Findings on actual knowledge
29 The whole tenor of these exchanges throughout the afternoon of 30 January 2002 is that the plaintiff's solicitor did not know the content and effect of the orders made by the court on 31 December 2001, although he did know that some order or other was behind the 8247782 recording on the title to the first defendant's land. Indeed, he made continuing attempts to obtain information from the solicitor for the first defendant about the significance and terms of the order. The latter, however, did not give the information sought. Rather, he took the line that the solicitor for the plaintiff really need not worry about the order because it was about to be "removed" and would not hinder action by the plaintiff to have his caveat recorded and mortgage registered by 14 February 2002.
30 The third defendant nevertheless seeks to show that the plaintiff's solicitor was, in reality, either aware in fact of the terms of the orders or was in such a position that he should be presumed to have been so aware. The submission that the solicitor for the plaintiff had actual knowledge of the terms of the orders is advanced by reference to the fact that the plaintiff's solicitor has produced an electronic search of the relevant title shown on its face as having been made at 11.59am on 30 January 2002 and including a notation, "8247782 - Order of Court". There was also produced by the solicitors a copy of a page from the internet evidencing communication from a search facility at 11.02am on 30 January 2002 making it clear that an image of "dealing 8247782" had been requested. The result of the request was shown as "pending" and the delivery method as "download". The following information and instruction were included:
"Images usually take 10 minutes to process, but can take several hours. Images will be available for collection from the Inbox. The Inbox can be accessed by clicking on the Inbox link in the header above."
31 The two items to which I have just referred, being the electronic search at 11.59am on 30 January 2002 showing "8247782 - Order of Court" and the electronic request for "dealing 8247782" activated on the same day are said by the third defendant to be enough to show that the plaintiff's solicitor had actual knowledge of the terms of the orders of 31 December 2001 when the mortgage was taken by him on behalf of his client late in the afternoon of 30 January 2002.
32 I do not accept this submission. There can be no doubt that the plaintiff's solicitor knew that there was on the title a recording relating to a court order and that it was numbered 8247782. His fax of 1.15pm made that clear, as did his subsequent e-mails: in several of them, he referred to "the order" and the number 8247782. Whether he obtained the number from the search made electronically at 11.59am - indeed, whether he or someone in his office initiated the search or had it on 30 January 2002 - is something on which the evidence throws no light, apart from the fact that the solicitor's bill to his client shows certain disbursements for land title search fees without identifying the times at which the searches were obtained. Knowledge of the existence of an order says nothing about knowledge of its terms.
33 The only evidence from which it might possibly be inferred that the plaintiff's solicitor had notice of the terms of the orders of 31 December 2001 is the evidence that the plaintiff's solicitor had in his possession the electronic request for downloading of "dealing 8247782". But there is no evidence that the plaintiff's solicitor had the electronic request on 30 January 2002 or, more importantly, that he ever had whatever it was that was eventually downloaded, assuming that anything was. The item itself does not record by whom the electronic request was made. It also makes it clear that "several hours" might elapse before the requested material became available to the person by whom the request was apparently submitted at 11.02am. Furthermore, positive action was needed to obtain the result by resort to the inbox link. There is no evidence that anyone clicked the inbox link to obtain the image sought.
34 Against this single piece of evidence centred on the electronic request stand requests made by the plaintiff's solicitor to the first defendant's solicitor at 1.15pm, 1.24pm, 2.56pm, 3.56pm and 4.30pm on 30 January for information about the meaning and content of the order the subject of recording 82447782. The terms of each such request make it clear, in my view, that the plaintiff's solicitor was not in fact aware of the content of the orders of 31 December 2001 at any of those times and was genuinely seeking information on that very subject. I conclude that he was in the same position when the mortgage was given late on the same afternoon.
35 The third defendant's attempt to make out a case of the relevant species of contempt against the plaintiff by reference to actual knowledge of the plaintiff's solicitor of the terms of the orders of 31 December 2001 therefore fails. There was no suggestion that the plaintiff himself had such actual knowledge.
The constructive notice argument
36 It was submitted on behalf of the third defendant that, even if the plaintiff's solicitor did not have actual knowledge of the terms of the orders of 31 December 2001, he should be taken to have had constructive notice; and that this is sufficient to ground a finding of being knowingly concerned in a contravention of the orders.
37 The concept of constructive notice is one which has developed for limited purposes. It is particularly pertinent to the operation of equity's principles concerning a bona fide purchaser of a legal estate for value without notice. Equity works on the basis that, for these and related purposes, a person has constructive notice of matters he or she would have ascertained upon making the investigations usual in the circumstances or any further investigations indicated as reasonably required by matters actually known. The doctrine is really a reflection of the expectation that someone embarking on a particular transaction should act in a reasonable and responsible way in the furtherance of their own interests and cannot be said to have a legitimate complaint, at the expense of some competitor, if the course of conduct taken does not measure up to those standards. It is on this basis that a purchaser who, in the course of inquiries, receives notice of a relevant fact is affected with notice of other facts that could have been discovered by further proper investigation. The effect of the constructive notice is to deprive the party of the ability to resist claims which could be resisted in the absence of notice.
38 In short, doctrines of constructive notice operate to reward prudence and discourage imprudence when it comes to resolving the question whether one person should be entitled to assert and retain some interest or benefit as against another. The precise non-statutory operation of these doctrines in relation to documents and the content of documents entered on publicly accessible registers must be regarded as uncertain: see generally W J Gough, "Company Charges", second edition (1996) at pages 820 to 836. At most, they prevent enjoyment of an interest or benefit in circumstances where search would have disclosed circumstances inconsistent with a prudent person's electing without investigation to assume the position from which the interest or benefit is asserted.
39 I was not referred to any authority for the proposition that constructive notice can operate to make a person guilty of contempt of court; or, to put this another way, that a person having actual knowledge of the existence of a court order directed to another person is, in his or her dealings with that other person, presumed to have notice of the actual terms of the order. (I note here that the Real Property Act contains no provision fixing the world at large with notice of the content of a court order a recording of which is entered on a folio of the register.)
40 It seems to me that the mens rea relevant to contempt of court of the kind under discussion cannot exist except by reference to actual knowledge. Contempt of court can involve, for an individual, loss of liberty and, for any person, substantial penalty. It should therefore not be approached by reference to principles which, for the purpose of resolving property disputes, deem persons to know things they do not know but would have discovered had they acted prudently. In saying this, I acknowledge that different considerations may apply where someone wilfully shuts their eyes with a purpose of avoiding learning something that they would otherwise learn. On the evidence, that is not the case here.
Imputed knowledge
41 The conclusions I have reached - namely, lack of actual knowledge of the plaintiff's solicitor of the terms of the order and the inapplicability of notions of constructive notice to fix him with knowledge of those terms - make it unnecessary for me to decide whether, in the present context, knowledge of the solicitor is to be imputed to his client. It was observed in Z Ltd v A that knowing assistance by a bank employee of a customer's breach of the terms of an injunction will become the responsibility of the employer bank, but that was an application of principles of vicarious responsibility in the employer-employee situation: see also Re Supply of Ready Mixed Concrete [1992] 1 QB 213; Director General of Fair Trading v Pioneer Concrete (UK) Ltd [1995] 1 AC 456. Nowhere is it suggested that the employer is guilty because knowledge of the employee is imputed to the employer. There is also the point that the employer-employee relationship is more comprehensive than that between principal and agent where the overriding consideration is the scope of the agent's authority: see, for example, Heatons Transport (St Helens) Ltd v Transport and General Workers' Union [1973] AC 15.
Conclusion
42 The evidence does not support a conclusion that, when on 30 January 2002 the plaintiff's solicitor acted for the plaintiff in taking a mortgage from the first defendant, the solicitor had knowledge that that action involved contravention of the orders of 31 December 2001 by the first defendant. This is because, although the solicitor was aware that some court order or other had been recorded on the title to the first defendant's land, he did not have knowledge of the terms or effect of the order and no knowledge of those matters can be regarded as attributed to him by any legal principle.
43 In the result, therefore, the case the third defendant sought to establish in support of the proposition that the court should not (or must not) hear the plaintiff upon his application under s.74K of the Real Property Act is not made out. I therefore need not consider whether a party in contempt is automatically barred or whether the court has a discretion to hear that party. On that, however, I note the view of Young J in Young v Jackman (above) that, in this State at least, there is no judicial discretion to be exercised; whereas not only in K P Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 to which counsel referred but also in Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (unreported, FCA, 1 July 1998), single judges of the Federal Court have seen the matter as involving a judicial discretion. The House of Lords favoured the discretionary approach in X Ltd v Morgan-Grampian (Publishers) Ltd [1991] 1 AC 1.
44 Having ordered, by consent, at the conclusion of the hearing on 16 July that the plaintiff's caveat be extended for a limited period judged sufficient to accommodate delivery of this judgment by me, I shall now proceed to hear submissions on the question whether a further extension should be ordered under s.74K of the Real Property Act. I note, in that connection, the third defendant's concession that the plaintiff has shown that there is a serious question to be tried as to the existence of the caveatable interest claimed by the plaintiff, so that any further submissions should be largely confined to the balance of convenience.
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