Sinclair v Registrar-General

Sinclair v Registrar-General - [2010] NSWSC 173 - NSWSC 2010 case summary — Zoe

[13]

2 Clause 7 of the deed between the Bonds and the plaintiffs dated 29 October 1984 ("the Deed") provides: "It is hereby agreed between the parties hereto that the interest in the freehold comprising part of the servient tenement hereby created shall entitle the Grantees to protect the same by caveat." 3 The reason for the contingency was that the plaintiffs had applied to the Council of the Shire of Nambucca ("the Council") for a subdivision of Lot 3 and Lot 28 (showing the enlarged Lot 3 as Lot 29, with the enlargement extending Lot 3 down to Deep Creek), and the Council had approved the subdivision subject to the dedication to the Council as a public reserve, free of cost, of a portion of land along Deep Creek approximately 10 metres wide fronting Lot 3 and Lot 28 (I shall refer to this requirement as "the public access requirement"). 4 On 21 March 1985, the plaintiffs lodged with the Registrar-General a caveat detailing the easement and claiming also an interest in the land the subject of the Deed, which I shall refer to as "the land". 5 It appears that the Registrar-General had a policy that when a caveat was lodged in respect of an interest that was subsequently created, it would treat the caveat as having lapsed. The easement the subject of the caveat had been created, so the caveat was treated as having lapsed, it not being recognised that the caveat also claimed an interest in the land based on the Deed. 6 The Bonds sold and transferred Lot 28 to Mr and Mrs Hill ("the Hills") in August 1986, and the Hills sold and transferred Lot 28 to Mr and Mrs Byrne ("the Byrnes") in February 1988. 7 The plaintiffs' case is brought for compensation from the Torrens Assurance Fund ("the Fund") pursuant to s 129(1) of the Real Property Act 1900, which provides: "(1) Any person who suffers loss or damage as a result of the operation of this Act in respect of any land, where the loss or damage arises from: (a) any act or omission of the Registrar-General in the execution or performance of his or her functions or duties under this Act in relation to the land, or (b) the registration (otherwise than under section 45E) of some other person as proprietor of the land, or of any estate or interest in the land, or (c) any error, misdescription or omission in the Register in relation to the land, or (d) the land having been brought under the provisions of this Act, or (e) the person having been deprived of the land, or of any estate or interest in the land, as a consequence of fraud, or (f) an error or omission in an official search in relation to the land, or (g) any error of the Registrar-General in recording details supplied in the notice referred to in section 39 (1B), is entitled to payment of compensation from the Torrens Assurance Fund." The plaintiffs rely only on subsection (c).

[24]

18 Mr Sirtes asserts that the plaintiffs' claim is really one for loss of an opportunity, namely the lost opportunity of obtaining an order preventing the sale by the Bonds to the Hills without protection of the equitable interest claimed by the plaintiffs. Section 129(1) of the Real Property Act requires that the plaintiffs have suffered "loss or damage ... in respect of any land" as a result of the operation of the Real Property Act, and that the loss or damage must relevantly here have arisen from "any error … or omission in the Register in relation to the land" (s 129(1)(c)). Ms Richards accepted that the claim was "a cause of action to recover money recoverable by virtue of an enactment" (s 14(1)(d) of the Limitation Act), but contended that the cause of action did not accrue until 2005, when the Byrnes refused to transfer the land to the plaintiffs. 19 Leaving aside Mr Sirtes' other points and subject to a consideration of the case relied upon by Ms Richards, viz Registrar-General v Cleaver (1996) 41 NSWLR 713, it seems to me that if loss or damage arose as a result of the operation of the indefeasibility provisions, that loss arose at the moment the Hills were registered as owners. There was no agreement entered into between the Hills and the plaintiffs whereby the Hills agreed to transfer the land if the Council agreed to a subdivision, but rather only an agreement between the plaintiffs and the Bonds. Once the Hills were registered, the only course of action open to the plaintiffs was to assert a right to damages against the Bonds. Even that claim had the difficulty that whilst the Bonds, by the Deed, agreed that they covenanted "for themselves, their heirs, executors, successors entitle [sic] and assigns" (clause 6 of the Deed), it was not part of the agreement that they would procure the entry into a tripartite agreement by any purchaser of Lot 28. The Bonds may well have been able to argue that all that they were promising was to transfer the land to the plaintiffs should the Council approve a plan of subdivision without the public access requirement whilst they remained the owners of Lot 28. Of course, the Council did not approve the subdivision without the public access requirement whilst the Bonds owned Lot 28, and indeed no plan of subdivision was submitted by the plaintiffs after 1984, when it was approved subject to the public access requirement. 20 It is necessary then to consider whether Cleaver, a decision of the New South Wales Court of Appeal, requires a different view of the matter. In Cleaver, the owner of two lots that had been subdivided in 1967 sold Lot 1, and at the time of sale created a height-restrictive covenant burdening Lot 1 and benefiting Lot 2. The Registrar-General noted the benefit on Lot 2's title but did not note the burden on Lot 1's title because, apparently, the vendors failed to provide a copy of the certificate of title for Lot 1. Lot 1 was subsequently sold to Mr and Mrs Cirino ("the Cirinos") in 1980, and Lot 2 was sold to Mr and Mrs Stephenson ("the Stephensons") in 1976. The Stephensons subsequently sold Lot 2 to Mr and Mrs Cleaver ("the Cleavers") in 1978. In 1988, the Registrar-General purported to register the covenant in favour of Lot 2 upon Lot 1, but the Cirinos objected and sought either removal of the encumbrance from their certificate of title or compensation. It was held that the Registrar-General could not register the covenant, and the Cleavers sought compensation pursuant to a provision in similar terms to s 129(1) of the Real Property Act. 21 The Cleavers claimed that had they known that Lot 1 was not burdened with the height restriction, they would not have purchased Lot 2, which had extensive views of Middle Harbour. One of the arguments advanced on behalf of the Registrar-General was that the claim was statute-barred because the Cleavers had bought Lot 2 in 1989, and more than six years had passed since the purchase. The Cleavers argued that they did not suffer loss until the notation on Lot 1's certificate of title was removed by the Registrar-General following the Cirinos' success in the case. 22 The Court of Appeal unanimously upheld the decision of the trial judge (Cole J, as His Honour then was) that the claim was not statute-barred. Clarke JA (with whom Abadee A-JA agreed) held that loss was only suffered by the Cleavers when the owners of Lot 1 "insisted on their rights to enjoy that lot without the burden of the covenant and were entitled to maintain that insistence because of, for example, the doctrine of indefeasibility. If the Registrar-General's endorsement of the notation of the burden on the register for Lot 1 had not been objected to by those owners and the premises then re-sold, the loss would, as it seems to me, not have been suffered. It follows that it was not inevitable that the respondents would suffer loss from the omission" (at 721).

[30]

33 Returning then to the first point, it appears that there are very few cases which consider s 56, and the only one to which my attention was drawn was Hillebrand v Penrith Council [2000] NSWSC 1058. In Hillebrand, the plaintiffs sued the defendant council for wrongfully selling three portions of the plaintiffs' land as a result of mistakes claimed to have been made by the defendant. Austin J held that the plaintiffs' claim was barred by s 14(1)(b) of the Limitation Act, and that s 56 was not available because the plaintiffs sought relief from the consequences of negligence, rather than a mistake (at [48]). 34 The only detailed consideration of a provision very similar to s 56 is found in Phillips-Higgins v Harper [1954] 1 QB 411. In Phillips-Higgins, the plaintiff mistakenly failed to realise that she had been (on her case) underpaid, and that money was due to her. Pearson J (as his Lordship then was), interpreting s 26(c) of the now repealed Limitation Act 1939 (UK), held that that plaintiff's claim was properly characterised as one to recover moneys due to her under a contract, not one for relief from the consequences of a mistake (at 418-419). Pearson J provided three examples of actions which would be caught by the Limitation Act 1939 (UK): an action for money paid in consequence of a mistake; an action for rescission or rectification of a contract entered into in consequence of a mistake; and a reopening of an account settled in consequence of a mistake (at 418). Phillips-Higgins has been followed in Australia in Wheatley v Bower [2001] WASCA 293 at [111], [119] per Malcolm CJ (Kennedy and Wallwork JJ agreeing), in which it was held that a partner's claim against his former partners that debts owed to him had not been paid was statute-barred, and that the Western Australian equivalent of s 56 was not applicable. 35 In Peco Arts Inc. v Hazlitt Gallery Ltd [1983] 1 WLR 1315, the plaintiff and the defendant had mistakenly believed that the painting purchased by the plaintiff from the defendant was an original by Ingres. The case was concerned with whether the plaintiff could, with reasonable diligence, have discovered the mistake. The defendant did not contend that the fact that the mistake was mutual was a ground which precluded the plaintiff from relying on s 32(1)(c) of the Limitation Act 1980 (UK), the equivalent of s 56 of the Limitation Act 1969 (NSW).

[32]

37 As a matter of first impression, a claim for statutory compensation based on loss or damage arising as a result of the operation of the Real Property Act does not appear to be a claim for relief from the consequences of a mistake. The cause of action is one for money recoverable by virtue of an enactment, although in this case the damage is claimed to arise from an error, misdescription or omission, and that is why, as Ms Richards accepted, s 14(1)(d) of the Limitation Act is relevant. Mistake is certainly not essential for s 129(1)(a), (b), (d) or (e) of the Real Property Act. Section 129(1)(c), (f) and (g) uses the words "error", "misdescription" or "omission", which could be characterised as a mistake, but s 129(1) requires the loss or damage to be the result of the operation of the Real Property Act, which adds an intermediate qualifier. Further, it would be an anomaly if a claim under s 129(1)(c), (f) or (g) of the Real Property Act were subject to s 56 of the Limitation Act, but a claim under s 129(1)(a), (b) or (d) of the Real Property Act were not. 38 In Hillebrand, this Court did not accept that claimed mistakes by the defendant council changed a cause of action from being one in negligence to one for relief from the consequences of a mistake. It can be said here that the fact that there was an error or omission by the Registrar-General (accepting this as equivalent to a mistake) does not take the cause of action out of being one for money recoverable by virtue of an enactment and make it a cause of action for relief from the consequences of a mistake. Although not considered in Hillebrand, there is another basis which can be discerned for the conclusion that s 56 is not available, and that is that the mistake referred to in s 56, from the consequences of which relief is sought, must be made by the plaintiff. The examples given by Pearson J are all of that kind. "Mistake" by a defendant per se does not itself found a cause of action - there must be some other characterisation available to make it actionable, such as negligence or misleading and deceptive conduct, which reinforces the view that the mistake required for s 56 must be the plaintiff's mistake. If s 56 is read in the wide way for which the plaintiffs contend, then a claim for negligence (where the negligence can be characterised as a mistake made by the defendant) could be brought within s 56. As Hillebrand demonstrates, s 56 is not available in that context.

[35]

Other Issues 42 In the light of my conclusion that the plaintiffs' claim is statute-barred, I strictly do not need to consider the other issues, but it is appropriate that I deal with them nevertheless. 43 There is ample authority for the proposition that a contract for the sale of land gives to the purchaser an equitable interest: Galvasteel Pty Ltd v Monterey Building Pty Ltd (1974) 4 FCR 335. Mr Sirtes submitted that the reason why this is so is because, subject to the payment of the purchase price, the Court will order specific performance of the contract of sale, which would result in the property vesting in the purchaser: Howard v Miller [1915] AC 318 at 326; and see Central Trust and Safe Deposit Company v Snider [1916] 1 AC 266 at 272; Brown v Heffer (1967) 116 CLR 344 at 349; see also S Lindsay, Caveats Against Dealings in Australia and New Zealand (1995), The Federation Press, Sydney at 104. 44 Mr Sirtes argued that in the absence of fulfilment of the precondition to which the transfer of land was subject in this case, the plaintiffs would not be entitled to a decree of specific performance. It followed, he submitted, that until the plaintiffs had obtained approval of a subdivision without the public access qualification, they did not have an equitable interest in land and did not have a caveatable interest, and hence had suffered no loss by reason of the removal of the caveat. Ms Richards responded by asserting that a Court of Equity would act against a party, in this case the Bonds, who attempted to sell to a third party without seeking from the purchaser an acknowledgement of the interest of the plaintiffs. Ms Richards also drew attention to clause 7 of the Deed and relied on Troncone v Aliperti (1994) 6 BPR 13,291 as authority for the proposition that the agreement by a vendor to the lodgement of a caveat carries with it, by implication, an estate or interest in land sufficient to support it: see Troncone at 13,292-13,296 per Mahoney JA, with whom Priestley JA and Meagher JA concurred. 45 Mr Sirtes submitted that mere agreement to the lodging of a caveat could not give rise to a caveatable interest, but I do not think that this is consistent with Troncone. Further, the proposition that an equitable interest can only exist if specific performance in the strict sense is available is not consistent with the approached preferred by Mason and Deane JJ in Legione v Hateley (1983) 152 CLR 406 at 446; see also Stern v Macarthur (1988) 165 CLR 489 at 522 and the detailed discussion of this issue in relation to conditional contracts in Lindsay at 104-10, which I am not persuaded may now be out of date. I do not accept that a contract in which performance by the promisor is subject to a contingency (as here) is equivalent to a contract by which an option is granted, so I do not think that cases such as Samah Zaraah Pty Ltd v 888 Projects Pty Ltd [2007] NSWSC 1041, to which Mr Sirtes referred, are relevant here. I proceed upon the basis that the plaintiffs did have a caveatable interest. 46 Accepting that the caveat was validly lodged and that had the caveat not been removed the plaintiffs, if given notice of the sale to the Hills, would have been able to approach the Court for relief, there are the following obstacles in the plaintiffs' path: (1) The plaintiffs would have needed to persuade the Court that the Bonds were required to extract an acknowledgement from the Hills of the plaintiffs' right to call for transfer of the land should the contingent event occur. In this context, I note that the Deed did not contain any promise to that effect. This leads to the question of whether or not, on its true construction, the Deed required the Bonds to transfer the land only if the subdivision was approved whilst they owned the land. Ms Richards was unable to point to any authority in which an order of the kind necessary to maintain the caveat as against the Hills was made. (2) The difficulty to which I have referred in respect of the sale by the Bonds to the Hills is compounded in relation to the sale by the Hills to the Byrnes. Had the caveat remained in place, I think it is most unlikely that the Court would impose any requirement on the Hills to obtain the agreement of the Byrnes to a caveat. Not only is there the privity problem, but the Hills would have received no benefit from the plaintiffs in respect of the land that would have made it unconscionable for them to sell the land without the burden of the agreement made by their predecessors in title. In addition, it would have been observed that the plaintiffs had made no attempt to obtain a subdivision and had no prospect of obtaining a subdivision that did not contain the public access requirement at that time. The plaintiffs not only could not have obtained specific performance against the Hills, they could not have established that there was some imminent prospect of the contingent event being met. (4) In effect, the plaintiffs' submissions asserted that they could maintain indefinitely as against every purchaser along the chain the same rights that they had against the Bonds and without any attempt by them to obtain a subdivision or even to inquire if the Council's policy had altered. Even on their own case, they did not do this until 2005, after they were told by a neighbour of her understanding that the Council's policy had changed (no timing is specified, but it is implicit that, on her understanding, the change was a recent one). (5) The plaintiffs relied on a letter from the Council dated 20 February 2008. That letter responded to a letter from the plaintiffs' solicitors to the Council dated 7 February 2008, in which the solicitors said: "My above clients own 63 Banyandah Road Hyland Park being Identifier 3/19579 and an issue has arisen relating to the neighbouring property, FI 28/612246 which lies between my clients' property and Deep Creek. I understand that for many years there was a Council policy that land adjacent to Deep Creek would be dedicated for a public right of way, but that that policy changed some years ago and is no longer in force. I should be most grateful if you would confirm the date when that policy changed and refer me to Council's decision in that respect." The Council responded: "Reference is made to your request for Council to confirm its position on the requirement for land to be dedicated as a public right-of-way, in relation to Lot 28 DP 612246. A search of Council's records does not reveal the existence of any formal right-of way benefiting your client's property, and it does not appear that Council has a policy that identifies land adjacent to Deep Creek to be dedicated for a public right-of-way. Please be advised however, that Council generally favours the public control of foreshores areas [sic] as a means of ensuring that coastal development is sensitive to environmental constraints and does not impede on public access to the coastal foreshore. For more site specific information, a search of the LPI records may be useful. For your information the following notations are listed on DP 612246: (A) Covenant H572800 (B) Benefited by right of carriageway H57280 ."

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47 I make three observations about that correspondence: (1) The plaintiffs' solicitors referred to a policy that the land adjacent to Deep Creek would be dedicated for a public right of way. The Council's response was that it did not appear that the land was dedicated for a public right of way, nor did it have a policy that identified land adjacent to Deep Creek to be dedicated for a public right of way. Those are different questions to the question of whether the Council still had a policy that if a subdivision was sought, a public right of way would be required. The solicitors' letter to the Council did not enclose a copy of the Council's approval of the plan of subdivision in 1984, which did address this issue. (2) The solicitors' letter did not seek any indication of whether approval would be given to a plan of subdivision without the public access requirement. (3) The Council's statement that it "generally favours the public control of foreshores areas [sic] as a means of ensuring that coastal development is sensitive to environment constraints and does not impede on public access to the coastal foreshore" points to the significant prospect that as a condition of approval of a plan of subdivision, the Council would require such a public right of access. 48 It seems an odd proposition that a change in council policy almost twenty years after the removal of the caveat from the Register in 1986 should govern whether the plaintiffs suffered loss by reason of the caveat's removal. Even in 2005, when the plaintiffs sought the transfer of the land from the Byrnes, they did not have approval from the Council for a plan of subdivision without the public access requirement. Even if it were appropriate to consider the position as at 2005 or later, in my view, the correspondence does not establish on the balance of probabilities that a subdivision without the public access requirement would be approved even now. I do not think that the Byrnes would have been required to transfer the land to the plaintiffs even if the caveat had still been in place in 2005.

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