Aliraja v Susan Dukes, Commissioner of Titles
[2025] WASCA 103
•4 JULY 2025
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: ALIRAJA -v- SUSAN DUKES, COMMISSIONER OF TITLES [2025] WASCA 103
CORAM: QUINLAN CJ
VAUGHAN JA
SOLOMON J
HEARD: 22 MAY 2024
DELIVERED : 4 JULY 2025
FILE NO: CACV 77 of 2023
BETWEEN: MYRIAM MICHELLE PAULETTE ALIRAJA
Appellant
AND
SUSAN DUKES, COMMISSIONER OF TITLES
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: WHITBY J
Citation: ALIRAJA -v- SUSAN DUKES, COMMISSIONER OF TITLES [2023] WASC 225
File Number : CIV 1242 of 2023
Catchwords:
Administrative law – Judicial review – Commissioner of Titles' refusal of compensation pursuant to s 196(1) and s 201 of the Transfer of Land Act (1893) (WA) – Whether applicant's loss was 'occasioned by' breach of trust – Statutory construction – Proper construction of s 196(1) of the Transfer of Land Act (1893) (WA) – Indefeasibility of title – Torrens system – Whether State liability exempted where express or constructive trust exists – Meaning of words 'occasioned by' fraud
Legislation:
Bankruptcy Act 1966 (Cth)
Real Property Act (1900) (NSW)
Real Property Amendment (Compensation) Act 2000 (NSW)
Transfer of Land Act (1893) (WA)
Result:
Appeal allowed
Category: A
Representation:
Counsel:
| Appellant | : | T E Pontre |
| Respondent | : | J Shaw with S Walsh |
Solicitors:
| Appellant | : | Fortuna Legal |
| Respondent | : | State Solicitor's Office |
Cases referred to in decision:
Aldi Foods Pty Ltd v Shop, Distributive & Allied Employees Association [2017] HCA 53; (2017) 262 CLR 593
Aliraja v Susan Dukes, Commissioner of Titles [2023] WASC 225
Ausbao (286 Sussex Street) Pty Ltd v Registrar General NSW [2023] NSWCA 18
Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378
Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 59 NSWLR 452
Chief Executive Officer of Customs v Adelaide Brighton Cement Ltd [2004] FCAFC 183; (2004) 139 FCR 147
Commissioner of State Revenue v Oz Minerals Ltd [2013] WASCA 239
Eastern Suburbs Leagues Club v Royal & Sun Alliance Insurance [2003] QSC 413
Environment Agency v Empress Car Co [1999] 2 AC 22; [1998] All ER 481
Farah Constructions v Say-Dee [2007] HCA 22; 230 CLR 89
Goliath Portland Cement Co Ltd v Chief Executive Officer of Customs [2000] FCA 1164; (2000) 101 FCR 11
Harman Nominees Pty Ltd v Leighton Shores Pty Ltd [2012] WASCA 189
Lacey v Attorney-General (Qld) (2011) 242 CLR 573
Lincu v Registrar-General [2019] NSWSC 568
Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133
March v Stramare (E & MH) Pty Ltd [1991] HCA 12; (1991) 171 CLR 506
Mercantile Mutual Insurance (Aust) Ltd v Rowprint Services (Victoria) Pty Ltd [1998] VSCA 147
Moneywood v Salmon Nominees [2001] HCA 2; 202 CLR 351
Parker v Registrar General [1976] 1 NSWLR 342
Parker v Registrar-General [1977] 1 NSWLR 22
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355
Re Real Estate and Business Agents Supervisory Board; ex parte Cohen (1999) 21 WAR 158
Re Real Estate and Business Agents Supervisory Board; Ex parte Cohen (1999) 21 WAR 158
Robb Evans v European Bank Ltd [2004] NSWCA 82; 61 NSWLR 75
Stevens v Motor Vehicle Insurance Trust [1978] WAR 232
Summit Rural (WA) Pty Ltd v Lenane Holdings Pty Ltd [2024] WASCA 122
Sze Tu v Lowe [2014] NSWCA 462; 89 NSWLR 317
Thiess v Collector of Customs [2014] HCA 12; (2014) 250 CLR 664
Wallace v Kam [2013] HCA 19; (2013) 250 CLR 375
Table of Contents
QUINLAN CJ:
Introduction
Some factual background and relevant assumptions
Statutory provisions
Principles of statutory construction
'Occasioned by'
Causation in the law
Legislative purpose and context of s 196 and s 201 of the Act
'Occasioned by' in light of its statutory purpose
Application to the present case
Conclusion
VAUGHAN JA:
SOLOMON J:
Introduction
Legislative framework
Decision of the primary judge
Grounds of appeal
Primary ground
Textual argument
Support from Parker decision
Alternative ground
Further alternative ground
Consideration of primary ground
Consideration of alternative ground
Consideration of further alternative ground
Conclusion
QUINLAN CJ:
Introduction
This appeal raises a difficult issue of statutory construction concerning the interaction between two provisions of the Transfer of Land Act1893 (WA) (Act): s 196 and s 201.
In summary, s 201 of the Act provides that, in certain circumstances, a person may recover damages from the State where he or she is deprived of land in consequence of fraud. Section 196, by contrast, provides that the State shall not be liable for compensation 'occasioned by any breach by a registered proprietor of any trust'.
The appellant, Ms Aliraja, claims that she was deprived of land in Ballajura (Land) as a consequence of fraud perpetrated by a Mr Seedat, a convicted murderer and fraudster. Without determining whether the State would otherwise be liable under s 201 (or another provision of the Act), the Commissioner of Titles (Commissioner), refused to admit Ms Aliraja's claim on the basis that it was precluded by s 196 of the Act. The Commissioner's decision not to admit the claim was made pursuant to an administrative procedure provided for in s 208 of the Act. That administrative decision is amenable to judicial review.[1]
[1] Re Real Estate and Business Agents Supervisory Board; ex parte Cohen (1999) 21 WAR 158.
The issue raised by this appeal is whether the Commissioner erred in law in refusing to admit Ms Aliraja's claim. I have had the considerable advantage of reading, in draft, Solomon J's reasons for concluding that the Commissioner did so err. I agree with his Honour's reasons generally, and that the appeal should be allowed and Ms Aliraja's claim be remitted to the Commissioner to be determined according to law.
In light of Solomon J's comprehensive reasons as to the factual and legal background, I am able to explain my own reasons briefly.
Some factual background and relevant assumptions
At all material times, Ms Aliraja's father, Aboubakur Aliraja, was Ms Aliraja's attorney for the purposes of dealing with the Land. In April 2016, Mr Aliraja, pursuant to that power of attorney, transferred the Land to Mr Seedat, his friend and accountant, on the premise that Mr Seedat would borrow money using the Land as security in order to invest in shares on behalf of Mr Aliraja. The consideration for the transfer was stated as being 'Pursuant to an Agreement to Transfer and Declaration of Trust between the Transferor and Transferee dated 1 March 2016'.
In June 2016, Mr Seedat borrowed $305,875 (Loan). The Loan was secured by a mortgage against the Property in favour of Permanent Mortgages Pty Ltd (Mortgage). Mr Seedat did not use the Loan to invest in shares or any other assets for the benefit of Mr Aliraja. The Mortgage has not been repaid. Mr Sadeet is now bankrupt (and in prison), and Ms Aliraja has been unable to recover the Land, as it remains subject to the mortgage.
In refusing Ms Aliraja's claim, the Commissioner did not finally determine whether Ms Aliraja was deprived of the Land by fraud. In particular, there has been no final determination as to whether Mr Sadeet was guilty of fraud in relation to the initial transfer of the Land to him, or whether the fraud occurred after the transfer of the Land (for example, by the registration of the Mortgage or by the dissipation of the funds from the Loan otherwise than in accordance with the agreement between Mr Sadeet and Mr Aliraja).
That was because the Commissioner concluded that Ms Aliraja's claim was necessarily excluded by s 196 of the Act, regardless of the existence or nature of any fraud committed by Mr Sadeet, because Mr Sadeet was a trustee of the Land. It is clearly implicit in the Commissioner's decision that, regardless of the existence or nature of any fraud, Mr Sadeet had been in breach of trust in his dealing with the Land and that the compensation claimed by Ms Aliraja was 'occasioned by' such a breach.
In light of the factual background generally, in my view the Commissioner (and the learned primary judge) were correct to proceed upon the basis that, at the very least, Mr Sadeet was in breach of an express and/or constructive trust when he dissipated the funds from the Loan to the detriment of Ms Aliraja. To that extent, it may properly be said that, 'but for' a breach of trust, Ms Aliraja would not have been deprived of the Land.
At the same time, for the purpose of the appeal, it is appropriate to proceed upon the basis that it is at least arguable that Mr Sadeet was guilty of fraud in relation to the initial transfer of the Land to him and, indeed, that everything that he did relating to Mr Aliraja and the Land was part of an overarching fraud.
The legal issue is whether in those circumstances s 196 necessarily excludes a claim under s 201.
Statutory provisions
As set out in Solomon J's reasons, s 196 and s 201 of the Act form part of a broader suite of provisions in the Act relating to claims for compensation (including s 205 and s 208). Sections 196 and 201, however, are the central provisions for the purposes of the appeal.
Section 201 relevantly provides:
201. Compensation of person deprived of land
(1) 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 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.
…
(3) 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 from the State by action against the Registrar as nominal defendant.
(4) All damages and costs to be paid by the State under this section shall be charged to the Consolidated Account and this section appropriates the Consolidated Account accordingly.
Section 196 in turn provides:
196. State not liable in certain cases
(1) The State shall not under any circumstances be liable for compensation for any loss damage or deprivation occasioned by any breach by a registered proprietor of any trust, whether express or implied or constructive, or by the improper exercise of any power of sale expressed or implied in any mortgage or encumbrance; in any case in which the same land may have been included in 2 or more grants from the Crown or transfers of Crown land in fee simple; nor shall the State be liable in any case in which loss or deprivation has been occasioned by any land being included in the same certificate of title with other land through misdescription of boundaries or parcels of any land unless in the case last aforesaid it shall be proved that the person liable for compensation and damages is dead or has absconded or has been adjudged bankrupt or the sheriff shall certify that such person is unable to pay the full amount awarded in any action for recovery of such compensation and damages.
While each of these sections has been amended from time to time since the Act was passed in 1893, their operative provisions have remained in substantially the same form since that time.
One aspect of the legislative history, however, is notable, and underscores the purpose of the provisions and the relationship between s 196 and s 201.
As originally enacted, the Act, rather than providing for a right of recovery from the State charged to the Consolidated Fund, created an assurance fund. Section 201, for example, provided, in the equivalent to s 201(3), that 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'. Likewise, the opening words in s 196 referred to 'the assurance fund' rather than 'the State'.
Otherwise, as I have said, s 196 and s 201 largely reflect the form in which they were originally enacted.
In that regard, it will be immediately apparent that the statutory provisions in this case reflect the drafting conventions of 1893, rather than what would be expected in contemporary legislation. In particular, while it is clear that s 196 and s 201 must be read together (and indeed that one provides an exception or limitation to a right conferred by the other), the provisions appear to be stand‑alone provisions, in that they do not expressly refer to, or even recognise, one another, as would likely be the case in contemporary legislation.
This adds to the complexity of the issue of statutory construction in the present case, which concerns the breadth of the operation of s 196 in the context of the provisions of the Act as a whole and in particular the proper approach to the expression 'occasioned by' in s 196.
Before addressing that issue, I can briefly refer to the principles of statutory construction generally.
Principles of statutory construction
The principles of statutory construction are well settled. Statutory construction involves the attribution of meaning to statutory text. The Court's task in that regard must begin and end with the statutory text as a whole, considered in its context, including its objectively discerned statutory purpose.[2]
[2] Thiess v Collector of Customs [2014] HCA 12; (2014) 250 CLR 664 (Thiess v Collector of Customs) [22] ‑ [23] (French CJ, Hayne, Kiefel, Gageler and Keane JJ).
As to the last matter, statutory purpose, French CJ, Hayne, Kiefel, Gageler and Keane JJ, said in Thiess v Collector of Customs:[3]
Objective discernment of statutory purpose is integral to contextual construction. … For:
'it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning.'
[3] Thiess v Collector of Customs [23] (French CJ, Hayne, Kiefel, Gageler and Keane JJ) (footnotes omitted).
The statutory purpose of legislation may be discerned from an express statement of purpose in the statute, inference from its text and structure and, where appropriate, reference to extrinsic materials. The purpose must be discerned from what the legislation says, as distinct from any assumptions about the desired or desirable reach or operation of relevant provisions.[4]
[4] Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378 [25] - [26] (French CJ & Hayne J).
Of particular significance in the present case, in my view, is the need for the disparate provisions of the Act to be understood, if possible, as parts of a coherent whole. As the High Court said in Project Blue Sky:[5]
A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court 'to determine which is the leading provision and which the subordinate provision, and which must give way to the other'. Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme.
[5] Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 (Project Blue Sky) [70] (McHugh, Gummow, Kirby and Hayne JJ) (footnotes omitted); Aldi Foods Pty Ltd v Shop, Distributive & Allied Employees Association [2017] HCA 53; (2017) 262 CLR 593 [16] (Kiefel CJ, Bell, Keane, Nettle, Gordon And Edelman JJ).
I turn then to s 196 of the Act, in its overall context.
'Occasioned by'
Commencing, as I must, with the statutory text, the critical issue in the present case is the meaning of the expression 'occasioned by' in s 196.
Causation in the law
The first point to make is that the words 'occasioned by' are clearly concerned with the issue of causation. In other words, s 196 is concerned to exclude from the liability of the State certain loss or damage that is 'caused' in a particular way. In this respect the words 'occasioned by' are similar to related expressions such as 'caused by', 'resulting from', or (as in s 201 of the Act) 'in consequence of'. Each is simply a different way of identifying the need for a relevant causal connection.
To recognise that the words 'occasioned by' refer to a question of causation, however, is not the end of the exercise in statutory construction. Indeed, it is just the starting point. That is because the legal concept of causation always, and only ever, arises in the context of ascertaining or apportioning legal responsibility for a given occurrence. As Mason CJ said in March v Stramare (E & MH) Pty Ltd:[6]
In philosophy and science, the concept of causation has been developed in the context of explaining phenomena by reference to the relationship between conditions and occurrences. In law, on the other hand, problems of causation arise in the context of ascertaining or apportioning legal responsibility for a given occurrence.
[6] March v Stramare (E & MH) Pty Ltd [1991] HCA 12; (1991) 171 CLR 506, 509 (Mason CJ).
In that regard, as I observed in Summit Rural (WA) Pty Ltd v Lenane Holdings Pty Ltd, questions of causation, both at common law and pursuant to statute, often involve both:[7]
(a) a question of historical fact as to how particular harm occurred; and
(b) a normative question as to whether legal responsibility for that particular harm occurring in that way should be attributed to a particular person.
[7] Summit Rural (WA) Pty Ltd v Lenane Holdings Pty Ltd [2024] WASCA 122 (Summit Rural) [8] - [10] (Quinlan CJ).
The normative question, being concerned with the attribution of legal responsibility, calls attention to the purpose of the relevant right, duty, liability or obligation in question. In other words the nature of the causal connection contemplated by a particular legal rule, whether statutory or common law, creating (or excluding) liability will be informed by the legal policy of the rule itself. So, for example, in the tort of negligence the scope of liability for the purposes of causation is often coextensive with the content of the duty of the negligent party that has been breached.[8] That is because:[9]
the policy of the law in imposing the duty on the negligent party will ordinarily be furthered by holding the negligent party liable for all harm that occurs in fact if that harm would not have occurred but for breach of that duty and if the harm was of a kind the risk of which it was the duty of the negligent party to use reasonable care and skill to avoid.
[8] Wallace v Kam [2013] HCA 19; (2013) 250 CLR 375 (Wallace v Kam) [26] (French CJ, Crennan, Kiefel, Gageler and Keane JJ).
[9] Wallace v Kam [26] (French CJ, Crennan, Kiefel, Gageler and Keane JJ).
With these matters in mind, I turn to the statutory context and objectively determined legislative purposes of the relevant provisions of the Act in this case.
Legislative purpose and context of s 196 and s 201 of the Act
The first point to make about the context of s 196 of the Act, is that s 196 provides an exception or a limitation on the liability of the State otherwise created by the provisions of the Act (and in particular s 201). As I have noted above, contrary to first appearances, s 196 and s 201 are not free‑standing provisions but must be read together.
In that context it is clear that s 196 of Act is an exception to the rights of recovery otherwise created by the Act. For that reason, as a matter of 'hierarchy', s 201 should properly be regarded as the leading provision and s 196 as the subordinate provision (in the sense described in the passage from Project Blue Sky referred to at [26] above).
This 'hierarchy' is relevant as it serves to make clear that in providing for compensation in certain circumstances the Act is beneficial legislation and so is generally to be interpreted broadly in favour of the remedial purpose of the legislation. In that context an exclusion from beneficial legislation should not generally be read widely,[10] albeit that it is important to recognise that an exception is intended to provide a practical balance between competing public interests, and so must be interpreted so as not to destroy that balance.[11]
[10] Goliath Portland Cement Co Ltd v Chief Executive Officer of Customs [2000] FCA 1164; (2000) 101 FCR 11 [29] (Lee, Cooper & Kiefel JJ).
[11] Chief Executive Officer of Customs v Adelaide Brighton Cement Ltd [2004] FCAFC 183; (2004) 139 FCR 147 [17] (Black CJ).
Accordingly, while it is always a matter of careful discernment of the statutory purpose, in my view, the fact that s 196 is an exception to what is otherwise a beneficial legislative scheme, means that the causal connection required for the operation of that exception should not be approached with the same liberality as might be the case in a provision creating the relevant benefit.
In relation to the objectively discerned statutory purpose of the compensation provisions of the Act as a whole, in my view the purpose is readily apparent. The rights to compensation created by the Act, in consequence of fraud, or through the bringing of land under the operation of the Act, are a legislative recognition of the 'cost' of the system of 'title by registration' created by the Act itself.[12] That system of title by registration is such that a person who deals, bona fide and for value, with a registered proprietor of land under the Act may acquire an indefeasible title notwithstanding the infirmity of the other's title. So, for example, an innocent purchaser (or mortgagee) dealing with a registered proprietor who has acquired the land by fraud, may nevertheless acquire good title upon registration to the detriment of the original owner (and victim of the fraud). Registration under the Act accordingly confers an indefeasible title where no title would have passed at common law.
[12] Butt P and Edgeworth B, Butt's Land Law (7th ed, 2017) (Butt).
The rights to compensation (historically against the assurance fund and now against the State) are intended to remedy the potential injustice caused by that indefeasibility. As Butt's Land Law puts it, the compensation rights are 'a concomitant to indefeasibility'.[13] In that regard, it is to be expected that the provisions of the Act creating those rights, such as s 201, will be interpreted liberally so as to further the legislative policy of protecting the system of title by registration.
[13] Butt [12.1390].
What, then, of the legislative purpose behind the exception in s 196 in relation to loss, damage or deprivation 'occasioned by any breach of trust by a registered proprietor'? That purpose may be discerned, at least in part, from the manner in which the Act deals with trusts generally. In that regard, it is a feature of the Act, as with the Torrens system generally, that notice of trusts may not be registered on certificates of title[14] and that 'except in cases of fraud' a person dealing with a registered proprietor shall not be affected by notice of any trust or unregistered interest (and that knowledge that any such trust or unregistered interest is in existence shall not of itself be imputed as fraud).[15]
[14] Act, s 55.
[15] Act, s 134.
The existence and operation of trusts, accordingly, stand outside the system of title by registration created by the Act, and are regulated by the ordinary rules of equity that apply vis-a-vis trustees and beneficiaries. The rights and remedies available to beneficiaries arising out of breaches of trust are not affected by the provisions of the Act dealing with title by registration, and so relevantly there is no legislative 'cost' for which it is necessary for the State (or the assurance fund before it) to compensate.
In that regard, s 196 evinces an intention to exclude from the State's liability those losses that may properly be said to arise out of the trust relationship itself, in relation to which the Act is generally silent.
In light of these matters of context and purpose I return to the expression 'occasioned by' in s 196 of the Act.
'Occasioned by' in light of its statutory purpose
As in the case of causation in other legal contexts, the causal connection created by the words 'occasioned by' involves both a question of historical fact and a normative question as to the attribution of responsibility.
As to the first matter, for liability under s 201 to be excluded by s 196, it must be the case that 'but for' a breach of trust, the relevant loss, damage or deprivation would not have occurred. A breach of trust must be at least one of the necessary conditions for the occurrence of the loss, damage or deprivation, for the exception in s 196 to apply.
Nevertheless, properly construed, s 196 requires more than simply a purely factual connection between the relevant deprivation and a breach of trust, no matter how incidental the breach of trust is to the fraud, or when in the chain of causation the relevant breach of trust occurred. Something more is required; namely a positive answer to the normative question. That is, the connection between the breach of trust and the relevant loss or deprivation caused by the fraud must be sufficiently close that legal responsibility for the particular loss or deprivation should be excluded from the State's liability for fraud. The answer to that question is ultimately a matter of fact and degree and will depend upon the closeness of the connection between the fraud and the breach of trust in light of legislative purpose underlying the exclusion in s 196 of the Act.
For example, in a case in which the relevant fraud is confined to relevant breach of trust (i.e. the only fraud is the breach of trust), it can readily be concluded that the consequent deprivation was 'occasioned by' the breach of trust within the meaning of s 196 of the Act. In such a case, the existing trust relationship between the trustee and the beneficiary is the only 'occasion' giving rise to the deprivation. There is no other cause for the deprivation.
By contrast, in a case in which the relationship of trustee and beneficiary itself arises by operation of law as a consequence of an antecedent fraud (by which the registered proprietor is deprived of land), the fact that any subsequent dealing by the fraudulent transferee which prevents the land from being restored to the innocent party would also be in breach of trust, it may be difficult to conclude that the deprivation of the land was occasioned by the breach of trust. In such a case the breach of trust is merely an incidental step in the execution of an independent fraud.
This was the position in Parker v Registrar-General,[16] in which the appellants had been defrauded into transferring their land to a company, which in turn mortgaged the land for its own purposes. The Registrar‑General contended that the New South Wales equivalent of s 196 applied in the circumstances because, when the company mortgaged the land, it was in breach of a constructive trust that the law imposed by reason of the antecedent fraud.
[16] Parker v Registrar-General [1977] 1 NSWLR 22 (Parker v Registrar-General).
Mahoney JA (with whom Street CJ agreed), while assuming such a breach of trust to have occurred, said:[17]
But it does not follow that the plaintiffs' loss, damage or deprivation was 'occasioned by' that breach of trust. The plaintiffs sue because they were 'deprived of land' within [the equivalent of s 201], and they claim the damages flowing from such deprivation. If the relevant deprivation took place, as I have held, when the company was registered as proprietor, then the deprivation took place before the company became a trustee and was not occasioned by it. The quantification of damage flowing from that deprivation may be affected by subsequent events, but it is the damage attributable to the deprivation which is in question.
But [the Registrar-General's] argument looks to what took place after the company became registered as proprietor, and, in particular, to the fact that the detriment which remained to the plaintiffs in the events which have happened was the detriment of the mortgage which the company gave to the life assurance company. It is for that detriment, it was submitted, that recovery is sought. I do not think that, even if [the Registrar-General's] argument be so pursued, that which, within the meaning of [the equivalent of s 196] 'occasioned' the relevant loss, damage or deprivation, was the postulated breach of trust. The company was party to a fraud which sought, by several steps, to achieve the result that mortgage moneys should be received by it and applied by it to its own purposes. Its becoming registered as proprietor and its granting the mortgage to the life assurance company were merely intended steps in the execution of the fraud. In such a case, that by which the final result was 'occasioned' may properly be held to be, not merely the immediately preceding step in the transaction, but the transaction itself: cf. Sheridan v Midland Great Western Railway Co of Ireland (19), per FitzGibbon LJ. That which, in the present case, occasioned the loss, damage or deprivation was, in my opinion, not the postulated breach of trust, but the fraud.
[17] Parker v Registrar-General, 32 ‑ 33 (Mahoney JA).
The conclusion in Parker v Registrar-General, in my view, was clearly correct. In that case, the relationship of trust only arose by the law's imposition of a constructive trust on the fraudulent transferee, such that any subsequent dealing would inevitably be in breach of trust. To have construed the equivalent of s 196 as excluding the right to compensation in such case, would likely exclude the right of recovery in every case of a fraudulent transfer in which the transferee deals with the land. The exception would eclipse the rule. Such a construction would be contrary to the legislative intention revealed by the provisions as a whole.
In Parker v Registrar-General, Glass JA explained the same result on the basis that the expression 'occasioned by' meant 'solely occasioned by'.[18] While it is certainly the case that s 196 would apply in a case in which the 'sole' or 'single' cause of the deprivation was a breach of trust (such as the example I gave at [47] above), I would not confine the operation of s 196 in that way. In my view there may well be circumstances in which a particular loss or deprivation could properly be characterised as 'occasioned by a breach of trust' notwithstanding that there are other substantial causes of the loss or deprivation.
[18] Parker v Registrar-General, 27 (Glass JA).
Nevertheless, in my view, it remains the case that the conclusion that a particular deprivation was 'occasioned by any breach … of any trust' requires that the deprivation would not have occurred 'but for' the breach of trust, and also that the fraud is sufficiently connected to the relationship of trustee and beneficiary that the deprivation and the fraud may properly be said to arise out of the trust relationship itself.
In that regard, little is to be gained by seeking to substitute for the language of s 196 some alternative formulation of the nature of the causal connection required by the words 'occasioned by', whether that alternative formulation is 'sole cause', 'true cause' or 'substantive cause'. In the end, each formulation is simply an imperfect way of emphasising that the causal connection required by s 196 is a matter of fact and degree informed by the statutory purpose of the exception. If pressed for a synonym, I might consider that 'root cause' comes closest to reflecting the legislative intention that the relevant deprivation can properly be said to arise out of the trust relationship itself, rather than some antecedent or overarching fraud.
Ultimately, as I have said, the causal connection required by s 196 is a matter of fact and degree, and depends upon the closeness of the connection between the deprivation resulting from the fraud and the breach of trust.
Application to the present case
As I have summarised above, in rejecting Ms Aliraja's claim the Commissioner concluded that the claim was necessarily excluded by s 196 of the Act, by mere dint of the fact that Mr Sadeet was a trustee of the Land, regardless of the existence or nature of any fraud that he committed.
In so concluding, the Commissioner in my view failed to properly address whether the deprivation claimed by Ms Aliraja was 'occasioned by' a breach of trust within the meaning of s 196 of the Act.
In that regard, it is at least arguable that Mr Sadeet was guilty of fraud in relation to the initial transfer of the Land to him and guilty of fraud by the creation of the trust, which was itself part of a fraudulent design. If that was the case, in my view, Ms Aliraja's deprivation of the legal title to the Land, at the very least, was a consequence of fraud (within the meaning of s 201) and wholly unconnected to and not 'occasioned by' any subsequent breach of trust by Mr Sadeet in granting the Mortgage or in dissipating the funds from the Loan.
If it is the case that the initial transfer of the Land occurred as a consequence of Mr Sadeet's fraud, then, as in Parker v Registrar‑General, it could be concluded the deprivation 'took place before [Mr Sadeet] became a trustee and was not occasioned by it'.[19] In such a case, while the subsequent dealings with the Land might be relevant to the quantification of any loss and damage flowing from that deprivation, they did not have the result that Ms Aliraja's claim was excluded by s 196 of the Act.
[19] Parker v Registrar-General, 32 ‑ 33 (Mahoney JA).
By not considering whether Ms Aliraja's claim should be admitted, under s 208 of the Act, in those circumstances, in my view, the Commissioner erred in law.
Conclusion
Ms Aliraja is entitled to have her claim determined by the Commissioner according to law.
I would allow the appeal and remit Ms Aliraja's claim to the Commissioner to be determined according to law.
By way of a final observation, I recognise that the resolution of this appeal took longer than was acceptable in all of the circumstances. While the legal issues raised by the appeal were certainly difficult, I accept that this Court should have dealt with the appeal sooner than it did. While I can offer no excuse for that delay, on behalf of the Court I do offer my apologies.
VAUGHAN JA:
I would allow the appeal, upholding ground 3 - described by Solomon J as the 'first alternative ground' - for the separate reasons given by Quinlan CJ.
SOLOMON J:
Introduction
This appeal concerns an application for compensation by the appellant, Ms Aliraja to the respondent, Commissioner of Titles (Commissioner) under pt XII of the Transfer of Land Act1893 (WA) (TLA). References to statutory provisions in these reasons are to the TLA unless stated otherwise.
There is no challenge in this appeal to the unfortunate background facts. The facts were set out in a statutory declaration of Ms Aliraja's father, Mr Abou Bakur Aliraja, that accompanied the initial application on 19 October 2022.[20]
[20] Green Appeal Book (GAB) 39 - 54.
The relevant background is as follows. Ms Aliraja was the registered proprietor of a residential property in Ballajura (Property). By instrument dated 27 July 2000, Ms Aliraja appointed her father Mr Aliraja as her attorney without condition or restriction, to do any lawful thing on her behalf. Mr Aliraja was friendly with a Mr Ahmed Seedat whom he trusted because he had known him since childhood. Moreover, Mr Seedat was employed as an accountant by a reputable firm and was a well-respected member of the Islamic community. Mr Seedat had also told Mr Aliraja that he was a financial advisor. In about February 2016, Mr Seedat persuaded Mr Aliraja to transfer the Property to him. Mr Seedat said he would use the Property to secure a loan to invest funds in the name of Mr Aliraja's investment company.
Mr Aliraja acting as Ms Aliraja's attorney and Mr Seedat executed a written instrument entitled 'Agreement to Transfer Land and Declaration of Trust' (Trust Agreement). The Trust Agreement was witnessed and dated 1 March 2016.[21]
[21] GAB 90.
Under the terms of the Trust Agreement, Ms Aliraja and Mr Seedat agreed and declared that upon execution of the Trust Agreement, the Property 'shall be transferred by [Ms Aliraja] to [Mr Seedat] to hold on behalf of and on trust for [Ms Aliraja] as beneficiary' on terms that included that Mr Seedat shall hold the Property on bare trust for Ms Aliraja as the sole beneficial owner'.
Pursuant to the Trust Agreement and in his capacity as Ms Aliraja's attorney, Mr Aliraja executed a transfer in favour of Mr Seedat dated 1 March 2016.[22] The transfer stated the consideration as pursuant to the Trust Agreement. In May 2016 Mr Seedat granted a mortgage over the Property to Permanent Mortgages Pty Ltd to secure a loan in the amount of $310,000. In March 2018 the mortgagee's interest was transferred to Perpetual Corporate Trust Limited.
[22] GAB 55.
In his statutory declaration Mr Aliraja explained that Mr Seedat did not use the loan funds for any benefit to Mr Aliraja or his company.[23] Rather, Mr Seedat used the loan funds for his own personal benefit. In 2018 Mr Aliraja discovered that Mr Seedat had been charged with murdering his wife and with a range of fraud offences. It was at that point that Mr Aliraja was alerted to Mr Seedat's nefarious side and discovered that the loan funds had been misappropriated.
[23] The evidence suggested that Ms Aliraja herself may have held the property for the ultimate benefit of Mr Aliraja, at least during his lifetime. It was common cause that nothing turned on this and that the matter could proceed on the basis that Mr Aliraja and Ms Aliraja's interests were entirely coextensive.
Mr Seedat was ultimately convicted of murder and fraud. There was no evidence that the fraud convictions related to the Trust Agreement or the transfer of the Property.
Due to Mr Seedat's default in loan repayments, in February 2019 the mortgagee demanded possession of the Property. Ms Aliraja sued Mr Seedat in the District Court of Western Australia for recovery of the Property and damages. Ms Aliraja obtained default judgment, and on 1 December 2021 the District Court made orders requiring Mr Seedat to deliver to Ms Aliraja a transfer of the Property and to pay Ms Aliraja the sum of $448,831. That figure represented the then balance of the loan together with interest. Mr Seedat did not pay as required, and on 12 September 2022 the Federal Circuit Court and Family Court of Australia made an order that the estate of Mr Seedat be sequestrated under the Bankruptcy Act 1966 (Cth).
In his statutory declaration, Mr Aliraja explained that interest on the loan continued to accrue, and that the application to the Commissioner for compensation was for the amount owing to the mortgagee under the loan (presumably to facilitate the discharge of the mortgage and the transfer of the Property back to Ms Aliraja).
The application was lodged by email on 1 November 2022 by Ms Aliraja's lawyer, Mr Stephen Gethin. The subject of the email was 'Claim under section 208 of the Transfer of Land Act'. The email included the following description of the claim:[24]
To summarise the fraud the subject of this application, one Ahmed Dawood Seedat, the current registered proprietor of the Property, who was (apparently) a trusted family friend of and who was the accountant to the attorney tricked the attorney into transferring title of the Property to himself. Seedat worked at a firm of accountants and financial advisors and falsely represented to the Attorney that he was also a financial advisor. He persuaded the attorney to transfer title of the Property to his name on the pretext that he would raise funds via loan secured against the tide (sic) of the Property and invest those funds for the benefit of the Attorney. The Attorney transferred title to the Property to Seedat pursuant to that arrangement. Seedat mortgaged the property to secure a loan to himself. He used the proceeds of the loan for his own purposes and did not provide any part thereof to the benefit of the Attorney or the Applicant.
[24] GAB 34.
Other than what was contained in the email application to the Commissioner made on 1 November 2022, there was no evidence adduced regarding the details of the fraud alleged in respect of the Property. It was alleged that the transfer of Property was procured by a trick. But nothing was said as to how or at what point the trick was perpetrated. Nor could it be concluded on the basis of what was alleged that the Trust Agreement itself was the product of fraud, had been set aside or was liable to be set aside.
Other than the reference in the subject line of the email to s 208 of the TLA, the application did not make reference to any statutory provision. As will be seen, the Commissioner's response referred to s 205 as the basis of the application (together with s 208). Nevertheless, the parties accepted at first instance and on appeal that the application was advanced alternatively under s 201 and s 205 in conjunction with s 208. On this appeal, Ms Aliraja's counsel took the position that the application, properly understood, was made under s 201.
The Commissioner responded to the application by letter dated 13 December 2022.[25] The Commissioner rejected the claim. The Commissioner's decision included the following:
[25] GAB 82 - 85.
Thank you for the above compensation claim you submitted by email on 1 November 2022 to the Commissioner of Titles under section 208 of the Transfer of Land Act 1893 (TLA) for compensation under the cause of action in section 205 of the TLA.
…
I have prioritised consideration of this claim. I do not admit the Applicant's compensation claim based upon section 196 (1) of the TLA, which excludes the State from liability to pay compensation for a breach by the registered proprietor of a trust. I provide details below.
…
The Applicant seeks compensation under section 208 of the TLA relying upon the cause of action in section 205 of the TLA.
Mr Abou Bakur Aliraja as the sole attorney under power of attorney H517382 on behalf of the Applicant, who is his daughter, submits, the Applicant was deprived of her proprietorship of the Ballajura Property by fraud committed by Mr Ahmed Dawood Seedat.
In summary, I understand that Mr Abou Bakur Aliraja transferred the Title of the Ballajura Property, using the power of attorney H517382 granted to him by the Applicant, to Mr Ahmed Dawood Seedat. Mr Ahmed Dawood Seedat became the registered proprietor of the Title to the Ballajura Property and encumbered the Title to the Ballajura Property with registered Mortgage, N345686. The Applicant submits that the Title was transferred to Mr Ahmed Dawood Seedat so he could obtain funds secured by a mortgage against the Ballajura Property and invest those funds for the benefit of Mr Abou Bakur Aliraja.
…
I have considered the Claim and the evidence and information provided in support. This Claim is fundamentally deficient. I confirm that I do not admit this Claim because the registered proprietor of the Title to the Ballajura Property is a trustee and section 196(1) of TLA excludes the State from liability for compensation 'occasioned by any breach by a registered proprietor of any trust …' (my emphasis).
Section 196 of the TLA provides that the State is not liable to pay compensation in certain cases. Of relevance to this Claim, is that part of section 196(1), which states:
'The State shall not under any circumstances be liable for compensation for any loss damage or deprivation occasioned by any breach by a registered proprietor of any trust, whether express or implied or constructive …'
Based upon the information and evidence I have considered, Mr Ahmed Dawood Seedat is the registered proprietor of the Title to the Ballajura Property, in the capacity of trustee. This is stated in the Transfer, in the Agreement and by the Applicant in the Statutory Declaration.
In any event, if section 196 of the TLA, did not apply and did not exclude the State from liability under the TLA, there is insufficient evidence and information submitted to establish the Claim, and I am not satisfied that the Claim can be admitted. Further evidence and information would be required to establish the Claim.
There is no merit in outlining the further information and evidence that would be required if the Claim was not barred under section 196(1) TLA.
However, it appears that fraud against the Title to the Ballajura Property or the land titles Register is not established on the evidence presented. The evidence does not show that the Title to the Ballajura Property was transferred fraudulently and it does not appear that the Mortgage was fraudulent. It is not known if Mr Ahmed Dawood Seedat was convicted of fraud in relation to the Ballajura Property.
The Commissioner's reasoning is not in all respects entirely clear, however, in substance, the Commissioner appears to have resolved the following:
1.There was insufficient evidence of fraud in the material provided in the application to establish the claim.
2.That was so, irrespective of whether the exemption from liability under s 196 applied or not.
3.There was no point in the provision of further evidence relating to the fraud.
4.That was because the documentation and evidence provided:
a.clearly established that Mr Seedat held the Property in the capacity of trustee;
b.did not go far enough to establish that the transfer of the Property was fraudulent; and
c.appeared to show that the mortgage itself was not fraudulent.
5.Therefore, irrespective of further evidence that may be provided to establish fraud in the transfer of the Property, the loss was occasioned by a breach by Mr Seedat in his capacity as trustee of the Property and s 196 therefore operated to exempt the Commissioner from liability.
Legislative framework
It is convenient first to set out the legislative framework.
A strength of the Torrens system is the indefeasibility of title it confers. The system thereby affords protection to those who acquire and register their interests in land. However, as the learned author of Butt's Land Law observes,[26] this protection comes at a cost: for in conferring title on an incoming proprietor, registration extinguishes the title of the former proprietor.[27] It also may conceal other interests in a property such as an equitable interest arising under a trust. Notwithstanding its efficiencies and other advantages, the Torrens system can therefore lead to aggrieved landowners or interest holders seeking recompense for injustices arising from the operation of the TLA.
[26] Butt P and Edgeworth B, Butt's Land Law (7th ed, 2017) (Butt).
[27] Butt 831 [12.450].
Part 12 of the TLA addresses that consequence by various means. They include the conferral of protection for officers of the statutory bodies responsible for the Torrens system, certain exceptions to the immunity of the registered proprietor and the provision of statutory claims for compensation in particular circumstances.
Part 12 begins with s 198 which confers protection against any action for those engaged bona fide in administering the TLA.
Section 199 begins with the preclusion of any action for ejectment or recovery of land against the person registered as proprietor. The section then specifies exceptions to that prohibition. Those exceptions include common instances such as a mortgagee action against a mortgagor in default and an action by a lessor against a lessee in default. The exceptions also include, at s 199(d), 'the case of a person deprived of any land by fraud as against the person registered as proprietor of such land through fraud, or as against a person deriving an interest in land otherwise than as a transferee bona fide for value'. Put simply, the sub-section provides that a person deprived of their land by fraud is not precluded from an action to recover the land from the fraudster who became the registered proprietor or the fraudster's knowing assignee. It may be observed that this was the action taken by Ms Aliraja and referred to at [73] above.
Section 199(d) thus permits recovery from the fraudulent registered proprietor but preserves the indefeasibility of title in that a person deprived of their land by fraud will be precluded from an action for ejectment or for the recovery of the land if a third party has innocently become the registered proprietor.
Section 201(1) provides, relevantly, that 'any person deprived of land or of any estate or interest in land in consequence of fraud … may bring and prosecute an action at law for the recovery of damages against the person … who acquired title to the estate or interest through such fraud …'.
Section 201(3) provides that 'in case the person against whom such action for damages … shall be … bankrupt … then and in any such case such damages with costs of action may be recovered from the State by action against the Registrar as nominal defendant'.
Section 205 provides, relevantly, that 'any person sustaining loss … 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 State with the Registrar as nominal defendant for recovery of damages'.
At this point, it may be observed that the statutory cause of action conferred by s 205 is available where the person is barred from bringing an action for the recovery of land. Ms Aliraja brought and indeed succeeded in such an action against Mr Seedat. Notwithstanding the reference to s 205 in the Commissioner's reasons, it is therefore difficult to see how that section could have been applicable.
Section 208 provides as follows:
208.Claims for damages may be made to Commissioner before commencing court action
(1)Any person sustaining loss or damage in any case in which heretofore he would have been entitled to bring an action to recover damages against the State with the Registrar as nominal defendant may before commencing proceedings against the Registrar make application in writing to the Commissioner for compensation and such application shall be supported by affidavit or declaration.
(2)If the Commissioner admit the claim or any part thereof and certify accordingly to the Attorney General thereupon the Governor may if he shall think fit issue a warrant to the Treasurer for the amount so certified and such amount shall be charged to the Consolidated Account and paid to the claimant and this section appropriates the Consolidated Account accordingly.
In short, s 201 and s 205 provide for claims for compensation. They also allow, in particular circumstances such as the bankruptcy of the putative respondent, for the claim to be brought against the State. In those circumstances s 208 provides for an administrative process by which the Registrar may determine the claim without the necessity for court proceedings.
It is against that legislative regime that it is necessary to consider s 196 which is the decisive provision in this appeal. Section 196 exempts the State from liability in prescribed circumstances. Section 196 provides relevantly, as follows:
196.State not liable in certain cases
The State shall not under any circumstances be liable for compensation for any loss damage or deprivation occasioned by any breach by a registered proprietor of any trust, whether express or implied or constructive, or by the improper exercise of any power of sale expressed or implied in any mortgage or encumbrance; in any case in which the same land may have been included in 2 or more grants from the Crown or transfers of Crown land in fee simple; nor shall the State be liable in any case in which loss or deprivation has been occasioned by any land being included in the same certificate of title with other land through misdescription of boundaries or parcels of any land unless in the case last aforesaid it shall be proved that the person liable for compensation and damages is dead or has absconded or has been adjudged bankrupt or the sheriff shall certify that such person is unable to pay the full amount awarded in any action for recovery of such compensation and damages.
The central question that arises in this matter is whether Mr Seedat's capacity as trustee under the Trust Agreement enlivened the exemption from liability under s 196.
Decision of the primary judge
Ms Aliraja applied for judicial review of the Commissioner's decision in this court. As a preliminary matter, there is no dispute that this is a proper matter for judicial review. Judicial review is available because Ms Aliraja is entitled to have her claim assessed by the Commissioner in accordance with law. That is so notwithstanding that it might be said that Ms Aliraja's most appropriate remedy once her claim was refused was to commence an action in the court against the Commissioner to pursue her claim. However, Ms Aliraja's contention is that the Commissioner did not determine her claim on a proper construction of s 196. That point was made in a similar circumstance, albeit in a different statutory context by Malcom CJ (with whom the other members of the court agreed) in Re Real Estate and Business Agents Supervisory Board; Ex parte Cohen.[28]
[28] Re Real Estate and Business Agents Supervisory Board; Ex parte Cohen (1999) 21 WAR 158 [113].
The learned primary judge dismissed the application.[29]
[29] Aliraja v Susan Dukes, Commissioner of Titles [2023] WASC 225 (primary reasons).
After setting out the competing arguments of the parties, the learned primary judge concluded that the proper construction of s 196(1) of the TLA is that the State is not liable for compensation for any loss, damage or deprivation where a breach of trust is a cause, being a not insignificant cause, of that loss, damage or deprivation. The breach of trust does not have to be the sole cause of that loss, damage or deprivation.[30] Her Honour concluded that this construction of s 196(1) of the TLA is supported by:
1.The natural and ordinary meaning of the words of the section.
2.The context within which the section appears in the TLA as a whole.
3.The object and purpose of the TLA as determined from its legislative history.
[30] Primary reasons [87] - [88], Blue Appeal Book (BAB) 20 - 21.
The learned primary judge noted that the Commissioner had not identified which particular event had occasioned the loss and whether it was the initial transfer, the granting of the mortgage, or an overall fraudulent scheme. Her Honour found that it was not necessary for the Commissioner to have done so. That was because the granting of the mortgage was at least one not insignificant cause of Ms Aliraja's loss. And although the grant of the mortgage may well have been fraudulent, Mr Seedat had granted the mortgage as a trustee under the Trust Agreement and his conduct was thereby a breach of trust. Even accepting that the transfer of the Property was fraudulent, Mr Seedat granted the mortgage as a trustee and was thereby in breach of trust. Since a breach of trust was a not insignificant cause of Ms Aliraja's loss, it followed that Ms Aliraja's loss was occasioned by a breach of trust within the meaning of s 196 of the TLA.[31] The Commissioner was therefore correct to dismiss the claim no matter what had occurred in terms of the particulars of the fraud.
[31] Primary reasons [91] - [95], BAB 21 - 22.
In the course of her Honour's reasons, the learned primary judge gave careful consideration to two decisions; Parker v Registrar General [1977] 1 NSWLR 22 (Parker) and Lincu v Registrar-General[2019] NSWSC 568 (Lincu). Those decisions appear to have reached different conclusions regarding the scope of the exemption in the NSW statutory equivalent of s 196 of the TLA. The learned primary judge expressly preferred and relied upon the decision in Lincu, which her Honour found more persuasive in determining the proper construction of s 196.[32] Those decisions will be considered below in the context of the grounds of appeal.
[32] Primary reasons [86], BAB 20.
Grounds of appeal
As the learned primary judge succinctly summarised, the Commissioner determined that the claim under either s 201 or s 205 was excluded by s 196 because the loss suffered by Ms Aliraja was occasioned by a breach of trust.[33]
[33] Primary reasons [34], BAB 19.
The appeal turns on the proper construction of the relevant sections of the TLA and their application to the circumstances referred to at [67] ‑ [75] above. This court applies the correctness standard in reaching its own view as to the proper construction of the provisions, without according any deference to the views adopted by the learned primary judge. While some reference will be made to the learned primary judge's reasoning, it is therefore unnecessary for this court to deal with each contention that the learned primary judge's reasons involved error.
Primary ground
Ms Aliraja's primary ground of appeal was not argued before the learned primary judge. It was advanced on appeal in the following manner.[34]
[34] This ground was also not contained in the original case and submissions of the appellant on this appeal. Rather, this ground and other amended grounds were set out in two separate documents titled Appellant's Amended Grounds of Appeal, and Appellant's Further Submissions, both of which were filed with the appropriate application dated 20 May 2024. On 21 May 2024, the respondent filed a notice consenting to the amendment of the appellant's case. The application was granted at the commencement of the hearing.
Ms Aliraja's claim was that the transfer of the Property to Mr Seedat was fraudulent. She was thereby deprived of her legal interest in the Property by fraud. Her claim was therefore a claim under s 201.
On its proper construction, a claim under s 201 is constituted by a deprivation of land or an estate or interest in land, relevantly, in consequence of fraud. The loss or damage said to be suffered by the claimant is not an element that constitutes, or is part, of the claim itself; it merely represents the quantification of the claim. Loss and damage are distinct from the claim itself.
Section 196 exempts the State from liability for compensation for any loss, damage or deprivation occasioned by any breach by a registered proprietor of any trust, which the State would otherwise bear. Ms Aliraja submitted that it is only deprivation, not loss and damage that constitutes a claim under s 201. When considering whether the exemption in s 196 applies to a claim under s 201, it is therefore irrelevant to ask whether the loss or damage was occasioned by a breach of trust. It is only relevant to consider whether the fraudulent deprivation was occasioned by a breach of trust. Whereas the words 'loss damage or deprivation' in s 196 cover the field of the various claims that may be made against the State, in the interaction between s 196 and s 201, only 'deprivation' is relevant. Section 196 does not purport to affect the quantification of damages once a claim for deprivation arises.
As will be explained, Ms Aliraja contended that the fraudulent transfer occurred before any trust arose. The transfer was therefore not in breach of trust and s 196 did not operate to exempt the State from liability in the claim under s 201.
In support of his construction of s 201 and s 196, counsel for Ms Aliraja directed attention both to the statutory text and to the judgment of Mahoney JA in Parker.[35]
Textual argument
[35] Appellant's Further Submissions [5] - [7]. This is the document described in footnote 34, above.
Counsel for Ms Aliraja observed that the 'trigger' for a claim in the text of s 201 is a person 'deprived of land or of any estate or interest in land'. It was submitted that those words establish the entitlement to a claim. The words do not include loss or damage. The reference to damage later in s 201(1) relates to the quantum of the claim; it is not an essential element of the claim itself. The text of s 201(1) does not expressly link the entitlement to 'damages' to the showing of any 'loss' or any 'damage'. Similarly, s 201(3) - which provides for recovery from the Registrar of Titles - does not expressly link the entitlement to recovery to the showing of any loss or damage. On that basis, counsel for Ms Aliraja submitted that concepts of loss and damage are irrelevant to s 201(3).
Although s 196 exempts the State's liability for 'compensation for any loss damage or deprivation', counsel for Ms Aliraja submitted that only 'deprivation' is relevant to the interaction between the exemption from liability under s 196 and a claim under s 201.[36] The notions of loss and damage under s 196 are limited to claims where loss is the entitling or triggering criterion of the claim such as a claim under s 205. That is evident from the text of s 205 itself, which provides for a claim consequent upon loss: '[a]ny person sustaining loss through any omission mistake …' (emphasis added).
Support from Parker decision
[36] Appellant's Further Submissions [13] - [15].
In Parker, Mr and Mrs Parker had for many years been friendly with a Mr Gray. The Parkers bought a property in Granville. Mr Gray, through deception, enticed the Parkers to transfer their Granville property to a company controlled by Mr Gray. The trial judge was satisfied that Mr Gray's conduct in procuring the transfer was designed to, and did defraud the Parkers of their land.[37] Mr Gray then mortgaged the property and used the borrowed funds for his own purposes. The land was eventually transferred back to the Parkers, but they were required to pay out the mortgage and thereby suffered loss.
[37] Parker v Registrar General [1976] 1 NSWLR 342, 351.
The relevant statutory provisions in the Real Property Act1900 (NSW) (RPA (NSW)) provided (at that time) as follows:
1.Section 126(1): Any person deprived of land or of any estate, or interest in land in consequence of fraud may bring and prosecute in any Court of competent jurisdiction an action for the recovery of damages;
2.Section 126(5): when the person liable for damages under this section is dead, bankrupt, or insolvent, or cannot be found within the jurisdiction, such damages with costs of action may be recovered out of the assurance fund by action against the Registrar-General as nominal defendant;
3.Section 133: The assurance fund shall not, under any circumstances, be liable for compensation for any loss, damage, or deprivation occasioned by the breach by a registered proprietor of any trust whether express, implied or constructive.
Mr Gray was an undischarged bankrupt. The Parkers brought proceedings against the Registrar-General as nominal defendant. The trial judge held in favour of the Parkers and the Registrar General appealed the decision. One argument advanced by the Registrar General on appeal was that by reason of the fraud, equity imposed a constructive trust on the company upon its registration as registered proprietor. The mortgage which ultimately was the cause of the Parkers' loss was thus effected in breach of trust. Section 133 therefore operated to preclude liability on the part of the Registrar General.
Rejecting the Registrar General's argument, Mahoney JA reasoned as follows:[38]
That which 'occasioned' the plaintiffs' loss, damage or deprivation was, in the relevant sense, not any such breach of trust as may have occurred; it was, in my opinion, the antecedent fraud. Such breach of trust as may have occurred was merely one of the intermediate results of the fraud.
[38] Parker, 31.
After setting out the Registrar General's argument regarding the imposition of a constructive trust, Mahoney JA continued:[39]
[I]t does not follow that the plaintiffs' loss, damage or deprivation was 'occasioned by' that breach of trust. The plaintiffs sue because they were 'deprived of land' within s 126(1), and they claim the damages flowing from such deprivation. If the relevant deprivation took place, as I have held, when the company was registered as proprietor, then the deprivation took place before the company became a trustee and was not occasioned by it. The quantification of damage flowing from that deprivation may be affected by subsequent events, but it is the damage attributable to the deprivation which is in question.
…
I do not think that … that which, within the meaning of s 133 'occasioned' the relevant loss, damage or deprivation, was the postulated breach of trust. The company was party to a fraud which sought, by several steps, to achieve the result that mortgage moneys should be received by it and applied by it to its own purposes. Its becoming registered as proprietor and its granting the mortgage to the life assurance company were merely intended steps in the execution of the fraud. In such a case, that by which the final result was 'occasioned' may properly be held to be, not merely the immediately preceding step in the transaction, but the transaction itself. That which, in the present case, occasioned the loss, damage or deprivation was, in my opinion, not the postulated breach of trust, but the fraud. (citations omitted)
[39] Parker, 32.
Counsel for Ms Aliraja observed that the statutory provisions of s 126 and s 133 of the New South Wales legislation were relevantly identical to the statutory text of s 201 and s 196 of the TLA. It was submitted that the analysis of Mahoney JA adopts a construction of the equivalent statutory provision whereby the claim is constituted by the fraudulent deprivation and the subsequent loss from the mortgage represents merely the quantification of the claim. The loss was irrelevant to the claim of deprivation which was effected before the imposition of the trust and therefore the statutory equivalent of s 196 was not operative. Ms Aliraja's counsel submitted therefore that the judgment of Mahoney JA is authority for the proposition that loss is irrelevant to the interaction between s 201 and s 196 and that the loss is a mere downstream consequence of the core deprivation and is relevant only to quantification of the claim.
It was contended that when this construction is applied to Ms Aliraja's claim, it is not precluded by s 196. Properly understood, Ms Aliraja's claim was made under s 201. That is because, as Ms Aliraja's lawyer summarised in his email referred to at [75] above, the basis of the claim was that the initial transfer of the Property to Mr Seedat was fraudulent. That is, it was a claim for deprivation of the Property in consequence of fraud and therefore a claim under s 201.
Ms Aliraja's position was that it may be accepted that her monetary loss occurred through the mortgage and the subsequent dissipation of the loan funds. But that loss or damage simply represented the quantification of the claim for fraudulent deprivation under s 201. It is irrelevant that the grant of the mortgage or the dissipation of loan funds were effected in breach of trust. The only relevant question is whether the deprivation was occasioned by a breach of trust.
Counsel for Ms Aliraja submitted that the effect of the express trust (similar to the constructive trust in Parker) is that the trust only arose upon completion of the transfer of the property to Mr Seedat as trustee and therefore the fraudulent transfer itself could not have been occasioned by a breach of trust. Counsel pointed to the words of the Trust Agreement which provided that the parties
agree and declare that upon execution of this instrument, the land … ('Property') shall be transferred by Myriam to the Trustee to hold on behalf of and on trust for Myriam as beneficiary (the 'Beneficiary'), on the following terms and conditions:
1)all capital improvement costs relating to the Property shall be funded by the Beneficiary;
2)the Trustee shall deal with the Property, all rights pertaining to the Property and all income and proceeds of the Property in such manner as the Beneficiary may, from time to time, direct and not otherwise;
3)the Trustee shall hold the Property as nominee and on bare trust solely for the Beneficiary as beneficial owner; and
4)upon the Beneficiary making such payments to the Trustee as are required to meet conveyancing, transfer duty and other expenses, and as and when demanded, the Trustee shall convey the Property to the Beneficiary as beneficial owner absolutely, and do whatever is necessary to enable the registration of the Beneficiary as the registered proprietor of the Property.
In support of the contention that the trust arose only upon completion of the transfer, and therefore the transfer itself could not have been in breach of trust, counsel for Ms Aliraja referred to the following passage of Jacobs on Trusts:
The maxim that equity will not assist a volunteer only applies to cases where the trust is not completely constituted. The distinction between the effect in equity of a completely constituted trust and an incompletely constituted trust was expressed by Lord Eldon in Ellison v Ellison (1802) 6 Ves 656 at 662; 31 ER 1243 at 1246 as follows:
'I take the distinction to be, that if you want the assistance of the Court to constitute you cestui que trust, and the instrument is voluntary, you shall not have that assistance for the purpose of constituting you cestui que trust; as upon a covenant to transfer stock, etc, if it rests in covenant, and is purely voluntary, this Court will not execute that voluntary covenant; but if the party has completely transferred stock, etc, though it is voluntary, yet the legal conveyance being effectually made, the equitable interest will be enforced by this Court.'
The proposition sought to be advanced from that passage appears to be that the equitable interest does not arise until the legal conveyance is completed. The legal transfer of the property must therefore have been antecedent to the existence of a trust relationship. The fraudulent transfer could not, therefore, have been in breach of trust.
Counsel for Ms Aliraja explained that since the claim was under s 201 for the fraudulent deprivation of the Property, it was exactly the same claim as that brought by the Parkers under s 126 of the NSW legislation. Both the facts and the statutory provisions were relevantly identical. The Parker decision was precisely applicable to the circumstances of this appeal where there was a fraudulent transfer followed by the grant of a mortgage causing loss. The same reasoning and result ought therefore to prevail, such that s 196 can have no application. The only difference is that Ms Aliraja maintained the beneficial interest in the property by reason of the trust; she was deprived only of the legal estate. But that difference is of no moment because s 201 (and s 126 in NSW) applies equally to the deprivation of only the legal estate.
Counsel for Ms Aliraja submitted that as in Parker, the fraudulent deprivation of itself gave rise to the statutory cause of action. It follows based on the reasoning of Mahoney JA in Parker, that if the 'deprivation' is not occasioned by a breach of trust (because it occurred before the trust arose), then s 196 does not operate to exclude liability under s 201. The cause of action under s 201 is triggered by a fraudulent deprivation. It is not the loss or damage that gives rise to the statutory claim. As in Parker, it is therefore not relevant that loss or damage may have arisen following the deprivation, such as by the grant of a mortgage or the misappropriation of loan funds in default of the trustee's duties. Section 196 has no application in respect of a claim under s 201 where the loss is suffered through a breach of trust following a fraudulent deprivation which was not itself a breach of trust.
The decision of the Commissioner did not identify precisely which conduct of Mr Seedat was fraudulent. Indeed, the Commissioner's decision noted expressly that the evidence presented did not establish fraud in the transfer or in the grant of the mortgage.[40] However, the Commissioner ruled that as Mr Seedat was 'the registered proprietor… in the capacity of trustee', s 196(1) precluded the claim in any event. The Commissioner ruled, in effect, that since Mr Seedat was a trustee of the Property, the State's liability was exempted by s 196 irrespective of the point at which the fraud occurred. The Commissioner's decision, upheld by the learned primary judge, was thus premised on the application of the exemption under s 196 irrespective of whether the fraud was perpetrated by the transfer itself, or through the grant of the mortgage, or by the misappropriation of the loan funds secured by the mortgage.
[40] GAB, 56.
Ms Aliraja contended that the Commissioner (and the learned primary judge) erred because if, as Ms Aliraja alleged in her claim, the transfer was itself fraudulent, then on a proper construction of s 196 and s 201, the State's liability was not ousted. The Commissioner (and the trial judge) thus erred in their construction and application of s 196 by concluding that further evidence as to the fraud would make no difference. The matter should therefore be remitted back to the Commissioner.
A further and related point relied upon by Ms Aliraja arose in the course of oral argument. It is often, if not invariably the case that a fraudulent deprivation of property will give rise to the imposition of a constructive trust. The express terms of s 201 provide for a claim for a fraudulent deprivation of property. It would be a curious outcome if an act of fraud (having given rise to a constructive trust) triggered the State's immunity from such a claim under s 196. That would denude a claim under s 201 of much, if not all of its scope of operation in circumstances of fraud. Yet the appellant contends that is the effect of the decision of the Commissioner and the learned primary judge.
Alternative ground
In her first alternative ground, Ms Aliraja argued that even if loss and damage are elements of a claim under s 201 and therefore not irrelevant to the interaction between s 201 and s 196, the exemption in s 196 only operates where a breach of trust was the 'overarching' or 'substantial' cause of the loss. It is not sufficient that the breach of trust merely be a not insignificant cause (as held by the learned primary judge). Ms Aliraja contends that this is the proper meaning to be given to the words 'occasioned by' under s 196 on its proper construction. Here, the facts demonstrated (or further facts could have demonstrated) that it was the fraudulent design of Mr Seedat that was the overarching or substantial cause of the loss. The breach of trust was a secondary or ancillary cause. The loss was not therefore 'occasioned' by the breach of trust. This is a matter that the Commissioner ought to have been prepared to consider on a proper construction of s 196, at least through the provision of further information. Ms Aliraja's position was that the matter should now be sent back to the Commissioner for that purpose.
Counsel for Ms Aliraja submitted that this was the construction adopted by Mahoney JA as demonstrated by the passages of the Parker judgment referred to above, where his Honour said that the exemption in s 133 of the RPA (NSW) will not apply where the breach of trust was 'merely one of the intermediate results of the fraud' or was 'merely [an] intended step in the execution of the fraud'. It was submitted on behalf of Ms Aliraja that Mahoney JA's construction of the words 'occasioned by' correctly looked to the 'true' cause of the loss.[41]
[41] Appellant's Further Submissions [40].
In the course of submissions regarding the proper construction of s 196 and the meaning of the words 'occasioned by', counsel for Ms Aliraja addressed the decision in Lincu, which the learned primary judge had accepted as persuasive. In Lincu, three men held a church property on trust for the Apostolic Church of Nazarene. One of the three trustees tricked the other two into signing the church property over to him. The trickster used the church property as security in order to obtain loan funds, and then he dissipated the funds. He was later declared bankrupt. The innocent trustees had the church property returned, they personally paid off the mortgage and then sought to recover their loss from the offending trickster through a claim under the statutory equivalent of s 201. There was no dispute that the conduct causing the loss was both a fraud and a breach of trust. The question for the court was whether the exemption from liability under the NSW statutory equivalent of s 196 applied.
By this time, the relevant provisions had been rewritten and were expressed quite differently to the legislation considered in Parker. Section 129(2)(f)(i) of the RPA (NSW) had been amended to provide:
(2)Compensation is not payable in relation to any loss or damage suffered by any person -
...
(f)where the loss or damage arises from -
(i)the breach by a registered proprietor of any trust (whether express, implied or constructive)[.]
The amendments to the RPA (NSW) also adopted a statutory administrative process for the adjudication of claims, similar to that contained in s 208 of the TLA.
Kunc J held that the exemption applied to oust the liability that would otherwise arise. Explaining the words 'loss or damage arises from the breach', Kunc J said:[42]
In my respectful view, the proper construction of the words 'arises from' in the Exemption is their natural and ordinary meaning in their context: the words mean a causal connection between two or more events or circumstances which is more than de minimis, but not necessarily direct or proximate, and not too remote. … They are words of a wide import, not of direct or proximate causation. Furthermore, in the context of the Exemption, they do not connote exclusivity of the causal connection: there may be more than one cause of a relevant event or circumstance which 'arises from' an anterior event or circumstance.
[42] Lincu [109].
Kunc J went on to explain:[43]
The conclusion I have reached also gives effect to the purpose of the new statutory scheme. It is intended to be an administrative scheme, clearer than the old legislation, able to be administered directly by the Registrar General and designed to minimise recourse to the Court. The administrative scheme is established by RPA s 131 and its primacy as the preferred course over proceedings in the Court is made clear by s 132. In my respectful view, this means that s 129 must be construed to facilitate that object by giving the words of the section the meaning they have on their face and, in particular, avoiding a construction which leaves open complex factual and legal arguments in the notoriously difficult area of causation.
[43] Lincu [113].
The learned primary judge adopted a construction of the words 'occasioned by' which largely mirrored the construction of the words 'arises from' adopted in Lincu. The learned primary judge explained:[44]
Neither the applicant nor the respondent could direct me to any decisions in this jurisdiction that have considered the proper construction of s 196(1) of the TLA. While both Parker and Lincu considered the same or a similar provision in the NSW Act (s 133), neither case is exactly on all fours with this one. While the words 'occasioned by' were contained in s 133 at the time it was considered in Parker, the NSW Act did not, at that time, provide for an administrative process to claim compensation. On the other hand in Lincu, while s 133 had been amended to replace the words 'occasioned by' with 'arising from', the NSW Act had also been amended to include a regime for administrative processing of claims. I place significant weight on the latter on these amendments in finding that Lincu is more persuasive than Parker in determining the proper construction of s 196(1) of the TLA.
In summary, I find that the proper construction of s 196(1) of the TLA is that the state is not liable for compensation for any loss, damage or deprivation where a breach of trust is a cause (being a not insignificant cause) of that loss, damage or deprivation and that the breach of trust does not have to be the sole cause of that loss, damage or deprivation.
[44] Primary reasons [86] - [87].
Kunc J observed that Baalman's The Torrens System in New South Wales[53] offers an extensive consideration of the statutory exemption (that is the equivalent of s 196 of the TLA). The references to statutory provisions are to the RPA (NSW) and the reference to s 133 is a reference to the NSW provision considered in Parker, and the equivalent of s 196 of the TLA. Relevant passages of the text include the following:[54]
The Torrens System anticipated, by upwards of 60 years, some of the major reforms which were introduced into England by the property legislation of 1925. An outstanding feature of the English legislation is the 'curtain' which it draws between legal and equitable estates. A purchaser from the owner of a legal estate is bound to assume that his vendor has full powers of disposition. If the vendor happens to be a trustee, the cestuis que trust will have remedies for any misuse of his powers, but they are remedies against the trustee - not against the purchaser. In other words, the purchaser is not a policeman for the cestuis que trust.
The Torrens 'curtain' is the register‐book. There is evidence of a consistent design throughout the Act to confine any supervision of fiduciary dealings to the persons immediately concerned. Section 43 exonerates a person dealing with the registered proprietor from the effect of notice of a trust. A fiduciary applicant for transmission continues, after registration, to be responsible to his cestuis que trust, 'but for the purposes of any dealing with such land' he is deemed to be the absolute proprietor thereof, and, no doubt, to have full powers of disposition; s 96. A bona fide purchaser is absolved from the consequences of any fraud or error (including a breach of trust) which may have attended the 'procuring the registration of the transfer to such purchaser'; s 135.
It is in conformity with the policy expressed in the sections above mentioned that s 133 relieves the Assurance Fund from liability for loss occasioned by a breach of trust. As the Assurance Fund can be reached only by an action against the Registrar‐General s 126 (5); and as any damages or costs recovered in action against the Registrar‐General are to be charged to the account of the Assurance Funds s 129; the exoneration of the Assurance Fund by s 133 amounts to an exoneration of the Registrar‐General.
Even without the express provision of s 133, it was apparent that, except in the limited class of cases contemplated by s 82 (2), the Registrar‐General was not intended to supervise the dealings of fiduciary proprietors, at least not to the extent of depriving purchasers of any exonerating curtain which the Act has drawn between legal and equitable estates. As the High Court stated in Wolfson v Registrar‑General, the notification of equities in the register‐book 'is within the very evil to which the Act is directed'.
That which was evil in 1934 has since been made good by the enactment of s 12(f), which empowers the Registrar‐General to enter caveats or notifications 'for the protection of any person interested in the land'. As the amendment made no attempt to reconcile the new power with the sections which exonerate purchasers, the extent to which it was intended to be exercised must be a matter for speculation. But it is clear that s 12(f) has potentialities for exposing to the public gaze much of that conveyancing untidiness which the curtain was intended to hide. It is possible also that it has some qualifying effect on s 133, on the basis that, in electing to supervise a trust when he is not required to do so, the Registrar‐General would relinquish the protection given by that section to the Assurance Fund. It was made clear in Ex parte Saunders that the Registrar‐General owed no duty towards cestuis que trust. It was held in that case that he should have registered a dealing by trustees in which the consideration was by way of compromising an adverse claim without inquiring whether the compromise was a provident one.
It was stated in Templeton v Leviathan Pty Ltd (cited in Beckenham & Harris at p 278) that the Registrar‐General should not register a dealing which he knows to be improper, and that to do so would expose the Assurance Fund to liability. It is difficult to see how there could ever be any doubt on that point. But propriety in this context is not measured by doctrines of English equity. We are 'here dealing with a totally different land law, namely, a system of registration of title contained in a codifying enactment'; Haji Abdul Rahman v Mahomed Hassan. In the clearest terms that law excludes breaches of trust from the field of impropriety with which the Registrar‐General need be concerned.
[53] Woodman R A, Baalman: The Torrens System in New South Wales (Law Book Co of Australasia Pty Ltd, 1951) (Baalman).
[54] Baalman 412 - 414 (citations omitted) and cited in Lincu [80].
As Kunc J observed,[55] Baalman's commentary reveals similar policy concerns as those propounded in favour of the trust exemption in the original 1861 commission report in South Australia. The inclusion of the trust exemption reflected the policy that the regime did not provide a further protection for breaches of trust, and that trusts were already afforded limited but sufficient protections.
[55] Lincu [81].
Kunc J explained that the amendments to the RPA (NSW) arose out of a report of the Law Reform Commission of NSW published in 1996. The report was critical of the 'ungainly drafting' of the statutory provisions that are mirrored in the TLA, describing them as a 'tangled skein' and 'in need of drastic revision'.[56] The amendments in NSW were introduced as a result of the report and were contained in the Real Property Amendment (Compensation) Act 2000 (NSW).
[56] Lincu [92].
Kunc J described the amendments as having 'completely rewritten' the relevant statutory provisions with the adoption of a 'new structure'.[57] In Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 59 NSWLR 452 (Challenger), Bryson J described the amendments as having been 'completely recast',[58] and amounting to a 'wide ranging reform' and 'a new beginning'.[59]
[57] Lincu [105].
[58] Challenger [64].
[59] Challenger [74].
I agree with those characterisations. For that reason, I respectfully consider, contrary to the approach taken by the primary judge, that it is not possible to construe s 196 by reference to the construction of the statutory provision considered in Lincu.
The observations in Lincu are nevertheless helpful in understanding the history and objects of the provisions, as they trace the development of the legislation, in the form in which it remains in the TLA. More recently, the reformed NSW provisions were considered by the Court of Appeal in Ausbao (286 Sussex Street) Pty Ltdv Registrar General NSW [2023] NSWCA 18 (Ausbao), which adopted the approach in Challenger and other first-instance decisions. Although dealing with the reformed legislation and different issues, those cases include important observations regarding the Torrens system of title by registration, its inherent pitfalls, and the necessity for legislative remedies to address those consequences.
In Challenger, Bryson J referred to the perilous and laborious processes that attended land transactions which characterised the general law or old system of title preceding the Torrens system.[60] The far more efficient system of title by registration creates the 'plainly discernible possibility' of loss and damage that will 'inevitably arise'. In that context, Bryson J said:
Recognising loss or damage and paying compensation become normal parts of the workings of Torrens System … The Torrens System pursues efficiency and promptitude in establishing land titles, and deals with the risks which pursuit of these advantages brings with it.
[60] Challenger [84].
In Ausbao,[61] the Court of Appeal similarly recognised, at least implicitly, that the system of indefeasibility may well operate to cause loss and prejudice and the consequent necessity for provisions enabling compensation.
[61] Ausbao [30], [51], [67].
In my view, the observations in the cases referred to above support the conclusion that an object of the TLA is to enable compensation to be available to innocent people who have incurred loss by reason of the system of title by registration and the indefeasibility of that title.
Ms Aliraja's contention went further. It was submitted on behalf of Ms Aliraja that the purposes of the TLA include 'a system of insurance' in the provision of compensation and a 'guarantee against losses which but for the TLA would not otherwise occur'.[62] It was submitted that such a purpose mandates a limiting construction to the exemption in s 196.
[62] Appellant's Further Submissions [46].
The purpose of a statute is not something which exists outside the statute. It resides in its text and structure.[63] In my view, the history and text of the statutory provisions suggest the following policy objectives:
[63] Lacey v Attorney-General (Qld) [2011] HCA 10; 242 CLR 573 [44].
1.The system is one of title by registration and the provision of indefeasibility of title.
2.Under the system, the register serves as a 'curtain' so as to remove from sight and concern interests in property arising from fiduciary duties owed by the registered interest-holder to others.
3.That feature of the system is critical to the indefeasibility of title which is a hallmark of the system itself.
4.That critical feature is manifested in statutory provisions such as those which preclude the registration of interests arising under a trust; see s 55 of the TLA.
5.The system has evolved to some extent to include limited recognition or measures for protection of such interests, for example by the lodgement of caveats.
6.The efficiency of the system brings with it the inevitability of loss to innocent people, and therefore the necessity for remedial provisions to provide compensation.
7.Specifically, the system of indefeasibility of title concealing, as it does, anything that lies behind the curtain of the register, including error and fraud, can create loss to innocent users of the system. The system therefore provides compensatory provisions in specific circumstances to address that injustice.
8.The compensatory provisions include liability to be assumed by the State or a statutory fund where recovery cannot be obtained from the perpetrator of the injustice.
9.The system did not permit the registration of interests arising under trusts, and it similarly did not generally afford remedies to those who suffer loss of or to their unregistered interest by the conduct of a fiduciary. The system left the remedy to be pursued as between the cestui que trust and the trustee.
10.The compensatory provisions therefore did not apply to loss suffered by the holder of an interest arising under a trust. For that reason, the State is, broadly speaking, exempt from liability if loss is caused by a breach of trust.
Those policy objectives expose the tension that is manifest in the circumstances of this appeal. The statutory system is concerned with providing compensation for the innocent victim of its operation, including a victim of fraud. But the efficacy of the system of indefeasibility of title depends upon leaving the holders of unregistered (relevantly, equitable) interests to recover any loss from those who owe them equitable (generally, fiduciary) duties. When the loss is caused by both fraud and a breach of fiduciary duty, a question arises as to whether the compensatory provisions apply or whether the loss comes within the exemption. That tension is resolved by the proper construction of s 196.
I respectfully agree with the observation of Kunc J in Lincu that it is a fundamental and historical position of the Torrens legislation that trusts are not recorded on the register and are accorded quite specific but minimal recognition.[64] The same may be said of the compensation provisions. They do not, as contended on behalf of Ms Aliraja, amount to, or reflect a purpose of, a system of insurance, or the provision of a guarantee. As Kunc J went on to observe in respect of s 129 of the RPA (NSW) (the successor provision to s 133 considered in Parker and the statutory parallel in NSW of s 196 of the TLA):
The Torrens scheme is based on indefeasibility by registration. It would be illogical and ahistorical to construe s 129 as permitting compensation where a cause of loss and damage is breach by a registered proprietor of something which the RPA expressly provides is not to be included in the register in relation to that registered proprietor.
[64] Lincu [112].
Notwithstanding the significant amendments to the statutory provisions considered by Kunc J, in my view that observation is apposite to a proper understanding of s 196. Having regard to the text, history and policy of the TLA, in my view it is going too far to say that its purpose encompasses a 'system of insurance' or a form of 'guarantee against losses'. Rather, the TLA reflects a carefully prescribed system of compensation that is at the same time designed to preserve the system's 'curtain' over interests lying beyond the register.
However, in my view, the TLA's disregard for interests lying beyond the register (such as those held within a trust structure) is to be balanced against the TLA's concern for the vulnerability of its system to fraudulent conduct. In that respect, the following may be observed regarding the provisions of the TLA; the interest of the registered proprietor is paramount (see s 68). That is so even where fraud may have infected the chain of transmission that led to the bona fide registered proprietor. A bona fide purchaser for valuable consideration who thereby becomes the registered proprietor of land is insulated from any action, even if the previous proprietorship is tainted by fraud (see for example s 202). At the same time, the fraudster and those with knowledge of fraud, are expressly excluded from the protections of the TLA. The fraudster is not permitted to exploit the statutory scheme of title by registration to enjoy the benefit of his or her fraud. That is evident from sections such as 68, 134, 188(7), 199(d) and 214A.
Simply put, fraud stands outside the principle of indefeasibility of title. And that is so independently of whether the law imposes a trust relationship by reason of the fraud. As the High Court explained in Farah Constructions v Say-Dee:[65]
If registration of the mortgagee's interest is achieved dishonestly then the registration, and with it the interest, are liable to be set aside not because, on registration, the registered holder became a constructive trustee, but because s 42(1) recognises that fraud renders the interest defeasible.
[65] Farah Constructions v Say-Dee [2007] HCA 22; 230 CLR 89 [193] citing Tadgell JA in Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133, 156 ‑ 157.
It follows in my view that in addition to the observations of Kunc J, the provisions of the TLA are to be construed in the context of a statutory scheme that seeks to prevent the fraudulent registered proprietor from benefitting from his or her fraudulent conduct.
The words 'occasioned by' in s 196 are to be construed against the matters set out above.
The first relevant question in my view is whether in light of those matters, it can be said that a loss caused by a fraudster, who by reason of the fraud became a constructive trustee at the time that the loss was suffered, was 'occasioned by' a 'breach of any trust'.
A trust will likely arise constructively as a matter of the law of equity in consequence of a fraudulent deprivation of land or an interest in land. That trust will likely render the fraudulent new registered proprietor subject to trust duties as a trustee, such that the registered proprietor's conduct causing loss to the defrauded original proprietor or owner of the relevant interest will constitute a breach of that constructive trust. As explained in [148] - [149] above, in my view, on a proper construction of s 196, such a breach of trust is not an independent cause of the loss or damage but is a mere constructed consequence or product of the fraud, such that the loss or damage is not, in truth, occasioned by the breach of trust. Rather, the loss from the breach of trust merely serves to quantify the damages caused by the fraud. The loss itself was in those circumstances occasioned by the fraud for the purposes of s 196, not the breach of trust. As explained at [148] - [151] above, that is how I consider that the approach of Mahoney JA in Parkeris best understood.
It follows, in my view, that on a proper construction of s 196, if loss is caused by a registered proprietor who has been rendered a trustee by reason of fraud, then the loss is occasioned by the fraud, not by any breach of trust. There may well be language that captures such a construction. The words 'occasioned by' may be said, on their proper construction, to connote the 'true' cause, the 'substantive' cause, or the 'animating' cause. Although I am inclined to the view that 'animating cause' might best reflect the legislative intention, I am not persuaded that it is helpful, or even possible, to identify the particular adjective that best reflects the causal link embodied in the words 'occasioned by' in s 196 for all purposes. In my view, it is sufficient and appropriate to conclude that the words 'occasioned by … any breach of trust' do not include loss caused by a fraudster whose trustee status is itself the product of the fraud.
As I have observed, this case is somewhat different from Parker and the circumstances posed in the question at [182] above. In this matter, there was an express trust pursuant to the Trust Agreement. The loss was suffered while Mr Seedat acted in that capacity. The Commissioner in effect, and the learned trial judge expressly, proceeded on the basis that because loss was suffered while Mr Seedat acted in that capacity, on a proper construction of the words 'occasioned by' in s 196, the claim had no prospect of success no matter what evidence might be forthcoming of when and how the fraud was perpetrated.
In my respectful view, the Commissioner's approach to the construction of s 196 overlooked what I consider to be the proper construction and application of s 196. That is because the construction effectively adopted by the Commissioner ignored the possibility that the Trust Agreement itself may well have been the product of a fraudulent design. If that were so, then even though loss was caused by Mr Seedat through the grant of the mortgage while he was (at least ostensibly) an express trustee under the fraudulent Trust Agreement, in truth the loss was occasioned by Mr Seedat's fraud, not by a breach of trust.
I would uphold the alternative ground. The matter ought to be remitted back to the Commissioner to determine the application in accordance with the proper construction of s 196. That is, if there were evidence that the Trust Agreement itself was fraudulent, then on a proper construction of s 196, Ms Aliraja's loss was occasioned by the fraud, not by a breach of trust.
Consideration of further alternative ground
Under the further alternative ground, Ms Aliraja submits that the words 'occasioned by' in s 196 should be understood to mean 'solely occasioned by'.
In my view such a construction requires the application of an unwarranted gloss to the statutory text by the addition of the word 'solely'. I would not uphold the construction, and therefore would not uphold the further alternative ground.
Conclusion
For the reasons set out above I would uphold the appeal and remit the matter back to the Commissioner to be determined according to law.
I certify that the preceding paragraphs comprise the reasons for decision of the Supreme Court of Western Australia.
MJM
Principal Associate to the Hon Chief Justice Quinlan
3 JULY 2025
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