Thomas v Registrar-General of New South Wales [2019] NSWCA 198 | Case summary

Court of Appeal (NSW)|2019-08-02|Before: Bell P, Leeming JA, Darke J

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Headnote [This headnote is not to be read as part of the judgment] The appellant purchased a property (the East Hills Property) subject to a mortgage. The appellant entered into an agreement with Messrs Sengoz and Masri by which she agreed to refinance the East Hills Property for the purposes of investing with Messrs Sengoz and Masri, and by which Messrs Sengoz and Masri agreed to provide security for the amount loaned by way of a registered second mortgage, or an unregistered second mortgage to be secured by way of caveat, over a property (the Terrigal Property). The appellant retained a solicitor to act for her on the transaction. The transaction settled and, while the loan amount was paid to Messrs Sengoz and Masri, no mortgage in favour of the appellant was ever registered on the title to the Terrigal Property. The appellant lodged a caveat against the title to the Terrigal Property claiming an unspecified interest based on an agreement with Messrs Sengoz and Masri. The appellant consented to the variation of the registered mortgage held over the Terrigal Property, and, later, agreed to withdraw the caveat to allow for a refinancing of the borrowings over the Terrigal Property. On that occasion, the appellant received a repayment of some of the principal. The new lender lodged a caveat over the title to the Terrigal Property claiming an interest under an equitable mortgage. The appellant then lodged a new caveat again claiming an unspecified interest arising by virtue of the original agreement with Messrs Sengoz and Masri. The Terrigal Property became the subject of a three lot strata plan such that the caveat affected each of the three lots. Following the fraudulent lodging of a withdrawal of caveat form, the appellant's caveat (along with the new lender's caveat) was withdrawn from the title to one lot. This allowed for the registration of a transfer of the fee simple in respect of that lot to a new registered proprietor (and the discharge of the mortgage over that lot). The appellant's caveat remained against the titles to the other lots, but she ultimately agreed to its withdrawal from those titles. The appellant defaulted under the mortgage on the East Hills Property. An order of possession was obtained and the East Hills Property sold leaving an amount outstanding on the mortgage. Messrs Sengoz and Masri each became bankrupt shortly after the sale of the East Hills Property. The appellant commenced proceedings against the solicitor who acted for her in the transaction with Messrs Sengoz and Masri alleging negligence and breach of fiduciary duties, in substance for his failing to attain for her a registrable second mortgage. An amount was paid to the appellant by the solicitor pursuant to a deed of settlement. The appellant also brought a claim seeking compensation from the Torrens Assurance Fund pursuant to s 129(1) of the Real Property Act 1900 (NSW). The appellant claimed loss on the basis that, because she had been deprived of her interest in the Terrigal Property, she lost the opportunity of benefitting from the increase in the value of the East Hills Property after it was sold. The primary judge dismissed the claim on the basis that the appellant had not established that any loss suffered in relation to the sale of the East Hills Property was causally related to the fraudulent withdrawal of the caveat over the Terrigal Property. The appellant appealed to the Court of Appeal. The Court held (Bell P, Leeming JA and Emmett AJA), dismissing the appeal: 1. The appellant's claim depended upon, and was wholly deficient in, establishing that her equitable interest as unregistered second mortgagee over the Terrigal Property had some value: [45]-[49] (Bell P); [53] (Leeming JA); [59] (Emmett AJA). 2. Whether or not the appellant's equitable interest had value depended upon the value of the Terrigal Property at the time of the fraudulent withdrawal of the caveat and the level of the indebtedness to the prior ranking mortgagee: [45] (Bell P); [53] (Leeming JA); [59] (Emmett AJA). 3. Even had the appellant been able to demonstrate that her equitable interest had some value, it would also have been necessary for her to demonstrate that she would have been able to extract repayment of some amounts owed to her by the mortgagors and that this amount would have meant that the East Hills Property would not have needed to be sold and that the consequential loss exceeded the amount recovered on the settlement of proceedings against her solicitor: [47] (Bell P); [53] (Leeming JA); [59] (Emmett AJA).

Judgment

BELL P: This is an appeal from a decision of Darke J in the Equity Division of the Supreme Court of New South Wales in which his Honour dismissed the statement of claim with costs: [2018] NSWSC 1517. In the proceedings below, compensation had been sought for alleged loss or damage to be paid from the Torrens Assurance Fund. That is a fund established pursuant to Pt 14 of the Real Property Act 1900 (NSW) (the Act).
The compensation claim was said in the Statement of Claim to be for: "[L]oss arising from the operation of the Real Property Act 1900 …, the conduct of the defendant [Registrar-General] and the act or acts or omission or omissions of the [Registrar-General] in the execution or performance of the Registrar General's functions or duties under the Act in relation to recording and withdrawal of caveat the caveat being reference AB303816J and the withdrawal of caveat being reference AB935164B".
The caveat to which reference was made in the Statement of Claim had been lodged by the Appellant and her now deceased partner in February 2005 in respect of their interest as unregistered second mortgagees over certain land at Terrigal (the Terrigal Property). The compensation sought to be recovered in the proceedings below, however, appeared to relate, at least principally, to alleged loss following a mortgagee sale of a property owned by the Appellant and her partner at East Hills (the East Hills Property).
The compensation order was sought pursuant to s 129(1) of the Act which is entitled 'Circumstances in which compensation payable', and which relevantly provides: "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 (including any such act or omission of the authorised operator), 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."
Section 129(2) provides that compensation is not payable in relation to any loss or damage suffered by any person in a number of circumstances including: "(a) to the extent to which the loss or damage is a consequence of any act or omission by that person, or (b) to the extent to which the loss or damage: (i) is a consequence of any fraudulent, wilful or negligent act or omission by any solicitor, licensed conveyancer, real estate agent or information broker, and (ii) is compensable under an indemnity given by a professional indemnity insurer, or (c) to the extent to which that person has failed to mitigate the loss or damage, or (d) to the extent to which the loss or damage has been offset by some other benefit to that person that has arisen from substantially the same circumstances as those from which the loss or damage has arisen …" .
An earlier application for compensation from the Torrens Assurance Fund pursuant to s 131 of the Act had been lodged on 11 November 2011 but was ultimately refused on 7 June 2016 with reasons on 28 June 2016. Section 131 provides for what are styled "administrative proceedings" for compensation. Section 132(2) of the Act provides that court proceedings may only be commenced if administrative proceedings have been commenced and determined in relation to the compensable loss or by leave of the court or with the consent of the Registrar-General.
It will also be noted that s 130(1) of the Act provides that, despite s 129(2), the Minister may: "[O]n the recommendation of the Registrar-General, direct that compensation is payable in any of the circumstances referred to in that subsection if, in all of the circumstances of the case, the Minister is satisfied that it would be just to do so". Section 130(2) provides that any direction for an ex gratia payment is in the absolute discretion of the Minister.
The background to the dispute, insofar as it emerged on the evidence before the primary judge, is largely not in issue and what follows is principally taken from the primary judgment.

Background facts

The Appellant and her then partner purchased the East Hills Property as joint tenants in 1991.
In 2003, the East Hills Property was subject to a mortgage in favour of the Bank of Western Australia with approximately $190,000 owing under that mortgage.
On 20 May 2003 the Appellant and her partner entered into an agreement with Abraham Sengoz and Sam Masri which was in the following terms: "Sheran [sic] Thomas [the Appellant] and George Pincham [her partner] have agreed to refinance their home at xx Enright Street Easthills [sic] NSW 2213 for the purpose of investing as private investors with Abraham Sengoz. Abraham Sengoz and Sam Masri have agreed to provide security for the monies being invested by way of registered second mortgages over residential real estate where the values of such real estate are Twenty Five percent higher that [sic] the registered mortgages. Properties being offered are xx Campbell Crescent Terrigal which is currently valued at $1,900,000 (one Million Nine Hundred Thousand Dollars) which has a First Mortgage of $1,120,000.00 (one Million One Hundred and Twenty Thousand dollars) Valuation done by Combined Valuers NSW. Amount agreed to be invested is $230,000.00 (Two Hundred and Thirty Thousand Dollars) as a registered second Mortgage. Abraham Sengoz and Sam Masri have agreed to provide an annual return of 20% (Twenty Percent) per annum on monies invested by Sharen Thomas and George Pincham to Abraham Sengoz and Sam Masri. Returns on investment will be paid monthly in advance commencing from the time above monies are invested. Term of investment is agreed to be Twelve Months of inception of principle amount loaned. Principle amount loaned can be paid in full by Sengoz and Masri prior to original term with Thirty day written notice."
In June 2003, the Appellant and her partner retained a solicitor, Mr Wehbe, to act for them on the transaction involving the proposed refinancing and investment. The transaction settled on 13 June 2003.
The Appellant and her partner borrowed a total of $500,000 from First Mortgage Company Home Loans Pty Ltd to be secured by first mortgage over the East Hills Property with the entire Bank of Western Australia mortgage being discharged using part of the proceeds of the new loan. A further $230,000 was paid to Messrs Sengoz and Masri as the investment amount as contemplated by the agreement referred to in [11] above. The remaining proceeds went towards costs or were otherwise applied at the direction of the Appellant and her partner.
The Appellant and her partner signed a deed on about 13 June 2003 that provided for the sum of $230,000 to be lent to Messrs Sengoz and Masri and for the sum to be secured by way of a registered second mortgage (cl 2) or unregistered second mortgage to be secured by way of caveat (cl 3) in relation to the Terrigal Property.
The Appellant and her partner also signed a form of mortgage over the Terrigal Property but the instrument was not signed by either Mr Sengoz or Mr Masri. In any event, no mortgage in favour of the Appellant and her partner was ever registered on the title to the Terrigal Property. However, on about 1 July 2003, the Appellant and her partner lodged a caveat (9745672P) against the title to the Terrigal Property, claiming an unspecified interest based on an agreement between them and Messrs Sengoz and Masri.
Later in 2003 the Appellant and her partner signed a revised version of the deed they (but not Messrs Sengoz and Masri) signed in June 2003. This revised version appears to have been signed by Messrs Sengoz and Masri.
Interpolating here, the primary judge found and indicated (at [56] of his reasons) that the Appellant accepted that she and her partner were reliant on the promised returns on their investment under the deed to service the loan that was secured over the East Hills Property.
In October 2003, the Appellant and her partner, as caveators, gave their consent to a variation of a mortgage held by Shakespeare Haney Securities Limited (Shakespeare) over the Terrigal Property, so that the amount secured under the mortgage was increased to $3.43 million, and the term of the mortgage extended to 15 August 2004. It may be noted that the agreement of 20 May 2003 referred to in [11] above asserted that the Terrigal Property has a value of $1.9 million as at that date.
In November 2004, the Appellant and her partner agreed to withdraw their caveat so as to allow a refinance of the borrowings over the Terrigal Property. The proposed refinance was to be with the National Australia Bank. As part of the transaction which followed, the Appellant and her partner received a repayment of $30,000 of the amount they had invested, leaving a balance of $200,000. The primary judge recorded that it appeared that Messrs Sengoz and Masri may have taken the opportunity to grant a second mortgage in favour of PDB Cap Pty Ltd (PDB), rather than refinance with the National Australia Bank. PDB lodged a caveat over the title to the Terrigal Property claiming an interest under an equitable mortgage dated 22 November 2004.
The Appellant and her partner lodged their own caveat (AB303816) on about 23 February 2005. The interest claimed in the caveat was again unspecified, but was stated to arise by virtue of an agreement between the caveators and Messrs Sengoz and Masri dated 13 June 2003.
At the trial, the Appellant gave evidence that she and her partner "were still having hassles" with payments from Messrs Sengoz and Masri and that these hassles had been going on for six months or more. She further deposed that after a period of "dribs and drabs", the payments "just stopped". This appears to have been in about May 2006.
In August 2005, the Terrigal Property became the subject of a three lot strata plan, namely SP 75435, such that caveat AB303816 affected the three lots in the Strata Plan.
In November 2005, following the lodgement of a Withdrawal of Caveat form which apparently contained the signatures of the caveators, caveat AB303816 was withdrawn from the title to Lot 1 in SP 75435. The Appellant, however, gave evidence, undisputed by the Registrar-General, that the signatures were not placed upon the form by the Appellant or her partner. The Appellant contended, and the primary judge accepted, that the lodgement of the form was a fraudulent act. This conclusion was supported by evidence from a forensic document examiner to the effect that the signatures on the Withdrawal of Caveat form were forgeries.
The fraudulently obtained Withdrawal of Caveat AB303816, and a withdrawal of the caveat that had been lodged by PDB, allowed the registration of a transfer of the fee simple in respect of Lot 1 in SP 75435 to a new registered proprietor, Heidelberg Investments Pty Ltd (Heidelberg). The transfer to Heidelberg appears to have been for a consideration of $1.43 million. The mortgage held by Shakespeare was discharged from Lot 1 in SP 75435 at the same time.
Caveat AB303816 remained against the titles to Lots 2 and 3 in SP 75435. In July 2006, however, the Appellant and her partner agreed to the withdrawal of the caveat from those titles which facilitated the eventual completion of contracts for the sale of those lots in July 2007. Lot 2 appears to have been transferred to Mr Sengoz for $550,000, and Lot 3 to Mr Sengoz for $650,000. The primary judge noted that it appeared that, following these transactions, Lots 2 and 3 became subject to a mortgage in favour of the National Australia Bank to secure an amount of $2.72 million.
The primary judge referred to evidence that the Appellant and her partner had gone into default under the mortgage over the East Hills Property by September 2006 and that it appeared from a default notice issued at that time that the amount of the loan had been increased to $540,000, and that an amount of about $551,000 was owing. A series of default notices followed and, in 2007, the mortgagee of the East Hills Property commenced proceedings for possession. An order for possession had been obtained by the end of that year. However, it appears that, by agreement with the mortgagee, the Appellant and her partner sold the East Hills Property in early 2008 for the sum of $510,000. Following the sale, an amount of almost $102,000 remained outstanding on the mortgage loan account.
In the meantime, both Mr Sengoz and Mr Masri had become bankrupt on 1 February 2008 and 12 October 2007, respectively.
The Appellant's partner died in May 2008.

Proceedings against Mr Wehbe

In 2009, the Appellant, in her own right and as the person entitled to her deceased partner's estate, commenced proceedings against Mr Wehbe, alleging that he had acted negligently and in breach of fiduciary duties in the course of acting on the refinance and investment transaction in 2003. The allegations made against Mr Wehbe included that he failed to attain: 1. a registrable second mortgage from Messrs Sengoz and Masri prior to settlement of the investment; and 2. the consent of the first mortgagee to the registration of a second mortgage in favour of the Appellant and her partner; and that the sum of $230,000 was paid to Messrs Sengoz and Masri without obtaining proper security.
It was alleged that, by reason of Mr Wehbe's breaches, the Appellant and her partner suffered loss and damage including: 1. loss of the outstanding principal sum of $200,000; 2. loss of interest thereon; 3. penalties and default interest incurred as a consequence of not receiving interest on the principal sum to enable the mortgage over the East Hills Property to be serviced; and 4. consequential loss arising from default under the loan secured over the East Hills Property, resulting in the forced sale of the East Hills Property at a loss to the Appellant and her partner.
The proceedings were defended by Mr Wehbe, with a Defence filed on 19 November 2009, and an Amended Defence on 6 February 2012.
In 2012, the Appellant and Mr Wehbe entered into a Deed of Settlement and Release. The deed included the following provisions: "BACKGROUND A [Sharen] Thomas and George Pincham (Pincham) were the registered proprietors of the land at xx Enright Street, East Hills in New South Wales, Folio Identifier 82/35736 (East Hills Land). Pincham is now deceased. B In or about June 2003, Thomas and Pincham borrowed the sum of $500,000 from First Mortgage Home Loans Pty Ltd (FirstMac) secured by way of a first registered mortgage over the East Hills Land (FirstMac Loan). Part of the FirstMac Loan was to refinance an existing mortgage on the East Hills Land. C Thomas and Pincham on-lent $230,000 of the FirstMac Loan to Abraham Sengoz and Sam Masri (Sengoz and Masri) (Investment Loan). Sengoz and Masri agreed to pay Thomas and Pincham interest of 20% per annum on the Investment Loan. The Investment Loan provided for an unregistered second mortgage over a property owned by Sengoz and Masri situated at xx Campbell Crescent, Terrigal (Terrigal Land). D Thomas and Pincham retained Wehbe and his firm, Robert Wehbe & Partners, to act for them in relation to the FirstMac Loan and the Investment Loan. E Sengoz and Masri subsequently defaulted on the Investment Loan and failed to repay $200,000 of the principal sum of $230,000 and/or all interest due. F Thomas issued proceedings against Wehbe in the Supreme Court of NSW, Proceedings No 2009/297596, alleging that Wehbe breached his duty of care to Thomas and Pincham and/or his retainer in the course of acting for her in relation to the FirstMac Loan and the Investment Loan (Proceedings). G Thomas alleges that she has suffered loss and damage as a result of Wehbe's alleged breaches of duty and/or retainer. H Wehbe denies the allegations made. I The parties have agreed to resolve the Proceedings without admission of liability by either party on the terms set out in this document. OPERATIVE PROVISIONS … 3.1 The parties have agreed without admission of liability to resolve the Proceedings on the basis that Wehbe pay Thomas the sum of $450,000 inclusive of Thomas' costs of the Proceedings and all other out of pocket expenses including, for the avoid [sic] of doubt, any amount that Wehbe is required to pay on behalf of Thomas to: 3.1.1 Medicare Australia pursuant to the Health and Other Services (Compensation) Act 1995 pursuant to a valid Notice of Past Benefits or Notice of Charge; and/or 3.1.2 Centrelink pursuant to a Notice of Charge/clearance from Centrelink. 3.2 Wehbe is authorised to deduct and/or pay from the settlement sum of $450,000 any moneys repayable in respect of the claim made by Thomas to any person or body whether in respect of workers compensation, Centrelink, sick leave payments, make up pay, accident pay or otherwise concerning which any demand or notice has been served or given to Wehbe or his solicitor or insurer either before, on or after the date of this document. … 3.4 Payment of the settlement sum of $450,000 stated in clause 3.1 less any amounts payable by Wehbe pursuant to clause 3.2 (the Settlement Amount) is to be made by electronic transfer to Thomas' solicitor, John Capsanis Solicitors and Barristers' Trust Account BSB 112879, account number 482170010. … 3.6 Upon the payment of the Settlement Amount, Thomas releases and discharges Wehbe from all claims, liabilities, costs and expenses whatsoever and howsoever arising out of the FirstMac Loan, the East Hills Land, the Terrigal Land, the Investment Loan, the Proceedings, the subject matter of the Proceedings and/or the matters recited above. … 5.1 This document may be raised or pleaded as a complete defence to the continuance of the Proceedings or any claims, proceedings or cross claims which may be filed now or in the future in respect of FirstMac Loan, the Investment Loan, the East Hills Land, the Terrigal Land, the Proceedings, the subject matter of the Proceedings and/or the matters recited above, provided however, Thomas may commence proceedings to recover any payment which Wehbe has defaulted in payment of pursuant to this [sic] terms of this document."
The sum of $450,000 was paid to the Appellant in accordance with the Deed. The Appellant accepted that the receipt of this settlement sum would need to be brought into account in relation to her claim for compensation from the Torrens Assurance Fund.

The primary judgment

The primary judge accepted the following propositions: 1. the Appellant and her partner acquired an interest in the Terrigal Property as equitable mortgagees arising from an enforceable agreement to grant a mortgage over the property; 2. this instrument was sufficient to form the basis of a caveat over the title in the Terrigal Property (and later over the title to the three lots in SP75435); 3. as a result of the Withdrawal of Caveat AB303816 in respect of Lot 1 in SP 75435, and the registration of the transfer of that lot to Heidelberg which obtained the benefit of indefeasibility of title under the Act, the plaintiff and her partner lost their interest in Lot 1 in SP 75435; 4. the Appellant would not have agreed to the withdrawal of the caveat "without receiving our money"; and 5. had the caveat not been withdrawn, the Appellant and her partner would have been in a position to negotiate with Messrs Sengoz and Masri if they had wished to pursue a dealing which was hindered by the caveat.
His Honour then held: "In my opinion, loss or damage sustained as a result of those dealings constitutes loss or damage suffered as a result of the operation of the Act in respect of Lot 1 in SP 75435. Moreover, such loss or damage could be regarded as arising from: (1) acts or omissions of the Registrar-General in the exercise or performance of his functions or duties under the Act, within the meaning of s 129(1)(a); or (2) the plaintiff and her partner being deprived of an estate or interest in Lot 1 in SP 75435, within the meaning of s 129(1)(e), and is thus capable of falling within s 129(1) of the Act."
His Honour's use of the phrase "capable of falling within s 129(1) of the Act" at the end of [49] of his reasons is significant because it makes plain that the loss of an equitable proprietary interest in Lot 1 in SP75435 arising from either of the two circumstances referred to in s 129(1)(a) and (e) does not mean that loss or damage has in fact been suffered. That is something that still needs to be established as a matter of causation.
It was here that the Appellant's case failed at first instance. The theory of the case at first instance appeared to be that, had the fraud not occurred, the Appellant and her partner: 1. would have had leverage over Messrs Sengoz and Masri in respect of Lot 1; 2. could have extracted repayment of some or all of the $200,000 (and any interest amounts) that were owing at the time of the fraudulent withdrawal of caveat; 3. could have used this "equity" to manage their repayment obligations with respect to the East Hills Property; and 4. in consequence, the East Hills Property would not have been required to be sold.
The primary judge held, for reasons with which, it will be seen, I entirely agree, that the claim for loss, so formulated, required the Court to engage in impermissible speculation. I note that the speculation would have required a conclusion, for the Appellant to be entitled to compensation pursuant to s 129(1) of the Act, that the loss exceeded the $450,000 secured by way of settlement in the professional negligence proceedings against Mr Wehbe: s 129(2)
What the primary judge said in relation to the speculative nature of the Appellant's case was succinctly contained in [51], [53] and [54] of his reasons as follows: "Whilst it seems clear that the plaintiff and her partner lost their interest in Lot 1 in SP 75435, there is little evidence before the Court concerning the value of that interest. It is not known how much Messrs Sengoz and Masri owed to Shakespeare Haney Securities Pty Ltd, which held a registered mortgage over each of the three lots in the strata plan. It is not known how much each of the lots was then worth, although it could be inferred that Lot 1 had a value in the vicinity of the $1.43 million apparently paid by Heidelberg Investments Pty Ltd. That is, it is not known whether there was any 'equity' available which could have been applied towards a repayment of the amount outstanding to the plaintiff and her partner. … Whether the plaintiff and her partner would have been able to extract a repayment from Messrs Sengoz and Masri, had the caveat remained on the title, is really a matter of speculation. It may well have been the case that they were powerless to stop a sale of Lot 1 in SP 75435 which involved the payment of all of the proceeds of sale to the registered mortgagee. It is not possible, on the evidence before the Court, to undertake a rational assessment of the value of the lost interest in Lot 1 in SP 75435, or the likelihood of receipt of a payment (or the likely amount of a payment) had the caveat remained in operation."
The primary judge also held that the Appellant had not established that, had the value (whatever it was) of the equitable interest in the Terrigal Property (or some part thereof) been able to have been extracted from Messrs Sengoz and Masri in a renegotiation, that would have been adequate to service the debt on the East Hills Property or to have obviated the need for its sale.
Moreover, as the primary judge observed at [59], there was no satisfactory evidence the East Hills Property was in fact sold for less than its true value, and no submission contrary to this was pointed to on appeal.
For these reasons, the primary judge dismissed the Statement of Claim and was relieved of the need to deal with the Registrar-General's contention, repeated on appeal, that the claimed loss of or with respect to the East Hills Property was not recoverable under s 129(1) of the Act because it concerned land that was different from the land the subject of the relevant dealings.

The appeal

The Appellant advanced submissions which emphasised that the mere difficulty in calculating loss or quantifying damage does not relieve a court from its obligation to do so, and that, in certain circumstances, precision will not be possible and broad estimation may be necessary and sufficient: see, for example, Searle v Commonwealth of Australia [2019] NSWCA 127 at [203]-[204].
So much may be accepted but there are limits to those principles and they do not avail the Appellant in the present case. The evidentiary deficits in her case were such that, as the primary judge held, there was no basis for even launching upon such an estimation.
Counsel for the Appellant who came late into the matter and did not appear in the proceedings below was constrained to concede that: 1. the Appellant's claim depended, as a first step, on being able to establish that her equitable interest as unregistered second mortgagee over the Terrigal Property had some value; 2. whether or not it did depended on the value of the Terrigal Property at the time of the fraudulent withdrawal of caveat, and the level of indebtedness to the prior ranking mortgagee; and 3. there was no evidence before the Court as to either.
In my opinion, this was fatal and the primary judge was not only justified but correct in rejecting the Appellant's claim.
It should be added that, even if the Appellant had been able to demonstrate that her equitable interest in the Terrigal Property had some economic value, it would also have been necessary to demonstrate that she and her partner would have been able to extract repayment of some or all (and if any, how much) of their loan and any amounts owed to them by Messrs Sengoz and Masri and that this amount would have meant that the East Hills Property would not have needed to be sold and that the consequential loss exceeded the amount recovered on the settlement of proceedings against Mr Wehbe.
The primary judge held, and I agree with him, that none of this had been demonstrated. The material before his Honour was scant, and an invitation to counsel for the Appellant on the hearing of the appeal did not yield any further elucidation. It was not put that the primary judge had overlooked any evidence. Indeed, it emerged that the Appellant had not ever sought to calculate, or present an estimation of her loss in even rough and ready form to the primary judge. Nor was that done in the submissions made on appeal.
At one point in oral submissions, it was put that the primary judge should have at least awarded nominal damages but not necessarily in the sum of $1.00. It appeared, as best could be discerned, that it was here being put that because the Appellant had lost her interest in the Terrigal Property, she must have suffered some monetary loss and this should be compensated by virtue of the loss of the equitable interest alone. But, it may be asked, in what amount? It may equally be asked why should such compensation be ordered, if it were the case that the equitable interest had no economic value because there was insufficient value in the Terrigal Property after priority creditors had been paid out? Such a contention may, conceivably, underpin an ex gratia direction for compensation from the Fund in the Minister's unfettered discretion pursuant to s 130 of the Act (see [7] above) but a Court cannot award compensation on the basis of speculation.
Counsel for the Appellant also submitted that the Court should remit the matter to the primary judge for assessment of damages. But there was no order for a separate trial, and it was not put that the primary judge had wrongly refused to separate liability and damages. A trial is not a dress rehearsal or preliminary skirmish. Subject to extraordinary exceptions, it is once and for all. That includes the assessment of damages unless there has been an order for their separate assessment: Dr Shanahan v Jatese Pty Ltd [2019] NSWCA 113 at [140].

Notice of contention

In light of the conclusions to which I have come, it is not necessary to deal with the Respondent's Notice of Contention (see [42] above).

Conclusion

The appeal should be dismissed with costs.
LEEMING JA: I agree with Bell P.
EMMETT AJA: The question in this appeal is whether the appellant, Ms Sharen Thomas, is entitled to compensation under the Torrens Assurance Fund (the Fund) pursuant to s 129 of the Real Property Act 1900 (NSW) (the Real Property Act). Section 129(1) relevantly provides that a person who suffers loss or damage as a result of the operation of the Real Property Act in respect of any land is entitled to payment of compensation from the Fund if the loss or damage arises from that person being deprived of the land, or of any estate or interest in the land, as a consequence of fraud. [1]
Ms Thomas and her late partner, Mr George Pincham, whom she succeeded upon his death, were the registered proprietors of a property situated at East Hills (the East Hills Property). They borrowed monies on the security of a mortgage of the East Hills Property to invest in the development of a property situated at Terrigal (the Terrigal Property). They intended to service the interest on their borrowing with the income from their investment.
The investment in the Terrigal Property was secured by an unregistered second mortgage. In addition, Ms Thomas and Mr Pincham lodged a caveat in respect of the Terrigal Property. However, the caveat was removed as a result of fraud on the part of the registered proprietor of the Terrigal property and, as a consequence, Ms Thomas and Mr Pincham were deprived of their interest, as equitable mortgagees, in the Terrigal Property.
Subsequently, Ms Thomas and Mr Pincham defaulted under the terms of the loan secured by the mortgage of the East Hills Property and, as a consequence, it was necessary for them to sell the East Hills Property in order to repay the loan that they had borrowed to invest in the Terrigal Property. Ms Thomas made a claim on the Fund on the basis that, because she and Mr Pincham had been deprived of their interest in the Terrigal Property, they lost the opportunity of benefitting from the increase in the value of the East Hills Property after it was sold.
When the claim on the Fund was declined, Ms Thomas commenced proceedings in the Equity Division against the respondent, the Registrar-General of NSW. A judge of the Equity Division concluded that there was no entitlement to compensation from the Fund and dismissed the proceedings brought by Ms Thomas with costs. Ms Thomas then appealed to this Court.
In the course of argument, counsel for Ms Thomas, accepted that there was no evidence before the primary judge as to the value of the interest of Ms Thomas and Mr Pincham in the Terrigal Property of which they had been deprived. In those circumstances, there was no evidence before the primary judge that Ms Thomas and Mr Pincham suffered any loss as a consequence of the loss of their interest in the Terrigal Property. I have had the advantage of reading in draft form the proposed reasons of the President. I agree with his Honour, for the reasons proposed, that the appeal should be dismissed with costs.

Endnote

Real Property Act 1900 (NSW) s 129(1)(e). 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: 14 August 2019

Real Property Act 1900(NSW)s 129(1)(e).

Thomas v Registrar-General of New South Wales

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