Teresa Nadia Pedulla v Fernando Rene Panetta & Ors

Supreme Court of NSW|2011-12-09|Before: Pembroke J

Introduction 1In these proceedings I gave judgment on 25 November 2011 in favour of the plaintiff. The primary claim which I determined was a claim by her for an award of compensation pursuant to Section 129 of the Real Property Act, 1900 . Section 129 entitles a person who suffers loss or damage as a result of the operation of the Act to compensation from the Torrens Assurance Fund where the loss or damage arises from specified circumstances. Those circumstances generally involve acts, errors or omissions by the Registrar-General or fraud by a third party. 2The amount of compensation that may be awarded is limited and defined by Section 129A. A question has now arisen as to the proper construction of Section 129A. The context is the amount, if any, to which the plaintiff is entitled for "legal, valuation or other professional costs reasonably incurred". Section 129A states that the total compensation payable under this Part: is limited to the market value of the land at the date on which compensation is awarded to that person, plus any legal valuation or other professional costs reasonably incurred by the person in making the claim.

Professional Costs 3The plaintiff has proved the professional costs incurred by her in making the claim. The amount is $329,140.37 up to 6 December 2011. She has put forward an affidavit of Ms Santangelo sworn 7 December 2011 which contains a detailed breakdown of all of the items that go to make up the sum of $329,140.37. I have had the opportunity of carefully reviewing that affidavit and all of the annexures to it, including all of the invoices which make up the total sum. 4There has been no cross examination of Ms Santangelo. There has been no submission that any amount set out in her affidavit was unreasonably incurred or that any work covered by the invoices was unnecessary or unreasonable. And the Registrar-General has refrained from taking up the offer of the plaintiff's legal representatives to identify any component of the costs incurred by the plaintiff which the Registrar General considers to be unreasonable or inappropriate. 5The Registrar-General has instead adopted a different approach. He contends that, on its proper construction, Section 129A does not entitle a successful claimant to the costs of making the claim as part of the award of compensation. His submission is that Section 129A "does not empower this Court to award costs in favour of the plaintiff". Rather, he says, that the claimant should recover those costs as costs of proceedings in the ordinary way. 6The Registrar-General contends that there should be an assessment before any determination should be made of the amount of costs for which the Registrar-General is liable. He also says that to do otherwise would give a successful claimant an indemnity for all costs incurred in making a claim against the fund, except those that are not reasonably incurred.

Proper Construction - Section 129A 7I am not able to accept the Registrar-General's submission. In my view, on the proper construction of Section 129A, and having regard to what I consider to be its policy objectives, it both defines and limits the components that comprise an award of compensation. The components are twofold - market value of land and professional costs. 8In my view, Section 129A is intended to provide a successful claimant with an indemnity for the professional costs incurred in making the claim other than those costs that are not reasonably incurred. Those professional costs form part of the award of compensation to which a successful claimant is entitled from the Torrens Assurance Fund. 9That is the natural and ordinary meaning of the language and syntax of Section 129A. To construe it as the Registrar-General contends would be to emasculate its language and to ignore its terms. It is difficult to see what useful purpose would be served by the concluding words of Section 129A if a successful claimant in court proceedings for an award of compensation pursuant to Section 129 were only entitled to recover his or her professional costs as costs of the proceedings in accordance with Section 98 of the Civil Procedure Act, 2005 and the Uniform Civil Procedure Rules, 2005 . If that were the case, the concluding words of Section 129A would be surplusage. 10There is, I think, no direct parallel between the policy and object behind Section 129A, insofar as it provides for the inclusion of professional costs in the award of compensation, and the process by which costs are awarded and assessed in ordinary proceedings in the court. And there are sound policy reasons why the former should be treated differently, perhaps even more generously. The object of the scheme for an award of compensation from the Torrens Assurance Fund is to compensate an entirely innocent person for the loss of their property, in circumstances where that loss has been caused by the fraud of another person or by some act, error or omission of the Registrar-General. The clear legislative intention appears to me to be that a person in that position should not be left out of pocket - except to the extent that costs have been unreasonably incurred. 11I should add that I see no particular difficulty in the meaning and application of the phrase "legal valuation or other professional costs reasonably incurred". It reflects similar language to that used in the Rules dealing with an award of indemnity costs: Rule 42.5(b). The claimant must of course prove as a fact that the professional costs were reasonably incurred. She has done so in this case. 12Given that there is no evidence and no submission as to any unreasonableness in the costs incurred by the plaintiff, and having regard to my own review of the evidence of the professional costs incurred by her, I see no reason not to award the full amount claimed as part of the compensation to which she is entitled from the Torrens Assurance Fund. 13In any event, even if the Registrar General's analysis were correct, I would have been inclined to make an order pursuant to Section 98(4)(c) of the Civil Procedure Act in the amount which has been claimed by the plaintiff. I explained in Ireland v Retallack (No 2) 2011 NSWSC 1096 at [38] - [44] the reasons why, in my view, the exercise of the power to award lump sum costs pursuant to Section 98(4)(c) can sometimes be a valuable adjunct in the administration of justice. I need not in fact do so in this case having regard to my view as to the proper construction of Section 129A. But it is an alternative route by which, subject to hearing further from the parties, I might well have been prepared to arrive at the same result.

Remaining Discretionary Costs Issues 14The remaining costs issues can be shortly dealt with. They are entirely discretionary. Notwithstanding the award of compensation that I propose to make, it is still appropriate that there be an order that the defendants pay the plaintiff's costs. There is unlikely to be much in the way of costs incurred by the plaintiff that is not covered by the award of compensation. However those costs, as assessed or agreed, should be paid by all of the defendants and the plaintiff can elect to recover from any one of them. 15As between Mr Yee (fourth defendant) and the Registrar-General (third defendant), it is appropriate that the Registrar-General be entitled to recover, pursuant to his right of statutory subrogation, an amount that reflects the proportionate responsibility of Mr Yee. It is also appropriate that Mr Yee pay the Registrar-General's costs of the cross-claim against him. 16I should observe that, at a practical factual level, the majority of the hearing time was taken up with the evidence of Mr Yee whose conduct was in many respects indefensible. Therefore I think it is appropriate in the exercise of my discretion that the orders be as I have proposed. I do not propose to limit the costs liability of Mr Yee any further than I have already explained.

Orders 17For those reasons I will make the further orders in the form of paragraph 5(b), 7(b) and 9 of the Short Minutes as amended by me.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 December 2011

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