(6) Remit the proceedings to the Equity Division for the Family Provision Act application to be heard and determined.
224 GZELL J: The facts and circumstances surrounding the hearing in the court below and on appeal are set out in the judgment of Young CJ in Eq. I have had the advantage of reading that judgment.
225 The first issue, in my view, is whether there was fraud on the part of the registration clerk within the meaning of the Real Property Act 1900, s 42(1).
226 In Assets Co Ltd v Mere Roihi [1905] AC 176 at 210, Lord Lindley said that fraud for this purpose meant actual fraud, that is, dishonesty of some sort, not what was called constructive or equitable fraud. That does not mean that all forms of equitable fraud are outside the statutory concept (Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 at 273-274, Bahr v Nicolay (No 2) (1987-1988) 164 CLR 604 at 614).
227 Beyond stating that fraud clearly implied some act of dishonesty and indicating that if the designed object of a transfer was to cheat a man of a known existing right, that was fraudulent, as was a deliberate and dishonest trick causing an interest not to be registered and thus fraudulently keeping the register clear, Lord Buckmaster said it was neither necessary nor wise to give abstract illustrations of what might constitute fraud for each case depended upon its own circumstances (Wiamiha Sawmilling Co Ltd v Waione Timber Co Ltd [1926] AC 101 at 106-107).
228 It was the High Court that introduced the concept of moral turpitude. In Butler v Fairclough (1917) 23 CLR 78 at 90, 97 it spoke of fraud as importing personal dishonesty or moral turpitude. Moral turpitude is rather an extreme synonym for personal dishonesty, if synonym it was meant to be. It connotes depravity, vileness, wickedness, baseness. However, as an alternative to personal dishonesty, it has been maintained by the High Court as part of the description of statutory fraud (Wicks v Bennett (1921) 30 CLR 80 at 91, Stuart v Kingston (1922-1923) 32 CLR 309 at 329, Latec Investments at 273-274, Bahr at 614).
229 Within this concept of statutory fraud, a line of authority has developed to the effect that the dishonest lodgement of a false document with the Registrar-General to obtain registration is fraud for the purposes of the statute.
230 In Australian Guarantee Corporation Ltd v De Jager [1984] VR 483, an agent of the finance company attested to the signature of a husband as mortgagor and returned the document to employees of the finance company. The document bore a signature purporting to be that of the wife as the other mortgagor. The employees pointed out to the agent that her signature had not been attested. Notwithstanding that he told the employees he had not been present when the wife signed the document, the agent then attested that he had. The mortgage was thereafter lodged for registration. The wife's signature was a forgery. Neither the agent nor the employees of the finance company were aware of this fact.
231 Tadgell J at 496-497 found a case of fraud within the meaning of the statute in that employees of the finance company and therefore the finance company itself, caused or allowed the mortgage to go forward for registration after the agent had signed it by way of attesting to the wife's signature in his presence.
232 Tadgell J did not rely upon any admission by the employees that they had a dishonest intent. His Honour regarded the lodgement of the false document as fraud a priori.
233 The Torrens system is designed to enable the public to rely upon entries on the register. One of the safeguards to the integrity of those entries is the requirement that instruments be signed by the parties to a transaction and that their signatures be the subject of attestation. That is no mere formality. As Tadgell J said at 497:
"… if there is a currency in the notion that the signature of an attesting witness to a document to be registered under the Transfer of Land Act 1958 is no more than a formality, then the sooner it is dispelled the better. Nothing, in my opinion, could be more unwarrantable. A system of land title by registration, such as the Torrens system is, plainly depends on the good faith of those presenting instruments for registration."
234 The personal dishonesty or moral turpitude of the employees of the finance company lay in their representation to the Registrar of Titles that the attesting witness was present when the wife signed the mortgage.
235 Proof of mens rea by direct evidence was unnecessary. It was to be inferred from the lodgement of the document with knowledge that the attesting witness had not seen the wife sign the mortgage.
236 As Tadgell J said at 498:
"A moment's reflection will confirm that, when AGC presented the subject instrument of mortgage for registration, it was representing to the Registrar of Titles, as against the mortgagors, an honest belief that they, and each of them, had executed the instrument in the presence of a witness who, if it came to the point, could be relied on to prove the execution. To lodge an instrument for registration in the knowledge that the attesting witness had not been present at execution must deprive the lodging party of an honest belief that it is a genuine document on which the Registrar can properly act."
237 To like effect is National Commercial Banking Corporation of Australia Ltd v Hedley (1984) 3 BPR 97210. At 9480, Hodgson J in like circumstances drew the inference, that in making the assertion to the Registrar-General that the mortgage had been signed in his presence by both mortgagors, the bank employee either knew it was false, or had no honest belief in its truth and acted recklessly as to whether or not it was true. The decision was reversed on another point (Hedley v National Commercial Banking Group of Australia, unreported, NSWCA, 31 October 1986).
238 A different result arose in Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202. A customer and his wife introduced an impersonator to the bank as the father of the customer. He had the certificate of title and other documents relating to the land in his possession. He forged the signature of the father to a mortgage in the presence of the bank officer who attested to the forged signature.
239 There was no fraud on the part of the bank. As had been said in Mere Roihi at 210, a person who presents for registration a document that is forged or has been fraudulently or improperly obtained, is not guilty of fraud if he honestly believes it to be a genuine document that can, properly, be acted upon. The decision does not detract from the approach taken in De Jager and in Hedley.
240 To similar effect to those cases is Westpac Banking Corporation v Sansom (1994) 6 BPR 97509. A wife forged the signature of her husband on a mortgage which she signed in the presence of a bank officer who attested to both signatures. At 13796, Rolfe J followed Hedley in concluding that there is fraud for the purpose of the statute when a representation is made, contrary to the fact, that a person is personally known to the attesting witness and has signed the document in his or her presence. The decision was affirmed on appeal, Sansom v Westpac Banking Corp (1996) 7 BPR 97584.
241 Beatty v ANZ Banking Group Ltd [1995] 2 VR 301 is also to like effect with respect to this issue. At 315, Mandie J followed De Jager in concluding that there was a case of statutory fraud against the bank by its false representation to the Registrar of Titles that it had an honest belief that the plaintiff whose signature to the mortgage was forged had executed it in the presence of the attesting bank officer.
242 Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188 does not require a different conclusion. The common seal of a corporate trustee was affixed to a mortgage and it was signed by the wife of one of the directors who was not herself a director. The solicitor for the building society had obtained a search of the corporate trustee but had not checked it and consequently did not discover that the wife was not a director.
243 In reversing the decision below, that fraud was constituted by a reckless indifference to the truth of the document tendered for registration, the Court of Appeal at 194 took the view that the evidence went no further than to show that had the building society made further enquiries it would have discovered that the mortgage had not been properly executed. That did not constitute fraud. As was said in Mere Roihi at 210, the mere fact that one might have found out fraud if one had been more vigilant, and had made further enquiries which were not made, does not of itself prove fraud. The decision, does not, in my view, detract from the propositions in De Jager and Hedley.
244 To similar effect to those cases is Hickey v Powershift Tractors Pty Ltd (1998) 9 BPR 97799. Bryson J took the view that fraud was established for the purpose of the statute by the lodgement of a document with false attestation of the genuine signature of a mortgagor. The mortgagor had signed in the presence of a director of the finance company. Concerned that his position might have some effect on the transaction, he persuaded an independent person to attest the signature.
245 The gravamen of the statutory fraud demonstrated by this line of authority, is the deliberate misrepresentation for the purpose of obtaining registration of a transaction. The misrepresentation for this purpose is sufficient to establish personal dishonesty and moral turpitude.
246 The decision of the Victorian Court of Appeal in Russo v Bendigo Bank Ltd [1999] 3 VR 376 may be thought, at first glance, to run counter to this line of authority. The mortgagor's signature had been forged. A clerk of the bank's solicitor, unaware of the forgery, signed the attestation clause contrary to the standing instruction of the solicitor not to attest the signature unless the person had signed in her presence. Neither the solicitor nor the bank was aware of the forgery.
247 The trial judge found that the clerk was not in a position to put the mortgage on the path to registration with knowledge of falsity and that, even if she did, the solicitor honestly believed that the clerk had witnessed the signature and it was he who put the documents on the path to registration with an honest mind.
248 Ormiston JA with whose reasons Winneke P and Batt JA agreed at 382 interpreted the primary judge to have found that the clerk had not acted dishonestly. At 386 his Honour upheld that finding on the basis that known falsity was not enough and that the final critical element in fraud, namely dishonesty, required a wilful and conscious seeking to defeat or disregard another's rights. His Honour went on to conclude at 387 that it had not been established that the clerk had the necessary appreciation of the consequence or significance of her false statement.
249 Without participation in the lodgement of the false document with the Registrar of Titles, the clerk was not party to a false representation against the mortgagor. That is the point of distinction and the basis for the finding that the clerk was not personally dishonest a priori. There was no false representation to the Registrar of Titles because the solicitor himself honestly believed that the mortgagor's signature had been attested properly.
250 This is not a case of false attestation. It is a case of false alteration of the transfer. In my opinion, however, the same principle applies.
251 Beatty is direct authority for that proposition. Not only did the bank officer falsely attest that she was a witness to the plaintiff's signature, but also she added the plaintiff's maiden name after her married name in the mortgage, the certificate of title being in the plaintiff's maiden name.
252 Mandie J held the alteration also constituted fraud for the purpose of the statute. At 316, his Honour said that it was a necessary inference that whoever made the alteration could not have been unaware that it would be falsely conveyed to the Registrar of Titles by the submission of the mortgage that the document had been executed in its altered state by the mortgagors. That was sufficient in his Honour's view to constitute statutory fraud.
253 In the instant circumstances, by altering the instrument and lodging it, the registration clerk falsely represented to the Registrar-General that New South Wales Land and Housing Corporation had transferred the land to the first opponent and her husband as tenants in common in equal shares. The false lodgement of the altered document was, in my view, enough to constitute fraud. That finding did not depend upon direct evidence that might have been given by the registration clerk as to her state of mind. Fraud was a priori. I agree with the learned trial judge's conclusion:
"This was fraud in the sense I have discussed committed by Ms Moore. She altered the transfer from the Corporation to Mr and Williams, after the transfer had been executed, by crossing out the words "as joint tenants" and inserting the words "tenants in common in equal shares". She knew that this did not represent the transaction between the Corporation and Mr and Mrs Williams and she expected the Registrar-General to act upon the alteration, as in fact occurred. She took that course for the purpose of saving a small amount of stamp duty. Nevertheless, she deliberately altered the transfer with the intention that the Registrar-General would act upon her alterations. Her conduct amounted to fraud for the purposes of the Act."
254 The second issue is whether, if I am correct in my view that there was fraud on the part of the registration clerk, it was fraud for which the deceased was answerable.
255 In order to invalidate the title of the deceased as registered proprietor the fraud of the registration clerk must be brought home to the deceased or to his agent, his solicitor (Mere Roihi at 210).
256 In the situation where fraud is committed by the person whose title is impeached or his agents, the principle of respondeat superior applies and the matter is to be tested by investigating whether or not the principal, in the particular circumstances, is liable to the person who has been defrauded for the acts of the agent (Schultz v Corwill Properties Ltd (1969) 90 WN (Pt 1) (NSW) 529 at 537).
257 In his extensive analysis of the authorities in Conlan v Registrar of Titles (2001) 24 WAR 299, Owen J at 345 referred approvingly to what Batt JA had said in Russo at 392 with respect to the bringing home to the registered proprietor or his agents of the fraud: "That means that it must be sheeted home to the registered proprietor or his agents, that he or they must be shown to be infected by it or complicit in it." Batt JA went on to find that the agent's employee's fraud could not be sheeted home to the agent or his principal. The registering party was neither complicit in nor aware of the fraud and it was too remote from the registering party to affect him.
258 On the other hand, Ormiston JA in Russo took a different view, a view regarded as important by Owen J in Conlan. At 390 Ormiston JA said:
"…I would have found it hard to reach a conclusion that the bank should not be responsible for the acts of its solicitor in circumstances such as the present, if fraud had been established, assuming the fraud in question not to have been for his own benefit. He was engaged to act as the bank's solicitor and to advise it in relation to the very transaction, that is, what was thought to be a mortgage by the appellant in favour of the bank…If he had consciously gone forward and obtained registration of the mortgage in the knowledge of, or wilfully blind to, the fact only that it was not properly attested, then I doubt that would have involved him doing something outside the scope of his authority. If he had been party to the lodging of the documents (which is not clear), then he would be doing so in order to carry out the instructions of his client, the bank, and it was only by chance that the document was not properly executed or attested. The same reasoning would apply if Miss Gerada were to be held (contrary to my opinion) to have been guilty of fraud on the same limited basis."
259 In my view that approach should be adopted in the instant circumstances. The solicitor was engaged to act for the deceased in the very transaction, lodgement of the transfer for registration. If she had consciously gone forward and obtained registration of the transfer in the knowledge of, or wilfully blind to, the fact that it had been altered after execution, she would not have been involved in doing something outside the scope of her authority. If she had been party to the lodgement of the transfer she would have been doing so in order to carry out the instructions of the deceased. It was only by chance that the document had been altered improperly.
260 Kooragang Investments Pty Ltd v Richardson & Wrench Ltd [1982] AC 462 involved a different question: whether the employee had authority to give valuations on behalf of his employer. Here there is no question of the solicitor's retainer or that of the registration clerk.
261 Likewise, BNP Paribas v Pacific Carriers Ltd [2002] NSWCA 379 does not assist the first claimant. It concerned the question whether the employee of the bank had authority to bind the bank to a contract of indemnity.
262 In my opinion, the fraud of the registration clerk was brought home to the solicitor, the agent of the registered proprietor. The act of the registration clerk, although improper, was a mode of doing the very thing that she was authorised to do.
263 As Gleeson CJ said in New South Wales v Lepore (2003) 77 ALJR 558 at 569 quoting from Salmond, Law of Torts: "an employer is liable even for unauthorised acts if they are so connected with authorised acts that they may be regarded as modes - although improper modes - of doing them, but the employer is not responsible if the unauthorised and wrongful act is not so connected with the authorised act as to be a mode of doing it, but is an independent act."
264 I agree with Davies AJ when he said:
"Ms Moore was a registration clerk. She was employed through Ms Pinter to act on Mr Williams' behalf in the stamping and lodgement of the transfer from the Corporation to Mr and Mrs Williams. The fraud which she committed was not authorised, but it was fraud committed in the course of and for the purposes of the transaction which Ms Moore was employed to do. Her fraud was fraud for which Mr Williams was responsible, it having been carried out by his agent in the course of her employment and, if it were necessary to add, for his benefit."
265 The third issue is what flows from this view of the matter. In my view, the first opponent is entitled to a declaration that the registration of the transfer of the land was procured by fraud within the meaning of the Real Property Act 1900, s 42 and was thereby void as against her.
266 However, statutory fraud is not of itself directly generative of legal rights and obligations. Its role is to qualify the operation of the doctrine of indefeasibility upon what would have been the rights and remedies of the parties if the land were held under unregistered title (Bank of South Australia Ltd v Ferguson (1998) 192 CLR 248 at 256).
267 The competing equities between the parties and the unsatisfactory nature of the way in which the trial proceeded before the primary judge, are discussed in the reasons for judgement of Young CJ in Eq. In my view, the matter should be remitted to the court below for those issues to be determined. I regard the first opponent as having been substantially successful on the appeal. Accordingly, I would propose the following orders:
(1) Appeal allowed in part.
(2) Orders made by Davies AJ be set aside.
(3) Declare that the registration of a transfer of the whole of the land in Certificate of Title volume 13400 folio 121 dated 8 January 1987 under dealing number U313855R was, as against Ivy Gladys Williams, procured by fraud within the meaning of the Real Property Act 1900, s 42(1) and is thereby void as against her.
(4) Otherwise remit the proceedings to the Equity Division for further hearing and determination.
(5) Order that the first claimant pay the first opponent's costs both of the trial before Davies AJ and of this appeal.
(6) First claimant to have a certificate under the Suitors' Fund Act if qualified.