Kumar v Registrar-General of New South Wales

Catchwords

[2017] NSWCA 99 Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 59 NSWLR 452[2003] NSWSC 1072 Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 24,675[2007] NSWSC 694 Chandra v Perpetual Trustees Victoria Ltd [2008] NSWSC 178 Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572[2001] NSWSC 495 Heid Connell Investments Pty Ltd v Registrar-General (1987) 9 NSWLR 628 Lincu v Registrar-General (2019) 19 BPR 39,351

Judgment (6 paragraphs)

[1]

Introduction

By these proceedings, Mr Mohan Kumar brings a claim against the Registrar-General pursuant to Part 14 of the Real Property Act 1900 (NSW) ("the Act") for compensation from the Torrens Assurance Fund.
Mr Kumar claims to have suffered a loss as a result of the operation of the Act in respect of a property in Old Northern Road, Dural. Mr Kumar, who sold the property in May 2016 to Bargo Developments Pty Ltd ("Bargo"), claimed to have an interest in the land in the nature of an unpaid vendor's lien, or as an equitable mortgagee. It is alleged that the interest ranked first in priority behind a first registered mortgage. The interest was, at certain times, protected by a caveat, including in the period from 4 December 2017 to 13 March 2018. However, during that period, on 25 January 2018, Bargo effected a refinancing transaction which involved the creation of additional interests in the land. One of the interest holders, Kesinda Pty Ltd ("Kesinda"), later became registered as a first ranking mortgagee in place of the existing mortgagee, N & M Investments/Properties Pty Ltd ("N & M"). None of the other interest holders achieved registration of their claimed interest.

Summary of salient facts

The plaintiff resides in India. He has not lived in Australia since about late October 2015. Since about that time, Mr Paligaru has acted as the plaintiff's business manager in Australia. The plaintiff granted a general power of attorney to Mr Paligaru on 6 October 2015. The power enables Mr Paligaru to do on the plaintiff's behalf anything the plaintiff may lawfully authorise an attorney to do. The power is not expressed to be subject to any limitations.
The plaintiff was in May 2016 the owner of the property in Old Northern Road, Dural, being the land contained in folio identifier 1/228521. By a contract dated 31 May 2016, the plaintiff agreed to sell the property to Bargo for $5.5 million. Special Condition 10 of the contract relevantly provided: 10. Payment of Purchase Price (a) The purchaser must pay the purchase price as follows: (i) On exchange and settlement the amount of $1,500,000. (ii) On the date four weeks after the date of this contract the amount $500,000. (iii) On the date six months after the date of this contract or upon the date the development approval is granted (whichever is earlier) the amount of $1,000,000. (iv) On the date nine months after the date of this contract or upon the date the development approval is granted (whichever is earlier) the amount of $2,500,000. (b) For the purposes of this Special Condition; (i) time will be of the essence; (ii) Development Approval means the approval of Hills Shire Council for the use of the land as a private hospital or an aged care facility or similar use. (c) The purchaser will on completion execute and hand to the vendor the second mortgage a copy of which is annexed hereto and marked with the letter "A" which said second mortgage shall remain unregistered until the purchaser has arranged a refinance of the first mortgage on security of the property which the purchaser agrees to do within 6 months of completion. If the second mortgage is not able to be registered within 6 months of the date hereof, the purchaser will be in default under the said second mortgage. The vendor (as mortgagee) shall be entitled to lodge a caveat protecting its interests in the property after registration of the transfer and registration of the first mortgage. The purchaser agrees to do all acts, things and documents necessary to arrange for registration of the transfer and mortgage as soon as possible and to inform the vendor in writing immediately the first mortgage has been registered. The purchaser shall pay the vendor's reasonable costs in relation to the preparation and registration of the second mortgage, and the provisions contained in the clause shall not merge on completion but will enure thereafter for the benefit of the vendor. …
It appears that the contract was actually settled on 31 May 2016. On that day a mortgage to ANZ Bank was discharged, and a transfer to Bargo was registered, together with a mortgage in favour of AR Mortgages Pty Ltd. That mortgage secured a principal sum of $2.275 million, which was repayable on 31 May 2017. The plaintiff received $1.5 million on the settlement as provided for in Special Condition 10(a). That was the only payment ever made by Bargo towards the purchase price. No mortgage, as provided for in Special Condition 10(c) was ever registered in favour of the plaintiff, although it seems that an executed mortgage was provided by Bargo to the plaintiff on the settlement. The evidence does not reveal why the mortgage remained unregistered.
The plaintiff did not lodge any caveat against the title to the property until about 23 March 2017. That was caveat AM255154 (signed by Mr Paligaru as the plaintiff's attorney). It claimed an interest described as "vendors lien" pursuant to the contract dated 31 May 2006 [sic - 2016].
In the meantime, on 1 December 2016, the AR Mortgages mortgage had been discharged and the mortgage in favour of N & M was registered in its place. The N & M mortgage secured a principal sum of $2.675 million, which was repayable on 30 November 2017. Also in December 2016, Bargo borrowed $350,000 from Paid On Exchange Pty Ltd. That loan was due to be repaid in about August 2017.
Following Bargo's acquisition of the property, various arrangements were made in conversations between Mr Paligaru on behalf of the plaintiff, and Mr Adams on behalf of Bargo, concerning the development and then sale of the property. It is not necessary to refer to the details of these arrangements, which are set out in Mr Paligaru's affidavit.
On 3 August 2017 caveat AM255154 was withdrawn by the plaintiff. The withdrawal of caveat form was signed by Mr Mahony, solicitor. Mr Paligaru deposed that the caveat was withdrawn to facilitate a refinancing by Bargo, of the Paid On Exchange Pty Ltd loan, but as it transpired, the refinancing that went ahead did not involve any security over the Dural property.
There is evidence that later in August 2017 Mr Mahony was acting for the plaintiff in relation to the proposed development of the property and was also acting for Bargo in the matter.
In the period from 13 April 2017 to 15 September 2017, seven caveats were lodged in relation to the property. It seems that two of those were withdrawn within that same period. Four were withdrawn on 13 March 2018 as part of the refinancing transaction that had settled on 25 January 2018. The other caveat, lodged by EBM Holdings Pty Ltd ("EBM"), remained on the title. By that caveat (AM732543) EBM claimed an interest as a chargee pursuant to a mortgage dated 20 April 2017.
Mr Paligaru deposed that these seven caveats were not lodged for the purposes of financing the development of the property, and were lodged without his or the plaintiff's knowledge or consent. He further deposed that he and the plaintiff were concerned about these encumbrances that he had discovered by about early November 2017.
On 6 November 2017 Mr Mahony sent an email to Mr Adams. Mr Paligaru agreed in cross-examination that he reviewed the letter before it was sent, and approved of its contents. The 6 November 2017 email included the following: I have now been contacted directly by the representatives in India of Mohan Kumar. As you are of course aware Mr Kumar is the Vendor to Bargo Developments Pty Limited of the abovementioned property pursuant to Contract for Sale of 31 May 2016. As you are also aware, Bargo Developments Pty Limited is in default of its payment commitments for the purchase of that property pursuant to special condition 10 of the Contract for Sale. The representatives of Mr Kumar have asked me to obtain details for them, as a matter of urgency, as to the bases on which the property at Old Northern Road, Dural is now so much encumbered. To assist you, I now enclose the following: 1. Copy of current title search of the property; 2. Copy of the five Caveats on that property. … We have been instructed to determine whether all of [sic] any of those Caveats can be removed through Lapsing Notice filed with the LPI or otherwise through litigation. Assuming that the Caveats on the property have been validly placed thereon, as between Bargo Developments Pty Limited and the Caveators, would you please advise the amount required to pay to the Caveators, to have each of the above Caveats removed. We have also been requested to ascertain the current balance on the first Mortgage to N&M Investments/Properties Pty Limited. Would you please also forward to us details of the current payout amount of that Mortgage. We await your urgent response. Mr Paligaru deposed that there was no response to the email.
Mr Paligaru travelled to Fiji on 17 November 2017, returning to Australia on 24 November 2017. He deposed that various proposals for a refinancing of the Dural property had not been finalised by the time he was due to leave in November 2017. He further deposed that: …in or about mid November 2017, I as attorney for Mr Kumar, signed a form of withdrawal of caveat for the then intended new caveat (the Second Kumar Caveat) that was to be recorded on the Title to the Dural Property, in respect of the Kumar Mortgage (Withdrawal Form). I did so in the event, that whilst I was overseas, if a refinance of the Dural Property was agreed upon between Adams and me, such refinance would not be delayed as a result of me not being in Australia, to sign a withdrawal of the Second Kumar Caveat.
Mr Paligaru gave further evidence about the withdrawal of caveat form as follows: The Withdrawal Form was incomplete at the time I signed it, as the caveat number of the caveat referred to on the Withdrawal Form, was not placed on the Withdrawal Form, as the Second Kumar Caveat had not then been registered on the title to the Dural Property. Before I departed Australia in November 2017, I left the Withdrawal Form in the bottom drawer of the desk I used from time to time at the Bargo Office. I gave an instruction to Adams to use the Withdrawal Form strictly only for purposes associated with the Development Arrangement, and only with my express consent (the Caveat Instruction). The Caveat Instruction was oral, and it occurred at the Bargo office on or about 15 November 2017. In giving the Caveat Instruction, I said to Adams words to the effect "I have signed a withdrawal of Mohan's caveat, which will soon be re-registered on Dural, so as to allow any transfer or mortgage to happen, if necessary. I am putting it here in this drawer. Do not use it, until I have full details of any proposed finance or equity position to be taken by any prospective partner or joint venturer with us, and until I am fully across any proposal that may come up and I have agreed with it". Adams knew that the Withdrawal Form was located in the bottom drawer of my desk at the Bargo Office as I had informed him of the location of the Withdrawal Form on or about 15 November 2017, at the same time as I gave him the Caveat Instruction.
In cross-examination, Mr Paligaru agreed that the office where he left the withdrawal of caveat form was neither his nor the plaintiff's office, and he said that he did not have key or security access to the office. He gave further evidence that the desk where the form was left was not his desk, and that he did not lock the drawer where the form had been placed. When asked why he did not leave the form with Mr Mahony, Mr Paligaru said that there were "logistical reasons" for why that did not occur.
If Mr Paligaru's evidence concerning the signing of the withdrawal form is accepted, the form was signed at a time when the plaintiff had no caveat in place in relation to the property.
The plaintiff lodged another caveat on 4 December 2017. That caveat was caveat AM936967 (again signed by Mr Paligaru as the plaintiff's attorney). It claimed an interest described as "unpaid vendor" pursuant to the contract dated 31 May 2016.
On 15 December 2017, solicitors acting for Mr Adams (Clinch Long Woodbridge) sent a letter to the solicitors (Baker & McKenzie) acting for Australasian Property Group Pte ("APG"). APG had earlier advanced money to Mr Adams. Security for the advances was provided over a property at Warriewood which was owned by Golden Arrow International Pty Ltd ("Golden Arrow"). Mr Adams was the sole director of Golden Arrow. Mr Adams' solicitors referred in their letter to a sale of the Warriewood property, and the letter contained a proposal for APG to release its security over the Warriewood property in return for new security over other properties including the Dural property. It appears from the affidavit of Mr Ian Jordan, a director of APG, that a proposal to that effect was eventually carried to fruition in late January 2018.
On 18 December 2017 Mr Mahony sent an email to Mr Adams that referred to the sale of the Warriewood property and, in relation to the Dural property, included the following: We understand that you intend to refinance the Dural property. We are instructed by Mr Kumar that a consent to such refinance will only be provided, subject to the following conditions: (A) Any proposed refinance of the Dural property is to be approved by Mr Kumar, and in that regard all proposed loan and security documentation in relation thereto, is to be forwarded to and approved by us, on Mr Kumar's behalf, at the cost of Bargo Developments Pty Limited; and (B) Any refinance is to result in payment to Mr Kumar of all interest owing on the sale of the Dural land, to the date of the refinance. Confirmation of the interest owing will be advised shortly; and (C) Any refinance is also to result in the discharge of the second mortgage over Mr & Mrs Paligaru's home, in favour of Franklin Yeezy Holdings Pty Limited. (D) No further or subsequent refinance of, or use of the Dural property as security in any way, is to take place without the consent of Mr Kumar. In that regard all such further applications must be referred to us, on behalf of Mr Kumar.
Mr Jordan deposed that he had a conversation with Mr Adams and others on about 23 January 2018 in which he told Mr Adams that APG would only agree to the settlement of the Warriewood sale "if APG ranks second behind the incoming lender and that any other securities in place are either discharged or withdrawn". Mr Jordan deposed that Mr Adams told him that he had discharges and withdrawals ready to go (including for the Dural property) "so that won't be a problem as we are paying all of them out".
At that time, there were six caveats on the title to the Dural property, including the plaintiff's caveat (AM936967) and the EBM caveat (AM732543).
On 23 January 2018 APG's solicitors sent an email to Mr Adams' solicitors in the following terms: We are instructed that there is a proposal for your client to grant our client new security. We are currently preparing the relevant documentation for this security. Our client cannot take this new security with the ranking your client proposes unless all of the securities in respect of the subject properties (and the registered proprietor entities) are released. We attach, for your reference, a list of all securities which must be released prior to our client taking this new security. Please confirm today that each of the securities in the attached table will be released prior to settlement. The attached list referred to the six caveats over the Dural property.
Later on 23 January 2018 Mr Adams' solicitors sent an email to APG's solicitors confirming that "all of the registered mortgages and registered caveats that you refer to in your summary list will be released at settlement".
On 25 January 2018 Mr Adams' solicitors sent an email to APG's solicitors in the following terms: The documents appear to all be in order. Our client will sign and provide these at Settlement, which is scheduled for 3pm today at SAI Global. In relation the matter raised yesterday about the second and third mortgages to your client and EBM Holdings, we are instructed that all parties (including the first mortgagee) have agreed to enter into a Deed of Priority early next week that confirms your client has priority as second mortgagee over EBM Holdings.
It appears that there was insufficient time for a Deed of Priority to be signed by EBM prior to the scheduled settlement. Arrangements were instead made for EBM to give a written confirmation of its consent to APG taking priority, and an undertaking to enter into a suitable Deed of Priority.
Although the evidence is incomplete and in some respects in an unsatisfactory form, it can be comfortably inferred from documents in evidence that a transaction was settled on 25 January 2018 that involved the sale of the Warriewood property and a refinancing in respect of the Dural property.
The refinancing transaction in respect of the Dural land appears to have involved: 1. a discharge of the N & M mortgage; 2. a mortgage by Bargo in favour of Kesinda; and 3. a mortgage by Bargo in favour of APG.
The Kesinda mortgage secured a principal sum of $3 million. That sum is $325,000 greater than the principal sum secured by the N & M mortgage. Mr Jordan gave evidence that APG was owed $1,163,593.11 by Mr Adams following the settlement on 25 January 2018. That debt was the subject of a Deed of Guarantee and Indemnity dated 25 January 2018 entered into by Bargo as Guarantor and APG as Lender, and APG claimed that the amount of the debt was secured by its mortgage over the Dural property.
There is evidence to suggest that following settlement of the transaction, the Kesinda mortgage was lodged for registration, but the existence of caveats stood in the way of that occurring.
Three further caveats were lodged against the title to the Dural property on 29 January 2018. These were: 1. caveat AN70851 lodged by Reliance Leasing Pty Ltd ("Reliance"), claiming an interest as a chargee pursuant to an agreement dated 1 June 2017; 2. caveat AN71227 lodged by APG, claiming an interest pursuant to various instruments including a mortgage dated 25 January 2018; and 3. caveat AN71750 lodged by Lumley Finance and Loans Pty Ltd ("Lumley"), claiming an interest as a chargee pursuant to an agreement dated 18 May 2017. I note that Lumley already had a caveat that claimed such an interest (AM724292).
On about 22 February 2018 Mr Mahony appears to have become aware of a refinancing transaction. On that day, Mr Mahony sent an email to Mr Adams in the following terms: I refer to previous correspondence which remains unanswered. Leaving aside the discourtesy thereof, you have now by your failure to include my client in your plans, forced my client to take affirmative action. I enclose copy of a letter to Reliance Leasing from the solicitors for your new first mortgagee. That letter was received today. The existence of a new first mortgagee, is of serious concern to my client, as my client has a beneficial interest in the whole of the Dural property, which has presumably now, become even more heavily encumbered, to finance Mr Adams's other ventures. I enclose copy of letter which will be forwarded to the solicitors for the refinancing mortgagee, unless satisfactory answers are received to the following questions by 10am tomorrow: 1. What is the amount secured by the refinance from Kesinda, secured by a first mortgage over the Dural property? 2. Which current encumbrances registered on the Dural property, other than the first mortgage to N&M Investments Pty Ltd, will be removed upon registration of the new first mortgage to Kesinda? Currently there are 9 caveats on the property.; 3. How is it proposed to remove those caveats not extinguished on registration of the Kesinda mortgage. 4. Why has the Warriewood sale not been completed? 5. When will it be completed? I suggest that you answer this letter by 10am tomorrow. No further notice will be given by my client, before he takes action to protect his interests.
In early March 2018 APG issued notices of default to Bargo. Mr Jordan deposed that since 25 January 2018 APG had not received any payments in reduction of the amount owed by Mr Adams. On 6 March 2018 a receiver and manager was appointed in respect of Bargo's property. At around the same time, Kesinda took further action to progress the registration of its mortgage.
Mr Jordan deposed that in the period from 6 March 2018 to 17 May 2018 various discussions occurred between APG, Kesinda and EBM which eventually resulted in APG and EBM consenting to the registration by Kesinda of its mortgage over the Dural land.
On 9 March 2018 Kesinda's solicitors (Bransgroves) sent a letter to APG's solicitors concerning registration of the mortgage. The letter enclosed a number of documents including signed withdrawal of caveat forms. Bransgroves said in their letter that they held copies of these documents. One such document was a withdrawal of caveat form that had been signed by Mr Paligaru as attorney for the plaintiff. The form was stated to concern caveat AM936967. That was the caveat that was lodged on 4 December 2017. The letter from Bransgroves included the following: 1. We refer to our meeting on 8 March 2018. 2. We enclose copy a [sic] spreadsheet which contains a tab for each of the security properties for which our clients seek to register their mortgages. We understand that there are three other units over which we do not seek to register a mortgage and we have not dealt with them. 3. Each tab lists all dealings which presently appear on title, whether a discharge/withdrawal/letter of consent has been lodged and what will happen to that dealing if your client consents to registration of the dealing. We have then set out the interests that will exist upon registration of our client's mortgage. 4. We have enclosed the dealings which we have copies of. 5. None of the withdrawals or discharges will be processed until your client's consent is given to the registration of our clients' mortgages. 6. Thus, the benefit of consenting is that: … c. it will minimise amount secured in priority: in relation to the Dural Property, the withdrawal of the Mohan Kumar caveat will be processed. Mohan Kumar's interest in the Dural Property will no longer be listed on title in priority to your client. We understand from the Receiver that Mohan Kumar claims an unpaid vendor's lien in the vicinity of $6,000,000. No doubt your client would prefer not to be behind that claim. … 7. Please confirm by return that your client will provide the consent to registration.
On 13 March 2018 five caveats were withdrawn from the title to the Dural property, including the plaintiff's caveat AM936967. The withdrawal of caveat form (AN76663) appears to be the same as the one that accompanied the Bransgroves letter of 9 March 2018. It is apparent from a notation on the form that it was lodged by Bransgroves.
The four other caveats withdrawn on 13 March 2018 were caveats that had been lodged by Lumley (on 13 September 2017, not 29 January 2018), ALS 022 Pty Ltd (on 8 June 2017), Assetline Investments Pty Ltd (on 1 September 2017), and ALS 022 Pty Ltd together with two other companies (on 5 September 2017).
I note in passing that Mr Paligaru gave evidence to the effect that at no time between his leaving of the withdrawal form in the draw of the desk in the Bargo office, and March 2018, did he receive any communication from Mr Adams about any refinancing of the Dural property. This is consistent with statements contained in a number of letters sent by Mr Mahony from about early March 2018. These letters include a letter dated 7 March 2018 to the receiver and manager of Bargo and a letter dated 22 March 2018 to Mr Adams.
On 3 April 2018 Mr Mahony sent an email to Mr Adams which included the following: As you are aware we act on behalf of Mr Mohan Kumar. We also act on behalf of Mr Ralph Paligaru who holds Power of Attorney for Mr Kumar. We note the following: … 7. The Withdrawal of Caveat was signed by Mr Paligaru as Attorney for Mr Kumar the Caveator. That Withdrawal of Caveat had been left with you during 2017, on the basis that it was not to be relied upon unless and until you received express instructions from Mr Paligaru on behalf of Mr Kumar. … 10. Nonetheless however, Kesinda's Pty Limited Lawyers on 13 March 2018 registered not only the Withdrawal of Caveat, of our client's Caveat over the Dural Property, but also registered four other Withdrawals of Caveat at the same time, being the former Caveats held by Also 22, Asset Line Investments, Also 34 Pty Limited and Lumley Finance and Loans Pty Limited. The Withdrawal of those other four Caveats was made possible by the sale of your other company's property at Warriewood, which property was the major security held by the abovementioned four Caveators. … 12. Our clients can only assume that a condition of the refiance of the N & M mortgage over the Dural Property, in favour of Kesinda Pty Limited, was that you were to deliver as many withdrawals of caveat as possible, for the Dural Property. The aforementioned four withdrawals of caveat from the Assetline parties, were obviously received by you upon the sale of the Warriewood property and the consequent discharge of the mortgages held over that property, by the Assetline parties (as their interest in the Dural Property was only secondary). 13. Unfortunately however, our clients can come to no other conclusion, than that you have fraudulently also delivered to the solicitors for Kesinda Pty Limited withdrawal of Mr Kumar's Caveat no. AM936967. As noted above, you were at all times aware, that the withdrawal of that Caveat signed by Mr Paligaru, was only to be used on the express authority of Mr Paligaru. 14. You were also clearly aware that Mr Paligaru had given you no consent whatsoever to hand over the Withdrawal of Caveat AM936967 to Kesinda Pty Limited or indeed anyone else. … 17. Our clients can only therefore conclude, that once again you have fraudulently misused a Withdrawal of Caveat which came into your possession, in circumstances where you knew, that neither Mr Kumar nor Mr Paligaru had given you consent for the use of that document. You also knew that neither Mr Paligaru nor Mr Kumar had any knowledge of your intention to use that document. Finally, you were also clearly aware that no benefit was to flow to Mr Kumar by you, from handing over that withdrawal but rather that the handing over of the withdrawal, without our client's knowledge or consent, would harm our client's interests, in your attempt to advance your own commercial interests. 18. In all circumstances, we have been instructed to again report your actions to the NSW Police Force for fraud.
On 17 May 2018 a discharge of the N & M mortgage was registered, and so too was the Kesinda mortgage.
On the same day, another caveat lodged by the plaintiff (AN204802) was recorded. By this caveat, the plaintiff again claimed an interest as an unpaid vendor pursuant to the contract dated 31 May 2016. Curiously, the caveat was apparently signed by Mr Paligaru as the plaintiff's attorney on 30 January 2018, when the plaintiff's second caveat remained on the title.
As already mentioned, in about June 2018 Kesinda took possession of the Dural property and proceeded to sell it. The property was sold for a price of $5.5 million. Settlement of the sale occurred in late September or early October 2018. Following the settlement of the sale and the discharge of the Kesinda mortgage, the remaining proceeds were paid into Court in the total amount of $2,030,150.84. As a result of a settlement reached between the various competing claimants, the plaintiff received the sum of $527,839.22, being 26% of the available funds. APG received 35.75% of the funds; EBM received 22.5% of the funds; the remaining 15.75% of the funds was paid in various proportions to Lumley, Reliance and DCP Litigation Holdings Pty Ltd ("DCP"). DCP appears to have asserted an interest on the basis that it was an assignee from Reliance.

Determination

In Lincu v Community First Credit Union Limited (2019) 19 BPR 39,351; [2019] NSWSC 568 at [106]-[107], Kunc J described the approach to a claim for compensation from the Torrens Assurance Fund as a two stage enquiry. The first stage of the enquiry is whether the claimant satisfies some part of s 129(1), which his Honour referred to as the "entitlement gateway". If the claimant passes through that gateway, the second stage of the enquiry is whether the amount of compensation which would otherwise be payable is not payable, in whole or in part, by reason of any of the provisions of s 129(2). That seems to me to be an appropriate way to proceed.
The plaintiff held an interest in the Dural property in the nature of an unpaid vendor's lien or as an equitable mortgagee. The existence of the interest was not disputed by the Registrar-General. As the land is under the Act, and as the interest was not recorded as a registered interest, the interest was necessarily equitable in nature.
The plaintiff contends that it suffered loss or damage as the result of the operation of the Act in respect of the Dural property, and that the loss or damage arose from being wholly or partially deprived of its equitable interest as a consequence of fraud (see s 129(1)(e) of the Act).
The fraud is alleged to have been carried out by Mr Adams, either in his own right or on behalf of Bargo. In essence, it is alleged that Mr Adams dishonestly made use of the withdrawal of caveat form, contrary to the express instructions of Mr Paligaru (acting as the plaintiff's agent), in order to effect the refinancing transaction on 25 January 2018. It is then contended that, as a result of the transaction, the plaintiff's interest in the land was relegated in priority or diminished in its value, and that this amounted to being deprived of land or an estate or interest in land for the purposes of the legislation (see Heid Connell Investments Pty Ltd v Registrar-General (1987) 9 NSWLR 628 at 637; Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572; [2001] NSWSC 495 at [31]).
The relegation in priority or diminution in value is said to have occurred because of the introduction of Kesinda as the registered mortgagee in place of N&M, and the creation of a new equitable interest in favour of APG.
In order to succeed in establishing an entitlement to compensation in relation to the claimed loss or damage, the plaintiff must not only show that any deprivation of land or an estate or interest in the land was a consequence of fraud; the plaintiff must also show that the loss or damage that arose thereby was a result of the operation of the Act. The Registrar-General's defence to the claim focused upon the first of these requirements. It submitted that there were good reasons to doubt the evidence given by Mr Paligaru upon which any finding of fraud must rest.
The evidence given by Mr Paligaru that is set out above at [21] is of central importance. This evidence is to the effect that on or about 15 November 2017 he gave instructions to Mr Adams to only make use of the withdrawal of caveat form in relation to a transaction that Mr Paligaru had fully considered and given his consent. The evidence was not directly challenged in cross-examination, and it was not put to Mr Paligaru that he had not given such instructions to Mr Adams. It nonetheless remains necessary to consider and assess the evidence as part of the evidence as a whole, including the other evidence given by Mr Paligaru on affidavit and in the witness box.
I have reservations about aspects of Mr Paligaru's evidence. In particular, some of his evidence in relation to the withdrawal of caveat form he signed seemed to me to be somewhat implausible. On Mr Paligaru's version of events he signed the form, spoke to Mr Adams about it, and left it in a drawer in Bargo's office at a time with the plaintiff did not even have a caveat lodged against the title to the Dural property. The plaintiff's second caveat was not lodged until about 3 December 2017. Moreover, these events are said to have occurred shortly after Mr Mahony sent his email to Mr Adams on 6 November 2017 in which questions were raised about numerous caveats on the title. Mr Paligaru accepted in cross-examination that at that time he had concerns about Mr Adams' dealings with the property, and he deposed that there had been no response to the 6 November 2017 email. Further, to the extent that Mr Paligaru's impending visit to Fiji was advanced as a reason why leaving the signed withdrawal form in the office was a convenient step to take, it is curious that Mr Paligaru did not instead simply provide appropriate instructions to Mr Mahony. After all, the withdrawal of the plaintiff's first caveat in August 2017 had been effected by a withdrawal of caveat form signed by Mr Mahony. I would add that I found unpersuasive Mr Paligaru's evidence in cross-examination about why he did not leave the withdrawal of caveat form with Mr Mahony. It is also curious that there is no mention in Mr Mahony's email to Mr Adams sent on 18 December 2017 of any withdrawal of caveat form that had been signed by Mr Paligaru, discussed with Mr Adams, and left at the Bargo office. Against that, the terms of the 18 December 2017 email are consistent with the terms of the instruction Mr Paligaru says he gave to Mr Adams, at least insofar as it states that any proposed refinancing transaction had to be approved by the plaintiff.
Despite my reservations, I have ultimately come to the conclusion that Mr Paligaru's evidence about the instructions he gave to Mr Adams about the withdrawal of caveat form should be accepted. As I have said, the evidence was not subjected to any direct challenge. I therefore find that before Mr Paligaru left the signed form at Bargo's office, he gave instructions to Mr Adams that the form could only be used in relation to a transaction that Mr Paligaru had considered and given his consent.
The evidence is clear that Mr Adams made use of the signed withdrawal of caveat form in the refinancing transaction that settled on 25 January 2018. I infer that, for that purpose, Mr Adams caused the number of the caveat to be withdrawn (AM936967) to be inserted on the form. It is also clear, based on Mr Jordan's unchallenged evidence, that Mr Adams told him that he had discharges and withdrawals [of caveats] "ready to go", and that "we are paying all of them out". On 23 January 2018 the solicitors acting for Mr Adams sent an email to APG's solicitors confirming that various mortgages and caveats, including the plaintiff's caveat over the Dural property, would be "released on settlement". It can be inferred from this evidence, as well as the settlement of the transaction and the evidence that the solicitors for the incoming first mortgagee obtained the signed withdrawal of caveat form, that the form was in fact handed over by or on behalf of Mr Adams at the settlement.
I further find that Mr Adams, in making use of the withdrawal of caveat form to facilitate the refinancing transaction, was acting contrary to the instructions he had been given by Mr Paligaru. I accept Mr Paligaru's evidence to the effect that neither he nor the plaintiff himself had any knowledge of the transaction. In circumstances where the transaction appears to have been undertaken for the benefit of Mr Adams or companies associated with him, I am prepared to conclude that Mr Adams acted dishonestly in this respect. This conclusion is bolstered by the evidence of the statement made by Mr Adams to Mr Jordan that the various encumbrances (including the plaintiff's interest in the Dural property) would all be paid out. At least in relation to the plaintiff, that statement appears to have been falsely made.
For the above reasons I am prepared to find that Mr Adams acted fraudulently in making use of the withdrawal of caveat form as part of the refinancing transaction that settled on 25 January 2018. Moreover, I am satisfied that had Mr Adams not made use of the form and caused it to be handed over at settlement, the transaction would not have proceeded. It is evident that at least APG required that the plaintiff's interest in the Dural property be "released". It can be inferred in all the circumstances that in this regard APG and its solicitors relied upon the provision of the withdrawal of caveat form on settlement.
It follows from the above that if the plaintiff suffered any deprivation of land or an estate or interest in land as a result of the refinancing transaction, the deprivation can be said to be a consequence of fraud within the meaning of s 129(1)(e) of the Act. The plaintiff would be entitled to compensation in relation to any loss or damage that arises from such deprivation, but only if the loss or damage can be said to be a result of the operation of the Act. I turn now to that question.
The requirement that a plaintiff claiming compensation from the Torrens Assurance Fund has suffered loss or damage as a result of the operation of the Act has been described by Bryson J (as his Honour then was) as the "overall control mechanism" of s 129(1) (see Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 59 NSWLR 452; [2003] NSWSC 1072 at [74]). His Honour observed that the workings of indefeasibility would usually play a part in the plaintiff's rights being in a worse situation than they would be but for the operation of the Act. Earlier, in Diemasters Pty Ltd v Meadowcorp Pty Ltd (supra), Windeyer J stated at [37]: …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 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 continuation registration. Such damage seems to me to arise out of the operation of the Act.
The loss or damage alleged to have been suffered by the plaintiff essentially falls into two parts. First, it is said that the plaintiff's interest in the Dural property was relegated in priority or reduced in value because Kesinda became the first registered mortgagee in place of N&M. This loss is quantified at $393,103.86. This amount consists of three components, namely: 1. $325,000, being the amount by which the principal sum under the Kesinda mortgage exceeded the principal sum under the N&M mortgage; 2. $18,603.86, being the amount of interest attributable to the addition to the principal sum; and 3. $49,500, being a discharge fee that was provided for in the Kesinda mortgage (special condition 5) but not the N&M mortgage. The Registrar-General did not dispute the accuracy of the above figures. In short, the plaintiff submitted that the equity in the Dural property that remained after the discharge of the Kesinda mortgage was $393,103.86 less than it would have been had the N&M mortgage remained in place and been discharged at the same time.
Secondly, it is said that the plaintiff's interest was relegated in priority or reduced in value in circumstances where it had to compete with other claimants for priority after the first registered mortgagee. So, even though the plaintiff's interest was created first in time, the plaintiff was unable to obtain the full amount of the proceeds of sale remaining after satisfaction of the first mortgage ($2,030,150.84), but instead received only $527,839.22. On that basis, a further loss of $1,502,311.62 is claimed. As I understood the submission that was ultimately put, the emphasis here is upon the effect brought about by the interest of APG which was created as part of the refinance transaction on 25 January 2018. APG received $725,778.93 out of the proceeds remaining after satisfaction of the Kesinda mortgage.
The plaintiff may have suffered loss or damage as a result of the operation of the Act in respect of the Dural property because Kesinda as a registered mortgagee obtained priority ahead of the plaintiff to an extent greater than the priority that had previously been enjoyed by N&M as a registered mortgagee.
Upon registration of its mortgage, Kesinda obtained an indefeasible title as mortgagee by virtue of the provisions of the Act, notably ss 42 and 43, despite any notice it had of the existence of any unregistered interests in the land. Kesinda had notice of the existence of various unregistered interests that were claimed by way of caveats, including the plaintiff's claimed interest. That is so even if it was represented to Kesinda (via the withdrawal of caveat form) that the plaintiff was content to withdraw his caveat.
The "equity" available for satisfaction of the plaintiff's interest was thereby reduced. When the property was sold shortly thereafter for $5.5 million, and the Kesinda mortgage was discharged, only $2,030,150.84 remained. Had the N&M mortgage remained in place instead, and been discharged at the same time, an extra $393,103.86 would have remained (i.e. $2,423,254.70). The plaintiff claimed to be owed at least $4 million by Bargo, being the amount of the purchase price that remained unpaid pursuant to the contract for sale of 31 May 2016, and claimed that the debt was secured over the Dural property.
However, it does not follow from the fact that the available equity was reduced that the plaintiff suffered loss or damage to that extent. The plaintiff was not the only person claiming an equitable interest in the Dural property. It cannot simply be assumed in the circumstances that the plaintiff's equitable interest ranked first in priority, or that the plaintiff would in fact have been able to recover to the full extent of the available equity.
I am not satisfied that the plaintiff may have otherwise suffered loss or damage as a result of the operation of the Act in respect of the Dural property. I do not think that the plaintiff's position, in its competition with other claimants for priority after the first registered mortgagee, was adversely affected by any relevant operation of the Act.
The plaintiff submitted that the Act operated in relation to the consequences of Mr Adams' use of the withdrawal of caveat form. It was noted that the statutory system for the lodgement and withdrawal of caveats is a central element of the operation of the Act.
I have found that Mr Adams made fraudulent use of the withdrawal of caveat form in order to effect settlement of the refinancing transaction. The use of the form can thus be seen to have played a part in the creation of the new interests held by Kesinda and APG. The form was later used to effect the withdrawal of the plaintiff's second caveat, which would otherwise stand in the way of registration of dealings, including registration of the Kesinda mortgage. In that way, the caveat provisions of the Act operated to facilitate the obtaining by Kesinda of its indefeasible title.
However, it is difficult to see how the caveat provisions of the Act operated so as to impair the plaintiff's position as against any other person claiming an equitable interest in the property. Apart from the interest of APG, all of the interests of the competing claimants were said to have been created prior to Mr Adams' use of the withdrawal of caveat form. That is the position in relation to EBM (20 April 2017), Lumley (18 May 2017), and Reliance/DCP (1 June 2017). I cannot see how the position of the plaintiff vis-a-vis these claimants could be adversely affected by, or as a result of, Mr Adams' use of the withdrawal of caveat form.
As for APG, it placed reliance upon the withdrawal of caveat form in proceeding to settlement on 25 January 2018. APG also placed reliance upon the representations made by Mr Adams (including by his proffering of the form) to the effect that the plaintiff would be paid out and was content for his caveat to be withdrawn. The creation of APG's interest on 25 January 2018 occurred in a context that involved the existence of the plaintiff's caveat, representations made about it and the claimed interest, and an expectation that the caveat was to be withdrawn with the plaintiff's consent. The caveat provisions of the Act thereby form part of the background against which the APG interest was created, but in my view the provisions of the Act do not operate in any way in connection with the creation of the interest. That is to say, the interest was created independently of any actual operation of the provisions of the Act.
The later operation of the caveat provisions of the Act, in effecting the withdrawal of the plaintiff's caveat, thereby facilitating the registration of the Kesinda mortgage, would not have any real bearing upon the question of priority as between the plaintiff and APG, and a fortiori as between the plaintiff and the other competing claimants. The question of priority, which depends upon the ascertainment in accordance with established principles of who has the "better equity", is primarily focused upon when the competing interests were created, the circumstances in which they were created, and the conduct of the competing claimants (see the discussion by Ward JA in Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd (2017) 18 BPR 36,683; [2017] NSWCA 99 at [229]-[257]). The position of the plaintiff in relation to these questions of priority was not adversely affected (or at least not to any material degree) by any operation of the caveat provisions of the Act.
For these reasons, I think that the only loss or damage that may have been suffered by the plaintiff as a result of the operation of the Act in respect of the Dural property was any loss or damage suffered because Kesinda as a registered mortgagee obtained priority ahead of the plaintiff to an extent greater than the priority that had previously been enjoyed by N&M as a registered mortgagee. The "equity" that was otherwise available for satisfaction of the plaintiff's claimed interest of more than $4 million was reduced. This reduction could have a negative effect upon the value of the plaintiff's claimed interest and contribute to the sustaining of a financial loss. Any loss or damage of that nature would arise from the plaintiff's interest in the property being relegated in priority or reduced in value as a consequence of the refinance transaction that would not have proceeded but for Mr Adams' fraudulent conduct. It would therefore be loss or damage that falls within s 129(1)(e) of the Act.
It remains necessary for the plaintiff to prove that loss or damage of that nature was in fact caused (see Thomas v Registrar-General of New South Wales [2019] NSWCA 198 at [36]). As I have said, it cannot simply be assumed that the plaintiff's equitable interest ranked first in priority ahead of all other claimed equitable interests. The plaintiff faced competition from other claimants. This competition cannot be ignored in circumstances where, as I have held, APG's interest was created independently of any actual operation of the provisions of the Act, and the interests of all other claimants were created prior to Mr Adams' use of the withdrawal of caveat form.
The question of causation can be approached by comparing the plaintiff's actual position where the refinancing transaction occurred with the position it would have been in had the transaction not occurred.
In the actual scenario, the claimants reached a settlement which involved a sharing of the available "equity" on the basis of agreed percentages of the whole (see above at [48]). The plaintiff agreed to accept 26% of the available funds, being $527,839.22.
What would have happened in the alternative scenario where the refinancing transaction did not proceed?
In that situation, the mortgages in favour of Kesinda and APG would not have been given and the mortgage in favour of N&M would have remained registered on the title. Further, the five caveats that were withdrawn on 13 March 2018 would not have been withdrawn. Those caveats were withdrawn as part of the refinancing transaction. The relevant withdrawal of caveat forms were lodged by Bransgroves, the solicitors acting for Kesinda. Those five caveats were: 1. AM936967 - the plaintiff's second caveat, lodged on 4 December 2017 claiming an interest pursuant to the contract for sale dated 31 May 2016; 2. AM724292 - a caveat lodged by Lumley on 13 September 2017 claiming an interest pursuant to an agreement dated 18 May 2017; 3. AM463996 - a caveat lodged by ALS 022 Pty Ltd on 8 June 2017 claiming an interest pursuant to an agreement dated 31 May 2017; 4. AM693022 - a caveat lodged by Assetline Investments Pty Ltd on 1 September 2017 claiming an interest pursuant to a mortgage dated 15 June 2017; and 5. AM701710 - a caveat lodged by ALS 022 Pty Ltd, Assetline Investments Pty Ltd and ALS 034 Pty Ltd (together referred to as "AAA") on 5 September 2017 claiming an interest pursuant to a mortgage dated 5 September 2017.
I note that the claimed interest referred to in the last-mentioned caveat appears to have been created at a time when the plaintiff did not have a caveat on the title to the property. The interests claimed in the caveats referred to at (2), (3) and (4) above appear to have been created at times when the plaintiff's first caveat (AM255154) was on the title.
Apart from the five caveats referred to above, there would have also been: 1. (6) AM732543 - a caveat lodged by EBM on 15 September 2017 claiming an interest pursuant to a mortgage dated 20 April 2017; and 2. (7) AN70851 - a caveat lodged by Reliance on 29 January 2018 claiming an interest as a chargee pursuant to an agreement dated 1 June 2017.
It is unclear whether another caveat lodged on 29 January 2018, being caveat AN71750 lodged by Lumley, would have gone on had the refinancing transaction not occurred. This caveat apparently claimed the same interest as that claimed in caveat AM724292 (see (2) above).
It therefore seems that if the refinancing transaction had not gone ahead, the Dural property would have had at least seven caveats on its title in addition to the N&M registered mortgage. On that basis, the plaintiff's interest would have been in competition with no fewer than six other claimed equitable interests.
The plaintiff's interest was created first in time, and except for one case had a caveat on the title at the time when the later interests were created. The exception is the interest claimed by AAA in caveat AM701710. This claimed interest appears to have been created after the plaintiff's first caveat was withdrawn on 3 August 2017, and before the plaintiff's second caveat was lodged on 4 December 2017.
It is necessary for the plaintiff to establish that it would have been financially better off in this scenario compared to the actual scenario in which he recovered $527,839.22 in respect of his interest in the property. The plaintiff does not seek to rely upon any valuation evidence to show that he suffered a loss. Rather, the approach taken by the plaintiff is to postulate that he would have recovered an amount greater than $527,839.22.
This approach assumes that there would have been a sale of the property, after which the plaintiff would have made recovery out of the proceeds of sale that remained after satisfaction of the N&M mortgage. The evidence of default by Bargo soon after the refinancing transaction, and the appointment of a receiver and manager to Bargo's property on 6 March 2018, provides a basis to think that if the refinancing transaction had not proceeded, Bargo may have been unable to meet its obligations to N&M, such that N&M would likely have taken enforcement action under its mortgage. However, even if it is assumed in the plaintiff's favour that N&M would have sold the property at about the same time it was actually sold, and for about the same price, it is difficult to undertake a rational assessment of how much the plaintiff would likely have received out of the remaining proceeds of sale.
In this scenario, the nature of the competition between the plaintiff and other parties claiming equitable interests in the property (and hence the proceeds of its sale) differs from that which existed in the actual scenario. In the actual scenario, the plaintiff's interest was in competition with the interests claimed by APG, EMB, Lumley and Reliance. In the alternative scenario, the competition would have been with the interests claimed by EBM, Lumley, Reliance, ALS 022 Pty Ltd, Assetline Investments Pty Ltd and AAA.
In my view, these differences mean that the outcome of the competition in the actual scenario, embodied in the settlement involving the sharing of the remaining proceeds according to agreed percentages, cannot be regarded as a reasonable proxy for what is likely to have occurred in the alternative scenario. Leaving aside other differences, it is noteworthy that the alternative scenario would involve competition with AAA rather than APG. However, apart from what can be gleaned from caveat AM701710, little is known about the interest claimed by AAA. The mortgage referred to in the caveat is not in evidence, and there is no evidence as to what amounts were claimed to be outstanding under the mortgage. There is no evidence as to the circumstances in which the claimed interest was created although, as already noted, it appears to have been created at a time when the plaintiff had no caveat on the title. That circumstance suggests that AAA may well have had a strong argument that it had a better equity than the plaintiff.
In that regard, there is some similarity with the position of APG which took its interest relying in part on the withdrawal of caveat form that was signed by Mr Paligaru. However, the Court is not in a position to form any firm conclusions as to the respective strengths of the arguments available to AAA in the alternative scenario and APG in the actual scenario. It may be that AAA would have had the relatively stronger argument given that it may have had no notice at all of the plaintiff's interest, but this is really to engage in speculation.
I do not consider that it is open to the Court in these circumstances to use the actual settlement as a basis to conclude that in the alternative scenario a settlement would have been reached by which the plaintiff would have likely obtained a particular proportion of the remaining proceeds of sale. I would add that there was no evidence as to the reasons why the plaintiff accepted a 26% share under the actual settlement. The agreement may have been influenced by a variety of legal and commercial considerations. It cannot be assumed that those considerations would be the same or largely the same in the alternative scenario that would involve more and different claimants, and notably AAA rather than APG.
For similar reasons, I do not think it is open to the Court to reach a conclusion as to the position the plaintiff would have been in had there been no settlement in the alternative scenario. The lack of evidence in relation to AAA at least would mean that such an exercise would involve engaging in impermissible speculation.
Accordingly, I cannot be satisfied that had the refinancing not occurred, the plaintiff would have recovered an amount greater than $527,839.22. It follows that the plaintiff has failed to establish that he suffered loss or damage that falls within s 129(1)(e) of the Act. He has not passed through the "entitlement gateway".
It is not strictly necessary in these circumstances to proceed to the second stage of the enquiry. Nevertheless, in case I am wrong, and the plaintiff has established that he suffered loss or damage within s 129(1)(e), I will go on to consider s 129(2)(a) of the Act which provides that compensation is not payable in relation to any loss or damage suffered by a person to the extent to which the loss or damage is a consequence of any act or omission by that person.
In Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 24,675; [2007] NSWSC 694 at [52] Bryson AJ said that s 129(2)(a) operates where the act or omission to which it refers "arises through fault in some sense" (see also his Honour's statement in the later decision in Chandra v Perpetual Trustees Victoria Ltd [2008] NSWSC 178 at [11]). At [53] Bryson AJ said he was inclined to the view that the act of a servant or other agent acting within authority should be regarded as "any act or omission by that person" within the meaning of s 129(2)(a). At [59], his Honour considered the words "to the extent to which" which appear in s 129(2)(a) (and also in sub-paragraphs (b) to (d)) and the question whether they require an apportionment of responsibility. Bryson AJ stated: I do not favour the view that s 129(2)(a) requires apportionment based on deciding the extent to which the loss or damage was a consequence of any act or omission by the person claiming compensation and the extent to which the loss or damage was a consequence of any act or omission by some other person or a consequence of something else: loss or damage is a consequence of an act or omission either wholly or not at all, whether or not other causes also operate, and it is unlikely that the legislature set about creating a new apportionment regime without in some way stating the principle or basis to be applied, as other apportionment legislation does.
I was not referred to any authority which casts doubt upon the correctness of the views expressed by Bryson AJ, but it was suggested by the plaintiff, and not clearly disputed by the Registrar-General, that s 129(2)(a) would allow the Court to reduce an amount of compensation otherwise payable, on the basis of an apportionment of responsibility to the claimant. However, no case where this had occurred was cited, and I am not aware of any such case.
For the reasons that follow I think that I should follow the view expressed by Bryson AJ that s 129(2)(a) does not establish an apportionment of responsibility regime. The words "to the extent to which" are apt to allow a reduction in an amount of compensation otherwise payable, but a reduction is only permitted to the extent the loss or damage is "a consequence" of relevant conduct of the claimant. The language of the provision seems directed to a question of causation of the relevant loss or damage, not to an attribution, on some basis, of responsibility for the loss or damage (cf s 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) and s 9(1)(b) of the Law Reform (Miscellaneous Provisions) Act 1965 (NSW)). I appreciate that the legislature has employed the expression "to the extent to which" in s 129(2)(a) (and also in sub-paragraphs (b) to (d)) rather than the word "where" that is found in sub-paragraphs (e) to (p). However, the expression when used in s 129(2) does not seem to me to be suggestive of anything more than a reduction in compensation (or preclusion of compensation) if the specified circumstances exist. So, s 129(2)(a) would operate to reduce the compensation to nil (or entirely preclude compensation) if the whole loss or damage is a consequence of relevant conduct of the claimant. If only an identified part of the loss or damage is a consequence of relevant conduct of the claimant, s 129(2)(a) would operate to reduce the compensation (or preclude compensation) to that extent.
I have considered the Second Reading Speeches for the Real Property Amendment (Compensation) Act 2000 (NSW). These speeches include the following: Also, the exceptions to the liability of the Torrens Assurance Fund are clearly stated. For the most part, these exceptions are the same as those that presently exist, either in the Real Property Act, or under common law. The exceptions provided in proposed sections 129(2)(b), (2)(f) and (2)(g) are already made by the existing legislation. 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. Proposed section 129(2)(c) is based on the general law rule that a person should, where possible, take action to mitigate, or lessen, any loss. Accordingly, under the new provision a claimant will be required to take all reasonable and prudent steps to mitigate a loss for which compensation is payable from the Torrens Assurance Fund. The Torrens Assurance Fund will not be liable for any damages incurred as result of the claimant's failure to mitigate.
I do not think that the speeches assist in either confirming that the meaning of s 129(2)(a) is the ordinary meaning of the text, or determining the meaning of the provision to the extent that it may be regarded as ambiguous. I note that Recommendation 13 of the Law Reform Commission in its 1996 report "Torrens Title: Compensation for Loss" was that: Apportionment of liability for the loss will occur between the parties responsible for the loss including apportionment of responsibility for the loss arising from contributory negligence or other fault of the person with the compensable claim. The Report went on to state: 5.16 This recommendation acknowledges the fact that claimants or plaintiffs can be responsible to some degree for their actions and those of their agents. Accordingly, the court should have the power to determine whether compensation should be reduced where claimants or plaintiffs are partly responsible for the acts of their agents which have contributed to a loss. In situations where agents are partly responsible for the loss and the Registrar-General has rejected a claim, it is contemplated that the plaintiff will commence proceedings against his or her agent and/or the Registrar-General. If the agent is not joined by the plaintiff, the Registrar-General should be able to do so.
However, the recommendation is not specifically referred to in the Second Reading Speeches. There is merely a general statement that the bill was based on the recommendations of the Law Reform Commission.
I turn then to consider the extent to which the claimed loss or damage should be regarded as a consequence of any act or omission of the plaintiff within the meaning of s 129(2)(a).
The claimed loss or damage is said to have arisen from the refinancing transaction that settled on 25 January 2018. I have held that the transaction would not have proceeded were it not for the use Mr Adams made of the withdrawal of caveat form, including his causing it to be handed over on settlement.
The Registrar-General submitted that any such loss should be held to be a consequence of the acts and omissions of Mr Paligaru, acting as the plaintiff's agent, in respect of the withdrawal of caveat form. In this regard, the Registrar-General pointed in particular to the following: 1. the execution of the form by Mr Paligaru as the plaintiff's attorney; 2. the leaving of the form, to Mr Adams' knowledge, in the office of Bargo to which Mr Adams (but not Mr Paligaru) had access by means of a key; 3. the subsequent failure of Mr Paligaru to take any steps to secure for himself possession or control of the form; and 4. the failure to formalise the conditions upon which Mr Adams could make use of the form. The Registrar-General submitted that the combination of those acts or omissions amounted to the fundamental cause of the entire loss.
The plaintiff did not dispute that the acts or omissions of Mr Paligaru were relevantly the acts or omissions of the plaintiff. The plaintiff submitted that for the purposes of s 129(2)(a) relevant acts or omissions must involve fault in some way. The plaintiff seemed to accept that the conduct of Mr Paligaru in relation to the withdrawal of caveat form involved some imprudence on his part, although not recklessness. It was submitted that the ultimate cause of the loss was the fraudulent conduct of Mr Adams and that if there was an apportionment of responsibility, Mr Adams should be held to be about 80% responsible for the loss.
However, as I have said, s 129(2)(a) is in its terms directed to questions of causation, namely, whether either the whole or some identified part of the claimed loss is "a consequence" of any relevant act or omission of the claimant. It is not directed to questions of apportionment of responsibility for the claimed loss.
In my opinion, the whole of the claimed loss or damage should be regarded as a consequence of the acts or omissions of the plaintiff for the purposes of s 129(2)(a). The conduct of Mr Paligaru, as the plaintiff's agent, in relation to the withdrawal of caveat form created the very means by which Mr Adams was able to perpetrate his fraud upon the plaintiff. The form was physically made available to Mr Adams. Its execution by Mr Paligaru as the plaintiff's attorney gave the form an apparent authenticity. Mr Adams only needed to fill in the appropriate number of the caveat to be withdrawn in order to make use of the form. Any unauthorised use of the form by Mr Adams would be more difficult to prove in circumstances where there was a lack of any clear written record of the conditions placed upon Mr Adams' use of the form.
To the extent that fault is required it is present here. The conduct of Mr Paligaru was in my view plainly negligent. He failed to take reasonable care for the interests of the plaintiff. That is particularly the case in circumstances where from November 2017 Mr Paligaru was not only aware of Bargo's breaches of its obligations under the contract for sale, but also had concerns about Mr Adams' dealings with respect to the Dural property. To make the signed withdrawal of caveat form available to Mr Adams in those circumstances strikes me as conduct that was very negligent, if not reckless.
Mr Adams utilised the means that were made available to him in order to carry out the fraud of which the plaintiff complains. Applying a common sense approach, the conduct of Mr Paligaru should be regarded as a cause of the claimed loss or damage. To my mind, it is a cause of the loss as much as the conduct of Mr Adams himself. It is a case where there are truly successive causes of the loss. It should thus be concluded that the whole of the claimed loss or damage was "a consequence" of the acts or omissions of the plaintiff within s 129(2)(a) of the Act.
For these reasons, had the plaintiff established that he suffered loss or damage that fell within s 129(1)(e), no compensation would be payable in relation to such loss or damage due to the operation of s 129(2)(a).
The plaintiff's Further Amended Statement of Claim will be dismissed. The Court will further order that the plaintiff pay the Registrar-General's costs of the proceedings.

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