NSW) that was in effect in 1995. The summary acknowledged that there was not an equivalent definition in 1995 for "registered plan".
In the body of the submissions, the Registrar-General explained how the different legislative schemes in force in 1995 did not change the conclusion that departmental plan DP 657427 was registered in the Register of Plans.
I broadly accept the Registrar-General's submission that the statutory provisions that were in force in 1995 are sufficiently equivalent to the ones that are now in force to justify a conclusion that the regulatory regime governing the registration of plans that was in force in 1995 is materially the same as the present regime.
Moreover, it does not appear to me that the differences that do exist in the legislation make a conclusive difference to the determination of the manner in which the Registrar-General maintained the Torrens Register and the Register of Plans.
It would be a gratuitous addition to these complex reasons for me to embark upon a detailed consideration of the differences in the legislative regime at the two dates and it is not necessary for me to do so.

[25]

Registration of DP 657427

The dispute between the parties as to the identity of the register in which DP 657427 was registered has arisen because the Registrar-General has introduced a submission that the deposited plan was registered in the Register of Plans under the Conveyancing Act, with the result that Ausbao 286 is not entitled to compensation from the Torrens Assurance Fund because any loss or damage suffered by Ausbao 286 has not arisen "as a result of the operation of this Act" for the purposes of the chapeau to s 129(1). The right to compensation is excluded for loss or damage resulting from an error contained in a plan that has been registered under the Conveyancing Act rather than the Act.
On balance, I am prepared to find, on the basis of the evidence that has been tendered, that DP 657427 was registered in the Register of Plans maintained under the Conveyancing Act. That fact is signified by the plan having been given a DP number.
As the maintenance of the Torrens Register and the Register of Plans is a pillar of the proper functioning of the State of New South Wales, it is surprising that the place of registration of a plan is not a straightforward question of fact able to be proved by direct evidence. That observation assumes that even if the two registers are now maintained in electronic form, there is some method of identification capable of unequivocally establishing in which register an instrument has been registered.
I am disinclined to proceed on the basis that the Registrar-General is not able accurately to inform this Court of the identity of the register in which a particular instrument has been registered. That should be true as to the identification of the place of actual registration, even if latitude remains for argument as to the proper location for registration as a matter of law.
I am not persuaded by Ausbao 286's submission to the effect that the statutory provisions that require the Registrar-General to register plans in the Register of Plans that are lodged by other parties which comply with the statutory requirements excludes the power of the Registrar-General to register plans prepared by the Registrar-General in the Register of Plans. The better view is that the Registrar-General has administrative power to register departmental plans in the Register of Plans.
However, I do not accept that a finding that DP 657427 was in fact registered in the Register of Plans is fatal to Ausbao 286's claim for compensation.
As I have said above when dealing with the deposited plans that were included in the electronic data room upon which Ausbao relied in formulating its bid price, the Plan was sheet 1 of 2 that had been part of certificate of title volume 13683 Folio 1, when that certificate of title was created on 23 August 1978. At that time, certificates of title were created in physical form. I have noted above that the Plan formed the second of four pages of certificate of title volume 13683 Folio 1.
Certificate of title volume 13683 Folio 1 was created by the Registrar-General in exercise of his power under s 32. When the certificate of title was prepared, it formed part of the Torrens Register under s 31B(2)(a) as a folio. Section 31B(1) required the Registrar-General at the time to maintain the Torrens Register comprised, among other things, of folios.
Consequently, the Plan, when prepared by the Registrar-General for the purpose of identifying the land in certificate of title volume 13683 Folio 1, was an "act … of the Registrar-General in the execution or performance of his or her functions or duties under this Act in relation to the land" within s 129(1)(a). For the reasons that I have explained above, any loss or damage suffered by Ausbao 286 as a result of relying on the Plan is not excluded from compensation as a result of any implication that cuts down the effect of s 129(1)(a).
That conclusion is not obviated by the later use of the plan for the purpose of producing DP 657427, even if that deposited plan was registered only in the Register of Plans.
The Plan was still produced by an act of the Registrar-General in the execution or performance of his or her functions or duties under the Act, and it did not lose that character because it was photocopied for the purpose of creating computer folio 1/657427 on 2 June 1995.
Furthermore, the act of the Registrar-General in using the Plan on 2 June 1995 to create the plan that was registered as DP 657427 was also an act of the Registrar-General in the execution or performance of his or her functions or duties under the Act within s 129(1)(a). It does not matter that the completed deposited plan containing the Plan may only have physically been registered in the Register of Plans.
In s 3, "computer folio" is defined as "a folio of the Register that is not a manual folio." Section 32(1)(a) has the effect that the Registrar-General creates a folio of the Torrens Register for land by, among other things, making a record of the description of the land for which it is created. As noted, s 31B has the effect that the Torrens Register is comprised of folios and other named instruments and records.
If the Registrar-General complies with the duty to make a record of a description of the land in the folio by referring to a lot in a deposited plan, the result will be that the only way to identify the land comprised within the folio will be to have regard to the deposited plan. It will not matter that the deposited plan is physically or electronically only registered in the Register of Plans. At least the description of the lot in the deposited plan to which the folio relates will be part of the description of the land in the folio, and therefore by force of s 31B part of the Torrens Register.
Consequently, I accept the view expressed by Ms Hole that the provisions of the Act and the Conveyancing Act relating to plans are not mutually exclusive. A deposited plan may in fact be registered in the Register of Plans. If there are numerous lots in the deposited plan, the only part of the deposited plan that may be incorporated in the Torrens Register will be the specific lot in the deposited plan that is the subject of the computer folio, as that will be all that is necessary to comply with the requirement that the folio include a description of the land. In the present case, as there is only one lot in DP 657427, the whole of that deposited plan is incorporated in the Torrens Register, notwithstanding the fact that it may actually also be registered in the Register of Plans.

[28]

Application of s 129(2)(e) - Meaning of "measurement"

It will be convenient to deal with this paragraph of s 129(2) first, as the issues raised are more straightforward than for the other paragraphs relied upon by the Registrar-General, and the subject matter is most directly relevant to the cause of the loss and damage that Ausbao 286 claims it has suffered.
It is the Registrar-General's case that, even if Ausbao 286 establishes that it suffered loss and damage falling within s 129(1), s 129(2)(e) has the effect that Ausbao 286 is not entitled to compensation because the loss or damage has arisen "because of an error or miscalculation in the measurement of land".
Section 129(2)(e) has, since the provision was amended by the Further Amendment Act in 2009, excluded the right to compensation "where" the loss or damage has arisen in the circumstances set out in the paragraph. As enacted by the Amendment Act, the provision had previously excluded liability "to the extent to which" the loss or damage arose in those circumstances. Consequently, the provision now appears to create a complete bar to compensation where there has been an error or miscalculation in the measurement of land that is a cause of the loss or damage.
The Registrar-General's submission is to the effect that the error in the area of the Lot stated in the Plan is an error in the measurement of land, because "measurement" includes a stated or ascertained size as well as the process of ascertaining a size. The Registrar-General submits that in this context "measurement" refers to the magnitude and placement of the physical attributes of land such as boundary length, position and area. Ausbao 286 submitted that "measurement" refers only to the process of determining the size of the physical attributes of land, so that it does not extend to the conceptual error involved in the transposition by an officer of the Registrar-General of the area written on a plan of an earlier lot without a realisation that the area had been reduced by an intervening resumption for road widening purposes.
The Macquarie Dictionary gives the following relevant definitions of "measurement": noun 1. the act of measuring. 2. an ascertained dimension. 3. extent, size, etc., ascertained by measuring. 4. a system of measuring or of measures. …
The first of the meanings given is consistent with the submission made by Ausbao 286, and meanings 2 and 3 are consistent with the Registrar-General's case that the word includes reference to a relevant ascertained dimension of land.
The dictionary definition does not of itself provide any guidance as to the meaning of the term in s 129(2)(e) and is used only to confirm my own understanding that the word "measurement" is capable of bearing the two general meanings: c.f. South Western Sydney Local Health District v Gould (2018) 97 NSWLR 513; [2018] NSWCA 69 at [77]-[83] per Leeming JA. It is necessary for the Court "to identify, from text, context and purpose, the particular meaning that [the word "measurement"] bears".
Taking that approach, I have concluded that "measurement" in s 129(2)(e) has the meaning for which the Registrar-General contends. That conclusion is primarily based upon the consideration that the ascertained dimensions of land, including its area, are of potential significance to the Registrar-General for the purposes of the administration of the Torrens system and also persons who have interests in land, but measurement in the sense of how ascertained dimensions are derived by a process of measurement has no real significance for the operation of the Torrens Register and the Torrens system. That is, what is significant is the result not the process.
No reason is apparent for why the right to compensation should be excluded where the error is caused by the process of measuring the dimension or area but not when the error is caused by some other logical process such as calculation or transposition.
Section 129(2)(e) uses the collocation "error or miscalculation". The latter word appears to encompass more than an erroneous process of measurement, but would extend to any process of reasoning that commenced with a starting position and deduced a final result by making or failing to make necessary logical adjustments to determine the true relationship between the start and end positions. The process by which the officer of the Registrar-General deduced that the Lot had the area stated in the Plan was a process of miscalculation.
To the extent that the multiple possible meanings of the word "measurement" may support an argument that s 129(2)(e) has an element of ambiguity, s 34(1)(b)(i) and s 34(2)(f) of the Interpretation Act 1987 (NSW) permit the Court to consider in the interpretation of the provision "the speech made to a House of Parliament by a Minister or other member of Parliament on the occasion of the moving by that Minister or member of a motion that the Bill for the Act be read a second time in that House". I consider that the interpretation of the provision that I prefer is supported by the statements of the Minister in the following parts of the second reading speech in the Legislative Assembly that is extracted more fully above: … The exception provided in proposed section 129(2)(e) relates to errors or miscalculations in the 'measurement' of land. In other words, it relates to errors in the dimensions or areas of parcels of land. In regard to dimensions, proposed section 129(2)(e) merely restates the existing common law. There is a line of legal cases which recognises that dimensions shown in title diagrams may not be conclusive and that extrinsic evidence is admissible to identify the land comprised in a certificate of title… Prior to the Voudouris decision it was not thought, nor was it ever intended, that the State guarantee of title extended to the area of a parcel of land.
The Minister gave the following explanation for the introduction of s 129(2)(e) in the second reading speech in the Legislative Council: … The exception provided in proposed section 129(2)(e) relates to errors or miscalculations in the "measurement" of land. In other words, it relates to errors in the dimensions or areas of parcels of land. In regard to dimensions, the proposed section 129(2)(e) merely restates the existing common law. There is a line of legal cases which recognise that dimensions shown in title diagrams may not be conclusive and that extrinsic evidence is admissible to identify the land comprised in a Certificate of Title. In regard to areas of parcels, mention must be made of the case of Voudouris v Registrar General (1993) 30 NSWLR 195. In this case, a surveyor overstated the area of a lot in a plan of subdivision. The relevant portion of the plan was reproduced on the Certificate of Title for the land and the court found that the plaintiffs had relied on the statement of the area on the title when they purchased the land. While the court decided that there was "no responsibility or fault in the Registrar-General', the Torrens Assurance Fund was held liable for the error by the surveyor in calculating the area of the parcel of land. Prior to the Voudouris decision it was not thought, nor was it ever intended, that the State guarantee of title extended to the area of a parcel of land. It is a matter of great concern that, as New South Wales has a less than perfect State survey system, the decision in the Voudouris case may expose the Torrens Assurance Fund to a multitude of claims for compensation for errors made in plans of such age that the surveyor could not be called to account. Furthermore, it was never the role of the Torrens Assurance Fund to underwrite the negligence of private surveyors. Accordingly, the bill excludes liability arising from errors in the measurement of the area of land.
Nothing in the Act that establishes the Registrar-General's duties and functions in respect of the maintenance of the Torrens Register requires that the Registrar-General accurately determine the dimensions of land within the folios of the Torrens Register, and nothing at all is said in respect of any obligation on the part of the Registrar-General to be responsible for statements of areas in lots the subject of folios of the Torrens Register.
Indeed, the context in which the Amendment Act was enacted in 2000 is likely to have involved an understanding by the Parliament that, from 1943, the Registrar-General's practice ceased to involve the checking of the area of lots less than 1 acre, and from 1 September 1983, the Registrar-General ceased checking the area of any lots: see Baalman and Wells [206.675].
Although I have not accepted the Registrar-General's submission that s 129(1) should uniformly be read down by reference to a suggested principal object of the Act or by reference to an implication in the wording of the chapeau to the subsection, I accept that the established historical view of the limits on the extent to which the Torrens Register should be accepted as being reliable in respect of dimensions and areas has survived into the exclusion from the right to compensation that is found in s 129(2)(e). Consistently with the change in the structure of the provisions governing the right to compensation to one that specifies the factors that entitle compensation and the factors that deny it, the established common law understanding has been enacted in s 129(2)(e).
In determining the proper interpretation of s 129(2)(e) that I prefer, I have noted that the editors of Baalman and Wells at [548.450], and similarly in Woodman and Nettle at [RPA.129.210], each state: Section 129(2)(e), however, does not absolve the Registrar-General from the consequences of his or her own errors or omissions, for example, in tabulating the areas of various parcels of land in a manual folio of the Register.
Though the greatest of respect is due to the editors of the two works, they have not explained nor given any reasons for the view expressed. The editors of Woodman and Nettle also said at [RPA.129.210], in respect of the provision: "In other words, it relates to errors in the dimensions or areas of parcels of land". While I acknowledge that these observations appear to describe a process of error that is close to the one made by the Registrar-General's officer in this case, for the reasons that I have set out above I do not agree with the opinions stated by the editors.
No reason appears as to why the Parliament would wish to deny compensation only for errors in the process of measurement by persons such as surveyors and to exclude from the exception to the right to compensation computational miscalculations made in the Registrar-General's office
My consideration of all of these factors leads to the conclusion that it is not part of the Torrens system of land titles in this State that the State guarantees the correctness of statements of dimensions or areas of parcels of land as stated in instruments that form part of the Torrens Register, or which in any other way are reproduced by the Registrar-General in the performance of the Registrar-General's functions or duties under the Act. That conclusion extends to errors made by the Registrar-General as well as third parties such as surveyors.
Consequently, on this ground alone, the claim made by Ausbao 286 must be dismissed.

[29]

Application of s 129(2)(b) - negligence by Ausbao 286's solicitor

In order to satisfy s 129(2)(b), the Registrar-General must establish two matters: first, the extent to which the loss or damage was, in this case, caused by the negligent act or omission of Ausbao 286's solicitors; and secondly, that that loss or damage is compensable under an indemnity given by the solicitors' professional indemnity insurer.
That means in practical terms that the Registrar-General must undertake the forensic task of standing in Ausbao 286's shoes and proving that its solicitors' negligence caused all or some part of the loss or damage, and then, in continuing to stand in the solicitors shoes' proving the solicitors' entitlement to an indemnity for the consequences of the solicitors' negligence. As the Registrar-General will be a stranger to the relationship between Ausbao 286 and it's solicitors, and an even remoter stranger to the relationship between the solicitors and the solicitors' professional indemnity insurer, the Registrar-General may face serious forensic difficulties in any attempt to reduce the amount of compensation payable by reliance on s 129(2)(b). Although the burden of proof will remain with the Registrar-General, difficult questions may arise in a given case concerning how the burden of adducing evidence may shift between the Registrar-General and the claimant for compensation. The Registrar-General's forensic difficulties may be compounded if the solicitors and the insurer are not parties to the proceedings, which is the position in the present case.
If the requirements of s 129(2)(b) are established, then Ausbao 286's entitlement to compensation from the Torrens Assurance Fund for the loss or damage that it suffered will be reduced "to the extent that the loss or damage" fell within those requirements. Consequently, it is necessary to apportion the loss or damage between the cause for which the Registrar-General is required to pay compensation under s 129(1) and the consequences of the solicitors' negligence.

[30]

Causation of loss by solicitors' negligence

The first issue to be considered is whether the loss or damage suffered by Ausbao 286 was caused or contributed to by the negligence of its solicitors, Elson Pow & Associates (the solicitors).
The defence based upon s 129(2)(b), as pleaded by the Registrar-General in par 19(c) of the amended defence, is singularly uninformative as it alleges only that any loss or damage suffered by Ausbao 286 "was as a consequence of the negligent act or omission by a solicitor". The Registrar-General did not allege that the loss or damage is compensable under an indemnity given by a professional indemnity insurer.
The Registrar-General submitted in the written outline of submissions delivered before the commencement of the hearing that the loss or damage that Ausbao 286 claims to have suffered was as a consequence of the negligence of the solicitors for the reasons set out in the report of Ms Diane Skapinker, an expert conveyancer, dated 23 September 2020. The Registrar-General submitted in par 32 that the solicitors "ought to have, inter alia, advised the plaintiff to obtain a survey in the circumstances".
As will appear from the consideration of the evidence that follows, the solicitors were in fact retained by Ausbao, but they plainly owed an equivalent duty to the special purpose vehicle, Ausbao 286, after it was incorporated.
The question of whether the solicitors acted negligently will substantially depend upon what the solicitors were required to do by their retainer.
As Mason CJ and Wilson J said, in dissent, in Hawkins v Clayton (1988) 164 CLR 539 at 544; [1988] HCA 15 (footnotes omitted): It is clear that any relationship of proximity that exists in this case would not have arisen but for the professional relationship between the respondents and the testatrix. In determining the precise nature of the relationship giving rise to the alleged duty of care, we find it helpful to start with the contract under which the will was drawn and retained in the custody of the respondents. It is that contract which "indicate[s] the nature of the relationship that gives rise to the common law duty of care": Central Trust Co. v. Rafuse; cf. per Richmond P. Bowen v. Paramount Builders. It was said by Windeyer J. in Voli v. Inglewood Shire Council, in the context of ascertaining the duty of care which an architect owes to one who is a stranger to the contract between the architect and the building owner, that the contract "is not an irrelevant circumstance. It determines what was the task upon which [the architect] entered". So it is here. In the case of solicitors, the remarks of Oliver J. in Midland Bank v. Hett, Stubbs and Kemp are particularly pertinent: The extent of [a solicitor's duties to his client] depends upon the terms and limits of [the] retainer and any duty of care to be implied must be related to what he is instructed to do. Now no doubt the duties owed by a solicitor to his client are high, in the sense that he holds himself out as practising a highly skilled and exacting profession, but I think that the court must beware of imposing upon solicitors - or upon professional men in other spheres - duties which go beyond the scope of what they are requested and undertake to do.
As the majority judgment in that case demonstrates, the law may, in particular cases, impose upon solicitors a common law duty of care in the absence of a contractual obligation contained in the solicitors' retainer. However, the Registrar-General has not in the present case suggested that Ausbao 286's solicitors' failure to warn their client that it was unsafe to rely upon dimensions or areas in plans prepared by the Registrar-General was a breach of a common law duty of care that did not arise out of the solicitors' retainer. As Mason CJ and Wilson J said, it is "helpful to start with the contract" (emphasis added). That will, in the general case such as the present, identify the legal services that the solicitors agreed to provide. The identification of the legal services may not be sufficient to end the enquiry. While, in the general case, a duty should not be imposed upon solicitors to provide legal services that they have not agreed to provide, the content of the duty, and what is adequate performance, may be influenced by implications and commonly accepted notions of proper practice.

[31]

The solicitors' retainer

As the solicitors' retainer was not created by a written agreement that fully set out the legal work that the solicitors undertook to do for Ausbao 286, it will be necessary to examine the evidence of the communications between Ausbao 286 and the solicitors whereby the retainer was established.
Ms Wei (Irene) Tang, who was then a marketing executive employed by Ausbao, retained the solicitors on behalf of Ausbao. In that part of her 28 June 2019 affidavit in which she dealt with the retainer, she only referred to email exchanges with the principal of the solicitors, Mr Elson Pow. There is no evidence that the retainer was in any respect made orally.
Mr Wei Dong (Gavin) Zhang, a former director of Ausbao and Ausbao 286, and Ms Tang each gave evidence that they checked that the areas of each of the four lots, as stated in the deposited plans, added up to the expected total site area of 1,337.4 m². Ms Tang exhibited to her affidavit copies of a planning report prepared for the vendor by Crone Partners, and planning reports prepared for Ausbao by JBA Urban Planning Consultants Pty Ltd and Urbis, each of which stated that the site area was, or was approximately, 1,337.4 m². Neither Mr Zhang nor Ms Tang gave evidence that they expected the solicitors to confirm the site area, or that they relied upon the fact that the solicitors did not question their belief that the site area as stated in the numerous documents provided to Ausbao was correct.
On 11 November 2013, Ms Tang sent an email to Mr Pow in which she noted that Mr Pow was aware that Ausbao was looking to purchase the Land by an expressions of interest process, and asked him to provide a quotation in two stages, being: - 1st, review the draft Contract of Sale prepared by vendor's solicitor and advice (sic) on the terms; - 2nd, represent Ausbao and negotiate the terms of the Contract, then finalise the transfer.
This request suggests that the solicitors were only required to review the draft contract for sale and to represent Ausbao in negotiating the terms of the contract, and in completing the transfer.
Mr Pow responded on the same day with an email that requested information on the expression of interest process. Mr Pow stated that an expression of interest process generally would comprise of 3 to 4 stages, which he listed in his email. Those stages were: Stage 1 - review of the contract for sale and the leases and other documents affecting the property which may affect future redevelopment of the site, so that Ausbao is aware of all commercial issues affecting the purchase and future redevelopment of the site; Stage 2 - submission of EOI to the selling agent and negotiations on the price and other terms applicable to the transaction in competition with other bidders; Stage 3 - if Ausbao is the successful bidder, then it should be given an exclusive due diligence period of up to 4 weeks to examine in detail all aspects of the property; Stage 4 - concurrent with carrying out the due diligence, Ausbao can negotiate the terms of the contract for sale with the vendor with the aim of exchanging contracts for sale by the end of the due diligence period…
Mr Pow sent a further email to Ms Tang on 11 November 2013, in which he requested access to the data room: "in order to see the extent and nature of information and documents provided by the vendor, including the draft contract for sale". The email included the statement "Liability limited by a Scheme approved under Professional Standards Legislation". The same statement is made at the foot of all emails sent by the solicitors to which letters of advice were attached
Ms Tang replied on 12 November 2013 to advise that the expressions of interest process was the "normal" one described by Mr Pow. She advised that she would forward the draft contract for sale together with an index for the data room. Ms Tang attached the draft contract for sale to a further email to Mr Pow on 12 November 2013.
Mr Pow sent an email to Ms Tang on 12 November 2013 which included: We set out below our estimate of the cost of undertaking each of the stages involved in the EOI process: Stage 1 - Review of the contract for sale and some due diligence work such as review of the leases and other documents. $5,000 - $7,000. Stage 2 - Submission of EOI. $2,000 Stage 3 - Exclusive due diligence. $8,000 - $10,000. Our costs of completing this stage will depend on the nature and extent of the due diligence that Ausbao intends to undertake and how much of that work it requires us to undertake. For example, will Ausbao itself or its town planning consultant be undertaking a detailed review of the permissible developments of the site and who will be responsible to complete that review? Will a structural/building inspection of the building be undertaken and if so, who will oversee that process? The air-conditioning system and elevators will also need to be examined to ensure that they can continue to work well at least in the short to medium term. Stage 4 - Negotiate the terms of the contract for sale with the vendor and completion of the transfer. $5,000 - $7,0000. This estimate allows for a reasonable amount of negotiation but may be exceeded if the negotiations become protracted or if complex issues arise. It does not allow for any work in relation to the financing of the purchase. Please note the following: 1. The above estimate is not a quote and may vary depending on the quality and completeness of the available information and the approach taken in the negotiations by the vendor's solicitor. 2. The above estimate does not include expenses which might be incurred, such as search fees, enquiry fees, inspection fees etc. 3. The above estimate does not include GST. 4. If Ausbao is unsuccessful in securing the property for purchase after Stage 1 is completed, we propose to cap our fees for stage 1 at $5,000 plus GST.
Stage 1 in this quotation, which describes the legal work to be done before the submission of the expression of interest, only involved the review of the draft contract for sale and due diligence apparently in relation to documents in the data room such as leases.
Ausbao accepted Mr Pow's offer by email dated 13 November 2013, in which Ms Tang said: We are please (sic) to confirm that we would like (sic) appoint you as our representing lawyer for the purpose of purchasing the above mentioned property. I will make sure that you receive all the documents in the DD room by today.
On 13 November 2013, Ms Tang sent an email to Mr Pow, which included the following statement: Please see the attached list that the HQ has requested us to provide answers to all the items. I have highlighted the ones I think should be reviewed by your firm, however, please feel free to raise any concern. Could you please provide Yes/No answers where needed and legal advices as attachment? It will be appreciated if you could advice (sic) a time frame for you to complete the document. Let me know if translation is needed for the attached list.
The attached due diligence work list was written in Chinese characters. The following is a translation of the due diligence work list. The items highlighted by Ms Tang have been indicated by an asterisk next to the item number. No. Contents of Work 1 Investigation into the legal background such as property rights 1.1* Clarify whether the property rights of the project are clear-cut; 1.2* Clarify whether the legal documents of the property rights of the project are complete; 1.3* Verify whether there is any legal dispute on the property rights of the project; 1.4* The status of the various types of licences for the building and its equipment, e.g. the C/O (Occupation Certificate), etc. 1.5* Whether the implementation records related to this project have fulfilled the requirements of government laws and regulations; 2 Investigation into information about the property (in collaboration with the banks) 2.1 Inspect and obtain relevant on-site work records for the last 3 years 2.2 Engineering and equipment inspection and evaluation, verification inspection reports and records of solution of engineering, equipment and specific problems in the last 3 years 2.3 Complete an environmental protection assessment report and related work for the project 3 Review the leases and related legal documents 3.1* Review all the contracts related to the operation of the project; 3.2* Clarify the registration status of the project; 3.3* Check whether there are any legal disputes in the business activities, how they were resolved and the records; 3.4* Review the management agreements; 4 Onsite inspection of the project 4.1 View the warranty certificates and licences for various types of equipment; 4.2 View all the drawings and engineering materials of the project; 4.3 Visit the clients to get more information about the project; 5* Obtain the documents about the water, electricity, gas, fuel etc., and obtain documentary proof of payment over the last 3 years 6* Record of on-site employees (whether they are union members, the number of people, their salary and benefits, etc.) 7 Contracts with suppliers, service companies and servicing records, maintenance records. 8* List of assets such as equipment and facilities, etc., in the building

[33]

Performance of the solicitors' retainer

Mr Pow wrote an email to Ms Tang on 14 November 2013 in which he said: We spoke to one of the selling agents earlier today and was informed that the selling process is as follows: 1. The EOI is to be submitted no later than 4pm next Thursday, 21 November 2013. 2. A shortlist of bidders will then be compiled by about Monday 25 November 2013 so that a further EOI submission can be made by the bidders on the shortlist. 3. It is expected that contracts for sale will be exchanged in the first week of December. This essentially means that the EOI process is not as we previously envisaged. There will in fact not be any period for due diligence to be carried out by the successful bidder once it has been chosen. The agent was of the view that, as the property is being sold as a development site and all leases will expire by August 2014, not much due diligence is required. Of course the purchaser will still be the landlord for a period of about six months, so it would be advisable to have the air-conditioning system, the elevators and other essential facilities checked to ensure that there is no major defect or problem which may arise during, say, the next 12 to 18 months. We presume that you will arrange for these facilities to be checked. If not, we can arrange an engineering consulting firm such as Sinclair Knight to do this checking. If you agree that the property is being acquired as a development site, then we believe that the main due diligence to be conducted by Ausbao is to ascertain the possible development parameters for this site including any possible constraints. For instance, the information memorandum contains a section headed optimal unit mix. The (sic) should be carefully checked as it will obviously affect the feasibility of the project. Based on our work for other clients, we are also aware that construction in this part of the Sydney CBD may be affected by future rail projects. We are making enquiries concerning this issue.
On 15 November 2013, Mr Pow sent an email to Mr Zhang and Ms Tang to which he attached a letter reporting on work that had been done so far in reviewing the due diligence materials. The letter, which is dated 15 November 2013, stated: We have reviewed the due diligence materials and set out below our initial comments on the major items arising from our view. As you are aware, the property is being marketed on the basis of its redevelopment potential. The intention is to redevelop the site upon the expiry of the current leases in June and August 2014. For this reason no due diligence material of significance in relation to the current condition of the building has been provided by the vendor. For the reasons set out below we consider that it may be difficult or costly to attract new tenants to the building if it is decided not to commence the redevelopment shortly after the leases expire. 1. Leases [Mr Pow then provided a commentary on the leases between the vendor and the three tenants in the building constructed on the Land]. 2. Asbestos report The due diligence materials include an asbestos materials survey report dated August 2008. This report identifies asbestos in the building, mainly in the fire stair doors and the wall cavities in the toilets. It also identifies suspected asbestos, mainly in the its switch rooms on each floor. Ausbao will need to factor in the cost of removing all asbestos materials. 3. RailCorp The due diligence materials include a notice from RailCorp stating that the property is within the area covered by the provisions in State Environmental Planning Policy (Infrastructure) 2007 ("SEPP 2007"). A copy of this notice is attached. [There is then a discussion of the effect of SEPP 2007 that had the effect that some developments were required to be referred to RailCorp] We recommend that Ausbao investigate the potential consequences of SEPP 2007 on any proposed development of the property. A discussion with RailCorp and the NSW Department of Planning and Infrastructure may be advisable. 4. Contract amendments We propose to request a number of amendments to the Contract for sale and will report to you in relation to these amendments once we receive the vendor's response. 5. Additional information We intend to request some additional information from the vendor's solicitor in order to complete the due diligence process and will report to you if any matter of significance arises from this information. 6. Rock Anchor Easement [The letter discusses the effect of a rock anchor easement that was understood to be required for the cross-city tunnel]. We recommend that you have this rock anchor easement assessed by a geotechnical expert and an engineer in order to determine the effect that it might have on a future redevelopment of the site.
Mr Pow wrote an additional letter to Mr Zhang and Ms Tang in the Chinese language which he sent to Mr Zhang and Ms Tang under cover of an email dated 25 November 2013. He said: "Attached is a letter prepared in the Chinese language summarising the results of our due diligence work and addressing the points you requested. This letter takes into account the results of our discussions with the vendor's solicitor last Friday, and replaces the two letters that we sent to you last week". The evidence included an English translation of the letter, which is as follows: How are you? As Ausbao Pty. Ltd. intends to purchase the property, it has commissioned this firm to carry out investigations concerning the property. The property is a 12-story office building in the heart of Sydney with 81 parking spaces. We have read the due diligence investigation materials (i.e., the due diligence materials) provided by the vendor and reviewed the Contract of Purchase & Sale issued by the vendor. Meanwhile, on last Friday, this firm and you had a telephone conference with the vendor's solicitor. We have reached an agreement on the alteration of some of the clauses in the Contract of Purchase & Sale, removing those clauses in the Contract of Purchase & Sale that are unfavourable to the Ausbao Company. During this process, this firm did not find any serious, unfavourable legal factors for the future redevelopment of the property. Of course, there are some specific issues that need to be considered. The issues raised in paragraphs 3 and 5 below are engineering and technical issues that need to be looked into and resolved by professionals in this area when considering redeveloping the project. This firm now briefly mentions five matters which are more important: 1. The right to renew the leases [The solicitors advised that two of the existing leases contained a right of renewal which, if exercised, would delay the commencement of the redevelopment. The solicitors reported that the vendor's solicitor would include in the contract a statement that the vendor had not received any notification of renewal of the leases]. 2. The leases signed by [tenant 1] and [tenant 2] [The solicitors discussed the proposition that Ausbao, as purchaser, would become entitled to receive compensation from the lessees in lieu of the lessees incurring the costs of reinstatement of the premises, and the liability of Ausbao to maintain the leased premises would be limited because of the imminent expiration of the leases, provided Ausbao satisfied itself that "there are no major issues with the current operating condition of the facilities in the property…"] 3. Underground restrictions [The solicitors recorded advice from Ausbao that it had sought an opinion from its engineer concerning a reservation for underground road use]. 4. Retail lease [The solicitors discussed a potential problem concerning the possible entitlement of a retail lessee operating a coffee shop being entitled to demand an additional two-year lease]. 5. The plan of the Railway Bureau The city of sydney is undergoing re-planning. The State government intends to extend or expand the underground railways. Therefore, the Railway Bureau has stated on many plots of land in the centre of Sydney that that bureau may have special requirements for future constructions. This firm recommends that you ask the Railway Bureau whether it has any specific plans for the property. The purchase and sale procedure The vendor sold the property by way of "expression of intention" (i.e., expression of interest), requesting each interested purchaser to inform the agent of the sale price it intends to buy the property for and other conditions. The first round of expression of intention ended on last Thursday afternoon. The agent informed [this firm] that 14 units provided an expression of intention, Ausbao company was included in the shortlist. The second round of expression of intention ended today at 5 p.m. Since many units have expressed their intentions this time, the vendor hopes to take this opportunity to sign the Contract of Purchase & Sale as soon as possible so as not to lose the good opportunity to sell the property. Therefore, the three units in the shortlist have been asked to provide a signed Contract of Purchase & Sale before 5 p.m. today. The real estate market in Sydney has been very hot recently, therefore, vendors have adopted various types of selling tactics to get the most favourable results. If you have any queries about the aforementioned matter, please call.
On 25 November 2013, Ausbao prepared a report in the Chinese language on the results of the due diligence investigations for the consideration of Ausbao's management. The English translation of the report includes the following observations on the due diligence investigation results: (2) Due diligence investigation results The work of due diligence investigations of the project commenced on 1 November. Ausbao engaged Elson Pow & Associates in Sydney to be the solicitor of the project to carry out the work of due diligence investigations of all the legal documents. That law firm is a reputable law firm in Sydney with ability in both Chinese and English. It has worked with Ausbao Company for more than 20 years. It was that firm that completed the due diligence investigations and signing the related Contract of Sale and cooperation agreement for The Quay Project. Meanwhile, Ausbao Company also invited the company that manages The Quay Project - Coffey Company - and relevant professional companies to investigate the current condition of the building, planning, and the work of demolition and construction. Currently, the investigation work has been completed. The specific situation is as follows: 1. List of contents of due diligence investigations [The due diligence work list table as set out above is then inserted with the word "Completed" for each item in a column called "Progress"]. 2. Explanation on the contents of the key points of the due diligence investigations (1) Related legal procedures After carrying out detailed due diligence investigations and checking the contract, the solicitor confirmed that the property right of the project is clear-cut, that related legal procedures and government certificates are all complete, that there are no major legal risks. (2) Planning indicators Urbis and JBA are two reputable professional planning companies that have both carried out detailed investigation and research into the planning indicators of the project and relevant planning regulations. The conclusion in the report is that the estimates in the feasibility study report match the planning indicators, i.e., the maximum FSR can be up to 12.1:1, the capacity area can be up to 16,190 m². …
For completeness, it should be noted that the report attached a list of materials read by the solicitors, which included the computer folios for the four lots and: "1.2 Diagrams that correspond with the Title Deed".
The balance of the work undertaken by the solicitors involved the standard steps taken by a solicitor for a purchaser in achieving an effective transfer of the Land.

[34]

Evidence of the solicitor with the conduct of the matter

The solicitor at Elson Pow & Associates who had the day-to-day carriage of the due diligence work and contract negotiations was Mr Michael Charters Kerr. Mr Kerr was admitted as a solicitor of this Court on 15 September 1995, and has been employed by the solicitors since that year. A significant portion of his work has been in the real estate area encompassing property conveyancing, leasing and off-the-plan sale projects. He has had the carriage of several major real estate transactions.
Mr Kerr gave evidence of the work undertaken by him in the due diligence process and the purchase of the Land. He said that the certificates of title and deposited plans for the four lots became available to him through the electronic data room.
In relation to the deposited plans, Mr Kerr said: b) My review of the Due Diligence Materials included reviewing each of the Deposited Plans in the data room. I checked to make sure that the DP numbers matched those which were on the Certificates of Title. Once I had satisfied myself that I was looking at the Deposited Plans for the Property I checked the areas on each of the Deposited Plans. I noted that: [Mr Kerr set out the Deposited Plan references and areas, including that Lot 1 in DP 657427 had an area of 588 m²]. c) I then added up each of the areas depicted on the relevant Deposited Plans. The areas on the Deposited Plans added up to 1337.4 m². I cross checked this with the IM. I noted that the total site area depicted on the plans (i.e., 1337.4 m²) was slightly greater than what was contained in the IM (i.e. 1337 m²). On the basis of my review of the Deposited Plans I was satisfied that the site area of the land was in fact 1337.4 m². I considered the difference of 0.4 m² to be immaterial. I assumed that it had simply been rounded down for the purpose of the IM.
In reference to the email and attachment sent by Mr Pow to Ausbao on 15 November 2013, Mr Kerr said: 15 … The letter does not make any comment about the Property's site area because, following my review of the Deposited Plans, I did not consider there to be any issue with the Deposited Plans because they depicted the sites area as being 1337.4 m², which was consistent with the information in the IM.
Mr Kerr also said: 17 I was aware that Ausbao was conducting its own commercial due diligence at the time and that it was utilising materials from the Data Room including the Deposited Plans depicting the Property. 18 Based on my review, I concluded that the Deposited Plans constituted a current representation of the land comprised in the Property and for this reason no concern in this regard was raised with Ausbao or Ausbao 286.
Mr Kerr was assisted by a solicitor called Jean Liu. In an email to Mr Pow dated 4 March 2014, in which she explained aspects of her involvement in the transaction (principally a discussion with a deputy registrar at Land and Property Information concerning the significance of a rock anchor easement), Ms Liu said: During the due diligence process, I did calculate the area for all 4 lots as stated in the plans and ensure that it added up to the areas stated in the Information Memorandum. I believe my rough calculations are in pencil on one of the plans.
It will be appropriate to set out the following extracts from the cross-examination of Mr Kerr. At: T 86.50-87.7: Q. You understood at the time that what you were engaged to do was carry out due diligence in respect of this proposed purchase? A. It was limited due diligence with respect to the conveyance. Q. What did you understand to be the scope of the due diligence exercise that you were engaged to perform? A. Would be to review the contract and identify issues arising out of the contract that should be brought to the attention of our client.
At T 91.25-92.26: Q. Part of that due diligence exercise involved checking what information was available in the data room as to the site area of the four lots; is that correct? A. No, it wasn't checking the area of the four lots, the site area of the four lots. Q. In paragraph 13(a) of your affidavit you refer to having reviewed the survey-- A. Yep. Q. --and I'll come to that in a moment, and noting that the property was, except for minor discrepancies, within the land as represented on the deposited plans? A. Yes. Q. Is it fair to take from what you've put in paragraph 13(a) that you regarded and did, as part of your due diligence exercise, check the site area to ensure accuracy? A. That survey was an identification survey and it, what we checked was that the boundaries of the property were as shown on the plans. Q. Did that involve looking at the square metreage that was stated on each of those deposited plans for each lot? A. Yeah, I think I say elsewhere in here that I added them up and that was to check that they were the same as on the information memorandum. Q. But if you just come back to my question-- A. Sorry, yeah. Q. --you said a moment ago that you checked the boundaries; was that-- A. No, I used, used the identification survey to confirm the boundaries. Q. I see, but the exercise that you were performing included looking at the statements of the areas for each of the lots that were contained in the deposited plans; is that correct? A. No. Q. In paragraph 13(b) of your affidavit you set out each lot and you specify next to it that you noted that each lot had an area of-- A. Yeah. Yes. Q. --whatever it may have been? A. Yes. Q. So what you did and what you regarded as part of your due diligence exercise, I'm putting to you, included checking the site area on the information that was available to you in the data room, was it not? A. As I said, the degree of check was to just add them up and see that they equalled what was on the information memorandum. Q. So it was a part of what you understood your task to be and what you, in fact, did to cross check whatever information was available to you in the data room on the question of the site area for these lots, correct? A. Well, that's what I did, yes.
See also to a similar effect: T 93.14-93.23 and T 96.28-96.48.
Mr Kerr was a candid, straightforward and credible witness. I accept the evidence that he gave. Mr Kerr did not understand that the solicitors had been retained to take responsibility for the accuracy of the information in the data room concerning the site area of the Land, or that his professional responsibility extended to advising Ausbao concerning the steps that it ought to take to verify the site area, such as by commissioning a survey of the Land. Mr Kerr understood his duty to be to ensure that upon the completion of the contract for sale, Ausbao 286 would obtain good title to the Land. For that purpose, he satisfied himself that the identification survey showed that the boundaries of the Land were as indicated in the deposited plans. Mr Kerr took the opportunity to add up the site areas of the lots in the four deposited plans just to be careful. Having regard to the specific terms in which the solicitors were retained by Ausbao and the division of professional labour between the solicitors and Ausbao's other consultants, it was reasonable for Mr Kerr to hold the understanding of the terms of the solicitors' retainer that he in fact had.

[35]

Evidence of the Registrar-General's expert witness

The Registrar-General's expert conveyancing witness, Ms Skapinker, provided reports dated 23 September 2020 and 5 March 2021. The latter report was a response to the expert conveyancing evidence of Mr Edward Spring Boyce that was served by Ausbao 286.
It should be noted that Ms Skapinker's first report records that she was given the pleadings and particulars in the Registrar-General's cross claim against the solicitors. I assume that the cross claim was made pursuant to s 133(2), on the basis that the Registrar-General was subrogated to Ausbao 286's right to claim damages from the solicitors for professional negligence. The Registrar-General abandoned that claim. The Court does not have the documents relevant to the claim and cannot tell whether those documents influenced the evidence given by Ms Skapinker.
The first question that Ms Skapinker was instructed to address was in the following terms: In 2013 what was the usual practice of a reasonably competent solicitor in the identification of the client's requirements of the property being fit for the purpose and following that assessment, what searches would be necessary to ensure fitness for the required purpose, including advising his or her client that a site survey of the area is prudent and the risks of not obtaining such a survey?
The terms of this question are infelicitous, as the question assumes that there is a usual practice and that a reasonably competent solicitor would identify what is required to ensure that the property was fit for the client's purpose. Ms Skapinker's expert opinion would have been more valuable if she had been asked an open question concerning the usual practice of reasonably competent solicitors in the relevant circumstances.
Ms Skapinker dealt separately with the situations where the solicitor's client was a prospective purchaser of a commercial building that was being sold as a going concern, and the case where the client proposed to redevelop the property after completion of the contract for sale. In relation to the latter alternative, Ms Skapinker said that "the solicitor's due diligence would have focussed on issues that could impact on the proposed development" and "would have reviewed and reported on" a number of matters including: (iv) the area of the property and any encroachments onto the property by reference to a survey provided by the vendor and in the absence of such a survey, would have advised the purchaser to obtain its own survey, particularly where area is likely to be a critical issue to the purchaser in relation to the proposed redevelopment.
Ms Skapinker then referred to aspects of the evidence that ought to have informed the solicitors that Ausbao 286 intended to redevelop the property and that Ausbao 286 had engaged the solicitors "to raise for its consideration any potential issues regarding the Property and the titles to the Property". Ms Skapinker analysed some of the communications between Ausbao and the solicitors that I have considered above, but did not explain how the communications imposed a professional duty on the solicitors to take responsibility for the accuracy of the site area of the Land as stated in the information memorandum and the contract for sale. Ms Skapinker noted that the solicitors did not raise any issue regarding the area of the Land, and that Mr Kerr had satisfied himself as to the area by examining the deposited plans. Ms Skapinker concluded that Mr Kerr: "realised that the area of the Property was, at least, a relevant issue for Ausbao in deciding whether to purchase the Property", but, relevantly, that Mr Kerr relied upon the information memorandum and the deposited plans.
Ms Skapinker then referred to the judgment of Dixon CJ and Fullager J in Svanosio v McNamara (1956) 96 CLR 186 at 200, where their Honours said: The making of a survey is an ordinary precaution for a purchaser to take. Many purchasers, of course, decline to incur the expense involved in a survey, and in many cases it may appear unnecessary, but, generally speaking, and in the absence of misrepresentation, a purchaser may fairly be regarded as omitting the precaution at his own risk.
She then posed the question as to whether Mr Kerr's reliance on the survey provided by the vendor and the information memorandum was reasonable, referring in particular to the disclaimer in the information memorandum to the effect that potential purchasers must take note that the figures and calculations contained in the report were provided from external sources and have not been verified in any way. The survey referred to was an identification survey provided by the vendor that confirmed that the building on the Land was constructed to the site boundaries.
Ms Skapinker then expressed the following opinion: (k) In my view, a reasonably competent solicitor practising in property law in 2013 would not have relied on the Survey or the IM as providing evidence of the area of the Property. The crucial issue accordingly is whether such a solicitor would have relied solely on the areas shown in the deposited plans so as to justify not advising Ausbao to obtain its own survey of the Property before entering into a contract to purchase the Property when the solicitor knew or ought to have known the importance of the areas to the (sic) Ausbao. (l) In my view, a reasonably competent solicitor practising in property law in 2013 ought to have known that although a purchaser of Torrens title land obtains an indefeasible title upon the registration of the transfer, such indefeasibility only applies to title issues and not to land boundaries, dimensions or measurements referred to on registered plans…
The statement of Ms Skapinker in (l) is an assertion as to what a reasonably competent solicitor would have known concerning the significance of indefeasibility in the Torrens system. Ms Skapinker then set out an analysis of authorities and the second reading speech in the Legislative Council concerning the Amendment Act, and a reference to Butt's Land Law.
Ms Skapinker then added: (m) Even if a solicitor acting for a developer on a purchase of property in the central business district of Sydney in 2013 was not aware of the limitations on the Registrar General's liability for errors or miscalculations in the measurement of land in the deposited plans, in my view a reasonably competent solicitor at that time would have: (I) alerted Ausbao to the fact that the Survey attached to the sale contract: (a) was only an identification survey that did not describe the area of the Property; and (b) had been prepared over 15 years ago by a surveyor against whom Ausbao would no recourse for any errors in the Survey; and (ii) advised Ausbao to obtain a survey of the Property to confirm the area of the Property, particularly if the area was critical to its decision to purchase the Property and/or to formulate the price it was willing to pay for the Property, before entering into a sale contract to confirm the area of the Property and to ensure that there were no encroachments onto the Property that could impact on the redevelopment of the property, on the basis that, as pointed out by the High Court in Svanosio, obtaining a survey is "an ordinary precaution for a purchaser to take" and that purchasers who omit that precaution "do so at their own risk".
This is a statement of Ms Skapinker's opinion as to what a reasonably competent solicitor ought to have done, rather than a statement from experience as to what the practice of reasonably competent solicitors was at that time. In stating the opinion, Ms Skapinker has not explained why it was the practice of reasonably competent solicitors to take responsibility for the accuracy of areas stated in deposited plans, even having regard to the significance of the area to the client, and has not explained why a reasonably competent solicitor would have understood, having regard to the relevant communications, that this duty fell to the solicitor rather than other consultants retained by the client.
The survey mentioned by Ms Skapinker, although old, was an identification survey that correctly confirmed that the existing building on the Land had been built to the boundaries of the Land. It in fact confirmed that Ausbao 286 would acquire the Land having the boundaries that it expected. Ms Skapinker does not explain why a reasonably competent solicitor would have advised that a survey be obtained by Ausbao 286 to confirm the site area of the Land, for reasons connected with the principle of indefeasibility under the Torrens system. Once Ausbao 286 obtained an indefeasible title in respect of the true boundaries of the Land, which in fact happened, the area of what was acquired had nothing to do with the principle of indefeasibility. Although the present case involves a claim for compensation from the Torrens Assurance Fund, there is no explanation as to why a solicitor acting for Ausbao 286 should have had in mind the prospect of a claim for compensation, rather than simply that Ausbao 286 should acquire an indefeasible title to the land that it was contracting to acquire.

[36]

Evidence of Ausbao 286's expert witness

Ausbao 286 responded to Ms Skapinker's evidence by relying upon an expert report dated 28 January 2021 by Mr Edward Spring Boyce.
In par 10 of his report, Mr Boyce specifically stated that, in providing his opinion, he had considered the "usual practice of solicitors practising in relation to the purchase of land in New South Wales in 2013". Mr Boyce consistently expressed his opinion in terms of the usual practice of competent solicitors.
Mr Boyce expressed the opinion that, although errors as to areas of lots in deposited plans do occur, they were in his "experience an extremely rare occurrence in the ordinary practice of a solicitor to the extent that it may never arise during the career of a solicitor". Mr Boyce said: (d) In my opinion it would be the conduct of a reasonably competent solicitor to assume that the Registrar General would amend an area shown in a lot in a deposited plan where the Registrar General has subsequently registered a deposited plan which has excised part of that land from the original lot for which a current folio of the register applied. This in my opinion would be more particularly so where the dimensions of the particular lot had been amended following the registration of the subsequent deposited plan. (e) It is in my opinion usual practice of competent solicitors to accept areas as shown in lots in registered deposited plans and not require in every occasion a survey as to the dimensions of a lot in a deposited plan including the area of the land in that lot. (f) In my experience surveys were not in 2013 and are not now regularly obtained by solicitors and conveyancers when acting on the purchase of land in order to verify dimensions and the area of a property as disclosed in a lot in a registered deposited plan. (g) In my experience (notwithstanding the decision of the High Court of Australia in 1956 in Svanosio v McNamara…) identification surveys were not in 2013 and are not now regularly obtained by solicitors and conveyancers when acting on the purchase of land… (h) In my opinion in the context of the transaction as summarised in the paragraphs of this statement following the heading of Background I do not accept that [the solicitors], acting in a manner widely accepted in Australia in November 2013 by peer professional opinion as competent practice, ought to have acted as set out in paragraphs 4(c)(iv) and 4(m) of the report of Ms Skapinker.
Mr Boyce explained the further view that there was no information at the time that would have caused a competent solicitor to doubt the accuracy of the area of the Land as disclosed in the applicable deposited plan. In Mr Boyce's experience, errors in the area of land in a lot in a registered plan of subdivision are so unexpected that solicitors in practice accept the areas as disclosed in a plan of subdivision. Mr Boyce referred to exceptions that are not now material.
In par 27 of his report, Mr Boyce referred to the fact that, in preparing the original departmental plan that ultimately was used in the preparation of the Plan, the Registrar-General had correctly changed the boundaries and dimensions of the residue of the original lot, to allow for the excision of the land that was resumed. Mr Boyce expressed the opinion that the fact that the Registrar-General had correctly stated the boundaries and the dimensions of the Lot would lead a competent solicitor to believe that the area had also been updated.

[38]

Adequacy of solicitors' performance of their professional duty

The law is currently unsettled as to whether solicitors owe a duty of care that extends beyond the ambit of their retainer, often referred to as a "penumbral duty", which requires solicitors to take some further steps for the protection of their client's interests beyond the scope of the retainer. The Court of Appeal recently discussed this duty in Australian Executor Trustees (SA) Limited v Kerr [2021] NSWCA 5 at [256]-[266]. Gleeson JA (with whom Leeming JA and Emmett AJA agreed) stated at [258] that "[t]he better view is that what reasonable care requires in particular circumstances is fact dependent". In that case, it was argued that the solicitors should have advised the plaintiff to seek to "negotiate a better deal" in discharge of a penumbral duty. The issue on appeal was whether the primary judge correctly decided that the circumstances did not justify a conclusion that the solicitors had a duty to advise the plaintiff to negotiate a better deal. The Court of Appeal upheld the primary judge's finding on the basis that the solicitors were not retained to negotiate the transaction terms and the plaintiff had not sought advice about that issue. In a similar vein to this case, the plaintiff was a professional and demonstrated its sophistication by seeking advice limited to five listed matters in an "attached format". The Court of Appeal held at [266]: "Taken together these circumstances firmly tell against finding of a duty to give advice beyond the retainer".
In relation to a penumbral duty, see also the judgment of Deane J in Hawkins v Clayton at 579.
The Registrar-General has not established to my satisfaction on the balance of probabilities that the solicitors' duty to exercise reasonable diligence and care in this case required the solicitors to advise Ausbao to obtain a survey of the Land before Ausbao 286 entered into the contract in order to confirm that the site area of the Land was the area expected by Ausbao for commercial purposes, as opposed to any matter in relation to legal title to the land.
I have analysed the communications between Ausbao and its solicitors in detail above. The solicitors negotiated a fee in advance that covered identified legal work. That work primarily involved the review of the draft contract for sale and representing Ausbao in negotiating the terms of the contract and then finalising the transfer. A more detailed statement of the solicitors' scope of work is included in Mr Pow's email to Ms Tang of 12 November 2013. In relation to the due diligence process, the solicitors' scope of work was described as depending on the nature and extent of the due diligence that Ausbao intended to undertake. Mr Pow asked the question: "For example, will Ausbao itself or its town planning consultant be undertaking a detailed review of the permissible developments of the site and who will be responsible to complete that review?" The due diligence work list provided by Ms Tang on 13 November 2013 specifically identified the legal work that the solicitors were required to undertake. The solicitors were required by item 1.1 to clarify whether the property rights of the project are clear cut. Item 4.2 required other consultants to view all the drawings and engineering materials of the project.
I am satisfied that Ausbao divided the responsibilities between its various consultants with some precision and it did not ask the solicitors to take professional responsibility for confirming the physical attributes of the Land that were critical for the determination of the feasibility of the project and the determination of the appropriate bid price for Ausbao to offer. The solicitors were reasonably entitled to proceed upon the basis that Ausbao had not retained them to provide advice concerning the physical attributes of the Land that may have been important to the feasibility analysis and the formulation of a commercially viable development project. The solicitors were entitled to proceed upon the basis that the consultants retained by Ausbao to advise on the feasibility of the project would take responsibility to provide the advice that Ausbao required to confirm that the assumptions that it had made that were critical to the accuracy of the feasibility analysis were valid.
It is necessary for the Court to have regard to s 5O of the Civil Liability Act 2002 (NSW) for the purpose of deciding whether the solicitors incurred a liability in negligence to Ausbao 286. That section provides: (1) A person practising a profession (a professional) does not incur a liability in negligence arising from the provision of a professional service if it is established that the professional acted in a manner that (at the time the service was provided) was widely accepted in Australia by peer professional opinion as competent professional practice. (2) However, peer professional opinion cannot be relied on for the purposes of this section if the court considers that the opinion is irrational. (3) The fact that there are differing peer professional opinions widely accepted in Australia concerning a matter does not prevent any one or more (or all) of those opinions being relied on for the purposes of this section. (4) Peer professional opinion does not have to be universally accepted to be considered widely accepted.
Having regard to the evidence given by Mr Boyce concerning the usual practice of solicitors in this State in the present context, I would conclude that any failure by the solicitors to advise Ausbao to obtain a survey of the Land to confirm its site area was consistent with the solicitors having acted in a manner that was widely accepted in Australia by peer professional opinion.
The solicitors' retainer required them to ensure that Ausbao 286 obtained good title to the Land. In my opinion, the opinion expressed by Dixon CJ and Fullagar J in Svanosio v McNamara concerning the prudence of purchasers of land obtaining surveys was primarily directed at the need for purchasers to ensure that the land for which they expect to obtain title is the land that will actually be conveyed to them on completion of the contract. In the present case, Ausbao 286 obtained title to the land that it expected to obtain. The survey that the Registrar-General submits the solicitors ought reasonably to have advised Ausbao 286 to obtain in the present case was not necessary to confirm that it would acquire title to the land it expected to receive.
The accuracy of the statements of site area in the deposited plans in the data room was not a matter of title but concerned a measurement that was important to the commercial feasibility of the acquisition of the Land and was a matter for Ausbao and its town planning and design consultants to confirm. It is immaterial to this conclusion that Mr Kerr took the trouble in fact to confirm the calculation of the site area on his inspection of the deposited plans without providing Ausbao with any advice on that subject.
The Registrar-General has not established that any loss or damage suffered by Ausbao 286 was as a consequence of the negligent act or omission of its solicitors.

[39]

Application of s 129(2)(b)(ii) - entitlement to professional indemnity insurance

As already mentioned, the Registrar-General's defence to the amended statement of claim does not specifically refer to the requirement in s 129(2)(b)(ii) that the loss or damage suffered by Ausbao 286 "is compensable under an indemnity given by a professional indemnity insurer". The Registrar-General's written outline of submissions did not remedy this deficiency. Consequently, the issues that may be relevant to this aspect of the Registrar-General's reliance on s 129(2)(b) have not been exposed by the pleadings.
Difficulties in the application of s 129(2)(b)(ii) arise where the claimant for compensation has not actually made a claim for damages for negligence against the claimant's solicitor, and consequently the solicitor has not made a claim on the solicitor's professional indemnity insurance policy. Where such a claim is litigated between the claimant, the solicitor and the professional indemnity insurer, the result may be to determine the issues that arise under sub-par (ii). Where, as in the present case, that has not happened, the relevant issues may be hypothetical. The parties have not dealt with all the relevant issues in their submissions, so it is not appropriate for the Court to decide the question on a hypothetical basis.
Section 129(2)(b)(ii) appears to have the effect that the claimant's entitlement to compensation is reduced to the extent to which the loss or damage is both caused by the negligence of the claimant's solicitor and "is compensable under an indemnity given by a professional indemnity insurer". That means that it must be established how much the claimant's solicitor would actually be entitled to recover under the solicitor's professional indemnity insurance.
The Registrar-General has done little more in support of this aspect of the case than to tender the solicitors' LawCover professional indemnity insurance policies for the years 2012/2013 to 2018/2019 (Exhibit D1). The policies are 'claims made' policies, and it is not clear which policy is the relevant one. The Court does not know whether Ausbao 286 notified any claim to its solicitors, or whether the solicitors notified the claim to LawCover. The policy wording and the information in the schedules generally appear to be the same from year to year, although there are some differences in the excesses stated in the schedules.
The parties have made no submissions as to how the Professional Standards Act 1994 (NSW) may affect the amount of any indemnity to which the solicitors may notionally have been entitled in the present case. I have noted above that the solicitors' emails to Ausbao contained the standard note about the solicitors' liability being limited by a scheme approved under the Professional Standards Legislation.
The limit on the amount insured and the maximum amount of indemnity under a top up provision in the policies is less than the nominal amount of compensation claimed by Ausbao 286 in the present case. It is not necessary, and it would not be fair to the solicitors, for the Court to record the amounts of the limits.
The theoretical maximum amount of the indemnity cover of the solicitors includes claimant's costs and defence costs. That gives rise to a difficult question concerning how the amount of the indemnity is to be ascertained in cases where the claimant for compensation has not claimed against its solicitor, and the solicitor has not claimed against its professional indemnity insurer, so that the issue before the Court is a hypothetical one, and it is not clear how the fact that there are no claimant's costs or defence costs is to be considered.
Consequently, it is not practicable for the Court to attempt to determine how s 129(2)(b)(ii) should be applied in the present case.

[40]

Application of s 129(2)(a) - act or omission by Ausbao 286

As I have found above that s 129(2)(e) operates in this case to exclude an entitlement by Ausbao 286 to compensation from the Torrens Assurance Fund, it is not strictly necessary for me to consider whether the right to compensation is also excluded by s 129(2)(a). However, just as I have considered the application of s 129(2)(b) above, against the possibility that I am wrong in my interpretation of the meaning of "measurement" in s 129(2)(e), I will also consider whether the Registrar-General has established this basis of exclusion.
Given that this course is not necessary for the purposes of determining the present application, it is somewhat problematic because of difficulties that arise in relation to the proper interpretation and application of s 129(2)(a). I have recently explained my view as to these difficulties in Wassell v Ken Carr Bobcat & Tipper Hire Pty Ltd [2021] NSWSC 1415 (Ken Carr Bobcat) at [239]-[280]. It is not necessary for me to repeat those observations.
The essential problem is that s 129(2)(a) provides that "compensation is not payable in relation to any loss or damage suffered by any person to the extent to which the loss or damage is a consequence of any act or omission by that person". The exclusion is expressed solely in terms of causation and not fault.
If the exclusion is interpreted literally, compensation will never be available in cases to the extent that any act or omission by the claimant is a cause of the loss or damage.
The Minister said in the second reading speech in the Legislative Assembly for the Bill that was enacted as the Amendment Act in relation to the proposed s 129(2)(a): … However, proposed section 129(2)(a) is new. It will allow contributory negligence of a claimant to be considered when determining the liability of the Torrens Assurance Fund. Under the new provision, compensation is not payable in relation to any loss or damage suffered by any person to the extent to which the loss or damage is a consequence of any act or omission by that person. This provision acknowledges the fact that claimants can, by their own actions or inactivity, be responsible to some degree for any loss they may suffer. Accordingly, the Torrens Assurance Fund is not liable to pay compensation where the loss is attributable to the conduct or negligence of the claimant. As pointed out by the Law Reform Commission, where a registered proprietor voluntarily signs a transfer under the influence of fraud or otherwise contributes to the loss, there is a strong case for reducing or excluding compensation. In such cases, the victim is assumed to have control over what is occurring. Otherwise, the State might be required to compensate a proprietor who has exercised poor judgment or made an unfavourable bargain. It is noteworthy that contributory negligence is available to the Registrar General as a defence in a claim on the assurance fund in New Zealand, Victoria and Queensland.
This speech clearly appears to assume that s 129(2)(a) would have the effect that, if the claimant for compensation has acted negligently and that negligence has been a contributory cause of the loss or damage suffered, the amount of compensation from the Torrens Assurance Fund that should be paid to the claimant may be reduced proportionately to the extent to which the loss or damage was caused on the one hand by one of the factors listed in s 129(1) and on the other by the claimant's own negligence.
However, as Darke J explained in Kumar v Registrar-General of New South Wales [2021] NSWSC 1103 (Kumar) at [107]-[109], while s 129(2)(a) should be interpreted in a way that requires some fault on the part of the claimant before the right to compensation is excluded, s 129(2)(a) "does not establish an apportionment of responsibility regime". That is notwithstanding that the provision commences with the expression "to the extent to which", and the second reading speech clearly assumed that some form of an apportionment would be available. I agreed with the conclusion reached by Darke J in Ken Carr Bobcat at [248].
If some degree of fault on the part of the claimant for compensation is required for the right to compensation to be excluded, the nature of that fault is not explained by s 129(2)(a). It is difficult to escape the consequences of the fact that the provision is expressed solely in terms of causation. If causation as explained in Kirkland in relation to the operation of s 129(1) operates in the same manner in the context of s 129(2)(a), then the right to compensation will be lost when an act or omission of the claimant for compensation is a material cause of the loss or damage that has been suffered.
Experience has caused me to understand that the considerations that may appear relevant to the application of s 129(2)(a) are dependent on the particular circumstances of the case and no generally applicable or coherent principles appear to be available. It seems that the proper course is to analyse the circumstances of each case in order to make a judgment based upon the apparent legislative purpose for making compensation available, when loss or damage is suffered as a result of the occurrence of one of the factors in s 129(1), weighed against the seriousness of the responsibility of the claimant's conduct for the loss or damage being suffered.
In the present case, on 23 August 1978, the Registrar-General issued certificate of title volume 13683 folio 1, which contained a sketch the purpose of which was to provide the required description of the land the subject of the certificate of title. The officer of the Registrar-General wrongly transposed the area of the larger lot of which the Land formed part, by wrongly failing to appreciate that the Land was smaller by reason of the resumption of an area of 91.1 m². No duty or responsibility of the Registrar-General required the officer to determine the area of the residue or to insert the area in the sketch plan. Given the established principle that documents included in the Torrens Register are not conclusive or reliable as to dimensions or areas of land, the Registrar-General's officer probably carried out the task of transposition without any appreciation that there was a need for precision and accuracy. The officer was not under any duty to expect that the sketch plan could be relied upon by any party who searched the Torrens Register or acquired the certificate of title for purposes that could involve substantial loss or damage if the area was inaccurate.
Furthermore, the land the subject of volume 13683 folio 1 was one portion of a larger area comprised of additional separate titles upon which was constructed an existing commercial building. The possibility that at some unknown future date the accuracy of the area stated in the sketch plan would be crucial to the determination of the bid price for the whole of the Land incorporating the Lot, for the purpose of acquiring the Land for a new development, would not reasonably have been understood by the responsible officer of the Registrar-General.
When the Registrar-General prepared DP 657427 on 2 June 1995, the error made on 23 August 1978 was perpetuated in circumstances where the relevant officer of the Registrar-General had no means of knowing that the area for the Lot in the earlier sketch plan was wrong.
Although the error as to the area of the Lot in the Plan was a material cause of the loss or damage claimed by Ausbao 286 because it was in fact relied upon by Ausbao 286 in determining its bid price for the Land, it is realistic to treat that cause as being the result of a historical event that involved the making of a transposition error in circumstances where the responsible officer of the Registrar-General had no reason to foresee that the error might be a material cause of an indeterminate loss suffered at a time in the far future by an unknown party who did not have a sound reason to treat the erroneous error as being accurate.
I now turn to consider Ausbao 286's responsibility for its own loss and damage, in the sense of determining how its acts and omissions caused that outcome.
Although Ausbao 286 proposed to acquire the whole of the Land as a single parcel for the purpose of redeveloping the existing building in a manner that involved Ausbao 286's conception of the highest and best use, that project involved the aggregation of four separate land titles that individually bore no relationship to the existing building or the proposed development. In short, the Land was broken up into four separate and irregular parcels. Ausbao 286 had no reason to believe that the individual parcels had any present significance, although perhaps they had done so in the far distant past.
Ausbao 286 should have appreciated that the validity of the stated areas of the four separate parcels had had no real significance for the period of existence of the current building, and that it was Ausbao 286's development proposal that created the significance of the accuracy of the individual areas, as the total of those areas gave the site area of the Land, which would ultimately be determinative of the permitted floor space ratio for the particular development proposed by Ausbao 286.
The information memorandum clearly contained a warning that the vendor did not guarantee the validity of any of the information contained therein, so Ausbao 286 was informed that it was responsible for the accuracy of its own enquiries. The relevant officers of Ausbao 286 acknowledged that they understood this fact. The only Ausbao 286 witness to be cross-examined by counsel for the Registrar-General was Mr Zhang. At T 46.36 - T 47.15, Mr Zhang accepted that he had read the disclaimer in the information memorandum, which required potential purchasers to satisfy themselves in relation to all aspects of the report. Mr Zhang also accepted at T 47.20 - T 48.24 that the information memorandum did not contain any survey that verified the site area of the Land and that Mr Zhang did not himself commission any survey to verify the site area.
That meant that Ausbao 286 was responsible for identifying crucial information and values so that it could protect its own position by ensuring that that information was verified.
In fact, the relevant officers of Ausbao 286 acted upon the information as to the areas of the four individual lots as if they were entitled to assume its accuracy, because it was contained in official plans used for the purpose of describing the individual parcels that comprised the whole of the Land. Mr Zhang said in evidence that he did not think that there would be an error on the Deposited Plans because they were government records.
The relevant officers therefore acted upon the basis of an assumption as to the accuracy of the information in the deposited plans in circumstances where they had no positive basis for believing that the individual plans had been prepared in circumstances where all information stated in them had been verified by professional processes.
It is significant that three of the four deposited plans, including the Plan, appear with reasonable obviousness to be sketch plans. By comparison with the fourth deposited plan, the three other plans do not bear the indicia of having been prepared by a professional surveyor. The three plans do not contain a surveyor's certificate as to their accuracy. Consequently, reliance upon the site area in the Plan can only be explained on the basis that it is a statement of area in a sketch plan that forms part of an official document registered in the Torrens Register.
So far as the evidence discloses, Ausbao 286 did not instruct any of the consultants that it retained to verify all assumptions made or information relied upon that was critical to the achievement of the development approval that was the basis upon which Ausbao 286 determined the bid price that it should offer for the Land. As I have explained above, Ausbao 286 specified the legal services that its solicitors were required to provide in a manner that excluded the solicitors having professional responsibility for issues concerning the Land other than Ausbao 286 obtaining good title. The evidence did not contain any detail of Ausbao 286's relationship with its other consultants, who should have been responsible for town planning and design issues in relation to the proposed development. It seems in fact to be the case that whatever instructions Ausbao 286 may have given to its other consultants, none of them thought to advise Ausbao 286 that it needed to protect itself by obtaining a survey of the Land to verify its site area.
As a result of this analysis of the relative responsibility for the error in the Plan and the failure by Ausbao 286 to take any effective step to verify the site area of the Land, I find that the material cause of any loss or damage suffered by Ausbao 286 was an act or omission of Ausbao 286 for the purposes of s 129(2)(a), and that Ausbao 286's responsibility for the loss or damage extends to the whole of that loss or damage.
This conclusion recognises that the inadvertent transposition error made by an officer of the Registrar-General, when the original sketch plan was prepared on 2 June 1995, was as a matter of fact a material cause of Ausbao 286's loss or damage, but proceeds upon the basis that, having regard to the relative responsibility for the loss or damage as between the two separate causes, the proper interpretation of s 129(2)(a) requires that the Court treat Ausbao 286's act or omission as the effective cause of its loss or damage.
As I recorded in Ken Carr Bobcat at [246], in Kumar at [107] Darke J referred with approval to the observation by Bryson AJ in Chandra v Perpetual Trustees Victoria Ltd [2007] NSWSC 694; (2007) 13 BPR 24,675 at [52] where his Honour said that s 129(2)(a) operates where the act or omission to which it refers "arises through fault in some sense". That is a proposition with which Darke J and I have agreed. It seems to be entirely inconsistent with the objective of the Torrens Assurance Fund that the right to compensation should be lost if some act or omission of the claimant that is entirely innocent has been a material cause of the loss or damage being suffered. However, if Bryson AJ was correct, no enlightenment will be found within s 129 concerning the nature of the fault that must be present in order to deny the claimant's right to compensation.
I acknowledge that in reaching the conclusion that I have stated above in this case, I have determined which act or omission should be accepted as being the material cause of the loss or damage by reviewing the conduct of the Registrar-General and Ausbao 286 in its full historical context, and by making a judgment as to the effective responsibility for the loss or damage. The idea of responsibility is related to fault, but I have intended to use that term in a more objective sense, and I have not acted upon my own conception of relative blame.
The process of reasoning that I have followed has been ad hoc. Section 129(2)(a) does not state a simple rule that can be applied to any set of facts. It seems to be necessary to analyse all of the facts of the particular case and then to consider on a bespoke basis what the proper approach should be to the application of s 129(2)(a).
In Kumar, Darke J dealt with a situation where the act of the attorney of the claimant for compensation of creating the withdrawal of caveat that was ultimately used fraudulently to cause damage to the claimant was found to be the cause of the loss or damage for the purposes of s 129(2)(a). The attorney's act was the initiating cause of the loss or damage, and the foreseeable consequence of the withdrawal of caveat being left in a place where the fraudster could misuse it was that the loss or damage would be suffered.
In Ken Carr Bobcat, I was concerned with the case where the act of the claimant for compensation in parting with the certificate of title was a necessary step in the loss or damage being suffered, but that act was itself caused by the fraud of the perpetrator. It was not the initiating cause. One issue was whether s 129(2)(a) should be held to apply where the fraudulent act was the initiating cause and the claimant's act was a consequence. Another issue considered in that case was whether the claimant's act should be treated as the cause of the claimant's loss or damage when a formal and precise procedure was established to prevent fraudulent dealing, but that procedure had miscarried in an unforeseeable way with the consequence that the claimant's act led to it suffering loss or damage.
I mention these examples because they show how the application of s 129(2)(a) is sensitive to the context and raises different conceptual problems in accordance with how the claimant's act or omission relates to the other causes of the claimant's loss or damage that are present. In this case, I consider that the presence of the error as to the area of the Lot in the Plan and Ausbao 286's failure to take proper steps to verify the area were concurrent causes of any loss or damage suffered by Ausbao 286. It may be that the application of s 129(2)(a) is most difficult when the causes are concurrent. As stated, in this case I have found that it is proper for the Court to treat Ausbao 286's conduct as the effective cause of its loss or damage. It will be apparent that the utility of my reasoning would have deserted me had I found that both causes were substantial and material contributors to the occurrence of the loss or damage. I would then have faced the problem raised by Bryson AJ, when he noted that s 129(2)(a) does not contain a mechanism for apportioning the responsibility for loss or damage between separate material causes. That is an issue that will need to be addressed when and if it arises in some future case.

[42]

Revision of compensation claim

It is necessary to begin by considering the history of Ausbao 286's compensation claim, as its juridical basis has changed substantially over the course of the proceedings.
In par 20 of its amended statement of claim, Ausbao 286 sought compensation in the range $5.0M - $7.5M (comprising the difference in the amount Ausbao 286 paid for the land (i.e. $55M), on the basis of the misconception that the site area was 1,337.4 m², and the amount it would have paid if it had known that the Land only had an area of 1,255.9 m² (i.e. $47.5M - $50.0M). In addition, Ausbao 286 claimed compensation for the additional stamp duty as well as legal, valuation and other professional costs in making the claim. The reason for the range in the amount claimed was that Ausbao 286 could only establish on the evidence that its bid price would have fallen within the range of $47.5M - $50.0M.
Ausbao 286 maintained this claim for compensation in pars 57 and 58 of its outline of written submissions served before the commencement of the hearing dated 20 May 2021.
The Registrar-General responded to this claim in par 20 of his defence to amended statement of claim by denying that Ausbao 286 had suffered the loss or damage claimed, and alternatively, by denying that Ausbao 286 is entitled to damages assessed by reference to any difference in the amount it would have paid had it known that the Land had a site area which was less than it believed by reason of any error or misdescription in the Plan.
On the first day of the hearing in oral opening, senior counsel for Ausbao 286 stated his understanding of the Registrar-General's position as being that the Court should apply the principle decided by the High Court in Potts v Miller (1940) 64 CLR 282 at 289 and 297, wherein it was held that the proper measure of damages for the tort of deceit in cases where the plaintiff was induced to acquire property was the difference between the price paid and the fair or real value of the property at the time it was acquired.
Senior counsel explained the new basis of Ausbao 286's claim, being that it sought compensation for the value of the chance that it could have acquired the Land for a price less than $55M. This new claim was explained in detail in Ausbao 286's final written outline of submissions dated 3 June 2021 at pars 110 to 153. Ausbao 286 encapsulated its case at par 153 in the following terms: For the foregoing reasons, this Court would find that Ausbao is entitled to damages in the sum of $5,000,000 - $7,500,000 adjusted for the probability that the vendor would have accepted an offer from Ausbao in the order of $47.5m - $50m on the counterfactual that the Deposited Plans accurately depicted the Land's area. Through this adjustment the Plaintiff's loss falls within a range of $4m to $2.5m.
In the Registrar-General's final written submissions dated 3 June 2021, he noted at pars 83 to 88 that Ausbao 286 had changed the basis of its compensation claim without seeking leave to amend its amended statement of claim. The Registrar-General indicated that he was loath to take a pleading point and sought an opportunity to consider Ausbao 286's final submissions and make further submissions of his own. The Registrar-General was given that opportunity.
As it has happened, the Registrar-General has not made a submission that Ausbao 286 is not entitled to formulate its compensation claim in the new way without being given leave to amend its pleadings. The Registrar-General replied in detail to Ausbao 286's new claim in pars 87 to 119 of his further closing submissions in response. Ausbao 286 responded to these submissions in pars 74 to 90 of its 7 October 2021 submissions in reply.

[43]

Evidence tendered in support of claim

Before I embark upon a consideration of the validity of Ausbao 286's new compensation claim, it will be appropriate to consider a number of preliminary matters that are material to that determination.
First, Ausbao 286 did not tender any expert valuation evidence as to the value of the Land at the date that it entered into the contract to acquire the Land. Consequently, Ausbao 286 would not have been in a position to prove the quantum of its entitlement to compensation if that entitlement was governed by the Potts v Miller principle.
Although, in respect of the new basis for quantifying its compensation, Ausbao 286 proved in detail how it determined its bid price in fact, and how it would have determined the lower bid price if it had known the true site area of the Lot, it called no evidence at all concerning the bids made by the other two selected bidders and how they determined their bid prices, or the process adopted by the vendor in selecting the bid made by Ausbao 286 and rejecting the other two bids. The result has been that Ausbao 286 has asked the Court to determine the value of its lost opportunity on a basis that is entirely theoretical in so far as it involves a consideration of how the other two selected bidders would have acted, if the site area of the Lot had correctly been stated on the Plan, what their bid prices may have been, and how the vendor may have acted in response to the three bids, if three bids were made. Although Ausbao 286's new compensation claim involves the consideration of a counterfactual involving the possible behaviour of three bidders and one vendor, it is still likely to have been material to the process of the assessment of relevant probabilities by the Court to know what the other bidders and the vendor in fact did in response to circumstances that included the error in the site area of the Lot in the Plan.
As will be seen, this course has led to the position where Ausbao 286 has asked the Court to make some detailed findings as to probable events that would have occurred in the counterfactual on an entirely hypothetical basis. Evidence of what the other bidders and the vendor in fact did may have made it possible for the Court to make findings as to the counterfactual probabilities on a much more sound basis than has been possible, given the forensic course taken by Ausbao 286.

[44]

Proper basis for determining compensation

The second preliminary observation is that, in par 89 of his 9 September 2021 submissions, the Registrar-General abandoned the claim that the proper principle to determine any loss suffered by Ausbao 286 was the principle stated in Potts v Miller. The Registrar-General specifically said: "The plaintiff's submissions in PS1 which address the Potts v Miller (1940) 64 CLR 382 basis of assessment can therefore be disregarded in circumstances where the plaintiff has now eschewed it. The Registrar-General makes no submission about damages which the plaintiff does not claim (notwithstanding that the claim as pleaded was on that basis)". The Registrar-General's submissions were confined to responding to Ausbao 286's loss of opportunity case.
The Registrar-General's response to Ausbao 286's new claim was encapsulated in par 88 in the following terms: However, even if the plaintiff had established that it had suffered compensable loss, for the reasons which follow, the plaintiff is not entitled to compensation for the alleged loss of opportunity it seeks in any event, because: (a) the loss claimed by the plaintiff, being an alleged loss of opportunity to have bid less for the Property and have that bid accepted is, by its nature and/or in all the circumstances of the case, not contemplated by the RPA and is inconsistent with the purpose for which the compensation provisions in the RPA exist; and (b) the plaintiff has not, in any event, made out its case, from an evidentiary perspective, for the compensation it seeks.
I will deal first with the question of whether Ausbao 286 is, as a matter of law, entitled to claim compensation on the basis of a loss of opportunity to have paid a lower price for the Land than it in fact paid as a result of acting on the error in the site area of the Lot contained in the Plan.
As a result of the course taken by the parties, the Court finds itself in the position that it is required to consider Ausbao 286's entitlement to compensation on a different legal basis than the one the Court considers is truly applicable. Consequently, the reasoning that follows is not only obiter by reason of the fact that I have found that Ausbao 286 is not entitled to compensation, but it also should not be taken to reflect my own considered view of what the applicable legal principles would have been if I had found otherwise on the issue of entitlement to compensation.
In order to explain this observation, it is necessary to focus on the essential nature of the transaction that has given rise to the claim for compensation. Ausbao 286 was successful in the expressions of interest process and it purchased the Land for $55M. Ausbao 286 owns the Land. Ausbao 286 did not lose the opportunity to acquire the Land. That which Ausbao 286 describes as a lost opportunity is the opportunity to have paid a lesser price in the circumstances of the counterfactual based upon all interested parties being aware of the true site area of the Land.
In my view, even though the law may theoretically allow a choice between these two alternative means of quantifying Ausbao 286's loss, in the usual case where the claimant acquires the property, and so has not lost an opportunity to acquire, the proper approach to quantifying the loss is on the basis of the Potts v Miller principle. Simply put, Ausbao 286's loss, as recognised by the law, is the difference between the price that it paid and the objectively determinable true value of the Land.
Ausbao 286 relied in its submissions upon a number of High Court authorities that decided, in the context of the assessment of damages for breach of statutory prohibitions, such as engaging in misleading and deceptive conduct, that while common law approaches to the assessment of damages in tort or contract may sometimes provide appropriate guidelines to determining compensation for the statutory contraventions, the proper approach will depend upon an analysis of the statutory purpose concerned. It is not necessary for present purposes to review all of the authorities relied upon by Ausbao 286. It will be sufficient to state the following extract from the judgment of Gleeson CJ in Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 at [18]: Section 82 of the Act is the statutory source of the appellants' entitlement to damages. The only express guidance given as to the measure of those damages is to be found in the concept of causation in the word "by". The task is to select a measure of damages which conforms to the remedial purpose of the statute and to the justice and equity of the case. The purpose of the statute, so far as presently relevant, is to establish a standard of behaviour in business by proscribing misleading and deceptive conduct, whether or not the misleading or deception is deliberate, and by providing a remedy in damages. The principles of common law, relevant to assessing damages in contract or tort, are not directly in point. But they may provide useful guidance, for the reason that they have had to respond to problems of the same nature as the problems which arise in the application of the Act. They are not controlling, but they represent an accumulation of valuable insight and experience which may well be useful in applying the Act.
It is implicit in Ausbao 286's claim for compensation that the Land was worth less than the price that it paid. That follows from the assertion that a feasibility study based upon the true site area of the Land would have led to Ausbao 286 making a lower offer for the Land than it in fact made. I consider that, on the proper interpretation of Part 14 of the Act, in a case where the claimant is successful in acquiring property, notwithstanding the existence of the error for which the Registrar-General is responsible, the measure of compensation contemplated by the expression "is entitled to payment of compensation from the Torrens Assurance Fund" in s 129(1) is the shortfall between the price paid and the true value.
More significantly, s 129 provides for compensation for loss or damage out of a publicly established fund. If the basis for compensation relied upon by Ausbao 286 in this case were permissible, even if the market value of the Land was in fact $55.0M or higher, Ausbao 286 would be entitled to compensation if it could nonetheless prove that it lost an opportunity to pay a price that was less than market value as a result of the error for which the Registrar-General is assumed to be responsible.
In cases where the claimant has been successful in acquiring the property, the difficulty with determining the claimant's loss by valuing the chance that the claimant has lost an opportunity to acquire the property for a lesser price than was paid is that the Court should not limit its consideration to the possibility that the claimant would acquire the property at a lesser price, but it should also take into account the possibility that its price would be rejected and it would not have acquired the property at all. The Court cannot meaningfully consider the possibility that the claimant's lesser price would have been rejected by the vendor as the known fact is that the claimant has the property.
If Ausbao 286 is entitled to claim compensation on the basis that it lost the value of the chance that it could have acquired the Land at a lesser price, why should the Court not also take into account the fact that it gained the opportunity of selling the completed development at a higher price than it forecast in the feasibility study upon which it based its bid price, because of an unanticipated higher escalation of property values in the City of Sydney? Conventional valuation principles would say that these questions are irrelevant because the theoretical basis of the estimation of the true market value of the Land at the date of the contract for sale is that all possible variables - upsides and downsides - are objectively taken into account in the process of determining market value. Thus, the only meaningful number is the market value.
There is a further practical reason why the Court should determine compensation on the Potts v Miller principle in cases where the claimant has actually acquired the property, and the opportunity to acquire is not the opportunity that has been lost. That reason is that the Court should determine compensation on a basis that is straightforward and objective, in preference to one which requires the determination of counterfactual scenarios that may, as Ausbao 286 would have it in this case, involve almost entirely theoretical processes of reasoning, where the assessment of probabilities must involve significant guesswork.
Had I been asked to do so by the Registrar-General, I would have rejected the submission of Ausbao 286 at par 113 of its 3 June 2021 submissions that this is not a Potts v Miller case. I do not agree with the submission put in that paragraph that Ausbao 286 is entitled to quantify its compensation on the basis that it "does not seek damages for buying an over-valued asset." I consider that that is precisely what Ausbao 286 is doing. It does not matter that Ausbao 286's "evidence is that it did not assess the purchase price of the property on its 'as is' basis but on its development potential." The market value of property is generally always determined on the basis of its highest and best use, and not necessarily on the basis of its present use or the basis upon which it is marketed.
In my view, the present case for compensation is not in principle different from that decided by Hodgson J (as his Honour then was) in Voudouris. It cannot be said that his Honour decided the question, as a matter of principle, that compensation should be quantified as the difference between the price paid by the claimant and the market value in cases where the claimant has acquired the property notwithstanding the relevant error. Rather, his Honour proceeded upon the basis that that was the natural way to determine compensation, and in my respectful view, his Honour was right in doing so.

[45]

Registrar-General's response to loss of chance claim

Ausbao 286 responded to the Registrar-General's submission that compensation quantified on the basis of the value of the lost opportunity was not available in this case, notwithstanding the Registrar-General's abandonment of the Potts v Miller principle, by relying upon the decision of Santow J (as his Honour then was) in Glensaugh Pty Ltd v Registrar-General [2001] NSWSC 1114; (2001) 10 BPR 19,311, where his Honour held, at [68]: The fact that the loss or damage sustained was of an opportunity to obtain a commercial advantage or benefit rather than a straightforward "actual" loss, is no impediment to a claim for damages, although it may be relevant in determining the quantum of damages awarded: per Mason CJ, Dawson, Toohey and Gaudron JJ in Poseidon Ltd and Sellars v Adelaide Petroleum NL at (1994) (supra) at 355-56; Brennan J at 364. While the loss of a mere opportunity to acquire a benefit is not in itself a loss, the loss of the benefit will be such a loss if the plaintiff, as here, proves that it could and would have taken the opportunity and that the benefit would then have been yielded: per Brennan J at 362.
However, the facts of that case were materially different to the present facts. As stated in the headnote in 10 BPR 97936: The Registrar-General erroneously showed the title to the subject land as being burdened by a reserved public road. The plaintiff had granted an option to a developer for development of the land but the option was never exercised. The plaintiff claimed that the presence of the reserved road on title prejudiced the development and that was the reason the option was not exercised. The plaintiff claimed compensation under ss 126, 127 of the Real Property Act 1900 (NSW).
In that case, the Registrar-General had acknowledged that the subject land was not burdened by a reserved public road and had subsequently removed the statement that it was so burdened from the title. Thus, in due course, the claimant for compensation came to enjoy the title to the subject land without the incorrect statement that it was burdened by a reserved public road. However, in the meantime, the claimant had granted an option to purchase the subject land to a party who contemplated constructing a golf course on the land. The apparent presence of a reserved public road created a substantial impediment to that development. The party with the option did not exercise it. The claimant proved to the satisfaction of Santow J that a reason why the option was not exercised was the presence on the title of the incorrect notification that the land was burdened by a reserved public road.
The consequence was that the claimant had lost the opportunity to sell the subject land following the exercise of the option, and that loss of opportunity was caused by the error in the title for which the Registrar-General was responsible.
The difference between Glensaugh and the present case was that there the only consequence of the error was that the claimant wholly lost a commercial opportunity to sell the subject land for an advantageous price. In the present case, Ausbao 286 did not lose the opportunity to acquire the Land as it did acquire it.
However, as I have explained, the Registrar-General has abandoned the bulwark of Potts v Miller and elected to oppose the claim for compensation on a different ground.
The Registrar-General put his submissions as to why the basis for quantification of compensation claimed by Ausbao 286 is not available in pars 91 to 105 of his submissions dated 9 September 2021.
I accept the submissions made at pars 92 to 94 that it is necessary to interpret the relevant provisions of Part 14 of the Act in their context and in a manner that would promote the purpose or object underlying the Act.
However, the Registrar-General then submitted in par 95 that the "purpose of the compensation provisions of the RPA and the context in which they exist are to provide for a system of title by registration which is underpinned by the state guarantee of that title … they are to 'balance the disadvantage', or 'address the hardship', that may be caused by the effects of indefeasibility." I have not included reference to the authorities cited in the footnotes to support this submission.
As I understand it, the Registrar-General's argument is encapsulated in par 98 as follows: There is, accordingly, no scope for the application of the principles relating to the assessment of loss of opportunity cases to the compensation provisions of the RPA as they relate to the circumstances of the plaintiff's claim, which have nothing to do with affectations on the title to the Property.
This submission appears to repeat that which the Registrar-General made about the proper interpretation of the compensation provisions in that they are only intended to have effect to protect claimants from losses that are caused by the operation of the Act concerning title to land and indefeasibility of title.
In par 99, the Registrar-General sought to explain the decision of Santow J in Glensaugh on the basis that: … However, as submitted earlier, that was a case where the plaintiff lost the commercial opportunity to sell its property as a golf course by reason of the Registrar-General's erroneous registration of a reservation of a Crown road on the title to the plaintiff's land. That error affected the title of the plaintiff in the sense that prospective purchasers did or could have believed that the plaintiff's land was affected by a Crown road when in fact it was not. A Crown road was registered on the title to the property as one of the dealings affecting title to the land, and the plaintiff was able to prove that because of that error, an opportunity to sell the property as a golf course was lost. (emphasis in original)
The Registrar-General therefore attempted to read into the reasoning of Santow J a consideration - which is not found in the reasons - that it mattered to the entitlement to compensation that the error in the title made by the Registrar-General put the holder of the option at risk that its title to the land upon exercise of the option would be subject to a Crown road. As I read the judgment, Santow J did not hold that the entitlement to compensation for the lost opportunity to sell the land depended upon the fact that the error infected the understanding of the holder of the option as to the title to the land.
The second argument put by the Registrar-General, commencing at par 100, was based upon the authorities that have considered the measure of damages in cases involving contraventions of statutory prohibitions and in the cases determining damages for loss of chance that were relied upon by Ausbao 286 in its submissions. The Registrar-General concluded in pars 103 and 104 by submitting: "Nothing in the Error, however, is or can by analogy be said to be a promise to provide a chance or an opportunity", and that the offer to purchase the Land for $55M made by Ausbao 286 was "based entirely on its own internal processes which occurred entirely outside of the 'operation of this Act'".
I do not accept that these arguments are valid once reliance upon the Potts v Miller principle is abandoned. Representations that are found to be misleading or deceptive are actionable notwithstanding the absence of a promissory element. As in this case, loss is suffered because an incorrect representation is acted upon. Further, it is entirely immaterial that the steps taken by Ausbao 286 to formulate its bid price based upon the error in the site area of the Lot contained in the Plan was an internal process of Ausbao 286.
If the submission made by the Registrar-General that compensation is only intended to be available when the loss of damage is caused by the "operation of this Act" concerning title to land and indefeasibility of title is correct, then the result would be that Ausbao 286 would fail in the first stage of the process identified by Kunc J in Lincu. If it does not have that effect, it would not separately have the effect of denying a claimant a right to compensation based upon the value of a lost opportunity, if the circumstances of the application were such that the quantification of the compensation on the basis of the value of the lost opportunity was the appropriate way to assess compensation.

[46]

Amount of compensation

It is therefore necessary to consider whether Ausbao 286 has proved that it has suffered a compensable loss, and if so what the quantum of that loss should be found to be.
I accept Ausbao 286's submission that, if it is entitled to compensation based upon the value of a lost opportunity, then the following statement of principle by Mason CJ, Dawson, Toohey and Gaudron JJ in Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4 at 355 is applicable: On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable.
Ausbao 286 correctly submitted at par 130 of its 3 June 2021 submissions: "This posits a two-stage enquiry: first, the Court must be satisfied that Ausbao lost a commercial opportunity which had some value (not being a negligible value); and, second, the Court must assess the value of the commercial opportunity by reference to the degree of probabilities or possibilities of it materialising."
I accept Ausbao 286's detailed submissions in pars 134 to 136 as to the manner in which Ausbao 286 had determined the initial bid price of $55M and that, had it instead acted upon the true site area of the Lot, it would have offered a bid price of between $47.5M and $50M for the Land. That evidence was not challenged in cross-examination, and it was not in any serious way contested in the Registrar-General's submissions.
In particular, I accept that the site area of the Land was of fundamental importance to the determination of the estimated value of the completed redevelopment, given that the existing use of the Land was not its highest and best use. The true site area of the Land was a crucial integer in the determination of the final permitted floor space ratio. The conventional way for developers to estimate the value of the hypothetical development on completion is on the basis of assigning per square metre values for the whole of the floor space in the completed development for the various intended uses. That is why an error in the site area for the Land can feed directly into the estimation of the value of the completed development, which itself, after allowance for costs, expenses, risk and profit feeds directly into the determination of the price that should be offered for the Land.
I also accept Ausbao 286's submission that the error in the site area of the Lot in the Plan was the probable source of the same error in the information memorandum, and that, if the Registrar-General's officer had not made the error in the first place, the whole of the expressions of interest process would have been conducted on the basis of an expectation by the selected bidders and the vendor that any determination of value would have been based upon an understanding that the site area was 1,255.9 m² rather than 1,337.4 m².
Accordingly, if on the basis of knowledge of the true site area of the Land, Ausbao 286 had offered a bid price of between $47.5M and $50M, there must have been a real or substantial commercial possibility that the other selected bidders would have offered lower prices, and that the vendor would have accepted the lesser bid made by Ausbao 286.
Consequently, I accept that Ausbao 286 has established the first stage of the enquiry required by Sellars.
In pars 143 to 152 of its 3 June 2021 submissions, Ausbao 286 set out its argument as to how the Court should ascertain its loss "by reference to the court's assessment of the prospects of success of that opportunity had it been pursued: Sellars, 355".
For the sake of brevity, I have summarised Ausbao 286's argument in those submissions as follows: 1. As the Land was sold on the basis of its development potential, all of the participants in the sales process would have offered a lesser price than they did had they known the true site area of the Land. 2. The format of the bidding process contributed to the likelihood that all the bidders would have offered less if they knew the true site area of the Land. 3. The Court should infer that all of the potential purchasers intended to redevelop the Land rather than to acquire it for the purpose of its existing use. 4. All of the participants in the expressions of interest process, including the vendor, were operating on the erroneous assumption that the Land had a site area of 1,337.4 m². If any participant had discovered the true site area, "this would have been raised". 5. If the correct site area had been included in the Plan, which formed part of the due diligence materials, all prospective purchasers would have learned of the true site area and would have offered less, and the vendor would have been prepared to accept less, than the offers that were in fact made. 6. The vendor would have considered Ausbao 286 as being "an attractive counterparty" because it was prepared to offer favourable terms to the vendor and had a presence in the Australian property development industry.
In broad terms, I am satisfied that it is appropriate for the Court to accept these submissions. I do so, despite the lack of evidence, because there is some logic in the proposition that the three bidders and the vendor would have acted in the same way that they in fact acted, save that they would have done so with the starting point of an appreciation of the true site area of the Land. My acceptance of the submissions is, however, only on the balance of probabilities. There is considerable uncertainty in the assumption that all bidders and the vendor would in fact have acted as postulated by Ausbao 286, particularly where Ausbao 286 has not provided any evidence to support the assumptions it makes.
At par 147, Ausbao 286 submitted that there are two main variables involved in the Court's assessment of its loss, being the amount that Ausbao 286 would have offered, and the probability that its offer would have been accepted by the vendor.
I accept the submission that there is an abundance of evidence as to the first variable, and that it is in respect of the second variable that the judgment of the Court as to the probabilities must be exercised.
In respect of the second variable, Ausbao 286 made the following submission at par 149: The factors that inform the probability (or possibility) of the Plaintiff's offer being accepted are as follows: a. first, the Court should assume that all the parties were bidding within the same parameters, namely, that the land was the correct size rather than the erroneously inflated size; b. secondly, that the parties, acting rationally, would have formulated their offers based on the correct size and, additionally, the vendor's expectations - as reflected in the 'price guidance' offered by its agents, would have been correspondingly tempered; c. thirdly, that, for the two preceding reasons, and to the extent there was a 'range' of sale prices within which the vendor would have treated with the purchaser, the range would have been pushed downwards owing to the fact that the vendor was selling a smaller parcel of land that even it, at the date of exchange (17 December 2013), believed; d. fourthly, that the three bidders that were shortlisted continued to behave consistently, that is, the dynamics of the hypothetical bidding contest would have mimicked what in fact occurred albeit with the parties pricing the asset to reflect their knowledge of its true size; e. fifthly, the vendor would also have acted consistently; f. sixthly, that during the second phase of the tender process the Plaintiff had a one-third chance of succeeding but that it could have improved its chances by adopting a vendor-centric posture in terms of telegraphing it was a determined offeror prepared to agree to a highly expedited settlement period of around three weeks such that this transaction would be completed before the end of the year; g. seventhly, we know, from actual events, that the approach adopted by the Plaintiff yielded it success in this three-way contest. That means that its calculation of price was obviously competitive and its amenability for an abbreviated settlement period was, presumably, of significance in signalling it was, to deploy the vernacular, 'cashed up and ready to go'.
Ausbao 286 then, in par 151, set out a table in which it suggested the range of outcomes for alternative bid prices at $50M, $49.5M, $49M, $48.5M, $48M and $47.5M. For each bid price, different ranges of prospects of success are suggested. By way of example, for $50M, the range is 80% to 65%, and for $47.5M, the range is 45% to 33%. The 80% prospect of success of a $50M offer gives a loss of $4M and the lowest prospect of success for a $47.5M offer at 33% gives a loss of $2.5M. There is a range of losses for the different assumed offers and for the different ranges of prospects of success.
The most obvious feature of this approach is that it is entirely theoretical, and perhaps artificial.
As, because of the choice of Ausbao 286 in not leading any evidence at all on the subject, the Court has no idea of the true circumstances of the other bidders or the vendor, the Court does not know whether the exercise proposed by Ausbao 286 has any reality, or whether it is only a numbers game.
Ausbao 286 relied in par 144 on a submission that the assessment of damages in a loss of opportunity case "has many of the characteristics of a discretionary judgment", relying upon the judgment of Mason J (as his Honour then was) in Commissioner of Taxation (Cth) v St Helens Farm (ACT) Pty Ltd (1981) 146 CLR 363 at 381; [1981] HCA 4, as cited by Ward JA (as her Honour then was) in Mistrina Pty Ltd v Australian Consulting Engineers Pty Ltd [2020] NSWCA 223 at [86].
Ausbao 286 also relied upon the following statement of principle by Mason CJ and Dawson J in The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83; [1991] HCA 54 (footnotes omitted): The settled rule, both here and in England, is that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can. Indeed, in Jones v Schiffmann Menzies J. went so far as to say that the "assessment of damages … does sometimes, of necessity involve what is guess work rather than estimation". Where precise evidence is not available the court must do the best it can. And uncertainty as to the profits to be derived from a business by reason of contingencies is not a reason for a court refusing to assess damages.
This Court accepts and is bound to follow these authorities. However, the present case poses a difficult question. Given the inherent difficulty in the exercise faced by the Court in making what is in substance a discretionary judgment concerning the valuation of lost opportunities, what is the significance of the claimant choosing not to provide evidence that is apparently available and that would add some element of objectivity to the process of judgment, without providing any explanation as to why the evidence has not been provided? Does the claimant simply have a choice as to whether to provide all of the objective evidence that may be available, or can the claimant simply put the Court in the position of having to determine the value of lost opportunities by making hypothetical guesses?
Ausbao 286's case is that, if it had known the true site area of the Lot, the lowest bid price it would have offered was $47.5 M. If the evidence had shown that the highest bid made by the other two selected bidders was less than $47.5 M, the Court would probably infer that the other bids would have been even less if those bidders had also known the true site area of the Lot. In that counterfactual, the vendor would probably have accepted the lower bid made by Ausbao 286. However, the process of valuing the lost opportunity would become a highly uncertain one if the evidence had shown that the highest of the other bids in fact was in the range $47.5M - $50M. The Court cannot know how the other bidders would have reacted to knowledge of the true site area of the Lot. The difficulty is compounded because the Court has no basis for determining on the evidence whether the other bidders were misled by the error in the site area of the Lot, or even whether they made their bids using the same approach to the determination of the value of the Land as a development site as did Ausbao 286.
The Court cannot know whether in reality better evidence could have been led by Ausbao 286 if it had taken the procedural steps necessary to obtain that evidence. The Court remains bound by authority to make an assessment of the loss suffered by Ausbao 286, even though it has a proper basis for concern that forensic choices made by Ausbao 286 have had the result that the assessment exercise may be much more hypothetical than ought to have been necessary. In my view, in conformity with the authorities considered above, the proper course for the Court to take is to treat the level of objective uncertainty in the evidence as a ground to discount the amount of compensation to reflect a level of contingency that requires the Court to exercise a discretion rather than to make any rational calculation.
Had I been required to determine an amount of compensation payable to Ausbao 286 out of the Torrens Assurance Fund, and on the basis that the position adopted by the Registrar-General would have allowed the Court to assess the compensation as the value of the opportunity lost by Ausbao 286 to acquire the Land at a lesser price, I would have assessed the compensation at $2M. It will be obvious that this amount has been determined by an intuitive assessment of the range of possibilities in the table in par 151 of Ausbao 286's submission approached conservatively because of the relative absence of any objective basis for the assessment.

Ausbao (286 Sussex St) Pty Ltd v The Registrar-General of New South Wales

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