Chamberlain v Registrar-General of NSW

Case •

[2020] NSWSC 923

•

21 July 2020

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Chamberlain v Registrar-General of NSW [2020] NSWSC 923
Hearing dates: 23 June 2020
Date of orders: 21 July 2020
Decision date: 21 July 2020
Jurisdiction:Equity
Before: Darke J
Decision:

Proceedings dismissed with costs.

Catchwords:

LAND LAW — Torrens title — claim for compensation from the Torrens Assurance Fund — property of plaintiff company transferred to director of company and his wife in 1997 — transfer effected as part of fraud perpetrated by director — director transferred his interest to wife in 2000 — wife thereafter held title as sole registered proprietor — company commenced statutory derivative proceedings in 2008 against director and wife to recover the land — held at first instance that wife’s title was indefeasible but orders for equitable compensation made against director — on appeal company successful in obtaining order that wife held property on trust for it — in 2015 High Court holds that wife’s initial title was indefeasible but she held a one-half interest on trust for the company — company makes claim in 2017 for compensation from Assurance Fund — Registrar-General rejects claim on basis that it was made out of time — whether claim for compensation brought outside time stipulated in s 131(2) of Real Property Act 1900 (NSW) — whether “compensable loss” within s 129 of Real Property Act arose more than six years before claim made in 2017 — held that “compensable loss” had been suffered by 15 September 2000 — held that “compensable loss” was not first suffered at time of High Court decision — whether cause of action barred by s 14(1)(d) of Limitation Act 1969 (NSW) — held that six year limitation period commenced to run on 15 September 2000 — held that limitation period was not thereafter suspended on the basis that company was a person “under a disability” within s 52 of Limitation Act — disability provisions of s 52 held to apply only to natural persons — held that in any event company was not substantially impeded by reason of any relevant impairment or restraint — held further that even if under a disability during a period of receivership the limitation period would have expired in March 2012 — no action brought on cause of action before expiry of limitation period — cause of action extinguished — proceedings dismissed.

Legislation Cited:

Limitation Act 1969 (NSW), ss 11(3), 14(1)(d), 52

Interpretation Act 1987 (NSW), s 21(1)

Minors (Property and Contracts) Act 1970 (NSW), ss 8,9

Real Property Act 1900 (NSW), Parts 13 and 14

Real Property Amendment (Compensation) Act 2000 (NSW)

Cases Cited:

Atlas Tiles Ltd v Briers (1978) 144 CLR 202

Bass v Permanent Trustee Company Ltd (1999) 198 CLR 334; [1999] HCA 9

Baxter v Obacelo Pty Ltd (2001) 205 CLR 635; [2001] HCA 66

Cassegrain v Gerard Cassegrain & Co Pty Ltd [2013] NSWCA 454

Cassegrain v Gerard Cassegrain & Co Pty Ltd (2015) 254 CLR 425; [2015] HCA 2

Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 59 NSWLR 452; [2003] NSWSC 1072

Gerard Cassegrain & Co Pty Ltd v Cassegrain [2011] NSWSC 1156

Gerard Cassegrain & Co Pty Ltd v Cassegrain (2013) 87 NSWLR 284; [2013] NSWCA 453

Guthrie v Spence (2009) 78 NSWLR 225; [2009] NSWCA 369

Haines v Bendall (1991) 172 CLR 60

Lincu v Community First Credit Union Ltd (2019) 19 BPR 39,351; [2019] NSWSC 568

Pedulla v Panetta [2011] NSWSC 1386

Registrar-General (NSW) v Behn (1981) 148 CLR 562

Registrar-General v Cleaver (1996) 41 NSWLR 713

Saade v Registrar-General of NSW (1993) 179 CLR 58

Scarcella v Lettice (2000) 51 NSWLR 302; [2000] NSWCA 289

Sinclair v Registrar-General [2010] NSWSC 173

Category:Principal judgment
Parties: Christopher Mel Chamberlain in his capacity as liquidator of Gerard Cassegrain & Co Pty Ltd (in liquidation) (First Plaintiff)
Gerard Cassegrain & Co Pty Ltd (in liquidation) (Second Plaintiff)
Registrar-General of NSW (Defendant)
Representation:

Counsel:
Mr B A Coles QC with Mr G B Colyer (Second Plaintiff)
Mr P Walsh (Defendant)

Solicitors:
McCabe Curwood (Second Plaintiff)
Stephen Prent, Solicitor for the Registrar-General (Defendant)
File Number(s): 2019/165634
Publication restriction: None

Judgment

Nature of claim; Summary of salient facts

  1. These proceedings concern a substantial claim for the payment of compensation from the Torrens Assurance Fund pursuant to Part 14 of the Real Property Act 1900 (NSW) (“the Act”). The claim is brought against the Registrar-General by Gerard Cassegrain & Co Pty Ltd (in liquidation) (“the company”). The company is named as the second plaintiff in the Amended Statement of Claim that was filed on 23 August 2019. The first plaintiff is the liquidator of the company. The company has been in liquidation since 24 July 2012. When the proceeding was commenced on 27 May 2019 the liquidator was the only plaintiff. However, the liquidator discontinued the proceedings so far as he was personally concerned on 15 November 2019.

  2. The claim concerns eight parcels of land near Wauchope, which are together sometimes referred to as the Dairy Farm (“the property”). The company was, prior to 10 March 1997, the sole registered proprietor of the property. The property was unencumbered.

  3. On 10 March 1997, upon registration of Transfer No 2892535 (expressed to be for a consideration of $1 million), Claude Cassegrain and his wife Felicity Cassegrain became the registered proprietors of the property as joint tenants. As will be seen, the transfer took place as part of a fraud perpetrated against the company by Claude Cassegrain.

  4. On 18 April 2000, upon registration of Transfer No 6724658 (expressed to be for a consideration of $1.00), Felicity Cassegrain became the sole registered proprietor of the property. Subsequently, on 28 October 2004 and 21 March 2006, parts of the property became subject to registered mortgages in favour of Westpac Banking Corporation (Mortgage AB54426) and Commonwealth Bank of Australia (Mortgage AC189222).

  5. In September 2008, a statutory derivative action was commenced on behalf of the company by a member of the company (Dennis Cassegrain) against Claude and Felicity Cassegrain. The relief sought included orders for the recovery of the land from Felicity Cassegrain, and equitable compensation from Claude Cassegrain. It was alleged, inter alia, that Claude and Felicity Cassegrain had become registered as proprietors of the land through fraud (see s 118 (1)(d)(i) of the Act). It was further alleged that Felicity Cassegrain was a person who derived her title as sole registered proprietor (otherwise than as a transferee bona fide for valuable consideration) from or through a person registered as proprietor of the land through fraud (see s 118(1)(d)(ii) of the Act).

  6. In essence, the conduct alleged to be fraudulent involved:

  1. the assertion by Claude Cassegrain that he was personally entitled to $4.25 million out of a settlement paid to the company by the Commonwealth Scientific and Industrial Research Organisation;

  2. the taking of steps by Claude Cassegrain to have the company acknowledge that it had a liability to him of $4.25 million; and

  3. the arranging of the transfer of the property from the company to himself and Felicity Cassegrain in such a way as to create the false impression that in exchange for its interest in the property the company would receive the benefit of a $1 million reduction of an existing liability to Claude Cassegrain.

  1. The evidence establishes that in the 1993-1994 financial year, following receipt of the settlement monies, entries were made in the books of account of the company to recognise a loan from the company to Claude Cassegrain of $4.25 million. As at 1 July 1996, Claude Cassegrain’s loan account stood in credit in an amount slightly more than $4 million.

  2. On 2 September 1996, the then directors of the company, Claude Cassegrain and his sister Anne-Marie Cameron, resolved to the effect:

  1. that the property (and certain associated assets) be sold to Claude Cassegrain and Felicity Cassegrain for $1 million (plus the amount incurred by the company on improvements to the property since 21 September 1995);

  2. that the loan account of Claude Cassegrain be debited for the amount of the consideration;

  3. that such debiting be in full satisfaction of the amounts payable to the company; and

  4. that the company shall relinquish all right, title and interest in the property (and associated assets).

  1. The transfer from the company to Claude Cassegrain and Felicity Cassegrain is not in evidence. However, it appears that the transfer was dated 14 September 1996. As noted earlier, the transfer was expressed to be for a consideration of $1 million.

  2. On 30 June 1997, following registration of the transfer, Claude Cassegrain’s loan account with the company was debited in the amount of $1 million in respect of the sale of the property.

  3. The derivative proceedings were heard at first instance by Barrett J (as his Honour then was) in 2011 (see Gerard Cassegrain & Co Pty Ltd v Cassegrain [2011] NSWSC 1156). His Honour found (at [121]) that the establishment in the books of the company of the loan account of Claude Cassegrain did not represent the recording of any genuine indebtedness of the company, and that to the extent Claude Cassegrain received payments from the company on that pretext he took monies of the company that he had no legal right to receive. Barrett J described the loan account as “a false loan account”. His Honour further found (at [127]-[128]) that Claude Cassegrain’s actions in relation to the loan account were dishonest such that when he drew on the loan account (including in connection with the first transfer of the property) he obtained the relevant money or value dishonestly. Barrett J thus held (at [129]) that on each occasion Claude Cassegrain obtained money or value from the company which reflected a reduction in the loan account balance he acted not only in breach of fiduciary duty, but also dishonestly. Claude Cassegrain was found liable to pay equitable compensation. An order was made in May 2012 for equitable compensation to be paid in an amount of almost $3.75 million.

  4. In relation to Felicity Cassegrain (who by then had become the sole registered proprietor of the property), Barrett J held (at [167]) that the fraud exception to indefeasibility of title found in s 42 of the Act did not operate to detract from her registered title. His Honour held (at [176]) that because there was no fraud by her she cannot be said to have been registered as proprietor through fraud (see s 118(1)(d)(i)). His Honour further held (at [177]-[179]) that whilst Felicity Cassegrain was not a transferee of Claude Cassegrain’s interest for valuable consideration, she did not derive her title from or through a person registered as a proprietor of the land through fraud (see s 118(1)(d)(ii)). This was because Claude Cassegrain’s fraud was outside the process by which he obtained registration. The proceedings against Felicity Cassegrain were thus dismissed.

  5. Appeals were brought by both Claude Cassegrain and the company. Claude Cassegrain’s appeal was dismissed (see Cassegrain v Gerard Cassegrain & Co Pty Ltd [2013] NSWCA 454). An application by Claude Cassegrain for special leave to appeal to the High Court was dismissed on 20 June 2014. He became a bankrupt on 15 September 2015. It appears that the company has recovered only about $102,000 from the bankrupt estate.

  6. The company was successful in its appeal against the dismissal of the proceedings against Felicity Cassegrain (see Gerard Cassegrain & Co Pty Ltd v Cassegrain (2013) 87 NSWLR 284; [2013] NSWCA 453). The Court of Appeal held, by majority, that Felicity Cassegrain held the property on trust for the company absolutely. She was thus ordered to transfer the property to the company. Both justices forming the majority (Beazley P and Macfarlan JA) found that Claude Cassegrain acted as Felicity Cassegrain’s agent with respect to the first transfer (see at [37] and [155]), and thus held that the title she obtained as registered proprietor jointly with Claude Cassegrain was defeasible for fraud. Macfarlan JA also reached that conclusion on the basis that Claude Cassegrain and Felicity Cassegrain took title from the company as joint tenants who are thus treated by the law as in effect one person only (see at [156]-[157]). The majority further found (at [98] and [158]) that Felicity Cassegrain was a person who derived her current title (otherwise than as a transferee bona fide for valuable consideration) from or through a person registered as proprietor of the land through fraud, s 118(1)(d)(ii) of the Act not being confined to the process of registration (see also Basten JA at [145]).

  7. On 15 January 2014, Felicity Cassegrain filed an application in the High Court for special leave to appeal. It seems that in these circumstances she did not proceed to transfer the property to the company in accordance with the order of the Court of Appeal. On 20 June 2014 the High Court granted an application by Felicity Cassegrain for special leave to appeal. The appeal was heard on 13 November 2014.

  8. The High Court delivered its judgment on 4 February 2015. By majority, the appeal was allowed in part (see Cassegrain v Gerard Cassegrain & Co Pty Ltd (2015) 254 CLR 425; [2015] HCA 2). The High Court did not accept that Claude Cassegrain acted as Felicity Cassegrain’s agent with respect to the first transfer or that his knowledge of the fraud should be imputed to her (see at [41]-[42]). Neither was it accepted that fraud could be imputed to Felicity Cassegrain because she took title as a joint tenant with Claude Cassegrain (see at [44]-[45] and [53]). It was held (at [55]) that because the fraud of Claude Cassegrain was not brought home to Felicity Cassegrain, her title as a joint tenant was indefeasible. However, the High Court upheld the conclusion of the Court of Appeal that Felicity Cassegrain was a person who derived her current title from or through a person registered as proprietor of the property through fraud, within the meaning of s 118(1)(d)(ii) of the Act (see at [58]-[62]). Accordingly, the High Court concluded (at [65]-[66]):

Felicity's title as joint tenant was not defeasible on account of Claude's fraud. Claude was not her "agent" in any relevant sense. Nor did it follow from Felicity's registration as joint tenant that her title was defeasible. Section 100(1) does not require that the fraud of one of the persons registered as joint proprietors denies all those persons the protection otherwise given by s 42(1). The fraud must be brought home to the person whose title is impeached. Claude's fraud was not brought home to Felicity.

But the interest which Felicity derived from or through Claude (an interest as tenant in common as to half) may be recovered by GC&Co. Felicity was not a bona fide purchaser for value of Claude's interest in the land.

  1. A declaration was made that Felicity Cassegrain held a one-half interest in the property on trust for the company absolutely, and an order was made that she transfer a one-half interest in the property to the company.

  2. Later in 2015, the company commenced proceedings against Felicity Cassegrain seeking relief pursuant to s 66G of the Conveyancing Act 1919 (NSW). Orders for the appointment of trustees for sale were made on 24 July 2015 in respect of some of the parcels of land, and on 4 December 2015 in respect of all of the property. Orders were also made to the effect that for the purposes of any sale which involved the discharge of the Westpac Banking Corporation mortgage or the Commonwealth Bank of Australia mortgage, the amount required to discharge those mortgages was to be treated as a liability of Felicity Cassegrain alone. Felicity Cassegrain filed an appeal against those orders, but the appeal was dismissed on 16 May 2016.

  3. The property was sold shortly thereafter for $3.2 million. The company received approximately $1.332 million from the net proceeds of sale in July 2016.

  4. On 17 January 2017, the company, by its liquidator, lodged an administrative claim for compensation pursuant to s 131(1) of the Act. The documents that embody the claim are not in evidence, but the fact of its lodgement is admitted on the pleadings. So, too, is the fact that on 28 February 2019 the Registrar-General refused the administrative claim for compensation. It seems to be common ground that the claim was refused because the Registrar-General took the view that it was made out of time.

  5. The company alleges, and the Registrar-General denies, that at the time of the refusal of the claim the company was entitled to compensation under Part 14 of the Act. The dispute is primarily centred upon competing contentions as to when the company became entitled to seek compensation under Part 14 of the Act, and as to whether the making of such a claim became barred by the operation of an applicable limitation provision.

Limitation issues

  1. In this regard, the case pleaded by the company is essentially encapsulated in paragraphs 37-40 and 44 of the Amended Statement of Claim. It is alleged in paragraph 37 that the registration of Transfer No 2892535 on 10 March 1997 resulted in persons other than the company being registered as proprietors of the land, and that further registered interests in the land “occurred” when the two mortgages were later registered. It is then alleged in paragraph 38 that the company “thereafter suffered loss and damage arising from the matters referred to in paragraph 37” and that such loss and damage was a result of the operation of the Act where the company “was ultimately unable to recover its unencumbered interest in the whole of the land”. It is alleged in paragraph 40 of the Amended Statement of Claim:

At no time during the pendency of or following the outcome of any of the proceedings referred to in paragraphs 9 or 13 above, or prior to the outcome of the proceeding in the High Court referred to in paragraph 31 above, was it open to the plaintiffs, or reasonably practicable for the plaintiffs to bring any claim against the defendant for any loss or damage resulting from the operation of the Act.

  1. The company then alleges in paragraph 44 that for the purposes of s 131(2)(b) of the Act, its entitlement to compensation “comprised loss and damage that had arisen during the six years prior to 17 January 2017”. I note in passing that s 131 of the Act (which is within Division 3 of Part 14) relevantly provides:

131   Administrative proceedings for recovery of compensation

(1)   A person who has suffered compensable loss may lodge a claim for compensation, in the approved form, with the Registrar-General.

(2)   Such a claim may not be made more than 6 years after:

(a)   the date on which the act or omission giving rise to the compensable loss occurred, or

(b)   if the compensable loss arose after the date on which that act or omission occurred, the date on which the compensable loss arose.

  1. Paragraph 40 of the Defence to the Amended Statement of Claim states:

The Registrar General:

(a)   denies the allegations in paragraph 40;

(b)   says that from the commencement of the Real Property Amendment (Compensation) Act 2000 (NSW) (“RP Amendment Act”) on 15 September 2000 GC&Co was able to claim from the Registrar General compensation for loss or damage suffered by it as a result of registration of Transfer 2892535 on 10 March 1997; and

(c)   says there has been no impediment to GC&Co making a claim against the Registrar General for compensation for loss or damage suffered as a result of registration of mortgage AB54426 on 28 October 2004 or mortgage AC189222 on 21 March 2006 from those dates.

  1. Paragraph 44 of the Defence to Amended Statement of Claim states:

In answer to paragraph 44 the Registrar General:

(a) denies that, for the purposes of s131(2)(b) of the RPA, any entitlement of GC&Co to compensation arose in the six (6) years prior to 17 January 2017;

(b)   says that the entitlement of GC&Co to compensation arose:

(i) in respect of transfer 2892535 on 10 March 1997, on commencement of the RP Amendment Act on 15 September 2000;

(ii)   in respect of mortgage AB54426 on registration on 28 October 2004;

(iii)   in respect of mortgage AC189222 on registration on 21 March 2006; and

(c) further says that GC&Co’s administrative claim for compensation, lodged on 17 January 2017 was not lodged with the Registrar General within the six (6) year period prescribed by s 131(2) of the RPA.

  1. Paragraph 50 of the Defence to Amended Statement of Claim states:

The rights, if any, of the plaintiffs to bring the claims the subject of these proceedings against the Registrar General did not arise within six (6) years of the commencement of this action, or within six (6) years of the first plaintiff’s administrative claim for compensation pursuant to s 131(1) of the RPA being 17 January 2017, and in consequence are barred by s 14(1) of the Limitation Act 1969 (NSW) and is extinguished pursuant to s 63 of that Act.

  1. The company filed a Reply in response to paragraphs 40 and 50 in which it is alleged that at various times the company was under a disability within the meaning of s 52(1) of the Limitation Act 1969 (NSW) such that the running of any limitation period under that Act was suspended. The disability is said to arise from Claude Cassegrain’s position of control in relation to the company, the fact that the company was in receivership between 15 June 1999 and 21 December 2004, and the fact that the company has been in liquidation since 24 July 2012. It is alleged, in the alternative, that the company was under a disability until the proceedings against Felicity Cassegrain were finally determined (on 4 February 2015) and Claude Cassegrain became a bankrupt (on 15 September 2015) because until then any court proceedings for compensation under Part 14 of the Act would have been liable to be struck out as an abuse of process.

Applicable legislation

  1. It is necessary to refer to the legislation that was applicable at certain times since 1997.

  2. At all relevant times s 14(1)(d) of the Limitation Act provided:

(1)   An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims:

…

(d)   a cause of action to recover money recoverable by virtue of an enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture.

  1. By s 12 of that Act, the provisions of Part 2 (which includes s 14) have effect subject to the provisions of Part 3 (which includes s 52). Section 52 at all relevant times provided:

(1)   Subject to subsections (2) and (3) and subject to section 53, where:

(a)   a person has a cause of action,

(b)   the limitation period fixed by this Act for the cause of action has commenced to run, and

(c)   the person is under a disability,

in that case:

(d)   the running of the limitation period is suspended for the duration of the disability, and

(e)   if, but for this paragraph, the limitation period would expire before the lapse of three years after:

(i)   the date on which the person last (before the expiration of the limitation period) ceases to be under a disability, or

(ii)   the date of the person’s death,

(whichever date is the earlier), the limitation period is extended so as to expire three years after the earlier of those dates.

(2)   This section applies whenever a person is under a disability, whether or not the person is under the same or another disability at any time during the limitation period.

(3)   This section does not apply to a cause of action to recover a penalty or forfeiture or sum by way of penalty or forfeiture, except where the person having the cause of action is an aggrieved party.

  1. Section 11(3) of the Limitation Act provides:

For the purposes of this Act a person is under a disability:

(a)   while the person is under the age of eighteen years, or

(b)   while the person is, for a continuous period of twenty-eight days or upwards, incapable of, or substantially impeded in, the management of his or her affairs in relation to the cause of action in respect of the limitation period for which the question arises, by reason of:

(i)   any disease or any impairment of his or her physical or mental condition,

(ii) restraint of his or her person, lawful or unlawful, including detention or custody under the Mental Health Act 1958,

(iii)   war or warlike operations, or

(iv)   circumstances arising out of war or warlike operations.

  1. Prior to 15 September 2000, Part 14 of the Real Property Act (headed “Civil rights and remedies”) included s 126 which concerned the bringing of proceedings by persons deprived of land or of any estate or interest in land, including in certain circumstances against the Registrar-General. Section 126 provided:

126(1)   Any person deprived of land or of any estate, or interest in land:

(a)   in consequence of fraud, or

(b)   through the bringing of such land under the provisions of this Act, or

(c)   by the registration of any other person as proprietor of such land, estate, or interest, or

(d)   in consequence of any error, omission, or misdescription in the Register,

may bring and prosecute in any Court of competent jurisdiction an action for the recovery of damages.

(2)   An action under subsection (1) shall, in any case in which the land to which the action relates has been included in two or more folios of the Register created under Part 3, or a folio of the Register has otherwise incorrectly been created under Part 3, be brought and prosecuted against the Registrar-General as a nominal defendant and, in any other case, shall, subject to subsections (3), (4) and (5), be brought and prosecuted against the person:

(a)   upon whose application the land was brought under the provisions of this Act,

(b)   upon whose application the erroneous registration was made, or

(c)   who acquired title to the land, or the estate or interest therein, through the fraud, error or omission or misdescription.

(3)   In every case in which the fraud, error, omission, or misdescription occurs upon a transfer for value, the transferor receiving the value shall be regarded as the person upon whose application the transferee was recorded as registered proprietor in the folio of the Register.

(4)   Except in the case of fraud or of error occasioned by any omission, misrepresentation, or misdescription in the person’s application, or in any instrument executed by the person, the person upon whose application such land was brought under the provisions of this Act, or such erroneous registration was made, shall, upon a transfer of such land bona fide for value cease to be liable for the payment of any damages which might have been recovered from the person under this section.

(5)   In any of the following cases, that is to say:

(a)   where such person ceases to be liable for the payment of damages as aforesaid, or

(b)   when the person liable for damages under this section is dead or bankrupt or cannot be found within the jurisdiction,

such damages with costs of action may be recovered out of the Torrens Assurance Fund by action against the Registrar-General as nominal defendant.

  1. It appeared to be common ground between the parties that no circumstances had arisen prior to 15 September 2000 that would have enabled the company to bring an action for damages under s 126 against the Registrar-General in relation to any dealings with the property up to that time. That seems to be correct as Part 3 of the Act had no relevant application to the situation, and neither Claude Cassegrain nor Felicity Cassegrain fell within s 126(5)(b). It seems that neither would any action have been available against the Registrar-General pursuant to s 127 of the Act as it then stood, as the provisions of the Act would not have barred the company from bringing proceedings against Claude Cassegrain and Felicity Cassegrain, or Felicity Cassegrain alone, for possession or recovery of the property on the grounds of fraud.

  2. The Real Property Amendment (Compensation) Act 2000 (NSW) commenced on 15 September 2000. Amongst other amendments to the Act, it inserted new Parts 13 (headed “Civil rights and remedies” – sections 118 to 127) and 14 (headed “The Torrens Assurance Fund” – sections 128 to 135). It is necessary to set out a number of these new provisions.

118   Registered proprietor protected except in certain cases

(1)   Proceedings for the possession or recovery of land do not lie against the registered proprietor of the land, except as follows:

…

(d)   proceedings brought by a person deprived of land by fraud against:

(i)   a person who has been registered as proprietor of the land through fraud, or

(ii)   a person deriving (otherwise than as a transferee bona fide for valuable consideration) from or through a person registered as proprietor of the land through fraud,

…

120   Proceedings for compensation

(1)   Any person who suffers loss or damage as a result of the operation of this Act in respect of any land, where the loss or damage arises from:

(a)   fraud, or

(b)   any error, misdescription or omission in the Register, or

(c)   the land being brought under the provisions of this Act, or

(d)   the registration (otherwise than under section 45E) of some other person as proprietor of the land, estate or interest,

may take proceedings in any court of competent jurisdiction for the recovery of damages.

(2)   Such proceedings may be taken:

(a)   against the person whose acts or omissions have given rise to the loss or damage referred to in subsection (1), or

(b)   against the Registrar-General.

(3) Proceedings against the Registrar-General are to be taken in accordance with Part 14.

…

129   Circumstances in which compensation payable

(1)   Any person who suffers loss or damage as a result of the operation of this Act in respect of any land, where the loss or damage arises from:

(a)   any act or omission of the Registrar-General in the execution or performance of his or her functions or duties under this Act in relation to the land, or

(b)   the registration (otherwise than under section 45E) of some other person as proprietor of the land, or of any estate or interest in the land, or

(c)   any error, misdescription or omission in the Register in relation to the land, or

(d)   the land having been brought under the provisions of this Act, or

(e)   the person having been deprived of the land, or of any estate or interest in the land, as a consequence of fraud, or

(f)   an error or omission in an official search in relation to the land,

is entitled to payment of compensation from the Torrens Assurance Fund.

(2)   Compensation is not payable in relation to any loss or damage suffered by any person:

(a)   to the extent to which the loss or damage is a consequence of any act or omission by that person, or

(b)   to the extent to which the loss or damage:

(i)   is a consequence of any fraudulent, wilful or negligent act or omission by any solicitor, licensed conveyancer or real estate agent, and

(ii)   is compensable under an indemnity given by a professional indemnity insurer, or

(c)   to the extent to which that person has failed to mitigate the loss or damage, or

(d)   to the extent to which the loss or damage has been offset by some other benefit to that person that has arisen from substantially the same circumstances as those from which the loss or damage has arisen, or

(e)   to the extent to which the loss or damage arises because of an error or miscalculation in the measurement of land, or

(f)   to the extent to which the loss or damage arises from:

(i)   the breach by a registered proprietor of any trust (whether express, implied or constructive), or

(ii)   the inclusion of the same land in two or more grants, or

(g)   to the extent to which the loss or damage arises from the recording, or the omitting to record, in the Register of an approved determination of native title or other matter relating to native title rights and interests, or

(h)   to the extent to which the loss or damage arises from circumstances in respect of which this Act provides that proceedings against the Registrar-General do not lie.

(The term “compensation” is defined in s 128(1) to mean compensation from the Torrens Assurance Fund to which a person is entitled under section 129.)

131   Administrative proceedings for the recovery of compensation

(1)   A person who has suffered compensable loss may lodge a claim for compensation, in the approved form, with the Registrar-General.

(2)   Such a claim may not be made more than 6 years after:

(a)   the date on which the act or omission giving rise to the compensable loss occurred, or

(b)   if the compensable loss arose after the date on which that act or omission occurred, the date on which the compensable loss arose.

…

(The term “compensable loss” is defined in s 128(1) to mean loss or damage of the kind referred to in section 129(1), other than loss or damage of the kind referred to in section 129(2).)

132   Court proceedings for recover of compensation

(1)   Proceedings before a court for the payment of compensation are to be taken against the Registrar-General as nominal defendant.

(2)   Court proceedings may not be commenced:

(a)   unless administrative proceedings have been commenced and determined in relation to the compensable loss, or

(b)   more than 12 months after the date on which administrative proceedings have been determined in relation to the compensable loss,

except by leave of the court or with the consent of the Registrar-General.

(3)   Court proceedings may be commenced at any time during the period of 12 months referred to in subsection (2)(b) despite any provision of the Limitation Act 1969 to the contrary.

…

(The term “court proceedings” is defined in s 128(1) to mean proceedings referred to in section 132. The term “administrative proceedings” is defined in s 128(1) to mean proceedings on a claim referred to in section 131.)

133   Subrogation of rights to claim compensation

…

(2)   If administrative proceedings or court proceedings are commenced in relation to a claimant’s compensable loss, the Registrar-General is subrogated to the claimant in respect of the claimant’s rights and remedies in relation to that loss:

(a)   against any person whom the claimant has a cause of action in respect of that loss, and

(b)   against any relevant professional indemnity insurer.

…

(4)   The Registrar-General may join any person as co-defendant in any court proceedings if of the opinion that the claimant has a cause of action against that person in respect of the compensable loss to which the proceedings relate.

…

  1. The amending Act contained certain transitional provisions (inserted as Part 5 of Schedule 3), including cl 13 in the following terms:

Parts 13 and 14 of this Act, as substituted by Schedule 1 [12] to the amending Act, apply to and in respect of any matter in respect of which proceedings are commenced on or after the commencement of those Parts, including any matter that occurred before that commencement.

Submissions concerning limitation issues

  1. The company referred to s 131(1) and noted that a claim for compensation by way of administrative proceedings is dependent upon the claimant suffering “compensable loss”. The definition of that expression directs attention to ss 129(1) and (2). It was submitted that s 129(1) identifies those persons who are entitled to payment of compensation from the Torrens Assurance Fund, and s 129(2) then sets out various circumstances that negatively affect an otherwise qualifying person’s entitlement to compensation (see Lincu v Community First Credit Union Ltd (2019) 19 BPR 39,351; [2019] NSWSC 568 at [106]-[107]). Accordingly, it was submitted, a person is only ever entitled to compensation if their circumstances fall within s 129(1) and the relevant loss or damage they have suffered as a result of the operation of the Act is not negatived by s 129(2).

  2. The company next referred to s 131(2)(b), and submitted that the provision postponed the running of time in the context of administrative claims until the date upon which the compensable loss arose. It was emphasised that the provision showed that the legislature contemplated that such loss might not arise until some time after the occurrence of the act or omission giving rise to the loss.

  3. The company submitted that no compensable loss arose prior to the decision of the High Court in 2015. It was put that prior to the appointment of the liquidator in July 2012 the books and records of the company showed that it had received the agreed value in exchange for the property in 1997, and by May 2012 the order for equitable compensation against Claude Cassegrain (which encompassed the sale price of the land) wholly negatived any entitlement the company might have had to compensation under s 129. It was submitted that essentially the same analysis is applicable in relation to the company’s entitlement to claim compensation through proceedings in the Supreme Court against the Registrar-General pursuant to s 120(2)(b) of the Act.

  4. The company further submitted that the reasoning of the majority of the Court of Appeal in Registrar-General v Cleaver (1996) 41 NSWLR 713 could be applied by analogy to the circumstances of the present case. It was put that damage was not suffered when Felicity Cassegrain acquired in 1997 what was ultimately held to be her indefeasible title as one of two joint tenants; rather, it was suffered when she first raised her successful argument in the High Court that she had indefeasible title as to one-half of the property. The company submitted that it had no reasonable prospect of success against the Registrar-General until 2015 because until then no entitlement to compensation had arisen under s 129(1), and even if it had, it was negatived by the operation of s 129(2) due to its successes in the course of the derivative proceedings.

  5. Also in this context, the company submitted that it suffered loss or damage as a result of the operation of the Act for the purposes of s 129(1) by the judgment and orders of the High Court. It was put that by those orders the company at least “lost its entitlement by order to become the sole registered proprietor of the land” and “lost its interest in the land as the sole beneficiary of a constructive trust affecting the whole”.

  6. Finally, it was submitted that under the provisions that had been in operation since 15 September 2000, a new cause of action and an entitlement to compensation arises whenever loss or damage, arising from any of the circumstances prescribed in s 129(1), is suffered as a result of the operation of the Act in respect of any land.

  7. The Registrar-General submitted that the company’s claim for compensation from the Torrens Assurance Fund is brought pursuant to ss 120 and 129 of the Act, on the basis that the operation of the indefeasibility provisions of the Act (notably ss 42 and 43) brought about loss or damage to it. It was submitted that loss or damage was suffered by the company in 1997 when Felicity Cassegrain became registered as a proprietor of the property through Claude Cassegrain’s fraud. The Registrar-General submitted that those circumstances meant that s 129(1) was satisfied, at least by reason of paragraphs (b) and (e). The Registrar-General accepted that the company could not have made a claim against the Registrar-General until 15 September 2000 when the new provisions of Parts 13 and 14 of the Act came into force. However, it was submitted that, at that time, s 131 operated so as to provide a six year period within which to bring any administrative proceedings for compensation against the Registrar-General, and s 14(1)(d) of the Limitation Act operated so as to provide a six year period within which to bring court proceedings for compensation against the Registrar-General. Reference was made to the decision of Rein J in Sinclair v Registrar-General [2010] NSWSC 173 at [19] as support for the proposition that loss or damage arose at the moment Felicity Cassegrain became registered as a proprietor.

  1. The Registrar-General took issue with the propositions that the company had no cause of action in respect of which time could run until the High Court made orders, and that those orders amounted to a new and separate cause of loss or damage to the company. It was submitted that the decision of the High Court declared the state of affairs that had existed at all times since Felicity Cassegrain acquired her interest in the land in 1997 (see Atlas Tiles Ltd v Briers (1978) 144 CLR 202 at 208).

  2. The Registrar-General also took issue with the contention that underpinned the company’s Reply, namely, that the company was at any time under a disability for the purposes of s 52 of the Limitation Act. It was submitted that only natural persons could come within paragraphs (a), (b)(i) and (ii) of the definition found in s 11(3) of that Act. Insofar as reliance was sought to be placed upon paragraph (b)(ii), the Registrar-General submitted that the restraint of the person must be a physical restraint. It was further submitted that as no equitable claim was involved, there was no occasion to seek to apply the provisions of s 52 by analogy as Barrett J did at first instance in relation to the equitable relief sought by the company (see the judgment of Barrett J at [239]-[241] and see also the decision of the Court of Appeal on Claude Cassegrain’s appeal at [156] and [201]; cf at [195]).

  3. Finally, the Registrar-General submitted that the company’s right to claim compensation from the Torrens Assurance Fund has been extinguished by the operation of s 63 of the Limitation Act.

  4. In support of its Reply, the company submitted that the provisions of s 52 apply to corporations, and in this case the company was substantially impeded in the management of its affairs for the purposes of s 52. This was said to be so regardless of whether the definition in s 11(3) exhaustively prescribes the ways a corporation may be substantially impeded for the purposes of s 52. It was suggested that the company was so impeded from 1997 until some reasonable time after the date when the liquidator was appointed to the company in July 2012. It was also suggested that the company was relevantly impeded during the entire period when Claude Cassegrain controlled the company. It was further submitted that the analogical approach taken by Barrett J at first instance was equally applicable to the direct application of s 52 of the Limitation Act.

Determination

  1. On 10 March 1997 Transfer No 2892535 was registered in respect of the property. The company thereupon ceased to be the registered proprietor. In its place, Claude Cassegrain and Felicity Cassegrain became registered as proprietors as joint tenants. The transfer was effected as part of a fraudulent transaction orchestrated by Claude Cassegrain in the course of the period from about September 1996 to 30 June 1997. The transaction involved the dishonest use of the false loan account of Claude Cassegrain that had been established in the books and records of the company. A false impression was thereby created that the company would receive, and indeed had received, the stated consideration for the transfer. In truth, the company received no consideration for the transfer of the property to Claude Cassegrain and Felicity Cassegrain.

  2. In these circumstances, the company was a person deprived of land in consequence of fraud within the meaning of s 126(1)(a) of the Act as it then stood. By virtue of s 126(1), the company had a right to bring an action for the recovery of damages. Any such action could be brought against any person who acquired title to the property through the fraud (see s 126(2)(c); Saade v Registrar-General of NSW (1993) 179 CLR 58 at 68). However, unless s 126(5) was satisfied, there was no entitlement to recover damages out of the Torrens Assurance Fund by action against the Registrar-General. The right of action against the Registrar-General would only crystallise when s 126(5) was satisfied (see Saade v Registrar-General of NSW (supra) at 68-9; see also Registrar-General (NSW) v Behn (1981) 148 CLR 562 at 571). That did not occur prior to the repeal of those provisions, and the introduction of the new Parts 13 and 14 of the Act, on 15 September 2000.

  3. In the meantime, Felicity Cassegrain became the sole registered proprietor of the property on 18 April 2000 when Transfer No 6724658 was registered. As held by the High Court (at [65]-[66]), the interest she thereby derived from Claude Cassegrain was able to be recovered by the company, but her former title as a joint tenant was indefeasible.

  4. As from 15 September 2000, s 120(1) of the Act provided, inter alia, that any person who suffers loss or damage as a result of the operation of the Act, where the loss or damage arises from fraud, may commence proceedings in this Court for the recovery of damages. By s 120(2), such proceedings may be taken against the persons whose acts or omissions have given rise to the loss or damage, or against the Registrar-General. Proceedings against the Registrar-General have to be taken in accordance with Part 14 of the Act. In Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 59 NSWLR 452; [2003] NSWSC 1072 Bryson J (as his Honour then was) expressed the view (at [69]) that s 120 did not itself create a cause of action or an entitlement to the recovery of damages, but authorised the taking of certain proceedings. It appeared to be common ground between the parties that the proceedings contemplated by s 120 could be taken against either or both of the person whose acts or omissions have given rise to the loss or damage, and the Registrar-General (see Pedulla v Panetta [2011] NSWSC 1386 at [48]-[49]). I observe that in some cases (for example, where the loss arises from an error in the Register) they would be one and the same. The transitional provisions operated so that the new Parts 13 and 14 applied to any matters in respect of which proceedings were commenced after 15 September 2000, including any matter that occurred before that date.

  5. Turning then to Part 14 of the Act, s 129 provides for an entitlement to payment of compensation from the Torrens Assurance Fund. In my opinion, s 129 thereby creates a cause of action to recover money recoverable by virtue of an enactment within the meaning of s 14(1)(d) of the Limitation Act. There is thus a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff (or to a person through whom the plaintiff claims).

  6. Similarly, s 131(1) provides for an entitlement to make a claim for compensation from the Torrens Assurance Fund by means of what is referred to as “administrative proceedings”. Section 131(2) provides that such a claim may not be made more than 6 years after the date on which the act or omission giving rise to the compensable loss occurred, or if the compensable loss arose after the date on which that act or omission occurred, the date on which the compensable loss arose. This provision thus imposes a limitation period for the purposes of a claim made by way of administrative proceedings.

  7. Section 132(2) provides that, except by leave of the court or with the consent of the Registrar-General, court proceedings for compensation from the Torrens Assurance Fund are only to be commenced after the conclusion of administrative proceedings in respect of the compensable loss. The evident intention is that claims for compensation from the Torrens Assurance Fund will normally be pursued in administrative proceedings.

  8. Compensable loss means loss or damage of the kind referred to in s 129(1), other than loss or damage of the kind referred to in s 129(2). Loss or damage of the kind referred to in s 129(1) includes loss or damage as a result of the operation of the Act in respect of land where the loss or damage arises from: the registration of some other person as proprietor of the land (otherwise than under s 45E – concerning possessory title); or the person having been deprived of the land as a consequence of fraud.

  9. In my opinion, by 15 September 2000 the company had suffered loss or damage as a result of the operation of the Act because the effect of the registration of Transfer No 2892535 was that it ceased to be the registered proprietor of the property and Claude Cassegrain and Felicity Cassegrain became registered as proprietors instead. The rights of the company as registered proprietor were lost, and Claude Cassegrain and Felicity Cassegrain came to have such rights, subject to the provisions of the Act. As Bryson J observed in Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (supra) at [74]:

The overall control mechanism in s 129(1) is that the plaintiff must have suffered loss or damage as a result of the operation of the Act; and the workings of indefeasibility will usually have a part in the plaintiffs’ rights’ being in a worse situation than he was entitled to have them but for the operation of the Act.

  1. Upon the registration of the transfer the company was undoubtedly in a worse situation due to the operation of the Act. At the very least, and as ultimately held, Felicity Cassegrain obtained an indefeasible title upon registration. Moreover, the loss or damage can be said to have arisen from: the registration of other persons as proprietors of the land; and being deprived of the land as a consequence of fraud, being the fraud perpetrated by Claude Cassegrain. The suffering of that loss or damage was not negated by the April 2000 transfer from Claude Cassegrain to Felicity Cassegrain which gave her “a new and different title” (see Barrett J at [171]-[172]). It follows that by 15 September 2000 the company had suffered loss or damage of the kind referred to in s 129(1) of the Act. Subject to the operation of s 129(2), the company would thus have suffered compensable loss.

  2. I do not think that s 129(2) can be said to operate so as to reduce or eliminate the loss or damage suffered by the company. None of the paragraphs of s 129(2) seem to me to apply in the circumstances of this case. A suggestion was made by the company that certain orders made in the course of the derivative proceedings may be offsetting benefits for the purposes of s 129(2)(d). In this regard, reference was made to the equitable compensation order made against Claude Cassegrain, and the orders made against Felicity Cassegrain in the Court of Appeal proceedings. To the extent that these are benefits, they arose many years after the loss or damage within s 129(1) was suffered, and they arose in the context of contested legal proceedings. I am unable to accept that they arose from “substantially the same circumstances as those from which the loss or damage has arisen” within the meaning of s 129(2)(d). It can be said that in general terms that provision is directed towards benefits that arise from the very transaction or events that give rise to the relevant loss or damage of the kind referred to in s 129(1). In any case, it has not been shown that at any stage the suggested offsetting benefits were such as to eliminate (not merely ameliorate) the s 129(1) loss or damage suffered by the company.

  3. It is my view, therefore, that by 15 September 2000 the company had suffered a compensable loss for the purposes of Part 14 of the Act. The company thus had an entitlement to make a claim for compensation from the Torrens Assurance Fund pursuant to s 131 of the Act. The company was also entitled, subject to obtaining the necessary consent of the Registrar-General or the leave of the court under s 132(2), to claim compensation from the Torrens Assurance Fund by means of court proceedings against the Registrar-General (see s 132(1)).

  4. It follows from the above that I do not accept that no compensable loss arose prior to the decision of the High Court in February 2015. The company was deprived of land in 1997 as a consequence of fraud, and thereby suffered a loss. It was thereafter open to the company to take proceedings to recover the land or to seek damages from those responsible, including pursuant to s 126 of the Act as it then stood. As I have sought to demonstrate, the loss was a compensable loss for the purposes of Part 14 of the Act. Upon the commencement of Part 14 on 15 September 2000 it became open to the company to take proceedings against the Registrar-General for compensation for the loss from the Torrens Assurance Fund.

  5. The suffering of the loss does not depend upon whether any proceedings were in fact instituted. Neither does the happening of that event depend upon the outcome of any proceedings in which relief is sought to ameliorate the loss. Of course, an actual recovery of damages can affect the extent of recovery from the Torrens Assurance Fund in respect of the loss (see Saade v Registrar-General of NSW (supra) at 69), and of course recovery greater than the loss is not permitted (see Haines v Bendall (1991) 172 CLR 60 at 63; Baxter v Obacelo Pty Ltd (2001) 205 CLR 635; [2001] HCA 66 at [57]).

  6. It may be accepted that from 15 September 2000 there remained uncertainty as to whether, or the extent to which, Felicity Cassegrain’s title to the property was indefeasible. However, the prospect that orders might ultimately be made requiring her to transfer the property to the company does not lead to the conclusion that no loss had been suffered, or that no loss had yet been suffered. The making of such orders might ultimately reduce the extent of recovery from the Torrens Assurance Fund but that is because they act in respect of the same loss. For similar reasons, I do not accept the submissions of the company to the effect that the order for equitable compensation made by Barrett J in May 2012, and the orders of the Court of Appeal against Felicity Cassegrain, meant that it was not possible to pursue a claim for compensation against the Registrar-General until after the High Court had finally determined that in 1997 Felicity Cassegrain obtained an indefeasible title.

  7. Neither do I accept the submission that, by the judgment and orders of the High Court, the company suffered loss or damage as a result of the operation of the Act for the purposes of s 129(1). The judgment and orders of the High Court definitively declared how the Act operated in relation to the transfers in 1997 and 2000 (see Bass v Permanent Trustee Company Ltd (1999) 198 CLR 334; [1999] HCA 9 at [45]-[46]). In so doing, the High Court finally and conclusively determined that the company never had the entitlement, found by the Court of Appeal, to become the sole registered proprietor. The setting aside of the relevant declaration and order of the Court of Appeal (which order had not been carried into effect) did not therefore cause the company to suffer any loss or damage, or loss or damage as a result of the operation of the Act.

  8. Finally, I should state that this is not a case where the reasoning in Registrar-General v Cleaver (supra) can be applied by analogy. That case involved very different circumstances. In that case, there was an error in the Register due to a failure to record a covenant that benefited certain land, on the certificate of title of the burdened land. It was held (by Clarke JA at 721; Abadee AJA agreeing at 725) that loss would only be suffered by the benefited owners if and when the burdened owners insisted on their right to enjoy their land without the burden of the covenant. Handley JA (at 724) stated that until that time the owners of the benefited land could have honestly dealt with their land with the benefit of the covenant “and in all probability never suffered any loss”. The decision in Registrar-General v Cleaver (supra) has been explained on the basis that it involved a latent defect in title that would not be discovered by normal conveyancing procedures (see Scarcella v Lettice (2000) 51 NSWLR 302; [2000] NSWCA 289 at [20]-[22] and [42]). That is clearly not the situation here, where registration of the transfer in 1997 meant that the company was removed as a proprietor of the land, and it was thereafter not possible for it to deal with the land as a proprietor.

  9. In summary, I have concluded that by 15 September 2000 the company had suffered compensable loss within the meaning of Part 14 of the Act. From that date, the company had an entitlement to make a claim for compensation from the Torrens Assurance Fund pursuant to s 131 of the Act. The company was also entitled, subject to obtaining the necessary consent of the Registrar-General or the leave of the court under s 132(2), to claim compensation from the Torrens Assurance Fund by means of court proceedings against the Registrar-General (see s 132(1)). Any claim under s 131 (administrative proceedings) was required to be made within the six year period prescribed by s 131(2). Any claim under s 132 (court proceedings) would have to be commenced within the six year limitation period prescribed by s 14(1)(d) of the Limitation Act.

  10. On the basis that compensable loss had been suffered by 15 September 2000 when the provisions of the new Part 14 came into operation, s 131(2) of the Act would operate so that administrative proceedings to claim compensation would have to be brought by 15 September 2006. However, such proceedings were not brought until 17 January 2017. The Registrar-General was entitled to reject the claim on the ground that it was brought too late, outside the period allowed by the Act.

  11. Further, it is my view that 15 September 2000 is the date on which the cause of action to recover compensation from the Torrens Assurance Fund under the Act first accrued to the company. On that basis, s 14(1)(d) of the Limitation Act operated so that an action (any court proceedings) on the cause of action would not be maintainable if brought after the expiration of a 6 year limitation period running from 15 September 2000. Subject to any suspension or extension of the limitation period pursuant to Division 2 of Part 3 of the Limitation Act, the limitation period would expire on 15 September 2006.

  12. In this regard, the company contended that the limitation period was suspended for a time under s 52 of the Limitation Act whilst it was a person under a disability within the meaning of the section.

  13. The question whether a person is under a disability for the purposes of s 52 depends upon whether the person falls within the definition supplied by s 11(3) (see Guthrie v Spence (2009) 78 NSWLR 225; [2009] NSWCA 369 at [33]). In my opinion, it is clear that the definition exhaustively describes the circumstances in which a person is under a disability for the purposes of s 52.

  14. Under s 21(1) of the Interpretation Act 1987 (NSW), it is provided that in any Act or instrument “person” includes an individual, a corporation and a body corporate or politic. By s 5 it is provided that the Interpretation Act applies to all Acts, and does so except insofar as the contrary intention appears in either the Interpretation Act itself or the Act to which it is applied (see ss 5(1) and 5(2)).

  15. There is much to be said for the view that the language of s 11(3), read as a whole, evinces an intention that it may apply only to natural persons. Such an intention might be discerned from the references in s 11(3)(b) to “his or her affairs”, “his or her physical or mental condition”, and “his or her person”. The later references in that paragraph to war or warlike operations cannot be divorced from those earlier references. Furthermore, the reference to a person under the age of eighteen years, whilst capable as a matter of language of applying to a corporation or a body corporate or politic, seems unlikely to do so in the context of disability in relation to a cause of action. Unlike the position concerning natural persons, there is no period of minority up to the age of eighteen years during which a corporation or body corporate or politic is considered to be legally incapable (cf ss 8 and 9 of the Minors (Property and Contracts) Act 1970 (NSW)). It is therefore my opinion that s 11(3) applies only to natural persons.

  1. If I am wrong about that, such that s 11(3) is capable of applying to the company, I am in any event not satisfied that the company was at any time substantially impeded in the management of its affairs in relation to the cause of action to recover compensation from the Torrens Assurance Fund, by reason of any of the matters identified in s 11(3)(b). (I note that it was not suggested that s 11(3)(a) had any relevant application.)

  2. The circumstances relied upon by the company in this respect were pleaded in the Reply as: the position of control over the affairs of the company possessed at times by Claude Cassegrain; the receivership of the company between 15 June 1999 and 21 December 2004; the appointment of the first plaintiff as liquidator of the company on 24 July 2012 and the continuation of the liquidation thereafter; and that any court proceedings commenced for compensation under Part 14 of the Act prior to the conclusion of the High Court proceedings (on 4 February 2015) and Claude Cassegrain becoming bankrupt (on 15 September 2015) would have been liable to be struck out as an abuse of process.

  3. There was no suggestion that these circumstances amounted to any disease, or any impairment of the “physical condition” of the company. Otherwise, I do not think that any of the circumstances, whether viewed separately or together, ought be regarded as an impairment of the company’s “mental condition”. Insofar as the company can be seen as a body that is directed through the minds of the human agents behind it, there seems to me to be no impairment of the mental capacities of such agents. The company remained fully capable of making decisions and exercising its powers accordingly. Neither do I think that the circumstances ought be regarded as a restraint of the company’s “person”. The company, viewed as a legal personality, was not restrained by those circumstances from exercising any of its powers. I appreciate, of course, that the control exercised by Claude Cassegrain, and the state of receivership, might well have made it unlikely that the company would exercise its powers so as to claim compensation from the Torrens Assurance Fund in respect of the transfer of the property, but I consider that it would stretch the language of the section too far to hold that there existed a restraint of the company’s “person”, bearing in mind that there was always the possibility of a derivative action.

  4. As already noted, Barrett J at first instance considered whether the provisions of s 52 of the Limitation Act, and hence s 11(3) which contains the relevant definition, could be applied by analogy for the purposes of selecting a limitation period for the claim for equitable relief against Claude Cassegrain. In that context, his Honour stated (at [239]-[241]):

I therefore proceed on the basis that, in relation to the breach of duty involving the Dairy Farm, the start of the s 14(1) period was 30 June 1997. On that basis, the six-year limitation period applicable by analogy with the statute would be taken to have expired on 30 June 2003.

But, bearing in mind that this is an equity case in which no common law remedy is sought and that the court, acting by analogy only, will follow the law according to the justice of the case, the process must be taken further. Because, at all times after 30 June 2003, Claude was either the sole director of GC & Co or one of two directors (Anne-Marie being the other), the situation was always one in which GC & Co could not, in any realistic sense, assert its cause of action against Claude by means of action by its board of directors and any action by GC & Co would have to be a derivative action initiated by one or more of its shareholders other than Claude. Throughout the period 15 June 1999 to 21 December 2004, however, there was no real ability for any such shareholder to initiate a derivative action either under the general law or by resort to the statutory procedure when it became available in December 1999: see para [205] above. The bank-appointed receivers’ predominant duty was to the secured creditor, particularly regarding the realisation of assets. They were at liberty to ignore the company’s own interests, except to the extent that any surplus was held after satisfaction of the creditor’s debt, in which event they were bound to preserve the surplus for the company. They had no duty to pursue claims of the kind involved in these proceedings. Indeed, they might well have been criticised for doing so instead of preferring easier avenues of realisation.

The state in which GC & Co found itself between 15 June 1999 and 21 December 2004 closely resembles a state of “disability” under s 11(3) of the Limitation Act. GC & Co was, during that period, “substantially impeded in” the management of its affairs in relation to proceedings against Claude by forces virtually equivalent to “impairment of … physical or mental condition” or “restraint of his or her person, lawful or unlawful”. By virtue of s 52, the running of a limitation period imposed by the Act is suspended while the person with the cause of action is under a disability in the s 11(3) sense. The process of analogy in the present case should be on the basis that the period 15 June 1999 to 21 December 2004 is one during which GC & Co was “substantially impeded” in the relevant sense, so that that period is excluded in determining whether proceedings commenced on 11 September 2008 upon a cause of action arising, in the relevant sense, on 30 June 1997 were commenced within six years after the accrual of the cause of action.

(See also at [204]-[205].)

  1. The company submitted that this analogical approach was equally applicable to the direct application of s 52. I do not think that is correct. It is apparent that his Honour considered the circumstances that pertained during the receivership to be “virtually equivalent” to the impairment or the restraint the subject of s 11(3)(b). That suggests that his Honour thought there was a substantial degree of similarity between the shackles inherent in the state of receivership and a relevant situation of impairment or restraint of the company. That falls short of a conclusion that the company, being in its state of receivership, was substantially impeded in the management of its affairs in relation to the cause of action by reason of an impairment or restraint that actually fell within s 11(3)(b).

  2. Even if the company was under a disability for the purposes of s 52 of the Limitation Act during the period of receivership, such that the running of the limitation period was suspended for the duration of that period (of approximately five and a half years), the limitation period would have expired in March 2012 (prior to the appointment of the liquidator).

  3. Well prior to that time a member of the company had obtained leave to bring the derivative proceedings on behalf of the company against Claude Cassegrain and Felicity Cassegrain. I note that Barrett J recorded (at [193]-[196]) that all relevant family members had been aware since 1997 of the circumstances of the transfer of the property to Claude Cassegrain and Felicity Cassegrain, and indeed were alleging (in certain Federal Court proceedings) that Claude Cassegrain’s loan account was false, that the transfer had caused loss to the company, and that the transfer had been carried out by Claude Cassegrain in breach of his fiduciary duty to the company. It would have been open to those persons to similarly seek leave (including if necessary pursuant to s 132(2)(b) of the Act) to bring derivative proceedings against the Registrar-General for compensation from the Torrens Assurance Fund in respect of that alleged loss. I do not accept that any court proceedings of that nature would have been liable to be struck out as an abuse of process. I note that had such proceedings been commenced, the Registrar-General would have obtained rights of subrogation under s 133(2) of the Act.

  4. For the above reasons, it is my opinion that the limitation period prescribed by s 14(1)(d) of the Limitation Act for the cause of action to recover compensation from the Torrens Assurance Fund expired on 15 September 2006, or at the latest in March 2012 if the period was suspended for the duration of the period the company was in receivership. No action was brought on the cause of action before the expiry of the limitation period. Any action brought on the cause of action thereafter is not maintainable. Moreover, by the operation of s 63 of the Limitation Act, the right and title of the company to the cause of action was extinguished on the expiration of the limitation period.

  5. I should add, for completeness, that the company did not contend that s 132(3) of the Act operated so as to nonetheless allow the cause of action to be brought in these proceedings (which were commenced within 12 months of the determination of the administrative proceedings). It seems to me that the company was correct not to do so. Section 132(3) should be construed to apply in respect of administrative proceedings that have been brought in accordance with the Act, within the time period prescribed by s 131(2). Here, the administrative proceedings were brought more than 10 years after the expiry of that period. It would be absurd to construe s 132(3) in such a way as to allow a claimant to commence court proceedings within 12 months of the determination of administrative proceedings where such administrative proceedings were correctly determined against the claimant on the ground that the claim was brought too late.

  6. It follows from the above that the company’s claim for compensation cannot be advanced in these proceedings, and that the proceedings must therefore be dismissed. The question of assessment of compensation does not arise.

  7. For the following reasons, I do not propose to proceed to an assessment of compensation in case my conclusion concerning the limitation issues is incorrect.

  8. First, the evidence adduced by the company concerning the quantum of its claimed loss was not disputed by the Registrar-General. In particular, the evidence of the valuer, Mr Michael Reid, was not challenged. His opinion was that the various lots that comprise the property had a combined value in September 2019 of $4,017,000. Further, there was no challenge to the evidence of the company’s solicitor, Mr Andrew Lacey, concerning the legal costs incurred by the company in the various aspects of its litigation against Claude Cassegrain and Felicity Cassegrain in respect of the property, and the extent of amounts recovered by the company in the course of or as a result of that litigation. The company’s claim was calculated on the basis of that evidence of land value, legal costs expended, and amounts recovered. In these circumstances, there is little to be served by me expressing an opinion as to what amount of compensation would have been payable if, contrary to my conclusion, the claim had been brought within time.

  9. In addition, having reflected upon the matter, had I concluded that the claim was brought within time, I would have required the parties to further address the Court as to the proper approach to assessment in the particular circumstances of this case. One issue of fundamental importance to consider would be whether it is proper to regard the claim as one for loss of the whole property, or as one for loss of a one-half interest in the property. That characterisation, as well as the related question of when the loss is assumed to have arisen, would significantly affect any assessment of compensation. Questions would likely arise concerning the manner in which, and the extent to which, the legal costs might be taken into account. These matters do not emerge clearly from the pleadings, and were not the subject of focused submissions. That is in no way intended as a criticism of the parties or their legal representatives. The submissions of counsel were overwhelmingly directed towards the limitation issues, which were of cardinal importance. The Court was greatly assisted by those submissions.

  10. The Court will order that the proceedings be dismissed. The Court will further order that the company pay the Registrar-General’s costs of the proceedings.

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Decision last updated: 21 July 2020

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Statutory Material Cited

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Atlas Tiles Ltd v Briers [1978] HCA 37
Atlas Tiles Ltd v Briers [1978] HCA 37
Bass v Permanent Trustee Co Ltd [1999] HCA 9