Pasquale Lanciana v John Alderuccio and Bruno Alderuccio
[2020] VSCA 152
•12 June 2020
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2019 0055
| PASQUALE LANCIANA | Applicant |
| v | |
| JOHN ALDERUCCIO | First Respondent |
| And | |
| BRUNO ALDERUCCIO | Second Respondent |
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| JUDGES: | TATE, HARGRAVE and EMERTON JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 21 May 2020 |
| DATE OF JUDGMENT: | 12 June 2020 |
| MEDIUM NEUTRAL CITATION: | [2020] VSCA 152 |
| JUDGMENT APPEALED FROM: | [2019] VSC 198 (Moore J) |
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REAL PROPERTY – Caveats – Solicitor lodged the caveats as agent for caveator – Caveats lodged without reasonable cause – Compensation – Whether liability under s 118 of the Transfer of Land Act 1958 extends to solicitors lodging a caveat without reasonable cause on behalf of a client – Whether solicitor ‘a person’ lodging a caveat – Leave to appeal refused – Gordon v Treadwell Stacey Smith [1996] 3 NZLR 281; Windlock Pty Ltd v Davidovic [2014] NSWSC 269; Arkbay Investments Pty Limited (In Liquidation) (Receivers and Managers appointed) v Echelon Property Management Pty Ltd (No 2) [2014] NSWSC 572, considered.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr A Panna QC with Mr J Mattin | Basilone Legal |
| For the Respondents | Mr C M Caleo QC with Mr N De Young SC | Minter Ellison Lawyers |
TATE JA:
HARGRAVE JA:
EMERTON JA:
Introduction
The applicant is a beneficiary of two trusts, the trustees of which are the registered proprietors of two properties, one in Mitchell Street, Maidstone, and the other in Stevedore Street, Williamstown (‘the properties’).
The respondents are legal practitioners practising together in a partnership. In March 2005, they lodged with the Land Titles Office caveats on the titles of the properties on behalf of their client, Bloomingdale Holdings Pty Ltd (‘Bloomingdale’).
The applicant has brought a claim for compensation under s 118 of the Transfer of Land Act 1958 (‘Act’) against the respondents themselves — rather than against their client, Bloomingdale — for loss alleged to have been sustained as a result of the lodgement of the caveats.
Section 118 of the Act provides:
118 Compensation for lodging caveat without reasonable cause
Any person lodging with the Registrar without reasonable cause any caveat under this Act shall be liable to make to any person who sustains damage thereby such compensation as a court deems just and orders.
On the application of the respondents, orders were made in the proceeding that the following question be determined as a preliminary question pursuant to Rule 47.04 of the Supreme Court (General Civil Procedure) Rules 2015:
Whether, assuming that the allegations contained in the further amended statement of claim are true, the [respondents] are ‘a person’ lodging a caveat with the Registrar for the purposes of s 118 of the Transfer of Land Act 1958 (Vic), or whether the [applicant] is confined to seeking compensation from the party identified as the caveator in the relevant caveats.
The preliminary question was answered by a judge in the Trial Division on 28 March 2019, following a hearing on 7 August 2018. The judge determined that the respondents were not ‘a person’ lodging a caveat with the Registrar for the purposes of s 118 of the Act.[1] The judge did not answer the second part of the question (whether the applicant is confined to seeking compensation from the party identified as the caveator in the caveats), as he considered it to be unnecessary and inappropriate to do so.[2]
[1]Lanciana v Alderuccio [2019] VSC 198, [5] (‘Reasons’).
[2]Ibid [87].
The judge answered the preliminary question on the basis of the following assumed facts:
(a) the applicant and Bloomingdale were equal unitholders in both the Mitchell Street Unit Trust and the Stevedore Street Development Unit Trust which owned (through the relevant trustee) the properties. At some stage, Bloomingdale lodged caveats over the properties to protect its interests (‘initial caveats’);
(b) the sole shareholder and director of Bloomingdale was Antonio Gangemi;
(c) in about May 2003, a dispute arose between the applicant and Mr Gangemi in respect of their joint business dealings and their rights in respect of the properties;
(d) from at least May 2003, the respondents acted as solicitors for Bloomingdale and Mr Gangemi in relation to this dispute;
(e) at a mediation held on or about 9 September 2003, a heads of agreement was signed by Mr Gangemi and Bloomingdale on the one part and the applicant and his associated entities on the other. The dispute was resolved on terms including that Mr Gangemi’s and Bloomingdale’s interests in the properties would be transferred to the applicant or his entities. Bloomingdale transferred its unit holdings in the trusts and executed withdrawals of the initial caveats. The withdrawals were lodged by the respondents. Thereafter, the applicant alone was entitled to the beneficial interest in the properties;
(f) some 18 months later, on 29 March 2005, the respondents lodged, on behalf of Bloomingdale, a further caveat over the registered title to each of the properties (‘the caveats’); and
(g) as a result of the lodgement of the caveats, the properties were not developed, various legal proceedings were commenced which resulted in the applicant incurring legal costs and the applicant is said to have suffered loss and damage.[3]
[3]Ibid [7]–[17].
The caveats were in evidence in the proceeding. Each caveat identified Bloomingdale as the caveator claiming an equitable estate in fee simple pursuant to a deed of trust dated 25 February 2002 between Bloomingdale and the relevant trustee. The caveats specified that they were lodged by ‘Alderuccio’ and identified ‘Alderuccio Solicitors,’ at a Melbourne address, as the address for service of a notice. The caveats were signed by John Alderuccio, as ‘agent being a Current Practitioner under the Legal Practice Act 1996’.
Before turning to the Reasons, it is convenient to set out s 89 of the Act, which provides for the lodging of caveats and their recording on the Register of land as follows:
Caveats temporarily forbidding dealing with lands
(1)Any person claiming any estate or interest in land under any unregistered instrument or dealing or by devolution in law or otherwise or his agent may lodge with the Registrar a caveat in an appropriate approved form forbidding the registration of any person as transferee or proprietor of and of any instrument affecting such estate or interest either absolutely or conditionally and may, at any time, by lodging with the Registrar an instrument in an appropriate approved form, withdraw the caveat as to the whole or any part of the land.
(2)A recording of every caveat lodged under this section must be made in any relevant part of the Register.
(3)The Registrar shall give to the registered proprietor of the estate or interest concerned notice of the caveat together with a copy of the caveat or of such particulars thereof as the Registrar deems material to such person.
(4)Every notice relating to any such caveat and any proceedings in respect thereof if served at the address in Victoria specified in the caveat shall be deemed to be duly served.[4]
[4]Emphasis added.
Reasons
It is unnecessary to set out the judge’s reasons in detail because, as will be seen, we consider his reasoning to be entirely correct and we have adopted much of it in our own analysis.
The central contest between the parties is whether the words ‘[a]ny person lodging’ in s 118 of the Act bear their literal meaning and give rise to a purely factual question as to who in fact lodged the caveat at issue, as the applicant contends; or whether, as the respondents contend, the words ‘[a]ny person lodging’ in s 118 should be construed in the context of the Act as a whole and s 89 in particular, so that ‘any person lodging’ a caveat is to be interpreted in light of the phrase ‘[a]ny person claiming any estate or interest in land’ in s 89(1).
The judge rejected the literal construction of s 118 contended for by the applicant. He held that the critical words in s 118 — ‘[a]ny person lodging’ — naturally invited the question, ‘who lodges the caveat?’. The judge found a clear and unambiguous answer to that question in s 89(1) of the Act: ‘Any person claiming any estate or interest in the land …’.[5] The judge did not accept the applicant’s submission that the Act should be construed on the premise that ss 89(1) and 118 play independent roles, as this ignored the fact that ‘[a]ny person lodging’ a caveat is a statutory concept which has been a feature of the statutory framework since the Real Property Act 1862.[6] Moreover, the fact that s 89(1) expressly authorises a person to lodge a caveat by ‘his agent’ strengthens the conclusion that an agent who lodges a caveat is not ‘any person’ lodging a caveat in his or her own right; the act of lodging is the act of the principal.[7]
[5]Reasons [74].
[6]Ibid.
[7]Ibid [75].
Based on the established relationship of agency between Bloomingdale and the respondents, the judge determined that the respondents were not a person lodging a caveat with the Registrar for the purposes of s 118 but declined to answer the second part of the preliminary question.
The judge also considered that his interpretation was consistent with s 115 of the Act, which provides:
Receipt for and return of lodged documents
(1) Documents lodged with the Registrar shall be returned only to or at the direction of the person who lodged them or some person claiming through or under him.
(2) The Registrar may require a receipt in writing acknowledging the delivery to the proprietor or any other person of any such document or certificate of title.
In the judge’s view, s 115 was consistent with the Act contemplating that the person who lodges a caveat can be identified with certainty.[8]
[8]Ibid [78].
Grounds of appeal
The applicant has raised five grounds of appeal, which essentially make the same complaint in slightly different ways. In short, the applicant contends that:
(a) the judge erred as a matter of construction in holding that the respondents were not ‘a person lodging’ a caveat with the Registrar for the purposes of s 118; and
(b) the judge ought to have held that s 118 extends to any person who in fact lodges the caveat, even when it is done on behalf of the caveator; and
(c) the judge ought to have held that the identity of the person who lodges the caveat is not determined by s 89 of the Act but by the terms of s 118, which is not limited to the caveator but includes any person who actually lodged the caveat albeit on behalf of the caveator.
The grounds are conveniently considered together rather than separately.
Submissions below and on appeal
The applicant’s submissions on appeal largely replicate his submissions before the trial judge which were usefully summarised in paragraphs [44] to [57] of the Reasons.
The applicant submits that on its natural and ordinary meaning, s 118 is not limited to imposing liability only on the caveator, but extends to any person who lodges the caveat, including a solicitor. The confinement of the phrase ‘any person’ in s 118 to mean ‘the caveator’ is inconsistent with the actual words in s 118.
As foreshadowed above, the applicant submits that the question posed by s 118 is a factual one, ‘who has lodged the caveat?‘ It is not the legal question, ‘who has a right to lodge a caveat?’ Section 118 does not deal with capacity or status. The factual question is to be answered by an examination of the circumstances in which the caveat was lodged and by looking at what, in fact, was lodged. At the top left hand corner of each caveat, there is provision for the name of the person who lodged the caveat. In this case, the caveats identify the first respondent as that person.
According to the applicant, s 118 ‘operates in its own sphere’ and deals with different issues from s 89: it identifies the class of persons liable to pay compensation and the class of persons who may seek such compensation, whereas the purpose of s 89 is to specify the class of persons who may lodge a caveat. Section 118 has the distinct purpose of giving compensation to ‘any person’ who has suffered loss and damage by the lodgement of a caveat by ‘any person’. That purpose is best given effect by construing the phrase ‘any person‘ literally and not by limiting its meaning to ‘the caveator’. The judge’s construction of the phrase ‘any person’ as being pre-determined by s 89(1) and limited to the caveator is inconsistent with the actual words used in s 118.
The applicant submits that the actual words used in the provision and their literal meaning should not be dismissed unless absolutely necessary in order to make the provision consistent with the purposes of the Act. The words used in s 118 make clear Parliament’s intention to widen the ambit of liability beyond caveators. In the absence of any conflict between ss 89 and 118, in construing s 118 the Court should give effect to the actual words used in the section. It is impermissible for the Court to put a gloss on the words used by Parliament or to substitute words which do not appear in the section so as to limit its operation. Parliament must be presumed to have intended the words ‘any person lodging with the Registrar’ to have their literal meaning because they were not expressly limited, as they could have been, to ‘any caveator’.
The applicant submits that there is nothing in the Act itself that prevents the words bearing their ordinary and natural meaning. He submits that s 115, far from supporting the respondents’ construction of s 118, as the judge concluded, supports the literal construction in directing attention to the person who actually lodged the caveat. This does not present a practical problem because all that the Registrar needs to do is obtain a receipt from the caveator or from the person who lodged the caveat.
As to the question of agency and the capacity in which the first respondent lodged the caveats, the applicant says that the mere fact that someone acts as an agent does not answer the question of who lodged the caveat for the purposes of s 118. As a matter of law, the fact that a person is an agent and is known to be an agent does not necessarily prevent the person incurring personal liability, and in some circumstances an agent may be jointly and severally liable with the principal in respect of an act or conduct carried out by the agent. Parliament has expressed its intention with clarity such that the doctrine of agency cannot obstruct or cut down the ambit of liability imposed by s 118.
Furthermore, so the applicant submits, confinement of ‘any person’ in s 118 to the caveator is contrary to s 37(c) of the Interpretation of Legislation Act 1984 which provides that words in the singular include their plural counterparts. The words ‘any person’ must therefore be construed as including not only the caveator, but other persons who are involved in the lodgement process.
The applicant submits that if s 118 is to be construed as only imposing liability on the caveator there will be at least two gaps in the liability for loss and damage caused by the lodgement of a caveat: first, where the caveator lodges a caveat on the wrongful or negligent advice of a solicitor; and, secondly, where a person lodges the caveat on behalf of another, but does so without authority. In the first scenario, solicitors could hide behind the existence of instructions from clients and the caveator would also likely escape liability on the basis of having acted on advice. In the second scenario, the caveator would not be liable because the lodgement was not carried out on their instructions and the unauthorised third party would not be liable because, on the respondents’ case, that person was not the caveator. The person who suffered loss would become entangled in a factual and legal dispute about the authority of the person who actually lodged the caveat which would have to be resolved before compensation could be claimed.
According to the applicant, it is no answer to the first problem identified that a solicitor who gives negligent advice to lodge a caveat may be held liable to pay for the costs of its removal. In contrast, the construction contended for by the applicant promotes one of the purposes of the Act by discouraging the lodging of caveats without reasonable cause, by encouraging persons — including solicitors — to make reasonable enquiries of the caveator to establish a factual basis for the claim, and by providing a clear path to compensation for loss caused by the lodging of a caveat.
The applicant distinguishes, however, between lodgement and ‘delivery’. If the caveat were put in the mail and Australia Post then delivered the document to the Registrar, it could hardly be said that Australia Post or its employee ‘lodged’ the document. According to the applicant, the act of lodging attracts the benefit of the various provisions under the Act.
The applicant relies on the decision of the New Zealand Court of Appeal in Gordon v Treadwell Stacey Smith,[9] in which Blanchard J delivered the judgment of the Court, holding that the phrase ‘any person lodging a caveat’ in the equivalent New Zealand provision[10] was not restricted to the caveator and that both client and solicitor, and any other person responsible for lodging a caveat, might be liable to pay compensation.[11] This could include solicitors, their employees and registration agents. In considering what might constitute ‘reasonable cause’, Blanchard J expressed the view that a solicitor could not hide behind the existence of an instruction to lodge a caveat if to do so was otherwise to act without reasonable cause in circumstances confronting the solicitor.[12]
[9][1996] 3 NZLR 281; [1996] NZCA 110 (‘Gordon’).
[10]Land Transfer Act 1952 (NZ) s 146.
[11]Gordon [1996] 3 NZLR 281, 288.
[12]Ibid.
The applicant urges this Court to adopt the reasoning of the New Zealand Court of Appeal, which was unimpressed by the argument that the ambit of the equivalent section to s 118 must be limited to the caveator and accepted that many people might take or be involved in taking a caveat to be lodged at the Titles Office. According to the applicant, Blanchard J’s analysis is the most natural way to approach s 118.
For their part, the respondents relied on two decisions in the Supreme Court of New South Wales, Windlock Pty Ltd v Davidovic[13] and Arkbay Investments Pty Ltd (in liquidation) (receivers and managers appointed) v Echelon Property Management Pty Ltd [No 2],[14] in which single judges declined to follow Gordon. In Windlock, Young AJA held that liability under the equivalent New South Wales provision[15] was limited by the fact that the words ‘lodging a caveat’ had always had a specific meaning in the legislation, namely, the action of a person who makes a claim under a caveat and files that claim with the Registrar.[16] His Honour observed that there were reasons why the words ‘any person’ might be read in a wide form to mean persons other than the caveator, yet not catch solicitors and filing clerks. The section might, for example, have been intended to include a person named as executor of an estate who has not yet taken out probate or a person seeking a guardianship order.[17]
[13][2014] NSWSC 269 (‘Windlock’).
[14][2014] NSWSC 572.
[15]Real Property Act1900 (NSW) s 74P.
[16]Windlock [2014] NSWSC 269, [32].
[17]Ibid [38].
Analysis
As discussed, the caveats record that they were lodged by ‘Alderuccio’ and identified ‘Alderuccio Solicitors,’ at a Melbourne address, as the address for the service of notices. They were signed by John Alderuccio, as ‘agent being a Current Practitioner under the Legal Practice Act 1996’. The caveator is named as Bloomingdale and the interest in the land that is described on the caveats is Bloomingdale’s asserted interest. This accords with the requirements of s 89(1), which confers a right on a person who claims to have an interest in land to lodge a caveat to protect the asserted interest and to do so either directly or by his or her agent. The right is conferred on the person claiming the interest, whether or not the interest is ultimately established. Insofar as the caveat is lodged by an agent of the person claiming the interest, the agent, according to the well-established principles of the law of agency, stands in the shoes of the person claiming the interest. The act of lodging the caveat is the act of the principal, that is, the person claiming the interest in the land.
In his Further Amended Statement of Claim the applicant alleges that on or about 29 March 2005, the respondents lodged the caveats on the titles to the properties with the Land Titles Office ‘on behalf of the [respondents’] client Bloomingdale’. In their Defence, the respondents admit that they lodged the caveats, which were ‘signed on behalf of, as disclosed agent for, and on the instructions of, Bloomingdale’. It is clear, therefore, that the respondents lodged the caveats as agents for Bloomingdale. In these circumstances, the acts of the respondents in lodging the caveats were the acts of Bloomingdale and the judge correctly so found in answering the first limb of the preliminary question. Bloomingdale lodged the caveats within the meaning of s 118.
We consider that the judge was entirely correct to read s 118 in tandem with s 89(1) of the Act. Section 89(1) confers an entitlement on any person, insofar as that person claims an interest in land, to lodge a caveat to protect that interest. The entitlement to ‘lodge’ a caveat is conferred on ‘any person claiming’ a relevant interest. Accordingly, ‘any person lodging’ a caveat is a statutory concept, not simply a question of fact. The identity of a person ‘lodging’ a caveat is ascertained by reference to the exercise of the entitlement conferred by s 89(1). As the judge held, the answer to the question, ‘who lodged the caveat?’ is provided clearly and unambiguously by s 89(1): ‘Any person claiming any estate or interest in the land …’.
We also agree with the judge that the proposition, that s 118 involves a factual enquiry about the person who lodged the caveat, proceeds from the false premise that s 89(1) does not provide an answer to the question and fails to appreciate that lodgement involves a statutory concept that can only be understood by reference to the requirements governing eligibility for lodging under the Act.
Contrary to the applicant’s case, it is not a rule of statutory construction that the words used in a statutory provision should be given their literal meaning unless it is necessary to make the provision consistent with the purposes of the statute. Rather, as the judge held, the primary task of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of the statute as a whole.[18] In any event, the applicant does not suggest that the judge’s construction was inconsistent with the purposes of the Act but, rather, that the applicant’s construction would better suit the Act’s purpose as contended for by the applicant. This is a ‘bootstraps’ argument based on a prior assumption about purpose that neglects to look to what the Act actually says in order to identify its purpose.[19] The applicant’s argument assumes the purpose of the Act is to broaden potential liability beyond the caveator, and then construes s 118 so as to give effect to that assumed purpose.
[18]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 381 [69]; [1998] HCA 28 (McHugh, Gummow, Kirby and Hayne JJ).
[19]Certain Lloyd’s Underwriters v Cross (2012) 248 CLR 378, 390 [26]; [2012] HCA 56 (French CJ and Hayne J).
The erroneous premise of the purpose of s 118 also informs the applicant's arguments about ‘gaps’ arising from the judge’s construction. The suggestion that there are gaps assumes a purpose of widening liability as far as possible. The first gap, based on the proposition that a caveator will necessarily be able to establish reasonable cause and therefore escape liability if a solicitor has given advice, does not accord with the authorities addressing the question of reasonable cause.[20] While the fact of advice will be relevant to the evidentiary enquiry into what constitutes reasonable cause and whether the caveator had it, it does not supply an answer in and of itself. The second gap that was asserted (where the person lodging the caveat acts without authority) does not arise in this case, but it could be answered by arguing that in such instances the so-called agent is in fact acting as the principal. Such a situation is best addressed on the particular facts of the case.
[20]See Edmonds v Donovan (2005) 12 VR 513; [2005] VSCA 27; New Galaxy Investments Pty Ltd v Tomson [2017] NSWCA 153; KB Corporate Pty Ltd v Sayfe [2017] VSC 623, [19] (Mukhtar AsJ).
The applicant’s construction of s 118 gives rise to its own problems. As the respondents submitted before us, the applicant has adopted both a narrow and a broad approach to answering the factual question, ‘who lodged the caveat?’, and neither approach is satisfactory. The narrow approach involves simply looking at the caveat, which, in the top left corner beside the words ‘Lodged by’, provides for a name to be inserted. The broad approach involves embracing the analysis in Gordon where any number of persons, including the caveator, the caveator's solicitor, the solicitor’s clerk and the registration agent, may be identified as a person who lodged the caveat. If the narrow approach were applied in this case, it might be necessary to establish whose writing appears in the top left hand corner of the caveats and how it came to appear there. The word ‘Alderuccio’ does not identify either the first or the second respondent specifically; nor does it correctly use the name of the respondents’ firm. Most importantly however, identifying the person who lodged the caveats in this way leads to the absurd result that one person who did not lodge the caveats was the caveator, Bloomingdale. If, as the applicant submits, the purpose of s 118 is to expand liability beyond the caveator, then the narrow approach to the factual question does precisely the opposite.
On the other hand, adoption of the broad approach, endorsed in Gordon, may require a wide-ranging factual inquiry as to who, in any way, was responsible for lodging the caveats. Rather than giving the word ‘lodging’ its literal meaning, the broad approach places a gloss on that word, because the question becomes ‘who was involved in lodging’ or ‘who had responsibility for lodging’,[21] which entails a departure from the text of the Act. The breadth of the enquiry that is required may be extremely large. If the caveator is a corporation, for example, quite apart from the persons considered to be potential ‘lodgers’ by Blanchard J in Gordon, it may be necessary to consider which officers within the corporation had an involvement in lodging the caveat. For example, is it each and every member of the board or is it only those directors who were consulted or who gave instructions?
[21]Gordon [1996] 3 NZLR 281, 288.
That ss 89(1) and 118 of the Act use the words ‘any person’ rather than ‘the caveator’ is a function of the fact that both the ‘claiming’ and the ‘lodging’ precede the ‘recording’ of the caveat in s 89(2). The opening phrase ‘[a]ny person lodging’ in s 118 is in the present tense because that is the point in time at which the question of ‘reasonable cause’ is to be assessed, that is, when the person is about to lodge or is in the course of lodging the caveat and the caveat has not yet been recorded on the Register. That is the critical point in time for assessment regardless of when the claim for compensation is made by any person who sustains damage. Section 89(1) operates at the same point in time, that is, prior to the recording of the caveat on the Register. The references in the Act to the ‘caveator’ all focus on a point in time after the caveat has been lodged.
In our view, the judge’s construction accords with the requirement to construe the provisions of a statute in a manner that is consistent with the language and purpose of all of the provisions of the statute.[22] It focusses on the language of ss 89(1) and 118 and how those provisions operate together, having regard to the words chosen by the legislature. It accords with authority emphasising the primacy of the text in statutory construction.[23]
[22]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 381 [69]; [1998] HCA 28 (McHugh, Gummow, Kirby and Hayne JJ).
[23]See, eg, Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27, 46-47 [47]; [2009] HCA 41 (Hayne, Heydon, Crennan and Kiefel JJ); Thiess v Collector of Customs (2014) 250 CLR 664, 671 [22]; [2014] HCA 12 (French CJ, Hayne, Kiefel, Gageler and Keane JJ); Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503, 519 [39]; [2012] HCA 55 (French CJ, Hayne, Crennan, Bell and Gageler JJ); Certain Lloyd’s Underwriters v Cross (2012) 248 CLR 378, 390 [26]; [2012] HCA 56 (French CJ and Hayne J); Taylor v Owners – Strata Plan 11564 (2014) 253 CLR 531, 549 [39]; [2014] HCA 9 (French CJ, Crennan and Bell JJ).
In contrast, the construction advanced by the applicant ignores the textual interplay between ss 89(1) and 118 and proceeds from an assumption that the purpose of s 118 is to give a person who suffers loss as a result of an improperly lodged caveat recourse against the widest possible number of persons. That assumed purpose then drives the applicant’s construction of s 118. As discussed, this ‘bootstraps’ methodology cannot be accepted. Moreover, the factual enquiry that it generates suffers from the incoherence identified above. If the narrow approach to the question ‘who lodged the caveat?’ is adopted, the caveator may be excluded; on the other hand, the broad approach may require a labyrinthine series of enquiries and gives rise to considerable uncertainty in circumstances where the Act contemplates that the identification of the person lodging the caveat will be clear.
As discussed, that the Act contemplates that the person lodging the caveat can be identified with certainty (as the person claiming the interest in the land) is reinforced by s 115 of the Act, which provides for documents lodged with the Registrar to be returned only to or at the direction of the person who lodged them. It must be clear to the Registrar who lodged the caveat. This is only consistent with the identity of the person who lodged the caveat being determined by reference to the operation of the Act, not following a potentially open-ended and broad-ranging factual enquiry.
It follows from this analysis that we respectfully decline to adopt the reasoning in Gordon. Having regard to the text of the statute with which we are concerned, we cannot agree that ‘any person’ in s 118 includes solicitors, their employees and registration agents and the like, some of whom even on the applicant’s analysis would only be handling or delivering the document or documents to the Registrar.
In Gordon, Blanchard J considered the question before the Court under two relevant headings: ‘Section 146: are solicitors liable?’ and ‘Section 146: reasonable cause’.[24] Most of his Honour’s discussion took place under the second heading, which is not relevant for present purposes, as the extension of liability beyond the caveator to solicitors and ‘any other person responsible for lodging a caveat’ is dealt with under the first heading. The relevant discussion is as follows:
[Counsel for the appellant] pointed to the ordinary meaning of ‘any person’. We agree with him that there is a pattern in the use of language in ss 136-148 dealing with caveats, although there is not complete consistency. Having, in ss 136 and 137, given any person claiming a caveatable interest the right to lodge a caveat either in Form M (against the bringing of land under the Act) or Form N (against a dealing), the statute from then onwards generally calls a person who has taken advantage of that right a ‘caveator’: see ss 138, 140, 141, 143, 145 and 147. (In s 144 which deals with the lapsing of a Form M caveat that is not done, but the word ‘person’ is qualified by words describing a caveator (‘person by whom or on whose behalf the caveat was lodged’). Section 143(2) speaks of ‘the caveator or the person on whose behalf the caveat has been lodged’. It is difficult to think whom the latter person could be but this uncertainty does not detract from [counsel for the appellant’s] argument. Section 147, dealing with withdrawal of a caveat, refers both to the caveator and the caveator's attorney or agent.
Section 146 is the only place in which ‘person’ is not accompanied by a direct reference to the caveator or use of words which can refer only to the caveator. The second time the word ‘person’ appears in the section, referring to someone affected by the caveat, it is not limited to the registered proprietor but extends to anyone who has sustained damage. The section is in both these ways wider in its application than the other caveat sections. We agree with [counsel for the appellant] that ‘Any person lodging any caveat’ in s 146 is not restricted to the caveator. This was also the view of Master Thomson who considered the question when the strike-out application was before him. If Parliament had intended otherwise, s 146 would surely have referred to a ‘caveator’ like the other sections of which mention has been made. We conclude, then, that both client and solicitor and indeed any other person responsible for lodging a caveat may be liable to pay compensation under s 146. Nor, as will be seen from the following portion of this judgment, does any matter of policy or practical difficulty require otherwise.[25]
[24]Gordon [1996] 3 NZLR 281, 287–288.
[25]Ibid.
Blanchard J’s analysis turns on the use of the word ‘person’ as opposed to the word ‘caveator’ in the relevant provision, s 146. For the reasons that we have given above, a close textual analysis of the Act explains why ‘person’ rather than ‘caveator’ is used in s 118 and is not based upon, or consistent with, expanding the class of persons liable to pay compensation if a caveat is lodged without reasonable cause.
We consider that the text of the Act provides the answer to the proper construction of s 118. We reject the submission that the applicant’s construction best gives effect to the purpose of the Act and accept the respondents’ characterisation of the applicant’s argument as circular.
If the construction that we favour creates ‘gaps’ in liability (and we make no determination as to whether it does or does not), that is a function of the words in the Act and the way in which the relevant provisions operate together. The Act evinces the legislative intent to confine liability to pay compensation to the person who lodged the caveat, that being an entitlement conferred on the person claiming the interest in the land.
It is unnecessary on the facts of this case to consider the possible exceptions to this confined liability mentioned by Young AJA in Windlock.
Disposition
The judge was correct to answer the preliminary question by stating that the respondents are not ‘a person’ lodging a caveat with the Registrar for the purposes of s 118 of the Act.
Leave to appeal is refused.
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