Registrar Of Titles (WA) v Franzon

Charles Reginald Hopkins, a solicitor, who held certain money for the Franzons applied, without their authority, to the second respondent, Finance Corporation of Australia Ltd., for a loan of $30,000. When this loan was approved by the second respondent, Hopkins forged the Franzons' signatures to a mortgage over their land to secure that amount. With the Franzons' money which he already held and with $4,850.76 of the money advanced by the second respondent and paid by it to AGC he discharged the mortgage to AGC. Upon registration of the discharge of AGC's mortgage and of the forged mortgage he received $25,149.24, being the balance of the moneys advanced by the second respondent. He then misappropriated this money.

The Franzons were not aware of these developments until October 1970. Thereafter they made payments of interest falling due under the forged mortgage, amounting in all to $10,075. In January 1972 the second respondent demanded repayment of the principal due under this mortgage and an amount of interest then outstanding, $116.70. Subsequently the Franzons paid out the second respondent with moneys borrowed from another source and the forged mortgage was then discharged, the costs of discharge being $40.

The Franzons commenced an action for damages in the Supreme Court of Western Australia against the appellant, the Registrar of Titles, as a nominal defendant. The action was reconstituted by amendment so as to include a further and alternative claim for damages against the second respondent. The claim against the second respondent, based on s. 201 of the Transfer of Land Act, was rejected by Burt J. who held that the Franzons were nevertheless entitled to recover judgment against the appellant the Registrar of Titles under s. 205 of the Act. He rejected a defence of estoppel which had been pleaded by the second respondent and gave judgment for the plaintiff for $35,380.94.

The appellant's case is that the primary judge should have found for the Franzons in their claim against the second respondent based on s. 201, a conclusion which, if correct, would deny the Franzons a remedy against the appellant under s. 205 because the cause of action created by that section is available only in the event that "the remedy by action for recovery of damages", that is, the action under s. 201, is "inapplicable". Secondly, the appellant submits that the Franzons' case for relief does not fall within s. 205 for other reasons.

Any person deprived of land or of any estate or interest in land in consequence of fraud or through the bringing of such land under the operation of this Act or by the registration of any other person as proprietor of such land estate or interest or in consequence of any error or misdescription in any certificate of title or in any entry or memorandum in the register book may bring and prosecute an action at law for the recovery of damages against the person upon whose application such land was brought under the operation of this Act or such erroneous registration was made or who acquired title to the estate or interest through such fraud error or misdescription.

Provided always that except in the case of fraud or of error occasioned by any omission misrepresentation or misdescription in the application of such person to bring such land under the operation of this Act or to be registered as proprietor of such land estate or interest or in any instrument signed by him such person shall upon a transfer of such land bona fide for value cease to be liable for the payment of any damage beyond the value of the consideration actually received which but for such transfer might have been recovered from him under the provisions herein contained; and in such last-mentioned case and also in case the person against whom such action for damages is directed to be brought as aforesaid shall be dead or shall have been adjudged bankrupt or cannot be found within the jurisdiction of the Supreme Court then and in any such case such damages with costs of action may be recovered out of the assurance fund by action against the Registrar as nominal defendant. Provided also that in estimating such damages the value of all buildings and other improvements erected or made subsequently to the deprivation shall be excluded.

It is common ground that the second respondent obtained an indefeasible title to the forged mortgage on its registration - Frazer v. Walker [3] . Nor is it now in dispute that the Franzons were persons deprived of an estate or interest in land by reason of the registration of the mortgage. Although they remained as registered proprietors of the land it became subject to the mortgage upon its registration and they were thereby deprived of the estate or interest in the land represented by that mortgage.

For the Franzons to bring themselves within s. 201 it must appear that they were so deprived "in consequence of fraud" - in which event they have an action against the person "who acquired title to the estate or interest through such fraud" - or "by the registration of any other person as proprietor of such estate or interest" - in which event they have an action against "the person upon whose application such erroneous registration was made".

There are several reasons why the reference to "fraud" should be read as a reference to fraud for which the person becoming registered is responsible. This is the meaning that the word "fraud" bears in the sections dealing with indefeasibility under the Torrens system. See Assets Co. Ltd. v. Mere Roihi [4] where it was expressed as fraud "brought home to the person whose registered title is impeached or to his agents". Although s. 201 is not a provision which relates directly to indefeasibility of title, it is complementary to those provisions which regulate indefeasibility of title and it provides compensation for loss of an indefeasible title.

It is a sound rule of construction to give the same meaning to the same words appearing in different parts of a statute unless there is reason to do otherwise. Here no such reason appears. Indeed, there are indications to be found in s. 201 that "fraud" is used in the limited sense already explained. First, the section identifies the person against whom action may be brought as the person "who acquired title to the estate or interest through such fraud " (italics supplied). These words strongly suggest that the section is directed to fraud perpetrated by or on behalf of the person who secures registration. As the relevant acquisition of title took place on and by registration, it is neither easy nor accurate to say that the second respondent by applying for and securing registration of the mortgage obtained title "through fraud". Secondly, the case of fraud is excepted from the limitation on liability which is brought about by the proviso to the section. That the case of fraud should be so excepted is understandable if by fraud is meant fraud in which the registered proprietor or his agent participated, but it is a very different matter if fraud in the wider sense is included within the operation of the proviso for them an innocent person who obtained registration following fraud on the part of a stranger would be liable for the plaintiff's loss without any limitation of liability.

In my view the appellant's alternative attempt to bring the Franzons within s. 201 is no more successful. Although the appellant is correct in saying that the Franzons were deprived of their estate or interest in the land by the registration of the second respondent as proprietor of the mortgage, that is, by registration of the mortgage, it must also be shown that an "erroneous registration" was thereby made on the second respondent's application. I do not doubt that the second respondent by lodging the mortgage, or causing the mortgage to be lodged, for registration made an "application" notwithstanding that it was not an "application" of a formal kind for which the Act elsewhere makes specific provision (see ss. 187, 219 and 221).

The difficulty is to describe the registration which ensued as an "erroneous" registration. There was no disconformity between the registration and the instrument on which it was based and which was the foundation of the application. No error was made by the second respondent or by the appellant or by those acting for them in effecting registration of the mortgage. This concept of "erroneous registration" is more consistent with the principle of indefeasibility, for the appellant's broad conception of "erroneous registration" would expose the innocent registered proprietor of the mortgage to an action for damages, a liability that is hardly consistent with the principle inasmuch as it requires him to pay the injured party's loss although it leaves him on the register.

Accordingly, the appeal against the primary judge's dismissal of the case based on s. 201 fails.

It is necessary then to examine that part of the appeal that relates to s. 205. This section provides:

Any person sustaining loss through any omission mistake or misfeasance of the Registrar or any other officer or clerk in the execution of their respective duties under the provisions of this Act or by any error omission or misdescription in any certificate of title or any entry or memorandum in the register book or by the registration of any other person as proprietor and who by the provisions of this Act is barred from bringing an action of ejectment or other action for the recovery of land estate or interest may in any case in which the remedy by action for recovery of damages as herein provided is inapplicable bring an action against the Registrar as nominal defendant for recovery of damages; in estimating which damages however the value of all buildings and other improvements erected or made subsequently to the loss or deprivation shall be excluded.

The Franzons, it is conceded, are barred from bringing any action for recovery of possession of the land and s. 201, it has been shown, is inapplicable. The question therefore is whether the Franzons sustained loss "by the registration of any other person as proprietor". The Solicitor-General seeks to escape the affirmative answer which these words so evidently demand by drawing attention to the distinction between the mere registration of a dealing, such as a transfer, lease or mortgage, and the registration of a person as registered proprietor of an estate or interest in land upon a formal application for which the Act makes specific provision - see, for example, s. 187 (application by executor, administrator or Public Trustee to be registered as proprietor), s. 219 (application by devisee or other person on a transmission) and s. 221 (application by remainderman or reversioner). In other cases provision is not made for a person to apply to be registered as proprietor; it is a legal consequence which is attributed to the person who takes under a dealing upon its registration - see ss. 52 and 82. It is then urged that s. 205 is directed only to registration upon formal applications for registration of the kind already discussed where there is need for the Commissioner to inquire into and investigate the application.

This ingenious argument derives no support from the language of s. 205 which does not confine itself to loss sustained by registration in the limited modes suggested. The words "by registration of any other person as registered proprietor" are equally capable of applying to a person becoming registered as proprietor of an estate or interest in land in consequence of the registration of dealing under s. 52 or s. 82. No doubt the language of the section was carefully chosen so as to include the two modes by which a person might become registered as proprietor.

The effect of the argument presented by the appellant, if it be correct, is to confine s. 205 to cases where the mistake or error giving rise to the registration is one which takes place within the office of the registrar or commissioner for titles. Yet the opening words of the section plainly cover this situation, thereby indicating that the later ground is intended to have some different or wider significance. Moreover, the argument attributes to s. 205 a limited indemnity only, one which falls far short of a corresponding counterpart to the indefeasible title which the Act sets out to confer on the registered proprietor. That the registrar is not given a consequential statutory right to recover against the wrongdoer does not detract from the importance of this consideration. The protection of the registered proprietor is paramount; the right of the registrar to recover from the wrongdoer is a secondary consideration.