Plaintiff v Defendants

2 For present purposes the account of the relevant events may commence on 23 January 2008. As at that date the registered proprietor of the property was Maryvell Investments Pty Ltd ("Maryvell"). That company had been in liquidation since 25 June 2006 and Mr Lawrence Fitzgerald was, and still is, its liquidator. The company is associated with Mr George Velissaris. On 23 January 2008 Bongiorno J ordered pursuant to s 90(3) of the Transfer of Land Act 1958 ("the Act") that a caveat lodged by Mr Velissaris on the property be removed and also ordered that Mr Velissaris and certain specified people associated with him be restrained from lodging any further caveat.

3 By a contract of sale dated 26 March 2008 Maryvell by its liquidator agreed to sell the property to Dynami Pty Ltd ("Dynami") for the sum of $1,600,000. On 8 May 2008 the plaintiff, Bank of Cyprus Australia Limited ("the bank"), issued a letter of offer to Dynami for an advance of $2,100,000. The facility offered was subject to terms and conditions. Amongst the terms and conditions was a condition requiring security by way of a first registered mortgage over the property. Under the terms of the facility the facility will expire on 19 September 2008.

4 According to an affidavit filed on behalf of the solicitor for the bank, settlement was scheduled for 8 May 2008. On that day the bank was advised that a number of caveats had been lodged on the title to the property and settlement was accordingly deferred.

5 On 21 May 2008 Hollingworth J dealt with an application by originating motion in proceeding number 6144 of 2008. That is a proceeding in which Maryvell's liquidator Mr Fitzgerald, and Maryvell are plaintiffs and Mr George Velissaris, Mary Velissaris and the Registrar of Titles are defendants. Amongst other things, Hollingworth J ordered that Mary Velissaris be restrained from lodging any further caveat on the property and also ordered that the Registrar of Titles reject any dealing concerning the property except dealings lodged on behalf of the liquidator and Maryvell or Dynami pursuant to the contract of sale dated 26 March 2008.

6 On the same day in a proceeding number 6117 of 2008 in which the liquidator and Maryvell are again plaintiffs and Nico La, Sydney Road 333 Pty Ltd, Bruno Strangio and the Registrar of Titles are defendants, Hollingworth J made orders concerning certain specified caveats and restrained the first defendant Nico La from lodging any further caveat.

7 The second defendant in that proceeding ("Sydney Road 333") was the caveator under a caveat on the property numbered AF548471M. The grounds of claim under that caveat were expressed as follows:

"Contract of sale dated 14 November 2007 between Richard Aidini and/or nominee and Maryvell Investments Pty Ltd ACN 080 327 073 and sale of real estate nomination form dated 10 December 2007 between Richard Aidini and the caveator as nominee."

8 Proceeding number 6117 of 2008 returned to Hollingworth J on 30 May 2008. On that day she made orders to the following effect:

(1) An application by Mr Strangio for leave to appear on behalf of Sydney Road 333 was refused.

(2) The Registrar of Titles was ordered to remove Sydney Road 333's caveat number AF548471M.

(3) Sydney Road 333 and its servants or agents were restrained from lodging or causing to be lodged any further caveat or other dealing concerning the property.

(4) Sydney Road 333 was ordered to pay the plaintiff's costs.

9 On that same day, 30 May 2008, Hollingworth J ordered Mr George Velissaris to pay the plaintiff's costs in proceeding 6144 of 2008 on an indemnity basis. She gave short reasons which were transcribed.

10 On 5 June 2008 the Registrar of Titles wrote to the solicitors for the bank. The Registrar referred to the orders made in proceeding 6144 of 2008 on 21 May 2008 and advised that in the light of those orders the Registrar would accept for lodgement the transfer of land to Dynami and the mortgage documentation of the bank as mortgagee. The matter proceeded to settlement on Thursday 12 June 2008. The bank lent funds to Dynami to finance the purchase. The bank lodged documents including a transfer and a mortgage with the Registrar.

11 Registration of the bank's documents was held up for a time whilst a requisition was addressed. The vendor addressed that requisition on the morning of Monday 16 June 2008.

12 In the meantime, on 13 June 2008 what purported to be a notice of appeal in proceeding 6117 of 2008 was delivered to the Registrar. On the hearing of this application a copy of the notice of appeal from the relevant court file was handed up. The copy handed up indicates that the appeal is proceeding 3810 of 2008 and that the notice of appeal was filed on 19 June 2008. The notice bears a notation "Filed on the insistence of Bruno Strangio 19/6/08". The notation is signed by the Registry Manager of the Court of Appeal. The notice purports to give notice of an appeal by Mr Strangio and Sydney Road 333. It states that it was prepared by Mr Strangio.

13 As a result of telephone calls made by the solicitors for the bank, the bank became aware that the Registrar was not proposing to register the bank's transfer and mortgage. On 21 June 2008 the solicitors for the bank wrote to the Registrar demanding that the Registrar do so. By a letter of 24 June 2008 the Registrar responded.

14 In the letter of 24 June 2008 the Registrar confirmed that he had been served with a notice of appeal filed 19 June 2008 and advised that he had previously received an "unfiled copy" on 13 June 2008. The Registrar advised as follows:

"... The appeal on its face affects the folio. Relief is sought from the Court of Appeal that may result in the Court determining that the issues considered in proceeding 6144 of 2008 be remitted to a single judge of the Supreme Court of Victoria for determination. The orders of Justice Hollingworth made 30 May 2008 may be quashed. I may be required to record a caveat claiming the interest claimed in caveat AF548471M in respect of the subject land."

15 The Registrar's reference to proceeding 6144 of 2008 was probably intended to be a reference to proceeding 6117 of 2008.

16 The Registrar went on to say that it was not open to the Registrar to go behind the appeal and form a view as to whether the appellant is likely to obtain the orders. The Registrar concluded as follows:

"The consequence of my granting your request to register the Bank of Cyprus dealings would be that some or all of those dealings would acquire the benefit of indefeasibility under section 42(1) and 43 of the Transfer of Land Act 1958; such action may render the relief sought by the appeal futile.

As you may be aware, it has long been held by the Courts in Australia that the Registrars of Title under State Torrens legislation have a discretion to refuse to register dealings, arising out of the general power vested in them to administer the land registers established by that legislation.

In the present circumstances, it is proper that I defer the registration of the lodged dealings until the outcome of action sought from the Court is known."

17 The bank responded by issuing this proceeding against the Registrar seeking an order under s 116 of the Act that the Registrar register the transfer, the mortgage and other specified documents.

18 When the matter first came before me in the Practice Court I queried whether Mr Strangio and Sydney Road 333 ought to be parties. I was referred to a decision of Hargrave J in Dharmalingham v Registrar of Titles[2] where he took the view that in a proceeding against the Registrar under s 116 which turned on whether a caveat had lapsed under s 89A of the Transfer of Land Act the caveator ought to be joined as a party. I took a similar view and ordered that Bruno Strangio and Sydney Road 333 be joined as parties. They were joined. Upon the return of the matter on 1 August 2008, Mr Strangio appeared in person and sought to appear on behalf of Sydney Road 333. Mr Riordan SC with Mr Barber appeared on behalf of the bank and Mr Connor of counsel appeared on behalf of the Registrar.

19 On 28 July 2008 a sequestration order had been made against the estate of Mr Strangio in the Federal Magistrates' Court and Mr Paul Patterson had been appointed as trustee of his bankrupt estate. On 1 August a solicitor, Ms Worsfield, appeared on behalf of Mr Patterson.

20 On both occasions when the matter was before me Mr George Velissaris also appeared in person. He applied to be joined as a party. He filed a handwritten affidavit sworn 31 July 2008 in support of that application and I heard oral submissions from him in support of that application.

21 Mr Velissaris' affidavit concerned the various proceedings between him and the liquidator of Maryvell and in particular concerned the orders made by Hollingworth J in proceeding 6144 of 2008. An affidavit filed on behalf of the solicitor for the Registrar exhibited copies of handwritten documents constituting an application for leave to appeal by Mr Velissaris in proceeding 6144 of 2008 naming the liquidator and Maryvell as the respondents. The appeal is Court of Appeal proceeding number 3803 of 2008. The application seeks leave to appeal from the indemnity costs order made by Hollingworth J on 30 May 2008 against Mr Velissaris. I was told by Mr Velissaris that his application for leave to appeal had been heard, that the decision was reserved, and that he was confident leave would be granted. He told me that if leave was granted he would then seek to amend his appeal so as to appeal from all of the orders made by Hollingworth J in proceeding 6144 of 2008. He confirmed that the only application presently on foot is the application for leave to appeal the costs order.

22 In relation to the matters which Mr Velissaris wished to put in this proceeding, he gave me a list of 14 matters he wished to raise. He sought to be made a party so as to raise those matters and he indicated that he would need an adjournment of three weeks in order to prepare if he was made a party. The 14 matters he raised were these:

(1) There should be an inquiry into the liquidator of Maryvell's actions.

(2) The liquidator would never tell him how much he wanted to settle the matter.

(3) The Maryvell liquidator undersold the property by $4,000,000.

(4) The liquidation should be stayed pending a full hearing of the inquiry into the conduct of the liquidator.

(5) The order for winding up should never have been made. There was corruption.

(6) The liquidator had no right to sign a transfer of the company's property.

(7) He had issued a proceeding number 4484 of 2008 seeking an inquiry under section 536 of the Corporations Act, and seeking termination of the winding up and other relief against the liquidator.

(8) If he obtained leave to appeal on the costs order he would seek to amend the appeal so as to appeal against all the orders of Hollingworth J.

(9) The property had been sold "with money under the table".

(10) The liquidator had locked him out of the auction.

(11) The liquidator sold the property for $1.6 million after Mr Velissaris had signed a contract to buy it for $1.66 million.

(12) All this must stop pending his proceedings against the liquidator.

(13) The Bank of Cyprus was on notice of his claims.

(14) The transfer must be stopped and he would guarantee the Bank of Cyprus's security.

23 None of the matters raised by Mr Velissaris concern the position of Sydney Road 333 or the caveat and the appeal which has prompted the decision the Registrar has made here. In the circumstances I reject Mr Velissaris's application to be joined as a party. He has other proceedings on foot under the Corporations Act in which he may pursue the matters which are the subject of his complaint.

24 Mr Strangio sought leave to appear on behalf of Sydney Road 333. He also made a number of complaints which I confess I was unable to follow concerning the presence of the solicitor representing his trustee in bankruptcy. I indicated to Mr Strangio that I would not give him leave to appear on behalf of Sydney Road 333 but that as he was a party personally he could make whatever submissions he wished to make and I would hear them and take them into account.

25 On behalf of the bank, Mr Riordan submitted that the Court had power under s 116 of the Act to compel the Registrar to register these dealings. He relied upon the decision of Dharmalingham in support of the proposition that an application under s 116 is a re-hearing and that if the Court disagreed with the decision of the Registrar it could substitute its own decision for that of the Registrar.

26 The submissions made on behalf of the Registrar did not contest this aspect of Mr Riordan's submission. The legal principle which the Registrar put to the forefront was the principle perhaps best encapsulated by Isaacs J in Perpetual Executors and Trustees Association of Australasia Limited v Hosken[3] where he said:

"Now of course the Registrar is not an automaton; he has a high and responsible public duty to discharge, and he has an obligation to see that the purpose of the Act is neither destroyed nor prejudicially affected. He has the right and the duty to preserve his entries and records from confusion, and to prevent the intrusion of anything calculated to obscure or mislead, or even to impede the ordinary and practical working of his department. He has also in certain cases a necessary discretion, though forms are complied with, to act so as not by undue haste or too facile compliance with any application to do what appears to him may be a wrong to another person, or bring a claim upon the assurance fund."

27 On behalf of the bank it was submitted that what the Registrar has done was to effectively go behind the order of Hollingworth J on 30 May 2008 and to, in substance, give Sydney Road 333 an injunction or a stay which it had never applied for, has never been granted, and never would be granted without giving an undertaking as to damages and/or some other security.

28 On behalf of the Registrar it was submitted that the Registrar has not refused to register but has simply deferred registration. The submission was that if Hollingworth J's orders are overturned on appeal the Registrar may be ordered to register the caveat AF548471M again. If the bank's instruments have been registered in the meantime then its interests might have become indefeasible and the Registrar might become liable to indemnify a person for loss or damage by deprivation of land caused by an amendment to the register pursuant to s 110 of the Act. The Registrar submitted that the argument of the bank that the Registrar's refusal gave Sydney Road 333 protection equivalent to an injunction or a stay without the protective mechanism of an undertaking as to damages or security "must give way to the greater principle that the indefeasibility provision should not be used to thwart the appeal process".

29 It is necessary to make some observations in relation to the pending appeal.

30 First, the notice of appeal indicates that it was prepared by Mr Bruno Strangio. I raised with Mr Strangio the provisions of Rule 1.17. He said that the lodging of the appeal had been authorised by two directors and that he had prepared it and lodged it. He said that corporations law did not require that only a lawyer could file documents on behalf of a company. In my view rule 1.17 does apply and the appeal on behalf of Sydney Road 333 is accordingly irregular. The irregularity might be addressed under Order 2, but my expectation is that significant obstacles would confront an application that the Court of Appeal should permit a bankrupt to pursue an appeal by a company in the circumstances here.

31 Secondly, it is important to emphasise that insofar as there is any proprietary claim which may be affected by the appeal it is a claim of Sydney Road 333, not Mr Strangio personally. Mr Strangio emphasised to me that his only interest in the appeal related to costs issues and that the only proprietary interest is that claimed by Sydney Road 333.

32 Finally, Sydney Road 333 is a company with paid up capital of $2. Mr Strangio was a director until 25 July 2008. The sole director is now one Paolo Seno.

33 The Registrar made some submissions as to the effect of the Charter of Human Rights and Responsibilities. I accept the submission of the bank that, given that the only person whose property could possibly be affected is not a human being, the Registrar's submissions concerning the Charter were misconceived (see s.6(1) and s.6(3) of the Charter of Human Rights and Responsibilities Act 2006).

34 I accept, as the Registrar submitted, that he must have a discretion in appropriate circumstances to take steps to guard against a possible claim upon the assurance fund. I also accept that there might well be cases where the Registrar would be correct to defer registration pending an appeal, or steps in an appeal, from an order to remove a caveat. I have reached a clear view, however, that this is not such a case.

35 The reasons I have reached this view are as follows:

(1) The appeal is irregular as there has been non-compliance with Rule 1.17. There is no regular appeal on foot by the only entity making a proprietary claim, Sydney Road 333.

(2) Prior to settlement, the Registrar advised the solicitors for the bank in writing that he would accept the documents for lodgement.

(3) Whilst it may be true, as the Registrar submitted, that the documents will be held for registration in the order in which they were received, pending registration the bank is unable to exercise certain rights of enforcement, under s 77 of the Act for example, in circumstances where expiry of the term of the facility will occur in September 2008.

(4) In my view the bank is correct in submitting that the effect of the Registrar's decision is to put Sydney Road 333 into a position which is effectively equivalent to the one it would be in if it had an injunction against the Registrar, or a stay of the relevant order, without any of the protections that would ordinarily be required. It has given no undertaking as to damages and has not been required to give any security for a stay (as to which see Rismondo v Rismondo[4]). Indeed, in my view if the Registrar's decision is to stand, Sydney Road 333 will be in a position which is perhaps superior to the position it was in prior to the orders of Hollingworth J as it can inhibit and delay the bank without the cause of that inhibition and delay being liable to lapse or removal under s 89A or s 90 of the Act and, perhaps, without being potentially liable for compensation under s 118.

(5) Mr Strangio is now a bankrupt. Sydney Road 333 is a $2 company. No person other than Mr Strangio has sought to appear in this proceeding on behalf of Sydney Road 333.

36 Where an application is made under s 116 of the Act, the Court is in the position to decide what should be done as if the Court were acting as the Registrar (see Dharmalingham at [38]). In my view the risk of injustice to the bank by the deferral of registration is so much greater than the risk of a successful claim for indemnity by Sydney Road 333 that the Registrar should proceed in accordance with the advice which he gave to the bank in writing prior to the settlement. Of course, if Sydney Road 333 were to obtain an injunction or some other relevant relief pending the appeal, the position would then become quite different. As matters now stand, in my view the Registrar ought to register the bank's documents and I will order accordingly.

[Argument was heard as to costs. The order made was that there be no order as to costs. Mr Velissaris sought a stay which was refused.]

[1] [2007] VSC 271.

[2] [2005] VSC 417.

[3] [1912] HCA 31; (1912) 14 CLR 286, 295.

[4] (1886) 49 VLR 1.