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[2019] VSC 198
Supreme Court of Victoria
2019-03-28
MOORE J
Original judgment source is linked above.
REAL PROPERTY - Caveats - No reasonable cause - Compensation - solicitor lodging the caveat - whether liability under s 118 of the Transfer of Land Act 1958 extends to solicitors lodging a caveat with the Registrar without reasonable cause on behalf of a client - Whether solicitor "a person" lodging a caveat - Solicitor not "a person" lodging a caveat - Gordon v Treadwell Stacey Smith [1996] NZCA 110; [1996] 3 NZLR 281 - Windlock Pty Ltd v Davidovic [2014] NSWSC 269 - Arkbay Investments Pty Limited (In Liquidation) (Receivers and Managers appointed) v Echelon Property Management Pty Ltd (No 2)
1 The defendants are legal practitioners who have practised together in partnership. In March 2005, they lodged with the Land Titles Office caveats on behalf of a client, Bloomingdale Holdings Pty Ltd (Bloomingdale), on the registered title of two properties. The plaintiff is the unit holder of two trusts, the trustees of which are the registered proprietors of those properties.
2 The plaintiff has brought a claim under s 118 of the Transfer of Land Act 1958 (the Act) against the defendants themselves - as distinct from their client Bloomingdale - for compensation (and alternatively damages) for loss alleged to have been sustained as a result of the lodgement of these caveats.
3 Section 118 of the Act provides as follows:
Compensation for lodging caveat without reasonable cause
Any person lodging with the Registrar without reasonable cause any caveat under this Act shall be liable to make to any person who sustains damage thereby such compensation as the Court deems just and orders.
4 On the application of the defendants, orders have been made that the following question be determined as a preliminary question pursuant to r 47.04 of the Supreme Court (General Civil Procedure) Rules 2015:
Whether, assuming that the allegations contained in the further amended statement of claim are true, the defendants are 'a person' lodging a caveat with the Registrar for the purposes of s 118 of the Transfer of Land Act 1958 (Vic), or whether the plaintiff is confined to seeking compensation from the party identified as the caveator in the relevant caveats.
5 For the reasons explained below, the answer to this question is as follows:
The defendants are not 'a person' lodging a caveat with the Registrar for the purposes of s 118 of the Act. It is otherwise unnecessary to answer the question_._
6 The following is a summary of the relevant allegations in the plaintiff's further amended statement of claim, which are assumed to be true for the purposes of answering the preliminary question.
7 In 2001, Clapana Pty Ltd purchased the property located at 86 Mitchell Street, Maidstone in the State of Victoria (Mitchell Street property). Clapana Pty Ltd was the trustee of the Mitchell Street Unit Trust.
8 In 2002, 87 Stevedore Street Pty Ltd purchased a property located at 87 Stevedore Street, Williamstown in the State of Victoria (Stevedore Street property). 87 Stevedore Street Pty Ltd was the trustee of the Stevedore Street Development Unit Trust.
9 The plaintiff and Bloomingdale were equal unitholders in both the Mitchell Street Unit Trust and the Stevedore Street Development Unit Trust.
10 The sole shareholder and director of Bloomingdale was Antonio Gangemi.
11 In about May 2003, a dispute arose between the plaintiff and Antonio Gangemi in respect of their joint business dealings and rights in respect of the Stevedore Street property and the Mitchell Street property.
12 From at least May 2003, the defendants acted as solicitors for Bloomingdale and Gangemi in relation to this dispute.
13 At a mediation held on or about 9 September 2003, a heads of agreement was signed by Gangemi and Bloomingdale on the one part and the plaintiff and his associated entities on the other. The dispute was resolved on terms including that Gangemi's and Bloomingdale's interests in the Stevedore Street property and the Mitchell Street property would be transferred to the plaintiff or his entities. Bloomingdale then executed the withdrawal of the caveats which had been lodged over the Mitchell Street property and the Stevedore Street property. After the withdrawal of the caveats, the plaintiff was solely entitled to all the beneficial interest in the Stevedore Street property and the Mitchell Street property.
14 Some 18 months later, on 29 March 2005, the defendants lodged, on behalf of Bloomingdale, a caveat over the registered title to the Stevedore Street property and a caveat over the registered title to the Mitchell Street property (the 2005 caveats).
15 The 2005 caveats were in evidence in the proceeding. In each instance, Bloomingdale was identified as the caveator claiming an equitable estate in fee simple pursuant to a deed of trust dated 25 February 2002 between Bloomingdale and 87 Stevedore Street Pty Ltd and between Bloomingdale and Clapana Pty Ltd. The caveats identified 'Alderuccio Solicitors,' at a Melbourne address, as the address for service of notice. The caveats were signed by an 'agent being a Current Practitioner under the Legal Practice Act 1996.'
16 The plaintiff alleges that, when the 2005 caveats were lodged, the defendants knew or ought to have known that Bloomingdale did not have a caveatable interest in the Stevedore Street property or the Mitchell Street property and could not reasonably have held an honest belief based on reasonable grounds that Bloomingdale had a caveatable interest capable of supporting any caveats in respect of those properties.
17 As a result of the lodgement of the 2005 caveats, the Stevedore Street property and the Mitchell Street property were not developed, various legal proceedings were commenced which resulted in the plaintiff incurring legal costs and the plaintiff is said to have suffered loss and damage.
18 The particular sections of the Act which loomed large in the hearing of the preliminary question are set out below.[1]
Caveats temporarily forbidding dealing with lands
(1) Any person claiming any estate or interest in land under any unregistered instrument or dealing or by devolution in law or otherwise or his agent may lodge with the Registrar a caveat in an appropriate approved form forbidding the registration of any person as transferee or proprietor of and of any instrument affecting such estate or interest either absolutely or conditionally and may, at any time, by lodging with the Registrar an instrument in an appropriate approved form, withdraw the caveat as to the whole or any part of the land.
(2) A recording of every caveat lodged under this section must be made in any relevant part of the Register.
(3) The Registrar shall give to the registered proprietor of the estate or interest concerned notice of the caveat together with a copy of the caveat or of such particulars thereof as the Registrar deems material to such person.
(4) Every notice relating to any such caveat and any proceedings in respect thereof if served at the address in Victoria specified in the caveat shall be deemed to be duly served.
Receipt for and return of lodged documents
(1) Documents lodged with the Registrar shall be returned only to or at the direction of the person who lodged them or some person claiming through or under him.
(2) The Registrar may require a receipt in writing acknowledging the delivery to the proprietor or any other person of any such document or certificate of title.
21 As has been noted, s 118 of the Act provides as follows:
Compensation for lodging caveat without reasonable cause
Any person lodging with the Registrar without reasonable cause any caveat under this Act shall be liable to make to any person who sustains damage thereby such compensation as the Court deems just and orders.
22 The principles of statutory construction were summarised by the Court of Appeal in Colonial Range Pty Ltd v CES-Queen (Vic) Pty Ltd as follows:[2]
[47] The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute.[3]
[48] To enable the relevant provision to be properly construed, it is therefore necessary to identify the legislative purpose of the Act as a whole and whether the relevant provision can be interpreted in a manner harmoniously with that purpose. This process requires consideration of:
(a) the text of the relevant provision itself;[4] and
(b) the whole of the instrument,[5] and the provisions with which the relevant provision interacts.[6] The context extends to the existing state of the law, the history of the legislative scheme and the mischief which the statute sought to remedy,[7] and 'imports all legitimate means by which the legislative intent may be ascertained'.[8]
[49] When identifying the legislative purpose of the Act consideration may be given to extrinsic material,[9] but such extrinsic material should be looked at after 'exhausting the application of the ordinary rules of statutory construction'[10] and it 'cannot be relied on to displace the clear meaning of the text'.[11]
[50] Where the ordinary meaning of the text is consistent with the legislative purpose, the court will apply that as the legal meaning.
[51] If the text permits more than one possible construction, s 35(a) of the Interpretation of Legislation Act 1984 requires that a construction which would promote the purpose or object of an Act be preferred to one that would not.
[52] A tension arises when the court considers that the ordinary meaning of the text is inconsistent with the legislative purpose. As the plurality in Project Blue Sky Inc v Australian Broadcasting Authority explained:
the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.[12]
[53] The circumstances which may justify a court departing from the ordinary meaning of a relevant provision include where:
(a) the literal meaning would conflict with other provisions of the statute;[13]
(b) the literal meaning is inconsistent with the purposes of the statute;[14]
(c) the literal meaning is incapable of practical application;[15] or
(d) adoption of the literal meaning would lead to a result which is absurd, unreasonable or anomalous.[16]
[54] Recent statements of the High Court have emphasised the primacy of the text in the resolution of any perceived tension between the text and the legislative purpose of the Act.[17] Such statements include the following:
(a) 'The words of the statute, not non-statutory words seeking to explain them, have paramount significance'.[18]
(b) 'This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text itself ... The language which has actually been employed in the text of legislation is the surest guide to legislative intention'.[19]
(c) 'A second and not unrelated danger that must be avoided in identifying a statute's purpose is the making of some a priori assumption about its purpose. The purpose of legislation must be derived from what the legislation says, and not from any assumption about the desired or desirable reach or operation of the relevant provisions'.[20]
[55] In the High Court decision in Taylor v Owners - Strata Plan No 11564[21] the majority stated that, in considering whether a provision could be interpreted as if it contained additional words, 'the task remains the construction of the words the legislature has enacted ... any modified meaning must be consistent with the language in fact used by the legislature'.[22] The majority said that whether such a construction is justified involves a judgment of matters of degree and explained:[23]
That judgment is readily answered in favour of addition or omission in the case of simple, grammatical, drafting errors which if uncorrected would defeat the object of the provision. It is answered against a construction that fills 'gaps disclosed in legislation' or makes an insertion which is 'too big, or too much at variance with the language in fact used by the legislature'.
23 At the hearing, the defendants also referred the Court to the following statement of principle by all members of the High Court in Thiess v Collector of Customs:[24]
Statutory construction involves attribution of meaning to statutory text. As recently reiterated:[25]
"'This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text'. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text."
24 I have applied these principles in answering the question of construction posed by the preliminary question.
25 As the preliminary question was fixed for determination on the application of the defendants, it is convenient to first consider their submissions on the question.
26 The defendants' case was that the phrase '[a]ny person lodging with the Registrar... any caveat' in s 118 of the Act generally refers to the caveator as the person claiming an interest in the land.
27 In support of this contention, the central proposition advanced by the defendants was that Parliament clearly intended '[a]ny person lodging with the Registrar ... any caveat' referred to in s 118 to be the same '[a]ny person [who] may lodge with the Registrar a caveat' under s 89(1). That conclusion was said to follow from the symmetry in language between the two provisions. Both refer to the person 'lodging' (or who may 'lodge') a caveat with the Registrar. Further, three features of s 89(1) were said to be of particular relevance in construing s 118: (1) it authorises 'any person' to lodge a caveat; (2) the 'any person' authorised to lodge a caveat is the person who claims an interest in land; and (3) the 'any person' claiming an interest in land may lodge a caveat by 'his agent'. The fact that s 89(1) expressly authorises a person to lodge a caveat by 'his agent' strengthened the conclusion that an agent who lodges a caveat is not 'any person' lodging a caveat in his or her own right; the act of lodging is the act of the principal.
28 The defendants submitted that the words 'lodge' and 'lodging' as used in the Act convey a statutory concept being the assertion of an interest in land by the act of filing a document. This meaning was submitted to be most evident from the terms of s 115(1) which, unusually for the Act, contains the word 'lodged'. The provision presupposes that there is certainty about who lodges a caveat, as lodgement governs the Registrar's functions and obligation of returning documents. For the Registrar to fulfil the function of returning a document, it is necessary to know who lodged the document. The Registrar is able to know with specificity who lodged a caveat because the person lodging a caveat is the caveator, lodging being the act of the principal.
29 The defendants submitted that this approach to the construction of s 118 was consistent with the need to construe the Act as a whole and was the only construction which would ensure that ss 89 and 118 were read conformably. The need to read different sections of an enactment together may require a provision to be read more narrowly than would be the case if it stood on its own. The construction contended for was also submitted to be consistent with the principle that a document should be construed as far as possible to give the same meaning to the same words wherever those words occur in a document. Parliament must be presumed to have intended that the words 'any person lodging with the Registrar ... any caveat' in s 118 would have the same meaning as those words in s 89(1).
30 The defendants also drew attention to the fact that there is no requirement for the address specified in the caveat to be the address of the caveator.[26] One respect in which the address for service and the deeming provision made by s 89(4) are significant is in the circumstances contemplated by s 89A(3). That provision relevantly obliges the Registrar to 'give notice to the caveator' of an application made to remove a caveat. Section 89(4) identifies where such notice is to be given, and s 90(3) makes plain that proceedings for the removal of a caveat are brought against the caveator.
31 The defendants also referred to s 113 of the Act which deals with the services of notices. Relevantly, s 113(3) provides that, '[t]he address appointed in a caveat as the place at which notices relating to the caveat may be served shall be the address for service of the caveator,' and s 113(6) which provides that, '[t]he Registrar shall on request in an appropriate approved form by a caveator amend or alter the address appointed in the caveat at which notices may be served.'
32 The defendants contended that a literal construction of s 118 was contrary to the doctrine of agency because it would treat a solicitor as liable as principal for the act of lodging a caveat. This would reverse the essential concept of agency encapsulated in the maxim '[q]ui facit per alium facit per se' (he who does an act through another does it himself), pursuant to which the acts of solicitors in lodging a caveat are the acts of their client. It was submitted that the Court should adopt the approach that:[27]
[i]t is in the last degree improbable that the legislature would overthrow fundamental principles, infringe rights, or depart from the general system of law without expressing its intention with irresistible clearness; and to give any such effect to general words, simply because they have that meaning in their widest, or usual, or natural sense, would be to give them a meaning in which they were not readily used.
33 The defendants sought to support their submissions on the construction of s 118 by referring to the legislative history of the provision (and that of s 89). The provenance of the provisions was traced to the Real Property Act 1862 (the 1862 Act). The defendants argued that, from their genesis in the 1862 Act, the provisions equivalent to ss 89 and 118 have reflected and mirrored each other.
34 Section 80 of the 1862 Act was the equivalent to s 89 and relevantly provided as follows (emphasis added):
Any settlor of land under the provisions of this Act transferring such land to be held by the transferee as trustee or any beneficiary or other persons claiming estate or interest in such land under any unregistered instrument or by devolution in law or otherwise may by caveat in the form M of schedule hereto or as near thereto as circumstances will permit forbid the registration of any instrument affecting such land estate or interest either absolutely or until after notice of the intended dealing given to the caveator shall state the name and address of the person by whom or on whose behalf the same is lodged and shall contain a sufficient description to identify the land and the estate or interest therein claimed by the caveator or by the person on whose behalf the caveat is lodged and except in case of caveats lodged by order of the Supreme Court or by the Registrar-General as hereinbefore provided shall be signed by the caveator or by his solicitor known agent or attorney and every notice relating to such caveat or to any proceedings in respect therefore if served at the address mentioned in such caveat or at the office of the solicitor known agent or attorney who may have signed the same shall be deemed to be duly served and every such caveat may be withdrawn by the caveator.
35 The defendants emphasised three features of this provision as compared to s 89(1) of the Act. First, like s 89(1), s 80 of the 1862 Act was concerned with persons claiming an interest in land who may lodge a caveat. Secondly, as with s 89(1), s 80 provided that it is the person who asserts an interest in land who lodges a caveat, but that it may be signed by anyone who is acting for that person. Thirdly, the defendants noted that, in the concluding words of s 80, a caveat could only be withdrawn by the caveator, with no reference to an agent being able to do so.
36 Section 83 of the 1862 Act was equivalent to s 118 of the Act and provided as follows:
Any person lodging any caveat with the Registrar-General without reasonable cause shall be liable to make to any person who may have sustained damage thereby such compensation as may be just and such compensation shall be recoverable in an action at law by the person who has sustained damage from the person who lodged the caveat.
37 The defendants noted that s 83 commenced in very similar terms to s 118 of the Act with the words, 'Any person lodging any caveat ...'. However, it concluded differently with the words 'by the person who has sustained damage from the person who lodged the caveat.' The repetition of the word 'lodged' in the first and last parts of s 83 was said to make clear that it is the person who lodged the caveat who was exposed to a claim. Further, s 80 identified the person who may lodge a caveat; namely, the person asserting an interest in land.
38 The 1862 Act was replaced by the Transfer of Land Statute 1866 (the 1866 Act). The equivalent to s 89 of the Act was s 116 of the 1866 Act. It contained the same features as those to which reference is made above in the 1862 Act, but with minor adjustments in language. In relation to s 118 of the Act, the equivalent provision in the 1866 Act was s 120 which, save for grammatical changes, in substance made the same provision.[28]
39 No change of substance in the provisions of the 1866 Act was made by the next legislative iteration being the Transfer of Land Act 1928. That Act was followed by the Transfer of Land Act 1954 (the 1954 Act) which simplified the language of the predecessor provision in terms that prefigured s 89 of the Act. Section 118 of the 1954 Act was expressed, for the first time, in identical terms to the terms of s 118 of the Act of relevance in this proceeding. Section 89 of the 1954 Act provided as follows:
(1) Any person claiming any estate or interest in land under any unregistered instrument or dealing or by devolution in law or otherwise or his agent may lodge with the Registrar a caveat in the form or to the effect of the Sixteenth Schedule forbidding the registration of any person as transferee or proprietor of or of any instrument affecting such estate or interest either absolutely or conditionally and may at any time withdraw the caveat.
(2) A memorandum of every caveat lodged under this section shall be entered on the Crown grant or certificate of title of the land or on the instrument to which it relates.
(3) The Registrar shall give to the registered proprietor of the estate or interest concerned notice of the caveat together with a copy of the caveat or of such particulars thereof as the Registrar deems material to such person.
(4) Every notice relating to any such caveat and any proceedings in respect thereof if served at the address in Victoria specified in the caveat shall be deemed to be duly served.
40 It was submitted that s 89 of the 1954 Act altered the positon of an 'agent' as compared to the predecessor provision in three respects:
(a) The equivalent predecessor provision (and all previous provisions) contain specific wording about the signing of caveats. Those particular provisions were removed from s 89 of the 1954 Act and inserted in Schedule 16. That schedule identified the form to be used for a 'Caveat forbidding Registration of any Dealing, &c,' which form was expressed in the personal form of address by use of the personal pronoun 'I', but which then explicitly made provision for the caveat to be signed by the caveator, or solicitor, or agent.
(b) Section 89 of the 1954 Act now included in the first sentence the words 'or his agent', making clear that a caveator may use an agent for the purpose of asserting an interest. Under the previous provisions, the word agent appeared only later in the provision by reference to the ability of an agent to sign a caveat.
(c) By including the words 'or his agent', the reference at the end of the section to the withdrawal of a caveat could only be read as applying to both any person claiming any interest in land or his agent, whereas under the previous provisions, the agent had no power to withdraw a caveat on behalf of his or her principal.
41 There was no change to the provisions made by ss 89 and 118 of the 1954 Act in the 1958 consolidation with the enactment of the Transfer of Land Act 1958.
42 The defendants submitted that the following propositions emerged from the legislative history:
(a) That, from its inception, the statutory right to relief for compensation has been against the person with the right to lodge a caveat.
(b) That the person with a right to lodge a caveat has always been the person asserting an interest in land. As such, what is now s 118 is directed to the act of the person asserting the interest in land.
(c) That the person claiming an interest in land need not sign the caveat form. In different ways at different times, the legislation has permitted the form to be signed by someone who is, in general terms, an agent of the person who asserts an interest in land.
(d) That, in relation to the signing of caveats, the form of the 2005 caveats reflect the above history in that they contain alternative signing options; by the caveator, by an agent or by an agent who is a lawyer.
43 The defendants also relied upon the decisions of Young AJA and Brereton J of the Supreme Court of New South Wales in Windlock Pty Ltd v Davidovic[29] and Arkbay Investments Pty Ltd (In Liquidation) (Receivers and Managers Appointed) v Echelon Property Management Pty Ltd (No 2)[30] in relation to s 74P of the Real Property Act 1990 (NSW) (the NSW Act), the equivalent provision to s 118 of the Act. These authorities are considered separately below.
44 The plaintiff contended that, on its natural and ordinary meaning, s 118 is not limited to imposing liability only on the caveator, but extends to any person who lodges a caveat, including a solicitor. Properly construed, its reach was submitted to extend to any person involved in the lodgement of a caveat.
45 The confinement of the phrase 'any person' in s 118 to meaning 'the caveator' was submitted to be inconsistent with the actual words of the provision. It was contended that, in undertaking the task of construction, a court, 'does not dismiss the actual words used in the section and their literal meaning unless it is absolutely necessary in order to make it consistent with the purposes of the Act.' The absence of any conflict between ss 89 and 118 meant that there was no reason why, in construing s 118, the Court should not give effect to the actual words used in the section. The observation by members of the High Court in Project Blue Sky Inc[31] about reconciling conflicting provisions by 'adjusting the meaning of the competing provisions'[32] was inapposite in the present case. It was submitted to be impermissible for the Court to put a gloss on the words used by Parliament or to substitute words which do not appear in the section so as to limit the ambit of its operation. This was particularly so in circumstances where there was no ambiguity or inconsistency in adopting a literal construction of s 118.
46 The plaintiff also argued that Parliament must be presumed to have intended the words 'any person lodging with the Registrar' to have their literal meaning because they were not expressly limited, as they could have been, to 'any caveator'. The plaintiff referred to a number of specific provisions of the Act, being ss 89, 89A and 90 of the Act[33] which, unlike s 118, specifically include reference to the word 'caveator'.
47 The plaintiff challenged the defendants' reliance on s 89(1) in construing s 118 of the Act. Whereas the purpose of s 89 is to specify the class of persons who may lodge a caveat, s 118 had a distinct purpose of giving compensation to 'any person' who has suffered loss and damage by the lodgement of a caveat by 'any person'. That specific purpose was effectuated by giving a literal meaning to the words used in s 118, rather than by confining them to the caveator. The words used in the provision made clear Parliament's intention for s 118 to create a wider ambit of potential liability beyond caveators. The difference in the purposes of the provisions meant that there was no conflict between them. There was accordingly no occasion to 'reconcile' their provision by construing s 118 by reference to s 89 as contended for by the defendants. The defendants' posited construction of s 118 impermissibly invited the Court to rewrite the Act by substituting the words 'any person' with the words 'the caveator', thereby cutting down the ambit of the protection provided by its provisions.
48 The plaintiff also referred to s 35 of the Interpretation of Legislation Act 1984 as requiring a construction of an enactment that would promote its purpose or object. The plaintiff placed particular reliance on the following observations by Dawson J in Mills v Meeking:[34]
The approach required by s 35 needs no ambiguity or inconsistency; it allows a court to consider the purposes of an Act in determining whether there is more than one possible construction. Reference to the purposes may reveal that the draftsman has inadvertently overlooked something which he would have dealt with had his attention been drawn to it and if it is possible as a matter of construction to repair the defect, then this must be done. However, if the literal meaning of a provision is to be modified by reference to the purposes of the Act, the modification must be precisely identifiable as that which is necessary to effectuate those purposes and it must be consistent with the wording otherwise adopted by the draftsman. Section 35 requires a court to construe an Act, not to rewrite it, in the light of its purposes.
49 In elaborating upon the second of the above points made by Dawson J, the plaintiff referred to the observations of Kirby J in Byrnes v The Queen that the 'cardinal rule' is that the legislature's purpose must be ascertained from the language of the legislation which it enacts.[35] Here Parliament's intention was to be deduced from the actual words used in s 118. The broader context and purpose of the Act - the creation of a system of ownership of land by registration with a public registry - was of no assistance in determining the proper construction of the section.
50 The plaintiff contended that the Court was bound to give effect to the clear language of a statutory provision even if, in the opinion of the Court, the result was anomalous or unfair. The plaintiffs emphasised, however, that there was nothing anomalous or unfair in giving s 118 an operation and effect consistent with its ordinary meaning. Although this would mean that the provision would have a wide operation, that operation would not be unfair because it provided a defence within its terms; namely, where there was 'reasonable cause' for the lodgement of a caveat. In this way the provision was capable of balancing the interests of justice between 'any person' who lodges the caveat and 'any person' who suffers loss by reason of the lodgement of the caveat.[36]
51 The plaintiff submitted that, if s 118 was to be construed as only imposing liability on the caveator, there would be at least two gaps in the liability for loss and damage caused by the lodgement of a caveat. The first is where a caveator lodges a caveat on the wrongful or negligent advice of a solicitor. The confinement of liability under s 118 to the caveator would mean that the solicitor would escape liability, even if there was no reasonable basis for the lodgement of the caveat and even if the solicitor had no reasonable or rational basis for believing that his or her client had a reasonable cause to lodge the caveat. It was submitted that this would allow solicitors to hide behind the existence of instructions from clients to lodge caveats, even if to do so was to act without reasonable cause in circumstances known to the solicitor. This would in turn provide incentive to a solicitor or any other person lodging a caveat not to ask questions and not to enquire about the basis upon which their client contends that there exists an interest in land.
52 In this scenario, where the caveator has lodged a caveat on the wrongful or negligent advice of a solicitor, it was submitted that the caveator would also likely escape liability because, having acted on the basis of advice, the caveat would have been lodged with 'reasonable cause' within the meaning of s 118. In support of this proposition, the plaintiff relied on the observations of Blanchard J in Gordon[37] and the obiter statements of Croft J in RDN Developments Pty Ltd v Shtrambrandt[38] in which his Honour referred to, without deciding, a divergence in the authorities about the consequence or effect of a caveator relying on legal advice. On the basis of these authorities, the plaintiff submitted that, even in the case of negligent advice given by a solicitor to the caveator, it does not necessarily follow that the caveator will have a reasonable basis defence based on s 118 and that whether that is so will depend on a consideration of all of the facts and circumstances of a case.
53 The second gap in liability referred to by the plaintiff is where a person lodges a caveat on behalf of another, but does so without authority. In that scenario, it was submitted that the caveator would not be liable because the lodgement was not carried out on the caveator's instructions and, therefore, the lodging of the caveat would not be the caveator's act, but the act of an unauthorised third party. The third party would also not be liable because, on the defendants' case, that person was not the caveator. The person who suffered loss would consequently become entangled in a factual and legal dispute about the authority of the person who actually lodged the caveat, which dispute would need to be resolved before compensation could be claimed against any person. The plaintiff referred to the statement by Croft J in RDN Developments about the undesirability of requiring a claimant for compensation under s 118 to enquire into and investigate the nature and extent of the caveator's instructions to an advising solicitor, and the content of that advice.[39]
54 In contrast to these asserted gaps in liability, the plaintiff's construction of s 118 was submitted to provide a clear path to compensation for loss. This would promote a purpose of the Act; namely, to discourage the lodgement of baseless caveats and for caveats to be lodged only in circumstances where a caveator has a reasonable basis for claiming an interest in land. The plaintiff's construction would also encourage all persons involved in the process of lodging caveats, including solicitors, to make proper enquiries as to the existence of an interest in land to be protected by the lodgement of a caveat.
55 The plaintiff also contended that the confinement of 'any person' in s 118 to the caveator was contrary to s 37(c) of the Interpretation of Legislation Act 1984 which provides that words in the singular include their plural counterparts. This was said to follow because the phrase 'any person' is not necessarily singular and must therefore be construed as including not only the caveator, but also other persons who may be involved in the lodgement process.
56 The plaintiff also rejected the defendants' reliance on principles of agency. It was submitted that Parliament had expressed its intention with clarity such that the doctrine of agency could not obstruct or cut down the ambit of liability imposed by s 118. Further, it was submitted that the fact that a person is an agent does not by itself necessarily prevent the person from incurring personal liability. In some circumstances,[40] an agent may be jointly and severally liable with a principal in respect of an act or conduct carried out by the agent.
57 As has been noted and as will be considered in detail below, the plaintiff also placed particular emphasis on the decision of the Court of Appeal of New Zealand in Gordon[41] in relation to the construction of s 146(1) of the Land Transfer Act 1952 (NZ), the equivalent provision to s 118 of the Act.
58 There is no authority on the issues raised in this proceeding about the proper construction of s 118 of the Act. As has been noted however, the parties rely on conflicting decisions of the Court of Appeal of New Zealand and the Supreme Court of New South Wales which deal with the equivalent statutory provisions in those jurisdictions. Those authorities are considered below.
59 The plaintiff placed particular emphasis on the decision of the Court of Appeal of New Zealand in Gordon which relevantly concerned the proper construction of s 146(1) of the Land Transfer Act 1952 (NZ), being the equivalent of s 118 of the Act.
60 Section 146(1) of the Land Transfer Act 1952 (NZ) is substantially similar to s 118 of the Act and, in its terms considered in Gordon, provided as follows:
Person entering caveat without due cause liable for damages
(1) Any person lodging any caveat without reasonable cause is liable to make to any person who may have sustained damage thereby such compensation as may be just.
(2) Such compensation as aforesaid shall be recoverable in an action at law by the person who has sustained damage from the person who lodged the caveat.
61 The plaintiff relied on the following aspects of the reasons for judgment of Blanchard J, who delivered the judgment of the Court:[42]
The respondents supported the position adopted by the Judge, who looked for consistency with s 137. They argued that it would be strange if a solicitor's clerk or a registration agent who physically attended to the lodging of the document should face liability where that person in all probability would have had no knowledge of the circumstances giving rise to the claimed interest in the land. It was submitted that on ordinary agency principles an attorney or agent acting for a principal should not be directly liable to a third party for something done on the instructions of the principal. A third party complaining of acts done by an agent should claim against the principal; if it then proved that the agent had acted without instructions, the issue should be resolved between the principal and the agent. This submission seemed to be based on the assumption that the act of lodging the caveat, although done without instructions, would be treated for the purposes of a claim by the caveatee as something done within the scope of the general agency of the solicitor.
Mr Gazley pointed to the ordinary meaning of "any person". We agree with him that there is a pattern in the use of language in ss 136-148 dealing with caveats, although there is not complete consistency. Having, in ss 136 and 137, given any person claiming a caveatable interest the right to lodge a caveat either in Form M (against the bringing of land under the Act) or Form N (against a dealing), the statute from then onwards generally calls a person who has taken advantage of that right a "caveator": see ss 138, 140, 141, 143, 145 and 147. (In s 144 which deals with the lapsing of a Form M caveat that is not done, but the word "person" is qualified by words describing a caveator ("person by whom or on whose behalf the caveat was lodged"). Section 143(2) speaks of "the caveator or the person on whose behalf the caveat has been lodged," It is difficult to think whom the latter person could be but this uncertainty does not detract from Mr Gazley's argument. Section 147, dealing with withdrawal of a caveat, refers both to the caveator and the caveator's attorney or agent.
Section 146 is the only place in which "person" is not accompanied by a direct reference to the caveator or use of words which can refer only to the caveator. The second time the word "person" appears in the section, referring to someone affected by the caveat, it is not limited to the registered proprietor but extends to anyone who has sustained damage. The section is in both these ways wider in its application than the other caveat sections. We agree with Mr Gazley that "Any person lodging any caveat" in s 146 is not restricted to the caveator. This was also the view of Master Thomson who considered the question when the strike-out application was before him. If Parliament had intended otherwise, s 146 would surely have referred to a "caveator" like the other sections of which mention has been made. We conclude, then, that both client and solicitor and indeed any other person responsible for lodging a caveat may be liable to pay compensation under s 146. Nor, as will be seen from the following portion of this judgment, does any matter of policy or practical difficulty require otherwise.
Section 146: reasonable cause
It does not follow that solicitors, their employees and registration agents are exposed to liability under the section where they have acted reasonably and in good faith. The statute contains its own test, one of absence of reasonable cause. What is reasonable will depend upon the information available to the person whose conduct is challenged under s 146. The position is best demonstrated by an illustration. Suppose a client seeks advice from a solicitor about whether an interest exists in land sufficient to support a caveat but deliberately or inadvertently conceals from the solicitor a crucial fact (eg that the client previously had an interest but has already assigned it absolutely to someone else). If the solicitor then advises that an interest may exist and that a caveat should be lodged and proceeds to undertake that task, the solicitor will not share the client's liability under s 146. The client had no reasonable cause; the solicitor, on the information available, did. The agent is not rendered liable under s 146 merely because the client principal has acted improperly. The liability of each person who participates in the lodgement of a caveat as an agent (solicitor, solicitor's clerk or registration agent) is to be examined separately and will depend upon what they knew or ought to have known of the facts and whether from their viewpoint the lodgement was done honestly and with reasonable cause. In the case of a registration agent or other person whose function is mechanical, liability is most unlikely to arise. Where the solicitor acts on the basis of incomplete information and it cannot be said that in the circumstances the solicitor ought to have taken inquiries further, there will be no liability.
A solicitor cannot, however, hide behind the existence of an instruction from the client to lodge a caveat if to do so was otherwise to act without reasonable cause in the circumstances confronting the solicitor. In our view s 146 makes solicitors or other agents responsible for their actions in lodging a caveat where they act dishonestly or without reasonable cause notwithstanding that on the basis of their advice to their client they have received instructions to caveat the title. If this were not so the client might be protected by taking advice from the solicitor, however wrong the advice proved to be, and the solicitor would be protected by acting in accordance with the instruction which was given because of the incorrect advice. It would be unsatisfactory if in this circular way a person affected by the lodging of a caveat could be deprived of any claim under s 146.
It is unnecessary to explore the interesting question just now touched upon and discussed by the Full Court of the Supreme Court of Western Australia in Bolton v Excell (1993) ANZ ConvR 562, of whether a client who relies upon a solicitor's advice, and instructs the solicitor on the basis of that advice to lodge a caveat, can be liable under the section. The Full Court suggested that even negligent advice could provide the client with reasonable grounds for an honest belief that there was a caveatable interest if the client had not contributed to the problem by failing to place all the facts before the solicitor. If that is so, the party affected by the caveat might have no remedy unless the solicitor were, as we have held, directly liable under s 146.
62 In Windlock, Young AJA of the Supreme Court of New South Wales considered, but opted not to follow, the approach of Blanchard J in Gordon. Windlock concerned a claim for compensation brought under s 74P of the NSW Act arising from caveats said to have been lodged without reasonable cause. In terms analogous to s 118 of the Act, s 74P of the NSW Act provided as follows:
Compensation payable in certain cases
(1) Any person who, without reasonable cause:
(a) lodges a caveat with the Registrar-General under a provision of this Part,
(b) procures the lapsing of such a caveat, or
(c) being the caveator, refuses or fails to withdraw such a caveat after being requested to do so,
is liable to pay to any person who sustains pecuniary loss that is attributable to an act, refusal or failure referred to in paragraph (a), (b) or (c) compensation with respect to that loss.
(2) Compensation referred to in subsection (1) is recoverable in proceedings taken in a court of competent jurisdiction by the person who claims to have sustained the pecuniary loss.
(3) A person who is a caveator is not entitled to bring proceedings under subsection (1) (b) if that person, having had an opportunity to do so, has failed to take all reasonable steps to prevent the caveat from lapsing.
63 One of the defendants in Windlock was not a caveator. A question for determination was who came within the words 'any person' who 'lodges a caveat.'
64 In considering that question, Young AJA was referred to the judgment in Gordon. His Honour expressed doubt about the approach adopted by Blanchard J and ultimately did not follow it.[43] He concluded that s 74P of the NSW Act did not apply to a person who was the mere agent of the caveator in lodging the caveat.[44] As to the contrary view adopted in Gordon, his Honour said:[45]
[32] There are many difficulties with this interpretation. First, the words "lodging a caveat" have always had in the Act a specific meaning, namely a person who makes a claim under a caveat and files that claim with the Registrar General. Caveats as opposed to all other dealings are lodged not registered.
[33] It has been common in court decisions where a solicitor lodges a caveat to say that the solicitor has lodged the caveat on behalf of the caveator.
[34] Surely there can only be one entity that lodges a caveat (putting to one side joint proprietors of a right) and when one is looking to see who lodges a caveat one must come up with a single person or group of people.
[35] It would seem wrong to say that if a client instructs a solicitor to lodge a caveat and the solicitor hires a corporation that trades as a law stationer and that law stationer employs a person of 18 years of age without any law degree physically to hand the document over the counter at the titles office then each and every one of them has lodged the caveat, and each and every one of them is liable if their action was without reasonable cause.
[36] It may be possible as the New Zealand case suggests that a solicitor who lodges a caveat can be excused if they were given the appropriate instructions to lodge the caveat when facts were withheld from him or her but the same could hardly be said of the 18 year old junior who handed the document in at the registry. He or she cannot rely on any "superior orders" type defence. Again there are problems as to whether there is proportionate liability in respect of each of the people or not.
[37] Secondly, the purpose of the legislation was to protect the registered proprietor and other persons from caveats which had no standing or were placed on to obtain delay. The compensation was to discourage people from doing this. It is hard to see how allowing compensation against the person who happened to hand the piece of paper containing the caveat across the counter fulfils this purpose. Dr Chapple says that the wider interpretation makes everyone who handles the caveat potentially liable to pay compensation and that this inhibits wrongful caveats. I do not think this outweighs the other detriments.
[38] Further there are reasons why the words "any person" might be read in a wide form to mean persons other than the caveator, yet not catch solicitors or filing clerks. It may be that there are people other than the caveators who can lodge a caveat rather than merely being the agent of the caveator, for instance a person named as executor of a deceased person who has not yet taken out probate where the unregistered interest which could the subject of a caveat is part of the estate and is threatened. Another possibility is to cove a person seeking a guardianship order in respect of an incapable person who has such an unregistered interest. It may well be that the legislature thought that it should use the words "any person" to cover that sort of situation, uncommon though it is likely to be.
[39] Accordingly, even though I have the greatest respect for the New Zealand Court of Appeal, and especially a court which includes Blanchard J who must be one of the premier property lawyers in New Zealand, I do not feel inclined to follow it as a guide to the construction of the NSW Torrens Act.
65 The defendants in this proceeding endorsed these observations by Young AJA and made a number of further criticisms of the decision in Gordon. First, they drew attention to the fact that the conclusion in Gordon was that 'any person responsible for lodging a caveat may be liable to pay compensation.'[46] The notion of a person being 'responsible for' lodging a caveat was said not to be supported by the statutory text and amounted to the reading of words into the relevant legislation in circumstances where the conditions for doing so had not been satisfied. In response, the plaintiff submitted that this was merely recognition of the need for a common sense approach to the question of causation; namely, that the person 'responsible for' the act is not necessarily the person who physically did the act. Questions of liability naturally and appropriately direct attention to the person who actually causes loss. This response was in turn rejected by the defendants on the basis that the balance of Blanchard J's reasons made clear that his Honour considered that the liability of each person who participates in the lodgement of a caveat is to be examined separately, indicating that the reference to any other person 'responsible for' lodging a caveat can only be understood as a reference to some other undefined and unjustified consideration.
66 Secondly, the defendants rejected the reasoning in Gordon that, if Parliament had intended the relevant provision to have been confined to a 'caveator', it would have done so expressly as it had in other sections. This argument was said by the defendants to be unpersuasive because the draftsperson had simply chosen to draft s 118 by using the full version of the words in s 89, rather than the shorthand expression, 'caveator'. Further, the defendants criticised Blanchard J's statement that 'section 146 is the only place in which "person" is not accompanied by a direct reference to the caveator or use of words which can refer only to the caveator,' on the basis that s 137 made clear that the reference in s 146 to 'any person lodging' can only refer to the person asserting an interest in land.
67 Thirdly, the defendants criticised the judgment of Blanchard J on the basis that, although his Honour recited the argument based on ordinary agency principles that an attorney or agent acting for a principal should not be directly liable to a third party for something done on the instructions of the principal,[47] his Honour later failed to address this argument in his reasons for judgment.
68 The plaintiff critiqued the decision in Windlock on a number of grounds. It was submitted that the decision placed a gloss on the words actually used in the statute and was inconsistent with the need to give effect to the literal words of an enactment unless there is some proper basis for departing from them in order to give effect to the purpose of the legislation, there being no proper basis for such a departure in that case. Further, for the reasons outlined in paragraphs [51]-[53] above, it would create a 'legal black hole' where arguably no one would be liable, including the caveator, for loss caused to any person by reason of the lodgement of a caveat.
69 The plaintiff also took issue with the statement by Young AJA that, where a solicitor lodges a caveat, it was common to say that the solicitor had lodged the caveat on behalf of the caveator. Although that was accepted to be a correct statement in a general sense, the plaintiff submitted that it was not to the point in determining who 'lodges' for the purpose of s 118 of the Act. The plaintiff also submitted that Young AJA's statement that, '[s]urely there can only be one entity that lodges a caveat' was unsound for the purposes of s 118 of the Act given the effect of s 37(c) of the Interpretation of Legislation Act 1984.
70 The plaintiff also took issue with the example referred to by Young AJA in relation to the potential liability of a client, their solicitor and a law clerk in relation to the lodgement of a caveat. According to the plaintiff, this concern was answered by the availability within the terms of s 118 to a potential defence based on 'reasonable cause,' as explained by Blanchard J in Gordon.
71 The defendants also relied on the decision of Brereton J in the Supreme Court of New South Wales in Arkbay. Arkbay concerned a claim for compensation under s 74P of the NSW Act. In a judgment delivered some 2 months after the decision in Windlock, one of the issues considered by Brereton J was whether the section extended to any person involved in the lodgement of a caveat and not only to the caveator. In coming to the conclusion that s 74P was limited to the caveator,[48] Brereton J stated:[49]
More significantly, the reference to "any person who, without reasonable cause, lodges a caveat" in s 74P mirrors earlier references in the Real Property Act to the caveator. In particular, the right to lodge a caveat is given by s 74F(1) to "any person who, by virtue of any unregistered dealing or by devolution of law or otherwise, claims to be entitled to a legal or equitable estate or interest in land under the provisions of this Act ...". Similar provisions are found throughout s 74F.
In my view, the preferable construction on the face of the Act is that the reference to "any person who, without reasonable cause lodges a caveat" in s 74P is intended to capture only the caveator who lodges a caveat as described in s 74F.
While I was inclining to this view in any event, Mr Moore properly drew to my attention the recent judgment of Young AJA in Windlock Pty Ltd v Velibor Davidovic & Ors [2014] NSWSC 269 in which his Honour came to the same conclusion. I would not in any event lightly depart from a judgment of Young J on a question of pertaining to the Real Property Act, and particularly in circumstances where in any event I incline to the same view, there is simply no reason to do so.
72 As has been outlined, to properly construe a statutory provision, it is necessary to identify the legislative purpose of the Act as a whole. In this case however, as the plaintiff submitted, that enquiry is of limited assistance because the purpose of the Act, which may be taken to be the creation of a scheme of land ownership by registration, is of such generality that it does not aid in the elucidation of the legal meaning of s 118.
73 In Windlock, Young AJA stated that the purpose of s 74P of the NSW Act was to 'protect the registered proprietor and other persons from caveats which had no standing or were placed on to obtain delay. The compensation was to discourage people from doing this.'[50] This description appears to be equally applicable to s 118 of the Act. However, as submitted by the defendants, the constructions of s 118 advanced by both parties are each generally consistent with this purpose, albeit that the plaintiff's construction would result in a right of recovery against anyone involved in the process of lodging a caveat.
74 Such an expansive construction of s 118 is not, however, supported by the text of the Act. I agree, with respect, with Young AJA's observation in Windlock that the critical words appearing in the equivalent Victorian legislation at s 118 - 'any person lodging' - naturally invite the question, 'who lodges a caveat?'[51] The Act has a clear and unambiguous answer to that question, being a matter of self-evident significance in the scheme which it creates. It is answered by s 89(1): 'any person claiming any estate or interest in land ...'. This highlights the underlying error in the plaintiff's submissions that the Act should be construed from the premise that ss 89(1) and 118 play independent roles. This construction ignores the fact that, as submitted by the defendants, 'any person lodging' a caveat is a statutory concept. Further, as the defendants' analysis of the legislative history makes clear, that concept has been a feature of the statutory framework since the 1862 Act.
75 The terms of s 89(1) provide further support for the defendants' construction once the connection between that section and s 118 is recognised. As has been noted, s 89(1) authorises a person asserting an interest in land to lodge a caveat by 'his agent'. This makes clear that the act of lodging a caveat is the act of the principal. It provides further textual support for a conclusion that 'any person lodging' referred to in s 118 is the principal; namely, the caveator, rather than their agent.
76 The plaintiff's submissions invite the Court to ignore this specific and important concept in the framework established by the Act and to instead give the words '[a]ny person lodging' their literal meaning. The plaintiff's submission that this approach is appropriate because of the different purposes served by ss 89(1) and 118 and the absence of any conflict between them which would otherwise call for construction of the provisions to be 'reconciled' is misdirected. It overlooks that '[t]he primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute.'[52] The pursuit of that primary object is not contingent or dependent upon the identification of conflict in statutory provisions, or a conclusion that certain provisions serve a common purpose as the plaintiff's submission would suggest. Without diminishing the critical importance of the text in statutory construction, the plaintiff's submission that the Court, 'does not dismiss the actual words used in the section and their literal meaning unless it is absolutely necessary in order to make it consistent with the purposes of the Act,' does not in my view properly reflect the established principles of statutory construction outlined above.
77 The plaintiff's contention that identifying 'any person lodging' a caveat requires one to address a factual question of who completed relevant documentation and who took it to the Registry proceeds from a false premise; namely, that the Act, through s 89(1), does not already have an answer to that question. In this way, the plaintiff's construction invites the Court to disregard the text of the Act and to embark upon a factual enquiry not contemplated by it.
78 Such an enquiry assumes that persons other than the caveator may 'lodge' a caveat. This seems inherently unlikely given the serious effect which s 89 attaches to the lodgement of a caveat in forbidding dealings with land. The serious consequences which flow from the lodgement of a caveat support the defendants' submission, which I accept, that the Act contemplates that the person who lodges a caveat can be identified with certainty. This is most clearly evident from s 115(1) which stipulates that documents lodged with the Registrar shall only be returned to or at the direction of the person who lodged the documents. As stated by Young AJA in Windlock, '[s]urely there can only be one entity that lodges a caveat (putting to one side joint proprietors of a right) and when one is looking to see who lodges a caveat one must come up with a single person or group of people.'[53]
79 The plaintiff's argument that the words 'any person lodging' a caveat in s 118 should not be confined to the caveator because that word is not used in the section but is used in various surrounding provisions is unpersuasive. First, as explained in the above paragraphs and as recognised by Young AJA in Windlock and Brereton J in Arkbay in relation to the equivalent provisions in the NSW Act,[54] the similarity in the language used in ss 89 and 118 support a conclusion that the provisions mirror and reflect each other such that the 'person' referred to in the opening words in s 118 is properly understood as being a reference to the caveator. Secondly, the similarity in language of ss 89 and 118 has a heightened significance and the appearance of the word 'caveator' in some of the surrounding provisions is of diminished significance once it is recognised that, as originally enacted,[55] the equivalent provisions appeared more closely together and many of the provisions referred to by the plaintiff which now contain the word 'caveator' did not appear at all in the predecessor provisions of the Act.
80 I do not accept the plaintiff's submissions that a construction of s 118 as only imposing liability on the caveator would create gaps in the liability for loss and damage caused by the lodgement of a caveat. As to the first claimed anomaly - where a caveator lodges a caveat on the wrongful or negligent advice of a solicitor - the plaintiff's submissions are inconsistent with established authority in Victoria concerning applications for compensation under s 118. The applicable principles were accurately and conveniently summarised as follows by Mukhtar AsJ in KB Corporate Pty Ltd. v Sayfe and Anor:[56]
(a) the applicant must show the caveator had no caveatable interest;
(b) the applicant must show the caveator did not have an honest belief based on reasonable grounds that a caveatable interest existed;
(c) the test is partially subjective and partially objective;
(d) the subjective component requires an examination of the caveator's belief and whether it was honestly held;
(e) it is objective in that it requires that the belief is held on reasonable grounds;
(f) it is a fallacy is to think that the absence of a caveatable interest at the time when the caveat was lodged establishes that the caveator did not have a reasonable basis for a belief that it was entitled to lodge a caveat; and
(g) legal advice that the caveator was entitled to lodge the caveat may be of considerable significance in determining whether the claimant has established that the caveat was lodged without reasonable cause, but the content and accuracy of the legal advice must be evaluated with all other relevant circumstances.
81 The last of the above propositions demonstrates the error in the plaintiff's contention. Contrary to the plaintiff's contention, a caveator will not escape liability merely because advice was obtained and that advice is wrong. Further, an accurate reading of Croft J's decision in RDN Developments also does not provide support for the plaintiff's contention. In RDN Developments, his Honour expresses a preference for the approach of Palmer J in Lee v Ross (No 2) and refers to the following statement by Palmer J in that case:[57]
Mr Blank, who appears for the Purchasers, submits that the test is entirely subjective: one must look to what the caveator believes. I am unable to accept that submission. In my opinion, the test is twofold: it is subjective in that it requires an examination of the caveator's actual belief and whether that belief is honestly held. The latter part of that question will often overlap the examination of the objective element of the test, namely, whether the caveator's belief is held on reasonable grounds.
82 As to the second gap in liability referred to by the plaintiff - where a person lodges a caveat on behalf of another, but does so without any authority whatsoever - as the defendants submitted, this scenario did not give rise to any question of agency, but instead involves the person who lodged the caveat acting as principal. Relying on the Young AJA's reference in Windlock to two examples where the 'any person' referred to in the equivalent to s 118 of the Act might be read to mean persons other than the caveator, the defendants submitted that this scenario might properly be regarded as a further novel and unusual scenario where 'any person' is not confined to the caveator. The two other unusual cases referred to by Young AJA were: (a) where an executor of an estate lodges a caveat to protect an unregistered interest in land in circumstances where probate has not yet been granted; and (b) where a caveat is lodged by a person seeking a guardianship order in respect of an incapable person who has an unregistered interest in land.[58]
83 I also do not accept the plaintiff's criticism of the defendants' construction on the basis that it places a premium on solicitors remaining ignorant and not asking questions. It overlooks established authority which makes clear that solicitors can be personally liable for the costs of caveat removal.[59]
84 Further, I also consider that the literal construction of s 118 contended for by the plaintiff is likely to give rise to unreasonable results and to be unworkable. First, the plaintiff's construction contemplates that, in every case, a factual enquiry be undertaken to identify all those persons who participated in the process of lodging a caveat and whether there existed in relation to each such person 'reasonable cause'. As the defendants submitted, depending on the facts of a particular case, this may involve an examination of the actions of the client, their solicitor and their registration agent. In the case of an incorporated client, the enquiries might potentially extend to board members and senior officers. There is no indication in the terms and purpose of the Act that Parliament intended that s 118 would require such a potentially burdensome set of enquiries and investigations. Secondly, while I accept that legislation may depart from established agency principles by attributing liability to an agent for the acts of their principal, such a departure from common law principles would typically be supported by the use of clear and express words. I consider that express words would be required to support the plaintiff's construction of s 118 as conveying a departure from fundamental agency principles by exposing an agent to liability for the act of their caveator principal.
85 The plaintiff's submission based on s 37(c) of the Interpretation of Legislation Act 1984 - that 'any person' cannot be confined to the singular - also does not assist in the task of statutory construction. The construction posited by the defendants is equally consistent with the caveator being a single person or a number of persons, such as a partnership with a shared interest in land.
86 I am affirmed in the conclusion that I have reached on the proper construction of s 118 of the Act by the decisions of the Supreme Court of New South Wales in Windlock and Arkbay on the construction of s 74P of the NSW Act_._ The plaintiff did not submit that the relevant provisions of the NSW Act were materially distinguishable from s 118 of the Act. Although I am not bound by either decision, as decisions of an Australian superior court in relation to legislation in very similar terms to the Act, I consider them to be highly persuasive, including because of the considered criticisms made by Young AJA about the decision in Gordon set out in paragraphs [32]-[39] of Windlock with which I generally agree. Further, although the judgment of Brereton J in Arkbay was ex tempore and brief, his Honour did not simply follow Windlock, but independently identified the critical relationship between ss 74F and 74P of the NSW Act and inclined to the view that the phrase 'any person who ... lodges' captures only the caveator.[60] In addition to these matters, as outlined in paragraphs [65]-[67] above, the defendants have also advanced three further cogent criticisms of Blanchard J's reasons in Gordon which in my view reveal further weaknesses in the analysis adopted in that case.
87 As referred to in paragraph [82] above and as noted by Young AJA in Windlock, there are perhaps three unusual circumstances where the 'any person' referred to in s 118 of the Act is not confined to the caveator. In the circumstances of this case, however, where the plaintiff alleges that the defendants solicitors were acting as agents, those exceptions do not arise in answering the preliminary question. For the reasons I have explained, the defendants as solicitors acting as agents in lodging the 2005 caveats were not 'a person' lodging a caveat with the Registrar for the purposes of s 118 of the Act. It is unnecessary and inappropriate for the Court to answer the remaining part of the preliminary question; namely whether the plaintiff is confined to seeking compensation from the party identified as the caveator in the 2005 caveats.
88 Within 14 days, the parties are to submit orders giving effect to these reasons for judgment and, in the absence of agreement, any short submissions on costs (which will be considered on the papers).
[1] The version of the Act relevant to the consideration of the preliminary question is version No. 143 incorporating amendments as at 1 January 2005.
[2] [2016] VSCA 328, [47]-[55].
[3] Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355, 381 [69] (McHugh,
Gummow, Kirby and Hayne JJ) (Project Blue Sky).
[8] DPP v Leys [2012] VSCA 304; (2012) 44 VR 1, 32 [94] (Redlich and Tate JJA and T Forrest AJA).
[12] Project Blue Sky [1998] HCA 28; (1998) 194 CLR 355, 384 [78] (McHugh, Gummow, Kirby and Hayne JJ).
[13] Ibid 382 [70] (McHugh, Gummow, Kirby and Hayne JJ).
[14] See for example DPP v Leys [2012] VSCA 304; (2012) 44 VR 1.
[15] See for example DPP v Walters [2015] VSCA 303.
[19] Certain Lloyd's Underwriters v Cross ([2012] HCA 56; 2012) 248 CLR 378, 390 [26] (French CJ and Hayne J).
[22] Ibid 549 [39] (French CJ, Crennan and Bell JJ).
[23] Ibid 548 [38] (French CJ, Crennan and Bell JJ) (citations omitted).
[24] [2014] HCA 12; (2014) 250 CLR 664, [22] (French, Hayne, Kiefel, Gageler and Keane JJ).
[25] Federal Cmr of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 250 CLR 503 at 519 [39] (footnote omitted).
[27] Potter v Minahan [1908] HCA 63; (1908) 7 CLR 277, 304 (O'Conner J), quoting JA Theobold, Maxwell on the Interpretation of Statutes, 4th ed (citations omitted).
[28] Section 120 of the 1866 Act provided: 'Any person lodging any caveat with the registrar either against bringing land under this Act or otherwise without reasonable cause shall be liable to make to any person who may have sustained damage thereby such compensation as a judge on a summons in chambers shall deem just and order.'
[29] [2014] NSWSC 269 (Windlock).
[30] [2014] NSWSC 572 (Arkbay).
[33] ss 89A(2)(b), (3)(b), (6); 90(1)(b), (d), (e), (2), (3) and (5).
[34] [1990] HCA 6; (1990) 169 CLR 214, 235 [19].
[35] [1999] HCA 38; (1999) 199 CLR 1, 34 [80].
[36] In this regard, the plaintiff also relied upon the observations of Blanchard J in Gordon v Treadwell Stacey Smith [1996] NZCA 110; [1996] 3 NZLR 281, 288 (Gordon) which are considered below.
[37] Ibid 288, referred to further below.
[38] [2011] VSC 130, [19]-[22] (RDN Developments).
[40] The plaintiff referred to the discussion in G E Dal Pont, Law of Agency, (LexisNexis Butterworths Australia, 3rd ed, 2014) 630 [24.1], 634 [24.9], 644 [24.28] about the personal liability of an agent to a third party for tort and for statutory breaches.
[42] Gordon [1996] NZCA 110; [1996] 3 NZLR 281, 287-288.
[43] Windlock [2014] NSWSC 269, [27].
[46] Defendants' Outline of Argument dated 24 July 2018, citing Gordon [1996] NZCA 110; [1996] 3 NZLR 281, 288 (emphasis added).
[47] Gordon [1996] NZCA 110; [1996] 3 NZLR 281, 287.
[48] Arkbay [2014] NSWSC 572, [12].
[50] Windlock [2014] NSWSC 269, [37].
[52] Project Blue Sky [1998] HCA 28; (1998) 194 CLR 355, 381 [69] (emphasis added).
[53] Windlock [2014] NSWSC 269, [34].
[56] [2017] VSC 623, 6 [19] (emphasis added).
[57] RDN Developments [2011] VSC 130, [18], quoting Lee v Ross (No 2) (2003) 11 BPR 20, 991 [25].
[59] See for example Pearl Lingerie Australia v TGY Pty Ltd [2012] VSC 451.
[60] Arkbay [2014] NSWSC 572, [10].
Lanciana
Alderuccio [2019] VSC 198
(1998) 194 CLR 355
(2009) 239 CLR 27
(2008) 235 CLR 619
(1981) 147 CLR 297
(2010) 241 CLR 252
(1997) 187 CLR 384
(2012) 44 VR 1
(2006) 228 CLR 529
(2014) 253 CLR 531
(2014) 250 CLR 664
(2012) 250 CLR 503
(1908) 7 CLR 277
(1990) 169 CLR 214
(1999) 199 CLR 1