Igarashi v APC International Pty Ltd

[1995] QCA 43

IN THE COURT OF APPEAL	[1995] QCA 043
SUPREME COURT OF QUEENSLAND

Appeal No. 203 of 1994

Brisbane

[Igarashi v. Registrar of Titles]

[Ozaki v. Registrar of Titles]

BETWEEN:

MICHIKO IGARASHI and
KAZUYOSHI IGARASHI

(Plaintiffs) Respondent

AND:

APC INTERNATIONAL PTY. LTD.

(Defendant)

AND:

THE REGISTRAR OF TITLES

(Respondent) Appellant

Appeal No. 204 of 1994

BETWEEN:

NORIHIOR OZAKI and
KAZUKO OZAKI

(Plaintiffs) Respondents

AND:

APC INTERNATIONAL PTY. LTD.

(Defendant)

AND:

THE REGISTRAR OF TITLES

(Respondent) Appellant

FITZGERALD P.
DAVIES J.A.

THOMAS J.

Judgment delivered 28/02/1995

Reasons for judgment of the Court.

BOTH APPEALS DISMISSED WITH COSTS.
CATCHWORDS: LAND - FRAUD - fraudulent procurement of

mortgage under Real Property Act 1861 so as to deprive registered proprietor of land, of estate or interest; whether an action under s.126 Real Property Act can only be brought against a person who becomes registered by reason of their fraud; whether benefit obtained by reason of fraud

Real Property Act 1861 ss.126 and 127
Beardsley v. Registrar of Titles [1993] 2
Qd.R. 117
Registrar of Titles (W.A.) v. Franzon (1975)
132 C.L.R. 611
Sekiya v. APC International Ltd. (No. 287 of

1994, 6 May 1994, unreported).

Counsel:	Mr. C. Hampson Q.C. with him Mr. D. Campbell for the applicant
Mr. J. McGill Q.C. for the respondent
Solicitors:	Crown Law for the applicant Steindls for the respondent

Hearing Date: 16 February 1995
IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 203 of 1994

Brisbane

Before Fitzgerald P.
Davies J.A.
Thomas J.

[Igarashi v. Registrar of Titles]

[Ozaki v. Registrar of Titles]

BETWEEN:

MICHIKO IGARASHI and
KAZUYOSHI IGARASHI

(Plaintiffs) Respondent

AND:

APC INTERNATIONAL PTY. LTD.

(Defendant)

AND:

THE REGISTRAR OF TITLES

(Respondent) Appellant

Appeal No. 204 of 1994

BETWEEN:

NORIHIOR OZAKI and
KAZUKO OZAKI

(Plaintiffs) Respondents

AND:

APC INTERNATIONAL PTY. LTD.

(Defendant)

AND:

THE REGISTRAR OF TITLES

(Respondent) Appellant

REASONS FOR JUDGMENT - THE COURT

Judgment delivered the 28th day of February 1995

These are two appeals by the Registrar of Titles against judgments in the Trial Division of this Court in favour of the respondents in separate actions by them against, in each case, APC International Pty. Ltd. ("APC").

The actions were each for damages pursuant to s.126 of the Real Property Act 1861. APC did not take part in the proceedings below, which were motions for judgment in lieu of defence, or in these appeals. Although the Registrar was not a party to either action he was allowed to take part in the proceedings below and no point was taken about his right to appeal against each of the judgments.

The facts were similar in each case. The respondents were registered proprietors of land. By the fraud of, including several forgeries by, APC their land was mortgaged to a financier Arkway Pty. Ltd. ("Arkway") who, ignorant of and itself deceived by the fraud, advanced money which APC then misappropriated. When the respondents discovered the fraud they paid Arkway the amount necessary to discharge their mortgage. It was that amount, together with some costs, for which judgment was given in each case.

Section 126 of the Real Property Act 1861 relevantly

provided:

"Any person deprived of any land or of any estate or interest in land in consequence of fraud or in consequence of the issue of a certificate of a title to any other person or in consequence of any recording in the register ... may bring and prosecute an action at law in the Supreme Court for the recovery of damages against the person who derived benefit by such fraud ... ".

It was common ground that, within the meaning of that section, the respondents were deprived of an estate or interest in land in consequence of the fraud of APC. The only question raised by the appeal is whether the phrase "the person who derived benefit by such fraud" is limited in its operation to a person who becomes registered by such fraud. If it is then the appeal must succeed because APC never became registered. Otherwise it must fail because, as the analysis below demonstrates, APC derived benefit by its fraud.

There are two compelling reasons why, in our view, the appeal must fail. The first is that there was nothing in the section or in the context in which it appeared which required a limitation such as that contended for upon the operation of the above phrase. The second is that such an implied limitation is inconsistent with the evident purpose of the section.

APC derived benefit by its fraud because it received a

substantial sum of money to which it was not entitled.
Moreover there was no-one else who derived any benefit by
the fraud in the ordinary sense of the word. Arkway
obtained a mortgage over the respondent's land but that was
for full consideration, the advance which it made to APC,
and it could not be said that it thereby obtained any
advantage. On the ordinary meaning of the phrase therefore,
APC derived benefit by its fraud and was the only one who
did so.

There was nothing in the section which would have limited its operation in the way contended for. However in Beardsley v. Registrar of Titles [1993] 2 Qd.R. 117 one of the bases upon which Ryan J. concluded that s.126 was so limited in its operation was that s.123 led to that conclusion. That section relevantly provided:

"Except ... in the case of a person deprived of any land by fraud as against a person registered as proprietor through fraud or against a person deriving otherwise and as a purchaser or mortgagee bona fide for value from or through a person registered as proprietor through fraud ... no action of ejectment shall lie or be sustained against a registered proprietor for the recovery of land under the provisions of this Act and except in any of the cases aforesaid the grant or certificate of title shall be held in every Court of Law or equity to be an absolute bar and estoppel to any such action against the person named in such grant or certificate of title as seized of or entitled to such land."

His Honour appeared to hold that the fact that s.123 prevented an action in ejectment from lying against a purchaser or mortgagee bona fide for value (in this case Arkway) led to a conclusion that s.126 should be construed as limited to recovery against a person registered as proprietor through fraud. We do not think that that conclusion follows from the plain words of the two sections and, as we will later demonstrate, that conclusion would be inconsistent with the evident purpose of ss.126 and 127.

The other basis for his Honour's conclusion that s.126 was so limited appears to have been his reliance on a passage from the judgment of Mason J. in Registrar of Titles (W.A.) v. Franzon (1975) 132 C.L.R. 611 at 618-9. But that passage, when read in context, has no relevance here for two reasons. First, his Honour was there considering a statutory provision (s.201 of the Transfer of Land Act 1893 (W.A.)) which expressly limited the action analogous to that under s.126 to one against "the person ... who acquired title to the estate in interest through such fraud ...".

Secondly the Court in that case was concerned with a quite a different question: whether an action could lie under s.201 against a person registered in consequence of fraud notwithstanding that that person was a bona fide mortgagee for value: see at 617.

Both Williams J. in Sekiya v. APC International Ltd. (No.287 of 1994, 6 May 1994, unreported) and the judge at first instance in the present case refused to follow Ryan J.'s reasoning or conclusion, in Beardsley, which derives no support from this Court's dismissal of an appeal in that matter. The present point was expressly left undecided on appeal and Ryan J.'s decision was affirmed for other reasons.

The evident purpose of the section must be seen from its context, with particular reference to s.127 and the principle of the Act of conferring indefeasibility of title on a registered proprietor. Sections 126 and 127 were a "corresponding counterpart to the indefeasible title which the Act set(s) out to confer on the registered proprietor" (Registrar of Titles (W.A.) v. Franzon at 620 per Mason J.) "guaranteeing against losses which but for the Act could not occur" (Finucane v. Registrar of Titles [1902] St.R.Qd. 75, 94 per Griffith C.J.). Those are losses which the person deprived of land in consequence of fraud suffers by being prevented from suing a bona fide purchaser or mortgagee for value. We respectfully agree with the view of the New Zealand Court of Appeal in The Public Trustee v. The Registrar General of Land (1899) 17 N.Z.L.R. 577, 593, with reference to the New Zealand analogue of these provisions, that:

"The scheme of the Act is to provide a fund for compensating all persons who are deprived of their land by the operation of the Act, and reason and justice require that no qualification should be put upon the rights so given which is not in express terms imposed by the statute."

The purpose of s.126 therefore does not require the implication of the limitation contended for. Moreover, to imply that limitation would be to provide a remedy where the indefeasibility provisions may cause no loss (where the fraudulent party has received and retains the estate or interest) but none where they will always cause loss (where the fraudulent party causes the estate or interest to pass directly to a bona fide purchaser or mortgagee for value).

Such a result would be inconsistent with the evident purpose of ss.126 and 127.

As Williams J. pointed out in Sekiya there is nothing in the judgments in Cox v. Bourne (No.2) (1897) 8 Q.L.J. 66 or Finucane v. The Registrar of Titles, the two earliest cases in which ss.126 and 127 were considered, which appear to envisage any limitation upon the plain meaning of those sections. Indeed there is no decision or dictum of any court, apart from that of Ryan J. in Beardsley, which does so. For the reasons given we prefer the reasoning and conclusion reached by Williams J. in Sekiya and by the primary judge in this case to that in Beardsley. The appeals should therefore be dismissed.

There is one final matter relating to the form of judgment in this case to which we should draw attention. It describes the judgment sum as damages "pursuant to s.126 of the Real Property Act 1861 for deprivation of the Plaintiff's interest in the land described as Lot 66 in Registered Building Units Plan No. 11509 ... ". Whilst that correctly describes the nature of the action it is undesirable to state in the judgment that it is a judgment for deprivation of the plaintiff's interest, in effect in consequence of fraud, lest it might be thought that the Registrar of Titles who, in many cases might not be heard in the proceeding and may not even know of it, is bound to accept the findings implicit in that statement.

The appeals are dismissed with costs.